AMENDED AND RESTATED EMPLOYMENT AGREEMENT JUNE 4, 2008
Exhibit
10.2
AMENDED
AND RESTATED
JUNE
4, 2008
The
parties to this Amended and Restated Employment Agreement (this “Agreement”) are LINN OPERATING, INC., a
Delaware corporation (the “Company”), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the “Employee”). The Company and the
Employee are currently parties to an Employment Agreement dated May 21, 2008
(the “Existing
Employment Agreement”). The parties desire to provide for the employment
of the Employee as Senior Vice President – Chief Accounting Officer of the
Company and of Linn Energy (as defined) commencing on Employee’s first date of
employment, June 1, 2008, such date to be mutually agreed upon by the parties
(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. This Agreement in all respects supersedes the Existing
Employment Agreement.
Accordingly,
the parties, intending to be legally bound, agree as follows:
1. Position
and Duties.
1.1 Employment; Titles;
Reporting. The Company agrees to employ the Employee and the Employee
agrees to enter 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 – Chief Accounting Officer. In such capacity, the
Employee will report to Linn Energy’s and the Company’s Executive Vice President
and Chief Financial 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 him by
the Company’s Executive Vice President and Chief Financial Officer or the Board
from time to time and otherwise consistent with such position in a public
company comparable to Linn Energy which is engaged in natural gas and oil
acquisition, development and production (including, but not limited to,
maintaining, to the extent applicable, compliance with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 and related regulations and all other federal, state and local laws and
regulations, as well as all regulations and rules of any exchange or electronic
trading system on which Linn Energy’s securities are traded).
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, will use his best efforts to
promote the Company’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
executive officers of the Company and Linn Energy. Nevertheless, the Employee
may, with the prior approval of the Board in each instance, engage in such other
business and charitable activities that do not violate Section 7 of this
Agreement, 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”) will commence 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.”
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 $235,000 for services rendered to the Company
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.
3.2 Bonus Compensation.
The Employee will be entitled to receive a guaranteed bonus payment
of not less than $152,750 with respect to the Company’s fiscal year ending
December 31, 2008. 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 determine in its sole discretion to award to him
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”). Any additional incentive compensation payable under any
Employee Bonus Plan will be referred to in the aggregate in this Agreement as
the Employee’s “Bonus.”
3.3 Long-Term Incentive
Compensation.
(a) Unit Options. As of
the Effective Date, the Employee will receive an award of non-qualified options
to purchase up to 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 shall be
awarded under the terms of the Linn Energy, LLC Long-Term Incentive Plan (the
“Incentive
Plan”), and subject to a service-based vesting schedule and such other
terms and conditions set forth in the applicable option agreement.
(b) Restricted Units. As
of the Effective Date, the Employee will receive a restricted Unit award in the
amount of 50,000 Units of Linn Energy, which shall be awarded under the terms of
the Incentive Plan, and subject to a service-based vesting
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schedule
and such other terms and conditions set forth in the applicable restricted unit
agreement.
(c) 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 on or after the Effective Date 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.
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.
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).
(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
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repeated
intoxication by alcohol or drugs during the performance of his duties; (iii)
malfeasance in the conduct of Employee’s duties, including, but not limited to,
(A) willful and intentional misuse or diversion of any of the funds of Linn
Energy or its direct or indirect subsidiaries, (B) embezzlement, or (C)
fraudulent or willful and material misrepresentations or concealments on any
written reports submitted to any of Linn Energy or its direct or indirect
subsidiaries; (iv) the Employee’s material failure to perform the duties of the
Employee’s employment consistent with Employee’s position, expressly including
the provisions of this Agreement, or material failure to follow or comply with
the reasonable and lawful written directives of the Board; (v) a material breach
of this Agreement; or (vi) a material breach by the Employee of written policies
of the Company concerning employee discrimination or harassment.
(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 will give the Employee
written notice stating with reasonable specificity the nature of the
circumstances determined by the Board in good faith to constitute “Cause.” If,
in the good faith judgment of the Board, the alleged breach is reasonably
susceptible to cure, the Employee will have fifteen (15) days from his receipt
of such notice to effect the cure of such circumstances or such breach to the
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. If, in the 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 fifteen (15) 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 thirty (30) 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.
For purposes of this Agreement, “Good
Reason” will mean any of the
following to which the Employee will not consent in writing: (i) a material
diminution in the Employee’s Base Salary, (ii) a relocation within two (2) years
from the Effective Date of this Agreement of the Employee’s primary place of
employment to a location more than 50 miles from Houston, Texas, or
(iii) any material reduction in Employee’s title, authority or
responsibilities as Chief Accounting Officer.
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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
of this Agreement) will be communicated by written Notice of Termination to the
other party hereto in accordance with Section 8.7 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 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 (the “Disability
Effective Date”), 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 written determination by a physician selected by the Company that the
Employee is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than twelve (12) months. 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.
6. Compensation
of the Employee upon Termination.
6.1 Death. If the
Employee’s employment under this Agreement is terminated by reason of his death,
the Company will 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, the amount of (a) the Employee’s accrued but
unpaid Base Salary through the Termination Date paid in a lump sum within thirty
(30) days following the Termination Date, (b) any accrued but unpaid Bonus,
which Bonus will be payable at such time as the bonuses of other executive
officers of the Company are payable, and (c) any other amounts that may be
reimbursable by the Company to the Employee as expressly provided under this
Agreement paid 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. Without limiting
the generality of the foregoing, any rights the Employee’s beneficiary may have
to the proceeds of any life insurance arrangement set forth in Section 4.3 of this
Agreement will be in lieu of any special entitlement to severance pay or
benefits upon the Employee’s death.
6.2 Disability. In the
event of the Employee’s termination by reason of Disability pursuant to Section 5.5 of this
Agreement, the Employee will continue to receive his Base Salary
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and
participate in applicable employee benefit plans or programs of the Company
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 will receive (a) the
Employee’s accrued but unpaid Base Salary through the Termination Date paid in a
lump sum within thirty (30) days following the Termination Date, (b) any accrued
but unpaid Bonus, which Bonus will be payable at such time as the bonuses of
other executive officers of the Company are payable, and (c) any other amounts
that may be reimbursable by the Company to the Employee as expressly provided
under this Agreement paid 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.
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 Base Salary through the Termination Date paid in a
lump sum within thirty (30) days following the Termination Date, (b) any accrued
but unpaid Bonus, which Bonus will be payable at such time as the bonuses of
other executive officers of the Company are payable, and (c) any other amounts
that may be reimbursable by the Company to the Employee as expressly provided
under this Agreement paid 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.
6.4 By the Employee for Good
Reason or the Company Other Than for Cause.
(a) Severance Benefits on Non-Change of
Control Termination. Subject to the provisions of Section 6.4(b) and
Section 6.4(d)
of this Agreement, if prior to or more than one (1) year 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”):
(i) an
amount equal to (A) the Employee’s accrued but unpaid Base Salary through the
Termination Date paid in a lump sum within thirty (30) days following the
Termination Date, (B) with respect to any termination by the Employee for Good
Reason or by the Company without Cause, any accrued but unpaid Bonus, which
Bonus will be payable at such time as the bonuses of other executive officers of
the Company are payable, (C) any other amounts that may be reimbursable by the
Company to the Employee as expressly provided under this Agreement paid in a
lump sum within thirty (30) days following the Termination Date;
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(ii) with
respect to any termination event described in this paragraph (a) of Section 6.4, a lump sum
payment in an amount equal to twenty-four (24) months of the Employee’s annual
Base Salary at the highest rate in effect at any time during the thirty-six (36)
month period prior to the Termination Date, commencing with the calendar month
immediately following the calendar month in which the Termination Date occurs,
subject to the terms and conditions of Section 6.7 and Section 6.8 of this
Agreement;
(iii) the
Company will pay the full cost of the Employee’s COBRA continuation coverage for
duration of the “maximum required period” as such period is set forth under
COBRA and the applicable regulations; provided, however, that, notwithstanding
the foregoing, the benefits described in this Section 6.4(a)(iii)
may be discontinued 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 (“COBRA
Benefit”).
(b) Change of Control Benefits.
Subject to the provisions of Section 6.4(d), if
within the one (1) year period following the occurrence of a Change of Control,
the Company terminates the Employee’s employment without Cause, or the Employee
terminates his employment for Good Reason (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”) identical to those set
forth in Section
6.4(a) except that the amount described in clause (ii) will be paid in a
lump sum within thirty (30) days following the Termination Date and will be
equal to twenty-four monthly payments.
(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 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
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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
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.
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(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
parties, 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. If the Employee fails or
otherwise refuses to execute a Release within a reasonable time after the
Company’s request to do so, and in all events 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.
(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 takes 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 Provisions
Regarding Payments Under This Agreement. Notwithstanding anything in this
Agreement to the contrary, in the event that any benefits payable or otherwise
provided under this Agreement would be:
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(a) subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”),
(such excise tax referred to in this Agreement as the “Excise
Tax”), then
the Board may, in its sole discretion, provide for the payment of, or otherwise
reimburse the Employee for, an amount up to such Excise Tax as the Board may
consider to be customary; however, if such payment or reimbursement is
determined to be made by the Board, payments shall be made no later than the end
of the executive’s tax year following the tax year in which the excise taxes are
due under federal law; or
(b) 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.
6.8. Timing of Payments by the
Company. Notwithstanding anything in this Agreement to the
contrary, no payment shall be made or benefit provided under this Section 6 unless the
event triggering the payment or provision of benefits constitutes a “separation
from service” as determined under Section 409A of the Code. However,
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 date of his separation from
service.
7. Restrictive
Covenants.
7.1 Confidential
Information. The Employee hereby acknowledges that in connection with his
employment by the Company he will be provided with, 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 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 and for a period of two (2)
years after the Termination Date, to hold in the strictest confidence all
Confidential Information, and not to, 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
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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 Linn Energy, LLC Long Term Incentive
Plan Form of Executive Restrictive Unit Grant Agreement, copies of the Linn
Energy, LLC Long Term Incentive Plan, copies of the Linn Energy, LLC Long Term
Incentive Plan Summary and 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
11
forth
above in any business or activity engaged in any such activity and provided
further that Linn Energy 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 Section 1.1 and Section 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.
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.
(b) Not Applicable Following Change of
Control Termination. The Employee will not be subject to the covenants
contained in this Section 7.3 and such
covenants will not be enforceable against the Employee from and after the date
that the Employee’s employment is terminated within one (1) year after a Change
of Control.
7.4 Non-Solicitation.
During the Employment Term and for a period of twenty-four (24) months 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), 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, (a) any
person who is employed by the Company or its direct or indirect subsidiaries
(including any independent sales representatives or organizations), or (b) any
client or customer of the Company or its direct or indirect
subsidiaries.
12
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.
To the extent that the Company seeks a temporary restraining order (but not a
preliminary or permanent injunction), the Employee agrees that a temporary
restraining order may be obtained ex parte.
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 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.
13
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.
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 parties
and their respective heirs, legatees, devisees, personal representatives,
successors and assigns.
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
14
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, all documents referenced in this Agreement, the
Linn Energy, LLC Long Term Incentive Plan, the Linn Energy, LLC Long Term
Incentive Plan Summary and Prospectus, and the Second Amended and Restated
Limited Liability Company Agreement of Linn Energy, LLC, embodies the
entire understanding of the parties hereof, and, upon the Effective Date, will
supersede all other oral or written agreements or understandings between them
regarding the subject matter hereof. 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, the Linn Energy, LLC Long Term Incentive Plan, the Linn Energy,
LLC Long Term Incentive Plan Summary and Prospectus, and the Second Amended and
Restated Limited Liability Company Agreement of Linn Energy, LLC.
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 and
Service of Process.
(a) Section 7 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 Section 7, the
Company and the Employee agree and consent to the personal jurisdiction of the
state and local courts of ▇▇▇▇▇▇ 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,
will have jurisdiction to determine any dispute, controversy or claim related
to, arising under or in connection with Section 7 of 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) Disputes Other Than Under Section 7.
In the event of any dispute relating to this Agreement, other than a
dispute relating solely to Section 7, the
parties will use their best efforts to settle the dispute, claim, question, or
disagreement. To this effect, they will consult and negotiate with each other in
good faith and, recognizing their mutual interests, attempt to reach a just and
equitable solution satisfactory to both parties. If such a dispute cannot be
settled through negotiation, the parties agree first to try in good faith to
settle the dispute by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before resorting to
arbitration, litigation, or some other dispute resolution procedure. If the
parties do not reach such
15
solution
through negotiation or mediation within a period of sixty (60) days, then, upon
notice by either party to the other, all disputes, claims, questions, or
differences will be finally settled by arbitration administered by the American
Arbitration Association in accordance with the provisions of its Commercial
Arbitration Rules. The arbitrator will be selected by agreement of the parties
or, if they do not agree on an arbitrator within thirty (30) days after either
party has notified the other of her or its desire to have the question settled
by arbitration, then the arbitrator will be selected pursuant to the procedures
of the American Arbitration Association (the “AAA”) in Houston, Texas. The
determination reached in such arbitration will be final and binding on all
parties. Enforcement of the determination by such arbitrator may be sought in
any court of competent jurisdiction. Unless otherwise agreed by the parties, any
such arbitration will take place in Houston, Texas, and will be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the “AAA”).
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):
to the
Company, to:
Attn:
Senior Vice President General Counsel
and
Corporate Secretary
Linn
Energy, LLC
▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ Tower
▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
to the
Employee, to:
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
with a
copy to:
▇▇▇▇▇▇
& Siurek LLP
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇.
▇▇▇▇ ▇▇▇▇▇▇
16
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.
17
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the 4th day
of June, 2008.
LINN
OPERATING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇
Title: Chairman
and Chief Executive Officer
EMPLOYEE
/s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
For
the limited purposes set forth herein:
LINN
ENERGY, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇
Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇
Title: Chairman
and Chief Executive Officer
18