FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT December 17, 2008
Exhibit
10.9
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
November 22, 2006, and is entered into by and between LINN OPERATING, INC., a
Delaware corporation (the “Company”), and XXXX X. XXXXX (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), the
Employee will serve each of the Company and Linn Energy as the President &
Chief Operating Officer. In such capacity, the Employee will report to Linn
Energy’s and the Company’s Chairman & Chief Executive Officer or directly to
the Board of Directors 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 him by the Chairman of the Board 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 his full working
time to the business and affairs of the Company and Linn Energy, will use his
best efforts to promote the Company’s and Linn Energy’s interests and will
perform his duties and responsibilities faithfully, diligently and to the best
of his 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
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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 other business activities do not violate Section 7, create a
conflict of interest or the appearance of a conflict of interest with the
Company or Linn Energy or materially interfere with the performance of his
obligations to the Company or Linn Energy under this Agreement.
1.3 Place of Employment.
The Employee will perform his 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. 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 $400,000 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 shall be reviewed annually by the Board and may be adjusted upward in the
Board’s sole discretion, but not downward.
3.2 Bonus Compensation.
The Employee will be entitled to receive a guaranteed cash bonus (“Guaranteed Bonus”) payment of
not less than one hundred percent (100%) of Employee’s then current Base Salary
with respect to the Company’s fiscal year ending December 31, 2008, provided
Employee is then employed by Company at that date. This Guaranteed
Bonus shall be paid to the Employee on or before March 14,
2009. Thereafter, 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 him 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 100% of his Base
Salary. The percentage of the Employee’s Base Salary that the Board
designates for the Employee to receive as his 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
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“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.
(a) Initial Grant of Unit
Options. As of November 22, 2006, the Employee received an award of
non-qualified options to purchase up to fifty thousand (50,000) Units of Linn
Energy at a per share exercise price equal to the fair market value of a Unit as
of the date of grant, which was awarded under the terms of the Linn Energy, LLC
Long-Term Incentive Plan, as it may be in effect from time to time (the “LTIP”). Provided
however, that this initial grant of options has vested or shall vest: (i)
one-third (1/3) as of 1/1/2007; (ii) one-third (1/3) as of 1/1/2008; and (iii)
one-third (1/3) as of 1/1/2009. Except as explicitly provided in this paragraph,
the options will be subject to such other terms and conditions set forth in the
applicable option agreement.
(b) Initial Grant of Restricted
Units. As of November 22, 2006, the Employee received a Restricted Unit
award in the amount of two hundred thousand (200,000) Units of Linn Energy,
which was awarded under the terms of the LTIP. Provided however, that the
Initial Grant of Restricted Units has vested or shall vest: (i) one-half (50%)
as of 1/1/2007; (ii) one-quarter (25%) as of 1/1/2008; and, (iii) the remaining
one-quarter (25%) shall vest as of 1/1/2009. Except as explicitly
provided in this paragraph, the Initial Grant of Restricted Units will be
subject to such other terms and conditions set forth in the applicable
restricted unit agreement.
(c) December 2007 Grants of Unit
Options. On December 18, 2007, Employee received an award of
non-qualified options to purchase up to fifty thousand (50,000) Units of Linn
Energy at a per share exercise price equal to the fair market value of a Unit as
of the date of grant, which was awarded under the terms of the LTIP. Each such
December 2007 Grant of Unit Options shall vest: (i) one-third (1/3) at the end
of twelve (12) months following the award; (ii) one-third (1/3) at the end of
twenty four (24) months following the award; and, (iii) the remaining one-third
(1/3) at the end of thirty-six (36) months following the date of such award.
Except as explicitly provided in this paragraph, the options will be subject to
such other terms and conditions set forth in the applicable option
agreement.
(d) December 2007 Grants of Restricted
Units. On December 8, 2007, Employee received a Restricted
Unit Award in the amount of one hundred thousand (100,000) Units of Linn Energy,
which was awarded under the terms of the LTIP. This grant of Restricted Units
has vested or shall vest: (i) one-third (1/3) as of 1/1/2008; (ii) one-third
(1/3) as of 1/1/2009; and, (iii) the remaining one-third (1/3) as of 1/1/2010.
Except as explicitly provided in this paragraph, all December 2007 Grants of
Restricted Units are subject to such other terms and conditions set forth in the
applicable restricted unit agreement.
(e) Future Awards. In addition to
the above long-term incentive compensation awards, 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
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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.
4.1 Reimbursement of
Expenses. The Employee will be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him 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 his 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).
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(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
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
his 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 his 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
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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.
5.3 Termination by the
Employee.
(a) Terminable at Will. The
Employee may terminate his 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 his
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 amounts 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; or (iv) a reduction in position or responsibilities that
in the reasonable determination of Employee constitutes a substantial reduction
in position or responsibilities.
(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 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 (A) any of the compensation or benefits
described in this Agreement that are due and owing, or (B) any amounts 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) a reduction in position or
responsibilities that in the reasonable determination of Employee constitutes a
substantial reduction in position or responsibilities; 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.
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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)
will be communicated by written Notice of Termination to the other party hereto
in accordance with Section 8.7. 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 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 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 his 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 his 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,
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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 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 his 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 his 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 his Bonus Level Percentage
and then multiplying the Bonus Level Amount resulting from applying 100% of his
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.
Notwithstanding
any other provision of this Agreement, on Employee’s death, all granted but
unvested Units, Restricted Units or Unit Options shall immediately vest and any
related restrictions shall be waived.
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 his Base Salary in effect
immediately prior to the Termination Date and participate in applicable employee
benefit plans
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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 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
any other provision of this Agreement, on Employee’s Termination on account of
Disability, all granted but unvested Units, Restricted Units or Unit Options
shall immediately vest and any related restrictions shall be
waived.
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 his
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 his 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,
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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 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
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within
thirty (30) days following the Company’s receipt of a premium payment for
Medical Benefits.
(v) All
of Employee’s granted but unvested Units, Restricted Units or Unit Options shall
immediately vest and any related restrictions shall be waived.
(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 three(3) times the sum of (A) 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 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),
except that 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 eighteen
(18) months instead of six (6) months. 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.
(iii) All
of Employee’s granted but unvested Units, Restricted Units or Unit Options shall
immediately vest and any related restrictions shall be waived.
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).
040707, 000014, 102625747.2
11
(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 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
040707, 000014, 102625747.2
12
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 under Section 6.4(a) or
Section 6.4(b),
the Employee will execute a release (the “Release”), which will include
an affirmation of the restrictive covenants set forth in Section 7 and 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 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 him, 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. Such Release shall be void ab initio, if Company
thereafter
040707, 000014, 102625747.2
13
fails to
fully and timely pay all compensation and benefits due to Employee under this
Agreement.
(ii) Limitation on Benefits. If,
following a termination of employment that gives the Employee a right to the
payment of Severance Benefits under Section 6.4(a) or
Section 6.4(b),
the Employee violates in any material respect any of the covenants in Section 7 or as
otherwise set forth in the Release, the Employee will have no further right or
claim to any payments or other benefits to which the Employee may otherwise be
entitled under Section
6.4(a) or Section 6.4(b) from
and after the date on which the Employee engages in such activities and the
Company will have no further obligations with respect to such payments or
benefits, and the covenants in Section 7 will
nevertheless continue in full force and effect.
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 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
040707, 000014, 102625747.2
14
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 his 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.
(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 (but not the
amount or value thereof) as reasonably 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;
or
(c) in
the event that any benefits payable or otherwise provided under this Agreement
would be subject to penalty and interest under Section 409A of this Code, then
Company shall provide for the payment of, or otherwise reimburse the Employee
for, an amount equal to such penalty and interest, and any related taxes, fees
or penalties thereon.
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. Restrictive
Covenants.
7.1 Confidential
Information. The Employee hereby acknowledges that in connection with his
employment by the Company he will be exposed to and may obtain certain
Confidential Information (as defined below) (including, without limitation,
procedures, memoranda, notes, records and customer and supplier lists whether
such information has been or is made, developed or compiled by the Employee or
otherwise has been or is made available to him) regarding the business and
operations of the Company and its subsidiaries or affiliates. The Employee
further
040707, 000014, 102625747.2
15
acknowledges
that such Confidential Information is unique, valuable, considered trade secrets
and deemed proprietary by the Company. For purposes of this Agreement, “Confidential Information”
includes, without limitation, any information heretofore or hereafter acquired,
developed or used by any of the Company, Linn Energy or their direct or indirect
subsidiaries relating to Business Opportunities or Intellectual Property or
other geological, geophysical, economic, financial or management aspects of the
business, operations, properties or prospects of the Company, Linn Energy or
their direct or indirect subsidiaries, whether oral or in written form. The
Employee agrees that all Confidential Information is and will remain the
property of the Company, Linn Energy or their direct or indirect subsidiaries,
as the case may be. The Employee further agrees, except for
disclosures occurring in the good faith performance of his duties for the
Company, Linn Energy or their direct or indirect subsidiaries, during the
Employment Term, the Employee will hold in the strictest confidence all
Confidential Information, and will not, both during the Employment Term and for
a period of five (5) years after the Termination Date, directly or indirectly,
duplicate, sell, use, lease, commercialize, disclose or otherwise divulge to any
person or entity any portion of the Confidential Information or use any
Confidential Information, directly or indirectly, for his own benefit or profit
or allow any person, entity or third party, other than the Company, Linn Energy
or their direct or indirect subsidiaries and authorized executives of the same,
to use or otherwise gain access to any Confidential Information. The
Employee will have no obligation under this Agreement with respect to any
information that becomes generally available to the public other than as a
result of a disclosure by the Employee or his agent or other representative or
becomes available to the Employee on a non-confidential basis from a source
other than the Company, Linn Energy or their direct or indirect subsidiaries.
Further, the Employee will have no obligation under this Agreement to keep
confidential any of the Confidential Information to the extent that a disclosure
of it is required by law or is consented to by the Company or Linn Energy;
provided, however, that if and when such a disclosure is required by law, the
Employee promptly will provide the Company with notice of such requirement, so
that the Company may seek an appropriate protective order.
7.2 Return of
Property. Employee agrees to deliver promptly to the Company,
upon termination of his employment hereunder, or at any other time when the
Company so requests, all documents relating to the business of the Company, Linn
Energy or their direct or indirect subsidiaries, including without limitation:
all geological and geophysical reports and related data such as maps, charts,
logs, seismographs, seismic records and other reports and related data,
calculations, summaries, memoranda and opinions relating to the foregoing,
production records, electric logs, core data, pressure data, lease files, well
files and records, land files, abstracts, title opinions, title or curative
matters, contract files, notes, records, drawings, manuals, correspondence,
financial and accounting information, customer lists, statistical data and
compilations, patents, copyrights, trademarks, trade names, inventions,
formulae, methods, processes, agreements, contracts, manuals or any documents
relating to the business of the Company, Linn Energy or their direct or indirect
subsidiaries and all copies thereof and therefrom; provided, however, that the
Employee will be permitted to retain copies of any documents or materials of a
personal nature or otherwise related to the Employee’s rights under this
Agreement, copies of this Agreement and any attendant or ancillary documents
specifically including any documents referenced in this Agreement, copies of the
LTIP Form of Executive Restrictive Unit Grant Agreement, copies of the LTIP,
copies of the LTIP Summary and
040707, 000014, 102625747.2
16
Prospectus,
and copies of the Second Amended and Restated Limited Liability Company
Agreement of Linn Energy, LLC.
7.3 Non-Compete
Obligations.
(a) Non-Compete Obligations During
Employment Term. The Employee agrees that during the Employment
Term:
(i) the
Employee will not, other than through the Company, engage or participate in any
manner, whether directly or indirectly through any family member or as an
employee, employer, consultant, agent, principal, partner, more than one percent
(1%) shareholder, officer, director, licensor, lender, lessor or in any other
individual or representative capacity, in any business or activity which is
engaged in leasing, acquiring, exploring, producing, gathering or marketing
hydrocarbons and related products; provided that the foregoing shall not be
deemed to restrain the participation by the Employee’s spouse in any capacity
set forth above in any business or activity engaged in any such activity and
provided further that Linn Energy or the Company may, in good faith, take such
reasonable action with respect to the Employee’s performance of his duties,
responsibilities and authorities as set forth in Sections 1.1 and
1.2 of this
Agreement as it deems necessary and appropriate to protect its legitimate
business interests with respect to any actual or apparent conflict of interest
reasonably arising from or out of the participation by Employee’s spouse in any
such competitive business or activity; and
(ii) all
investments made by the Employee (whether in his own name or in the name of any
family members or other nominees or made by the Employee’s controlled
affiliates), which relate to the leasing, acquisition, exploration, production,
gathering or marketing of hydrocarbons and related products will be made solely
through the Company; and the Employee will not (directly or indirectly through
any family members or other persons), and will not permit any of his controlled
affiliates to: (A) invest or otherwise participate alongside the Company or its
direct or indirect subsidiaries in any Business Opportunities, or (B) invest or
otherwise participate in any business or activity relating to a Business
Opportunity, regardless of whether any of the Company or its direct or indirect
subsidiaries ultimately participates in such business or activity, in either
case, except through the Company. Notwithstanding the foregoing, nothing in this
Section 7.3
shall be deemed to prohibit the Employee or any family member from owning, or
otherwise having an interest in, less than one percent (1%) of any publicly
owned entity or three percent (3%) or less of any private equity fund or similar
investment fund that invests in any business or activity engaged in any of the
activities set forth above, provided that Employee has no active role with
respect to any investment by such fund in any entity.
(b) Non-Compete Obligations After
Termination Date. The Employee agrees that the Employee will not engage
or participate in any manner, whether directly or indirectly, through any family
member or other person or as an employee, employer,
040707, 000014, 102625747.2
17
consultant,
agent principal, partner, more than one percent (1%) shareholder, officer,
director, licensor, lender, lessor or in any other individual or representative
capacity during the one (1) year period following the Termination Date, in any
business or activity which is in direct competition with the business of the
Company or its direct or indirect subsidiaries in the leasing, acquiring,
exploring, producing, gathering or marketing of hydrocarbons and related
products within the boundaries of, or within a two-mile radius of the boundaries
of, any mineral property interest of any of the Company or its direct or
indirect subsidiaries (including, without limitation, a mineral lease,
overriding royalty interest, production payment, net profits interest, mineral
fee interest or option or right to acquire any of the foregoing, or an area of
mutual interest as designated pursuant to contractual agreements between the
Company and any third party) or any other property on which any of the Company
or its direct or indirect subsidiaries has an option, right, license or
authority to conduct or direct exploratory activities, such as three-dimensional
seismic acquisition or other seismic, geophysical and geochemical activities
(but not including any preliminary geological mapping), as of the Termination
Date or as of the end of the six (6) month period following such Termination
Date; provided that, this Section 7.3(b) will not preclude the Employee from
making investments in securities of oil and gas companies which are registered
on a national stock exchange, if (A) the aggregate amount owned by the Employee
and all family members and affiliates does not exceed five percent (5%) of such
company’s outstanding securities, and (B) the aggregate amount invested in such
investments by the Employee and all family members and affiliates after the date
hereof does not exceed $500,000.
Notwithstanding
the foregoing, nothing in this Section 7.3
shall be deemed to restrain the participation by Employee’s spouse in any
capacity set forth above in any business or activity described
above.
(c) Not Applicable Following Change of
Control Termination. The Employee will not be subject to the covenants
contained in Section 7.3(b) and such covenants will not be enforceable against
the Employee from and after the date of an Eligible Termination if such Eligible
Termination occurs within six (6) months before or two (2) years after a Change
of Control.
7.4 Non-Solicitation
(a) Non-Solicitation Other than Following a Change of
Control Termination. During the Employment Term and for a period of one
(1) year after the Termination Date, the Employee will not, whether for his own
account or for the account of any other Person (other than the Company or its
direct or indirect subsidiaries), (i) intentionally solicit, endeavor to entice
away from the Company or its direct or indirect subsidiaries, or otherwise
interfere with the relationship of the Company or its direct or indirect
subsidiaries with, any person who is employed by the Company or its direct or
indirect subsidiaries (including any independent sales representatives or
organizations), or (ii) using Confidential Information, solicit, endeavor to
entice away from the Company or its direct or indirect subsidiaries, or
otherwise interfere with the relationship of the Company or its direct or
indirect subsidiaries with, any client or customer of the Company or its direct
or indirect subsidiaries in direct competition with the Company.
040707, 000014, 102625747.2
18
(b) Not Applicable Following Change of
Control Termination. The Employee will not be subject to the covenants
contained in Section 7.4(a) and such covenants will not be enforceable against
the Employee from and after the date of an Eligible Termination if such Eligible
Termination occurs within six (6) months before or two (2) years following a
Change of Control.
7.5 Assignment of
Developments. The Employee assigns and agrees to assign without further
compensation to the Company and its successors, assigns or designees, all of the
Employee’s right, title and interest in and to all Business Opportunities and
Intellectual Property (as those terms are defined below), and further
acknowledges and agrees that all Business Opportunities and Intellectual
Property constitute the exclusive property of the Company.
For
purposes of this Agreement, “Business Opportunities” means
all business ideas, prospects, proposals or other opportunities pertaining to
the lease, acquisition, exploration, production, gathering or marketing of
hydrocarbons and related products and the exploration potential of geographical
areas on which hydrocarbon exploration prospects are located, which are
developed by the Employee during the Employment Term, or originated by any third
party and brought to the attention of the Employee during the Employment Term,
together with information relating thereto (including, without limitation,
geological and seismic data and interpretations thereof, whether in the form of
maps, charts, logs, seismographs, calculations, summaries, memoranda, opinions
or other written or charted means).
For
purposes of this Agreement, “Intellectual Property” shall
mean all ideas, inventions, discoveries, processes, designs, methods,
substances, articles, computer programs and improvements (including, without
limitation, enhancements to, or further interpretation or processing of,
information that was in the possession of the Employee prior to the date of this
Agreement), whether or not patentable or copyrightable, which do not fall within
the definition of Business Opportunities, which the Employee discovers,
conceives, invents, creates or develops, alone or with others, during the
Employment Term, if such discovery, conception, invention, creation or
development (a) occurs in the course of the Employee’s employment with the
Company, or (b) occurs with the use of any of the time, materials or facilities
of the Company or its direct or indirect subsidiaries, or (c) in the good faith
judgment of the Board, relates or pertains in any material way to the purposes,
activities or affairs of the Company or its direct or indirect
subsidiaries.
7.6 Injunctive
Relief. The Employee acknowledges that a breach of any of the
covenants contained in this Section 7 may result
in material, irreparable injury to the Company for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat of breach, the
Company will be entitled to obtain a temporary restraining order and/or a
preliminary or permanent injunction restraining the Employee from engaging in
activities prohibited by this Section 7 or such
other relief as may be required to specifically enforce any of the covenants in
this Section
7.
7.7 Adjustment of
Covenants. The parties consider the covenants and restrictions contained
in this Section
7 to be reasonable. However, if and when any such covenant or restriction
is found to be void or unenforceable and would have been valid had some part of
it been deleted or had its scope of application been modified, such covenant or
restriction will be
040707, 000014, 102625747.2
19
deemed to
have been applied with such modification as would be necessary and consistent
with the intent of the parties to have made it valid, enforceable and
effective.
7.8 Forfeiture
Provision.
(a) Detrimental Activities. If
the Employee engages in any activity that violates any covenant or restriction
contained in this Section 7, in
addition to any other remedy the Company may have at law or in equity, (i) the
Employee will be entitled to no further payments or benefits from the Company
under this Agreement or otherwise, except for any payments or benefits required
to be made or provided under applicable law, (ii) all unexercised Unit options,
restricted Units and other forms of equity compensation held by or credited to
the Employee will terminate effective as of the date on which the Employee
engages in that activity, unless terminated sooner by operation of another term
or condition of this Agreement or other applicable plans and agreements, and
(iii) any exercise, payment or delivery pursuant to any equity compensation
award that occurred within one (1) year prior to the date on which the Employee
engages in that activity may be rescinded within one (1) year after the first
date that a majority of the members of the Board first became aware that the
Employee engaged in that activity. In the event of any such rescission, the
Employee will pay to the Company the amount of any gain realized or payment
received as a result of the rescinded exercise, payment or delivery, in such
manner and on such terms and conditions as may be required.
(b) Right of Setoff. The Employee
consents to a deduction from any amounts the Company owes the Employee from time
to time (including amounts owed as wages or other compensation, fringe benefits,
or vacation pay, as well as any other amounts owed to the Employee by the
Company), to the extent of the amounts the Employee owes the Company under Section 7.8(a)
(above). Whether or not the Company elects to make any setoff in whole or in
part, if the Company does not recover by means of setoff the full amount the
Employee owes, calculated as set forth above, the Employee agrees to pay
immediately the unpaid balance to the Company. In the discretion of the Board,
reasonable interest may be assessed on the amounts owed, calculated from the
later of (i) the date the Employee engages in the prohibited activity and (ii)
the applicable date of exercise, payment or delivery.
(c) Forfeiture by Company. In the
event that Company fails to timely and fully pay to Employee all Severance
Benefits or Change of Control Benefits due under this Agreement, then Company
shall forfeit all right to enforce this Article 7.
8. Miscellaneous.
8.1 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 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
040707, 000014, 102625747.2
20
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.
8.2 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.
8.3 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 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 8.3.
8.4 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.
8.5 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 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
040707, 000014, 102625747.2
21
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.
8.6 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.
8.7 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
such other addresses and facsimile numbers as a party may designate by notice to
the other parties).
040707, 000014, 102625747.2
22
to the Company:
Attn:
Senior Vice President and General Counsel
JPMorgan
Xxxxx Xxxxx
000Xxxxxx
Xxxxx 0000 Xxxxxxx, Xxxxx 00000
to the
Employee:
Xxxx X.
Xxxxx
00
Xxxxxxx Xxxx Xxxxxx
Xxx
Xxxxxxxxx, XX 00000
Addresses
may be changed by written notice sent to the other party at the last recorded
address of that party.
8.8 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.
8.9 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.
8.10 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.
8.11 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).
8.12 Capacity; No
Conflicts. The Employee represents and warrants to the Company that: (a)
he has full power, authority and capacity to execute and deliver this Agreement,
and to perform his obligations hereunder, (b) such execution, delivery and
performance will not (and 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 he
is a party or is otherwise bound, and (c) this Agreement is his valid and
binding obligation, enforceable in accordance with its terms.
Xxxxxxx
040707, 000014, 102625747.2
23
X. Xxxx
warrants and represents that he has actual authority to enter into this
Agreement as the authorized act of the indicated entities.
[Signature
page follows]
040707, 000014, 102625747.2
24
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/
Xxxx X.
Xxxxx
|
|
Xxxx X.
Xxxxx
|
|
For
the limited purposes set forth herein:
|
|
By: /s/ Xxxxxxx X.
Xxxx
|
|
Name: Xxxxxxx
X. Xxxx
|
|
Title: Chairman
and Chief
Executive
Officer
|
040707, 000014, 102625747.2
25
