Exhibit 10.4
LINN ENERGY, LLC
LONG-TERM INCENTIVE PLAN
FORM OF EXECUTIVE OPTION
AGREEMENT
This option agreement (“ Option Agreement ”) is made and
entered into effective as of [Grant Date], (the “
Grant Date ”) by and
between LINN ENERGY, LLC, a Delaware limited liability company
(together with its subsidiaries, the “ Company ”), and [Executive]
(“ Participant
”).
WHEREAS
, the Company considers it
to be in its best interest that Participant be given a proprietary
interest in the Company and an added incentive to advance the
interests of the Company; and
WHEREAS
, the Company desires to
accomplish such objectives by affording Participant an option to
purchase Units pursuant to the Linn Energy, LLC Long-Term Incentive
Plan, which is attached hereto as Appendix A and incorporated by
reference herein (the “ Plan ”). Unless otherwise
defined herein, capitalized terms shall have the meaning given such
terns in the Plan.
NOW, THEREFORE
, in consideration of the
mutual agreements hereinafter set forth, the parties hereby agree
as follows:
1.
Grant of Option. The Company
hereby grants to Participant an option (the “ Option
”) to purchase all or any part of an aggregate of
[ ]
Units, under and subject to the terms and conditions of this Option
Agreement and the Plan.
2.
Purchase Price. The
purchase price for each Unit to be purchased hereunder shall be $
[ ]
(the “ Exercise Price ”).
3.
Vesting and Option Period. Participant may exercise the
Option in whole or in part. Except as otherwise provided
herein, the Option shall become vested and exercisable with respect
to one third (1/3) of the covered Units on January 19,
[ ],
with respect to an additional one third (1/3) of the covered Units
on January 19,
[ ]
and with respect to the final one third (1/3) of the covered Units
on January 19,
[ ].
Prior to such time, no portion of the Option shall be exercisable
unless its exercisability is accelerated as provided in this Option
Agreement or the Plan. Except as provided otherwise in this
Option Agreement or the Plan, the Option, to the extent not
theretofore exercised, shall terminate on the expiration of ten
(10) years from the date of grant of the Option; provided,
however, that upon the termination Participant’s service
relationship with the Company for any reason other than
(a) the death of the Participant or (b) termination of
the Participant’s service relationship with the Company as a
result of a Change of Control, Participant may, until the earlier
of (i) 90 days from the date of such termination or
(ii) the expiration of the Option in accordance with this
Section 3, exercise the Option, to the extent such Option had
vested immediately prior to such termination and, thereafter, the
Option shall, to the extent not previously exercised, automatically
terminate and become null and void.
4.
Method of Exercise and Payment. To the extent that the
Option has become exercisable, the Option may be exercised from
time to time by written notice to General Counsel, in substantially
the form attached hereto as Appendix B or such other form as may be
approved from time to time by the Committee, accompanied by the
aggregate Exercise Price for the Units to be purchased and any
required tax withholding amount as may be determined in the
discretion of General Counsel. The Exercise Price and any
withholding shall be payable in cash, by certified check, by bank
check or other means provided for in the Plan and approved by the
Committee, including without limitation by cashless-broker exercise
or the withholding of Units upon the exercise of the
Option.
5.
General Restrictions. Subject to the terms
of this Option Agreement and the Plan, the Option may be exercised
at any time, and from time to time, in whole or in part, until the
termination thereof as set forth herein, or until all Units covered
by the Option shall have been purchased, whichever first
occurs. The Option shall not be assignable or transferable
except as expressly provided by the Committee.
6.
Termination by Company other than for
Cause. Upon
the termination by the Company of Participant’s service
relationship with the Company other than for Cause (as defined
herein and as determined by the Committee in its sole discretion),
the Option granted hereby shall automatically and immediately vest
in full. “ Cause ” shall mean
(a) Participant’s conviction of, or plea of nolo
contendere to, any felony, any crime or offense causing substantial
harm to the Company (whether or not for personal gain) or involving
acts of theft, fraud, embezzlement, moral turpitude or similar
conduct; (b) Participant’s repeated intoxication by
alcohol or drugs during the performance of his or her duties;
(c) malfeasance in the conduct of Participant’s duties,
including, but not limited to, (i) willful and intentional
misuse or diversion of any Company funds, (ii) embezzlement or
(iii) fraudulent or willful and material mi
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