exhibit10-3.htm


    Exhibit
10.3


    SEPARATION
AGREEMENT

     

    This SEPARATION AGREEMENT (this “Agreement”) is entered into by and between Linn
Operating, Inc., a Delaware
corporation (the “Company”), and Lisa D. Anderson (the “Employee”) (the Company and Employee are collectively referred
to herein as the “Parties”)
effective as of June 11, 2008 (the “Effective
Date”).  Linn Energy, LLC, a Delaware limited
liability company and the 100% parent of the Company (“Linn
Energy”), is joining in this Agreement for the limited purpose 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 Employee for any
purpose.

     

    WHEREAS, Employee
is currently employed by the Company pursuant to an Employment
Agreement dated July 7, 2006 (the “Employment
Agreement”); and

     

    WHEREAS,  Employee’s
employment will be terminated without Cause, as defined in the Employment
Agreement, effective May 31, 2008; and

     

    WHEREAS
the Employment Agreement contemplates the Employee’s receipt of certain
severance benefits upon the termination of her employment without Cause,
provided that she reaffirms certain provisions of the Employment Agreement and
enters into a release of claims with the Company; and

     

    WHEREAS
the Parties wish to amend the Employment Agreement to change to a limited extent
the timing and form of severance payments and to provide for additional benefits
to the Employee upon her termination, which changes are intended to comply with
the applicable requirements of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”),
the final regulations thereunder and the transitional relief.

     

    NOW, THEREFORE, in consideration of the promises
and benefits set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by Employee
and the Company, the Parties agree as
follows:

     

    1.           Employee’s
Employment.  Employee will cease to be employed by the Company
effective May 31, 2008 (the “Termination Date”). The Parties agree that such
termination will be deemed without Cause and that all notice provisions of
Section 5.4 of the Employment Agreement are waived.

    


    2.           Severance Benefits. The
termination of Employee’s employment without Cause will qualify Employee for
severance benefits pursuant to Sections 6.4(a)(ii) and (iv) of the Employment
Agreement.  The Parties desire to amend the Employment Agreement’s
provisions to specify the timing and form of the Employee’s receipt of those
benefits.  Accordingly, if Employee executes (and does not revoke)
this Agreement, and has satisfied all of the other terms and conditions set
forth in this Agreement, the Company will provide Employee the
following:

    


    (a)           the
Company shall pay to the Employee One Hundred Seven Thousand, Four Hundred
Ninety-Nine Dollars and Ninety-Six Cents ($107,499.96) on December 15,
2008;


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (b)           the
Company shall pay to the Employee Three Hundred Twenty-Two Thousand Four Hundred
Ninety-Nine Dollars and Eighty-Eight Cents ($322,499.88) on the first regular
payday in January 2009;

    


    (c)           beginning
on the Termination Date, if Employee is eligible for continuation insurance
coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) and has timely elected COBRA continuation coverage under the
applicable group health plan of the Company, then with respect to the period
beginning on the Termination Date and continuing through the earlier of the end
of the period for which Employee is eligible by law to receive COBRA
continuation coverage under the Company’s group health plan, the Company shall
reimburse Employee for her costs for such continuation coverage.  In
order to receive such reimbursement, Employee must not be eligible for
substantially similar benefits under the group health plan of any other
employer.  The first reimbursement shall be on or after December 15,
2008 and the amount of such first reimbursement shall include all costs of COBRA
continuation coverage for which Employee is entitled to reimbursement hereunder
for the period beginning on the Termination Date and ending on November 30,
2008.  Thereafter, reimbursement payments pursuant to this paragraph
shall be made on a monthly basis provided that Employee remains entitled to
reimbursements hereunder.

    


    For all purposes of this Agreement and
the Employment Agreement, the Termination Date shall occur on May 31, 2008 when
the Employee incurred a “separation from service” with the Company within the
meaning of Section 409A(2)(A)(i) of the Internal Revenue Code of 1986, as
amended, and the final regulations promulgated thereunder.  The
Parties recognize that by performing its obligations pursuant to this Section 2,
the Company will satisfy all of its obligations under Sections 6.4(a)(ii) and
(iv) of the Employment Agreement.  The Parties further agree that all
of the Company’s obligations with regard to Severance Benefits set forth in
Sections 6.4(a)(ii) and (iv) of the Employment Agreement are superseded in their
entirety by the provisions of this Agreement.

    


    3.           Payments of Accrued Base Salary,
Vacation, Reimbursements and Bonuses. 

    


    (a)           The
Company shall pay to Employee all of the accrued but unpaid Base Salary and
Vacation that she has earned through the Termination Date.  Such
payment will be made no later than the next regular payday following the
Termination Date on which Employee’s Base Salary would otherwise have been due
and payable if not for the termination of Employee’s employment.

    


    (b)           Within
thirty (30) days of the Termination Date, the Company shall reimburse Employee
for all expenses described in Section 4.1 of the Employment Agreement for which
Employee has submitted timely receipts prior to the Termination
Date.

    


    (c)           The
Parties recognize that Employee has been paid all accrued bonuses owed to her
under the Employment Agreement and that she will earn no additional bonus,
whether in whole or in part, pursuant to the Employee Bonus Plan for the
Company’s fiscal year ending December 31, 2008.


    
      
         


      

      
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    (d)           The
Parties recognize that by performing its obligations pursuant to this Section 3,
the Company will satisfy all of its obligations under Section 6.4(a)(i) of the
Employment Agreement.

    


    4.           Incentive
Plan Rights.

    


    The Parties recognize that a
termination without Cause will entitle Employee to certain rights under option
agreements and restricted unit agreements which she has previously entered and
which have been awarded under the terms of the Linn Energy, LLC Long Term
Incentive Plan or any successor plan (the “Incentive
Plan”).  Employee’s rights under those agreements will be
governed by the terms and conditions of the applicable agreements and the
Incentive Plan.

    


    


    


    5.           Outplacement Services. To
facilitate finding future employment, the Company will provide Employee
outplacement services through Challenger, Gray & Christmas, Inc. for a
period of six (6) months following the Effective Date of this
Agreement.

     

    6.           Attorneys’
Fees.  The Company agrees to reimburse Employee for attorneys’
fees incurred by Employee to review this Agreement; however, such fees shall not
exceed One Thousand Five Hundred Dollars ($1,500.00).

     

    7.           Additional
Payments.  In addition to the payments and benefits specified
in Sections 2 through 5 above, the Company shall pay to the Employee as soon as
practicable upon execution of this agreement, but in any event not later than
June 30, 2008 a payment equal to Seventy-Two Thousand
($72,000.00).  Such payment is made outside of the Employment
Agreement and is in recognition of the Employee’s agreement to cooperate fully
with the Company to ensure a smooth transition to the new Chief Accounting
Officer and to assist him in becoming familiar with the Company’s financial
operations and answering any questions he may have.

     

    8.           Employee’s Release. Employee
hereby releases, discharges and forever acquits the Company, Linn Energy, LLC
and their respective affiliates and subsidiaries and the past, present and
future stockholders, members, partners, directors, managers, employees, agents,
attorneys, heirs, legal representatives, successors and assigns of the
foregoing, in their personal and representative capacities (collectively, the
“Company
Parties”), from liability for, and hereby waives, any and all claims,
damages, or causes of action of any kind related to Employee’s employment with
any Company Party, the termination of such employment, and any other acts or
omissions related to any matter on or prior to the date of this Agreement
including without limitation any alleged violation through the date of this
Agreement of:  (a) the Age Discrimination in Employment Act of 1967, as
amended; (b) Title VII of the Civil Rights Act of 1964, as amended; (c) the
Civil Rights Act of 1991; (d) Section 1981 through 1988 of Title 42 of the
United States Code, as amended; (e) Employee Retirement Income Security Act of
1974, as amended; (vi) the Immigration Reform Control Act, as amended; (f) the
Americans with Disabilities Act of 1990, as amended; (g) the National Labor
Relations Act, as amended; (h) the Occupational Safety and Health Act, as
amended; (i) the Family and Medical Leave Act of 1993; (j) any state
anti-discrimination law; (k) any state wage and hour law; (l) any other local,
state or federal law, regulation or ordinance; (m) any public policy, contract,
tort, or common law claim; (n) any allegation for costs,

     


    
      
         


      

      
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    fees, or
other expenses including attorneys’ fees incurred in these matters; (o) any and
all rights, benefits or claims Employee may have under any employment contract,
incentive compensation plan or stock option plan with any Company Party or to
any ownership interest in any Company Party except as expressly provided in the
Separation Agreement and any stock option or other equity compensation agreement
between Employee and a Company Party; and (p) any claim for compensation or
benefits of any kind not expressly set forth in this Agreement or any such stock
option or other equity compensation agreement (collectively, the “Released
Claims”). 

     

     In
no event shall the Released Claims include (a) any claim which arises after the
date of this Agreement, (b) any claim to vested benefits under an employee
benefit plan,  (c) any claims under the terms of this Agreement, or
(d) any rights to indemnification from the Company and its direct or indirect
subsidiaries pursuant to any provisions of the Company’s (or an subsidiaries’)
organizational documents or any directors and officers liability insurance
policies maintained by the Company.

     

    This
Agreement is not intended to indicate that any such claims exist or that, if
they do exist, they are meritorious.  Rather, Employee is simply agreeing
that, in exchange for the consideration set forth in Sections 2 through 7
(except Section 3) of this Agreement, any and all potential claims of this
nature that Employee may have against the Company Parties, regardless of whether
they actually exist, are expressly settled, compromised and
waived. 

     

    By
signing this Agreement, Employee is bound by it.  Anyone who succeeds to
Employee’s rights and responsibilities, such as heirs or the executor of
Employee’s estate, is also bound by this Agreement.  This release also
applies to any claims brought by any person or agency or class action under
which Employee may have a right or benefit.  Notwithstanding this
release of liability, nothing in this Agreement prevents Employee from filing
any non-legally waivable claim (including a challenge to the validity of this
Agreement) with the Equal Employment Opportunity Commission (“EEOC”) or
comparable state or local agency or participating in any investigation or
proceeding conducted by the EEOC or comparable state or local agency; however,
Employee understands and agrees that Employee is waiving any and all rights to
recover any monetary or personal relief or recovery as a result of such EEOC or
comparable state or local agency proceeding or subsequent legal
actions.  THIS
RELEASE INCLUDES MATTERS
ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR
OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THE COMPANY
PARTIES.

     

    Employee
agrees not to bring or join any lawsuit against any of the Company Parties in
any court relating to any of the Released Claims.  Employee represents that
Employee has not brought or joined any lawsuit or filed any charge or claim
against any of the Company Parties in any court or before any government agency
and has made no assignment of any rights Employee has asserted or may have
against any of the Company Parties to any person or entity, in each case, with
respect to any Released Claims.

     

    9.           Affirmation
of Restrictive Covenants.

    


    (a)           Employee
recognizes that in connection with her employment with the Company, she has
obtained Confidential Information, as defined in the Employment
Agreement.  Employee further recognizes that the restrictive covenants
set forth in Section 7 of the Employment Agreement are necessary to protect the
Company’s legitimate business interests, including its


    
      
         


      

      
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    confidential
and proprietary information, trade secrets and goodwill.  Accordingly,
Section 7 of the Employment Agreement is hereby incorporated by reference in
this Agreement, as if set forth fully herein.  Employee acknowledges
her continuing obligations under Section 7 of the Employment Agreement and
reaffirms her duties to abide by the terms of Section 7 of the Employment
Agreement, including but not limited to its requirements regarding Confidential
Information (Section 7.1), Return of Property (Section 7.2), Non-Compete
Obligations (Section 7.3), Non-Solicitation (Section 7.4) and Assignment of
Developments (Section 7.5).

    


    (b)           If,
following the Termination Date, Employee violates in any material respect any of
the covenants set forth in this Agreement (including, without limitation, her
covenants pursuant to Section 7 of the Employment Agreement), Employee will
have no further right or claim to any payments or other benefits to which the
Employee may otherwise be entitled under Sections 2 through 7 (except
Section 3) of this Agreement from and after the date on which Employee engages
in such activities, the Company will have no further obligations with respect to
such payments or benefits, and the covenants in Section 7 of the Employment
Agreement will nevertheless continue in full force and effect.  The
rights afforded the Company under this provision are in addition to any and all
rights and remedies otherwise afforded by law.

    


    10.           Cooperation with
Company.  Employee acknowledges and agrees that following the
Termination Date she will cooperate fully with the Company, its officers,
employees, agents, affiliates and attorneys in the defense or prosecution of, or
in preparation for the defense or prosecution of any lawsuit, dispute,
investigation or other legal proceedings (“Proceedings”).  Employee
further acknowledges and agrees that she will cooperate fully with the Company,
its officers, employees, agents, affiliates and attorneys on any matter related
to Company business (“Matters) during the period of Employee’s
employment.

    


    Such
cooperation shall include providing true and accurate information or documents
concerning, or affidavits or testimony about, all or any matters at issue in any
Proceedings/Matters as shall from time to time be requested by the Company, and
shall be within the knowledge of Employee.  Employee shall be entitled
to reimbursement for all reasonable and appropriate expenses incurred by her in
so cooperating including, by way of example and not by way of limitation,
airplane fares, hotel accommodations, meal charges and other similar expenses to
attend Proceedings/Matters outside of the city of Employee’s
residence.  In the event Employee is asked by a third party to provide
information regarding the Company, she will notify the Company as soon as
possible in order to give the Company a reasonable opportunity to respond and/or
participate in such Proceeding/Matter.

    


    11.           Statements Concerning the
Company.  Employee agrees that she shall refrain from
publishing any oral or written statements about Linn Energy, the Company, any of
their affiliates or any of the Company’s, Linn Energy’s or any of their
affiliates’ directors, officers, employees, consultants, agents or
representatives that (a) are disparaging, slanderous, libelous, or defamatory,
(b) disclose Confidential Information of the Company, Linn Energy, any of their
affiliates or any of the Company’s, Linn Energy’s, or any of their affiliates’
business affairs, directors, officers, employees, consultants, agents or
representatives, or (c) place the Company, Linn Energy, any of their affiliates,
or any of the Company’s, Linn Energy’s, or any of their affiliates’ directors,
officers, employees, consultants, agents or representatives in a false light
before the public.  The Company and Linn Energy agree that they shall
refrain from publishing any oral or written statements about Employee that (a)
are disparaging, slanderous, libelous, or defamatory, (b) disclose
Confidential


    
      
         


      

      
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    Information
of Employee, or (c) place Employee in a false light before the
public.  A violation or threatened violation of this paragraph 11 may
be enjoined by the courts.  The rights afforded the Employee, Company,
Linn Energy and their affiliates under this provision are in addition to any and
all rights and remedies otherwise afforded by law.

    


    12.           No Waiver.  No
failure by either party hereto at any time to give notice of any breach by the
other party of, or to require compliance with, any condition or provision of
this Agreement shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

    


    13.           Confidentiality.  Employee
acknowledges and agrees that this Agreement and its terms and conditions shall
remain confidential.  Employee and any representative shall not
disclose or discuss the contents, terms or conditions of this Agreement, except
to Employee’s spouse, lending institutions, accountants, counsel, financial
advisors, tax advisors, or the Internal Revenue Service.  This
confidentiality provision is contractual and its terms are material to this
Agreement.  Breach of this confidentiality provision by Employee shall
entitle the Company to seek legal remedies for breach of contract and, in the
event that the Company is successful in any legal proceeding to enforce this
provision, it shall be entitled to recover from Employee its reasonable
expenses, including attorneys’ fees incurred in the prosecution of such legal
proceedings.

    


    14.           Time Limits.  Upon
receipt of this Agreement, Employee shall have up to twenty-one (21) calendar
days to consider and decide whether or not to sign and return it to the
Company.  If Employee decides to sign this Agreement at any time prior
to the end of the twenty-one (21) day period, Employee agrees to immediately
send the signed Agreement to the Company, by registered or certified United
States mail, return receipt requested, or by commercial overnight carrier
requiring signature upon delivery, to the attention of Charlene A. Ripley, JP
Morgan Chase Tower, 600 Travis, Suite 5100, Houston, Texas 77002, on the date it
is signed by Employee.  This Agreement shall be considered to have
been delivered to and received by the Company at the address set forth above on
the date it is postmarked.

    


    15.           Revocation.  Employee
may revoke this Agreement within seven (7) days of Employee signing
it.  Revocation must be made by delivering a written notice of
revocation to Charlene A. Ripley at the address set forth in paragraph 14 above,
either by hand delivery, facsimile or by registered or certified United States
mail, return receipt requested, or by commercial overnight carrier requiring
signature upon delivery.  If Employee revokes this Agreement, it shall
not be effective or enforceable and Employee shall not receive the consideration
promised by the Company described in Sections 2 through 7 (except Section 3) of
this Agreement.

    


    16.           Applicable Law.  This
Agreement is entered into under, and shall
be governed for all purposes by, the laws of the State of
Texas without reference to the principles of conflicts
of law thereof.

    


    17.           Severability. To
the extent permitted by applicable law, the Company and Employee hereby agree that
any term or provision of this Agreement that renders such term or provision or any other term or provision
hereof invalid or unenforceable in any respect shall be modified to the extent
necessary to avoid rendering such term or provision invalid or unenforceable,
and such modification shall be accomplished in the manner that most nearly
preserves the benefit of the Company and
Employee’s bargain hereunder.


    
      
         


      

      
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    18.           Withholding of Taxes and Other
Employee Deductions.  The Company may withhold from any
benefits and payments made pursuant to this Agreement all federal, state, local,
and other taxes and withholdings as may be required pursuant to any law or
governmental regulation or ruling.

    


    19.           Counterparts.  This
Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.

    


    20.           Assignment. This
Agreement shall be binding upon and inure
to the benefit of Company and any
successor of Company, by merger or
otherwise.  The Company may
assign its rights hereunder to an affiliate.  Except as set forth in the previous two
sentences, and except that any payments due Employee under this Agreement
shall be assignable by the Employee by will or the laws of descent and distribution, this Agreement and the rights and obligations of the
Parties hereunder are personal and neither this Agreement
nor any right, benefit or obligation of either party hereto
shall be subject to voluntary or involuntary assignment, alienation or transfer,
whether by operation of law or otherwise, without the prior written consent of
the other party.

    


    21.           Amendment; Entire Agreement.  This
Agreement may not be changed orally but
only by an agreement in writing agreed to and signed by both
parties.  This Agreement (including any and all
documents referenced herein) and the Employment Agreement as modified herein
constitute the entire agreement of the parties with regard to
the subject matter hereof.  The provisions of this Agreement amend and
supersede any contrary provision of the Employment Agreement; to the extent
there is any conflict between the Employment Agreement and this Agreement, this
Agreement governs and is binding upon the Parties.

    


    22.           Defined
Terms.  Unless expressly defined herein, all capitalized terms
shall have the same definition given to them in the Employment
Agreement.

    


    23.           Other
Representations.  Employee hereby represents and certifies that
she: (a) has carefully read all of this Agreement; (b) has been given a fair
opportunity to discuss and negotiate the terms of this Agreement; (c)
understands the provisions of this Agreement; (d) has been and hereby is advised
in writing and given the opportunity to seek advice and consultation with
attorneys regarding this Agreement; (e) has determined that it is in her best
interests to enter into this Agreement; (f) has not been influenced to sign this
Agreement by any statement or representation by the Company not contained in
this Agreement; and (g) enters into this Agreement knowing and
voluntary.

    


    


     

    Employee
acknowledges and agrees that she was given a copy of this Agreement to consider
for possible execution on June 11, 2008.

     

    /s/
LDA________________________________

    Employee’s
Initials

     


    
      
         


      

      
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    We the
undersigned do hereby sign and agree to the terms set forth in the Separation
Agreement on the dates set forth below:

     

     

    COMPANY:

    
       

      LINN OPERATING,
INC.

      


      


      By:
/s/ Charlene
Ripley                                        

      Name: Charlene
Ripley

      Title: SVP and General Counsel

      Date:
June 11, 2008

      


      


      EMPLOYEE:

      


      /s/ Lisa D.
Anderson                                                  

      Lisa D. Anderson

       

      Date: 6-11-2008

      


      LINN ENERGY, LLC

      


      


      By: /s/ Charlene Ripley                                        

      Name: Charlene Ripley

      Title:
SVP and General Counsel

      Date: June 11, 2008

       

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