Document:

EX-10.4

 

Exhibit 10.4

CONFIDENTIAL

SEPARATION AGREEMENT AND GENERAL RELEASE

     THIS CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE (“Agreement”) is entered into by
and among GERALD W. MERRIAM (“Merriam”), and LINN OPERATING, INC., LINN ENERGY, LLC, LINN ENERGY
HOLDINGS, LLC, CHIPPERCO, LLC and MID ATLANTIC WELL SERVICE, INC. (collectively “LINN”).

     WHEREAS, Merriam has been employed as Executive Vice President-Engineering Operations for Linn
Operating, Inc. and as an officer in certain of its affiliated entities; and

     WHEREAS, Merriam and Linn wish to terminate their employment relationship; and

     WHEREAS, Merriam and Linn wish to amicably resolve any and all potential disputes which they
may have to avoid the expense, inconvenience and distraction likely to result from litigation.

     NOW, THEREFORE, in consideration of the mutual promises contained herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree and intend to be legally bound as follows:

1.      The preamble as stated above is incorporated herein by reference as though fully set forth at
length.

2.      Merriam resigns his employment with Linn effective as of April 7, 2006. Merriam’s signature on
this Agreement shall constitute evidence of his resignation and no further document shall be
required. Merriam understands that, on and after that date, he will have no authority to act for
or on behalf of Linn in any capacity.

3.      Merriam also resigns as a member of the Board of Directors of Mid Atlantic Well Service, Inc.,
effective as of April 7, 2006. Merriam’s signature on this Agreement shall constitute evidence

 

 

of his resignation and no further document shall be required. Merriam understands that, on and
after that date, he will have no authority to act for or on behalf of Mid Atlantic Well Service,
Inc. in any capacity.

4.      In consideration of the release of all claims as provided herein, and for the other promises
made by Merriam in this Agreement, Linn agrees to pay Merriam the sum of $217,600.00, less all
applicable withholding, payroll taxes and deductions. The lump sum payment to Merriam hereunder
will made on or before the first full regularly scheduled payroll of Linn following the seven-day
revocation period as set forth herein, provided that Merriam signs this Agreement and does not
revoke and cancel the Agreement during the seven-day revocation period. Merriam shall be solely
responsible for any and all applicable federal, state, and/or local taxes which may be assessed or
payable on the severance sum specified herein and due, if any, in addition to the amounts withheld
by Linn. Merriam agrees to release, indemnify and hold harmless Linn, from any and all
responsibility or liability related to the payment of any tax which may be assessed or payable
regarding the settlement sum paid hereunder on which there was not withholding.

5.      The consideration reflected in Paragraph 4 hereof represents an amount that is in addition to
anything of value to which Merriam is otherwise entitled as a result of his separation of
employment from Linn.

6.      Merriam hereby agrees that the lump sum payment described in Paragraph 4 of this Agreement is
all that he will receive from Linn except for vested qualified retirement benefits, if any, to
which Merriam may be entitled to under Linn’s ERISA plans. Merriam agrees and understands that he
will not be eligible for any other employer-provided benefits, including but not limited to,
medical and dental insurance, unit options, pension contributions, 401(k) contributions,
participation or eligibility under the Linn Energy Long-Term Incentive Plan or any bonus or other
incentive plan, paid time off or vacation pay, sick pay or leave, accident pay or insurance,
short-term disability

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insurance, long-term disability insurance, or life insurance. Merriam’s eligibility to participate
in all employee benefits and/or plans will end on April 7, 2006. Merriam’s medical and dental
insurance is paid through April 30, 2006, and Merriam will be provided information relating to
continuation coverage under COBRA, at Merriam’s own expense.

7.      Merriam and Linn have entered into this Agreement solely for the purpose of avoiding the burdens
and expense of litigation, and the making of this Agreement is not intended, and shall not be
construed that Linn has violated any statute, law, rule, order, policy, procedure, or contract,
expressed or implied, or incurred any liability on account thereof and any such violation is
expressly denied.

8.      Merriam, knowingly and voluntarily, on his own behalf and on behalf of his respective heirs,
agents, executors, administrators, successors, legal representatives, and all persons or entities
claiming any right or rights through him, including, but not limited to, in his capacity as a
unitholder or otherwise, for and in consideration of the obligations set forth herein, does hereby
forever release, acquit, waive and forever discharge Linn Operating, Inc., Linn Energy, LLC, Linn
Energy Holdings, LLC, Chipperco, LLC and Mid Atlantic Well Service, Inc., as well as each of their
past, present and future, predecessors, successors, subsidiaries, parent companies,
representatives, affiliates, related entities, divisions, administrators, employees, shareholders,
unitholders, directors, officers, staff, attorneys, agents, assigns, which may include but are not
limited to unrelated parties and subsequent purchasers (hereinafter collectively referred to as the
“Released Parties”) from any and all suits, claims, demands, rights, causes of actions, damages,
losses, judgments, penalties, liens, attorneys’ fees and expenses of whatever kind or nature, in
law or in equity, direct or indirect, known or unknown, mature or not matured, present or future,
accrued or unaccrued, against any of the Released Parties arising out of or relating in any way to
Merriam’s employment with the Released Parties and/or his separation from employment from the
Released Parties, or any other act, omission,

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event, occurrence, or thing, including, but not limited to, any and all claims, suits, or causes of
action, whether in an individual and/or derivative capacity, relating in any way to Merriam’s
capacity as a unitholder or otherwise, which occurred from the beginning of time to the date that
this Agreement becomes effective. The Release contained in this Paragraph applies without
limitation to all Released Parties whose status is identified above as of the date of this
Agreement and shall continue to apply without regard to their future employment or affiliation with
Linn. This release specifically includes, but is not limited to, any and all claims for
negligence, breach of contract, defamation, intentional torts, retaliation, violation of any
federal, state and/or local statutes, laws or regulations prohibiting employment discrimination on
the basis of race, color, religion, national origin, sex, ancestry, age, disability, retaliation
and all other protected categories and all claims based on any other statute, law or regulation,
affecting relations between employers and employees, including, but not limited to, the Older
Workers Benefits Protection Act; the Age Discrimination in Employment Act; Title VII of the Civil
Rights Acts of 1964 and 1991; the Fair Labor Standards Act; the Americans with Disabilities Act;
the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974; the
Consolidated Omnibus Reconciliation Act of 1986; the Civil Rights Acts of 1866 and 1871; the Equal
Pay Act; 42 U.S.C. § 1981; the Pennsylvania Human Relations Act; the Pennsylvania Wage Payment and
Collection Law; the City of Pittsburgh Ordinance on Human Relations; the West Virginia Human Rights
Act; all as amended; and all other federal, state, and/or local statutory and/or common law claims
arising out of or relating in any way to Merriam’s employment with the Released Parties and/or his
separation from employment from the Released Parties, or any other act, omission, event,
occurrence, or thing, including, but not limited to, any and all claims, suits, or causes of
action, whether in an individual and/or derivative capacity, relating in any way to Merriam’s
capacity as a unitholder or otherwise, which occurr
ed from the beginning of time to the date this
Agreement becomes effective. This Release also includes but is

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not limited to a release for constructive discharge of Merriam, breach of employment and/or other
contract and other statutory, common law, tort or claim that he may have against any of the
Released Parties.

9.      Merriam agrees that he will not file, or permit to be filed, in his name, or on his behalf,
including in his capacity as a unitholder or otherwise, any complaint, charge, lawsuit or
administrative claim against any of the Released Parties identified in this Agreement, based upon
Merriam’s employment with the Released Parties and/or separation from employment from the Released
Parties, or any other act, omission, event, occurrence, or thing, including, but not limited to,
any and all claims, suits, or causes of action, whether in an individual and/or derivative
capacity, relating in any way to Merriam’s capacity as a unitholder or otherwise, which occurred
from the beginning of time to the date this Agreement becomes effective. Notwithstanding any other
language in this Agreement, Merriam understands that this Agreement does not prohibit him from
filing an administrative charge of alleged employment discrimination under the federal Age
Discrimination and Employment Act, Title VII of the Civil Rights Acts of 1964, the Americans with
Disabilities Act, or the Equal Pay Act. However, Merriam waives his right to monetary or other
recovery should any federal, state, or local administrative agency pursue any claims on his behalf
arising out of or relating in any way to his employment with the Released Parties and/or his
separation from employment from the Released Parties.

10.      Notwithstanding anything herein to the contrary, Merriam does not release any claims against
any party hereto for indemnity or contribution with respect to third party claims, and Linn
Operating, Inc., Linn Energy, LLC, Linn Energy Holdings, LLC, Chipperco, LLC and Mid Atlantic Well
Service, Inc. shall defend and provide defense, indemnification or contribution to Merriam to the
same extent that defense, indemnification or contribution would have been provided has this
Agreement not been made.

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11.      Merriam hereby acknowledges that during his employment with Linn he obtained information
regarding Linn’s business, including trade secrets, customer lists, and other confidential and
proprietary business information relating to Linn, its business operations and accounts, which are
valuable assets and property rights of Linn. Merriam agrees that he will not, either directly or
indirectly, misappropriate, use or disclose, without the prior written consent of Linn, any
information regarding Linn and/or any of the Released Parties, their respective businesses,
affiliates, customers, prospective customers and their employees, which Merriam acquired while
employed by Linn. Merriam further agrees not to make any statements which defame, slander or
disparage any of the Released Parties or any of their administrators, shareholders, unitholders,
directors, officers, staff, attorneys, agents, employees, heirs, representatives or partners.

12.      Neither Merriam nor Linn will disclose the terms and facts of this Agreement without the
written consent of the other party, provided however, either party may make such disclosure to his
or its legal and tax advisors or as required by law, including any reporting obligations either
party may have under any applicable tax, securities and other applicable laws and those individuals
employed at or by Linn who need to know in order to implement the terms of this Agreement. Merriam
and Linn understand and agree that noncompliance with the terms and conditions of this Paragraph
will be construed by the other party to be a breach of contract and such other party will be
entitled to such remedies that may include, but not limited to, money damages plus accrued interest
and all other equitable and legal remedies such party may be entitled to in the protection of its
rights at law, in equity or otherwise.

13.      On or before April 7, 2006, Merriam hereby agrees to return to Linn all computers, software,
records, manuals, proposals, electronic storage media, written and printed materials, keys,
identification cards and other property, documents or information of Linn and/or relating in any
way to any of the Released Parties and/or their businesses, customers and prospective customers in

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Merriam’s possession, custody or control. Merriam certifies that he has not kept the originals or
copies of any documents, records, computer files, software or any other property of Linn and/or any
of the Released Parties and/or their customers and prospective customers.

14.      The parties acknowledge that, as of the date of this Agreement, Merriam is the holder of
475,622 units of Linn Energy, LLC. The terms and conditions of this Agreement shall not alter or
affect his existing ownership rights in such units.

15.      Merriam agrees that he will make himself available from time to time for a period not to exceed
one (1) year from date of this Agreement to provide consulting services to Linn, upon the
reasonable request of Linn. Merriam hereby agrees that his hourly rate for serving as a consultant
will be $100.00 per hour plus reasonable direct out-of-pocket expenses upon the furnishing of
receipts or other supporting documentation acceptable to Linn. Merriam agrees and acknowledges
that Linn is under no obligation to request Merriam’s services as a consultant and that he will
only perform consulting services upon Linn’s request to do so. If Merriam’s consulting services
are requested by Linn, he will remain at all times an independent contractor and not an employee of
Linn or any of the Released Parties. Merriam shall have no obligation to provide consulting
services during any period in which he is gainfully employed on a full-time basis.

16.      By signing this Agreement, Merriam acknowledges and agrees that he:

(a)      has read and understands each and every provision of this Agreement;

(b)      understands that the Agreement is a legally binding agreement and has been given
the opportunity to review it with legal counsel of his choice prior to signing;

(c)      the consideration for this Agreement includes Linn’s payment of severance pay
and continuation of medical insurance benefits, as described above, which Merriam
acknowledges is in addition to anything of value to which he is already entitled to
from Linn;

(d)      acknowledges that he has had at least twenty-one (21) days after receipt of this
Agreement to consider whether or not to sign the Agreement and that he freely and
knowingly can waive the twenty-one (21) day period and execute this Agreement prior
to the expiration of the twenty-one (21) day period;

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(e)      realizes and understands that the Release contained in Paragraph 8 of this
Agreement applies to and covers all suits, claims, demands, rights, actions,
charges, and causes of action, arising under any federal, state, and/or local laws
prohibiting employment discrimination and all common law claims against each of the
Released Parties, including, but not limited to, any and all claims arising out of
his employment with the Released Parties and/or his separation from employment from
the Released Parties, whether or not he knows or suspects them to exist at the
present time and that he is giving up the right to sue Linn and each of the Released
Parties for any claims which he believes he has based upon any act, omission, event,
occurrence or thing which occurred from the beginning of the world to the date this
Agreement is signed and becomes effective;

(f)      has not received any promises or representations except those contained in this
Agreement;

(g)      has not filed any complaints or charges with a court or administrative agency
against Linn or any of the other Released Parties prior to the date of the signing
of this Agreement;

(h)      is aware that he may change his mind and revoke this Agreement in writing at any
time during the seven-day period after the Agreement is signed, in which case none
of the provisions of this Agreement will have any effect; and

(i)      understands that (1) the terms of this Agreement; and (2) that his signing of
this Agreement is done voluntarily and with the full understanding of its
consequences and has not been forced or coerced in any way.

17.      Merriam shall have a period of seven (7) days from the date he signs this Agreement to revoke
and cancel it. Any revocation and cancellation must be in writing signed by Merriam and received
by Mr. David J. Grecco, Esq., at 650 Washington Road, 8th Floor, Pittsburgh, Pennsylvania 15228,
before the close of business on the seventh (7th) calendar day following the date Merriam signs and
returns this Agreement. Consequently, this Agreement shall not become effective and shall have no
force and effect until the end of seven (7) calendar days following the day that Merriam signs and
returns this Agreement to Mr. David J. Grecco, Esq.

18.      If, in any legal action by Merriam the Release contained in Paragraph 8 hereunder is declared
unenforceable, Linn shall be entitled to a setoff or recoupment of the entire separation pay and
benefits paid by Linn hereunder to the extent permitted by applicable law. In the event that a
court of competent jurisdiction determines that Merriam has breached any of the other agreements
set forth in

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this Agreement, including but not limited to the confidentiality provisions contained in this
Agreement or that any information, representation or warranty made by Merriam contained in this
Agreement is false or misleading, then this Agreement shall be null and void and the entire
separation pay and benefits provided to Merriam under this Agreement shall be treated as an
overpayment and shall be repaid by Merriam with interest at the rate of six percent (6%) per annum.
Further, Merriam agrees to pay any collection or legal fees incurred by the Released Parties to
recover the aforestated amounts.

19.      This Agreement constitutes the complete agreement and understanding of the parties, supersedes
any prior agreements or understandings of the parties (oral or written) and may be amended only in
writing signed by the parties.

20.      If any part, term, or provision of this Agreement is declared or determined by any court to be
illegal or invalid, such invalidity or illegality shall not affect the validity of the other
provisions of this Agreement, and the illegal or invalid part, term or provision shall be deemed to
be severable and not part of this Agreement.

21.      This Agreement at all times and for all purposes, shall be interpreted, enforced and governed
in accordance with the laws of the Commonwealth of Pennsylvania.

22.      This Agreement is binding upon, and shall inure to the benefit of, the parties and their
respective heirs, administrators, executors, successors and assigns.

23.      This Agreement may be executed in duplicate with each party maintaining an original copy. Any
one of the two (2) original copies of the Agreement will be construed as an original document for
all lawful purposes.

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     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto on the date
indicated below.

     

	 	 	 	 	 
	 	 	/s/ Gerald W. Merriam
	 	 	 
	 	 	GERALD W. MERRIAM
	 
	 	 	 	 
	/s/ Roberta J. Merriam 

	 	Date:   April 7, 2006
	Witness
	 	 	 	 
	 
	 	 	 	 
	 	 	LINN OPERATING, INC., LINN ENERGY, LLC, and
LINN ENERGY HOLDINGS, LLC
	 
	 	 	 	 
	 
	 	By:	 	/s/ Roland P. Keddie 
	 
	 	 	 	 
	 
	 	 	 	Roland P. Keddie
	 
	 	 	 	 
	 
	 	Title:	 	Executive Vice President
	 
	 	 	 	 
	 
	 	 	 	 
	/s/ Joan H. Martin 

	 	Date:   April 7, 2006
	Witness
	 	 	 	 
	 
	 	 	 	 
	 	 	CHIPPERCO, LLC
	 
	 	 	 	 
	 
	 	By:	 	/s/ Roland P. Keddie 
	 
	 	 	 	 
	 
	 	 	 	Roland P. Keddie
	 
	 	 	 	 
	 
	 	Title:	 	President
	 
	 	 	 	 
	 
	 	 	 	 
	/s/ Joan H. Martin 

	 	Date:   April 7, 2006
	Witness
	 	 	 	 
	 
	 	 	 	 
	 	 	MID ATLANTIC WELL SERVICE, INC.
	 
	 	 	 	 
	 
	 	By:	 	/s/ Roland P. Keddie 
	 
	 	 	 	 
	 
	 	 	 	Roland P. Keddie
	 
	 	 	 	 
	 
	 	Title:	 	Secretary 
	 
	 	 	 	 
	 
	 	 	 	 
	/s/ Joan H. Martin 

	 	Date:   April 7, 2006
	Witness
	 	 	 	 

[Signature page to Separation Agreement and General Release (Merriam)]

-10-Exhibit 10.1

    Exhibit
      10.1

    

    OVERVIEW
      OF

    THE
      2006 LONG TERM INCENTIVES for 

    SENIOR
      MANAGEMENT COMMITTEE (SMC) MEMBERS

    

    

    The
      2006
      Long Term Incentives for SMC Members consist of:

    

    
      	I.  	
              Stock
                Options

            

    

    

    
      	II.  	
              A
                2006-2008 Long-Term Incentive Performance Cycle
                Award

            

    

    

    

    The
      intent of the 2006 Long Term Incentives is to:

     

    
      
        	
                ●

              	
                Foster
                  increased returns to shareholders;

              

      

      

      
        	
                ●

              	
                Tie
                  executive pay to measures that drive shareowner return;
                  and

              

      

    
      	
              ●

            	
              Provide
                competitive compensation consistent with LNC’s compensation
                philosophy.

            

    

    

    

    I. Stock
      Options

    

    SMC
      Members will receive one-half of their 2006 Long Term Incentives award target
      in
      the form of options to purchase share of LNC common stock. The options will
      have
      ten (10) year terms, with the exercise price set based on the fair market value
      of LNC common stock at the date of grant. The options will vesting ratably
      over
      three (3) years, with one-third vesting on each anniversary of grant date.
      The
      options are “time-vested,” not performance vested—in other words, they will vest
      simply on the basis of the passage of time, not on the achievement of
      performance criteria.

    

    II. 2006-2008
      Long-Term Incentive Performance Cycle Award

    

    SMC
      Members will receive the other half of their 2006 Long Term Incentives award
      target as a 2006-2008 LTIP Performance Cycle award. Participants will have
      the
      opportunity to elect to receive their award as either: 100% phantom performance
      shares (“performance shares”), or 75% performance shares and 25% cash (permitted
      only if current share ownership requirements are satisfied) within thirty (30)
      days of the date the 2006-2008 Cycle was established (by May 12, 2006).
      Participants entering the cycle after May 12, 2006 shall receive their awards
      entirely in performance shares. The ultimate payout of LTIP performance shares,
      and, in some cases, LTIP cash, will depend on the achievement of the various
      financial performance measures for the performance cycle, as discussed below.
      

    

     

    a. Payout
      Philosophy for LTIP Performance Shares

     

    

    Performance
      shares awarded under the 2006-2008 LTIP Performance Cycle are intended to
      provide competitive compensation relative to market, consistent with LNC’s
      compensation philosophy. The LTIP shares are performance leveraged, with
      performance goals established at the beginning of the cycle such that
      achievement at the target performance level will produce median compensation.
      All performance measures are absolute. In setting the performance targets,
      an
      analysis was performed to ensure the targets were set consistently with the
      above philosophy.

     

    The
      maximum award, 200% of target, will be paid when performance is superior, and
      a
      minimum award, 50% of target, will be paid out when a threshold level of
      performance is met. For an award of LTIP shares or LTIP cash to ultimately
      be
      paid out, the threshold or minimum achievement level for at least one of the
      three performance measures must be attained.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    b. LTIP
      Cycle Duration

     

    The
      2006-2008 LTIP Performance Cycle is based on performance period beginning on
      January 12, 2006, and ending on December 31, 2006, for a total cycle duration
      of
      1,083 days (a normal three-year cycle, not including any “leap” years, will run
      a total of 1,095 days).

    

    c. Cycle
      Frequency

     

    The
      2006-2008 LTIP Performance Cycle will begin on January 12, 2006, upon approval
      by the Committee at its April 12, 2006 meeting. This cycle will run concurrently
      with other LTIP cycles. Normally, three cycles will be in effect at the same
      time. 

    

    d. LTIP
      Performance Measures 

     

    The
      performance measures, all absolute, are growth in income from operations per
      diluted share (EPS), growth in return on equity (ROE), and growth in retail
      sales. Each measure will be equally weighted (33 1/3%) with respect to each
      participant’s potential award (“Sales Growth”). 
      At the
      beginning of the 2006-2008 LTIP Performance Cycle, at its April 12, 2006
      meeting, the Compensation Committee set minimum, target, and maximum performance
      achievement levels for each measure. Awards where the actual performance falls
      in between the established minimum, target, and maximum achievement levels
      will
      be determined by interpolation.

    

    
      	·  	
              EPS
                growth is weighted 33 1/3% and expressed as a compound average annual
                growth rate, based on the point-to-point difference between EPS for
                the
                year prior to the beginning of the cycle (2005) and the EPS of the
                final
                year of the cycle (2008). 

            

    

    

    
      	·  	
              ROE
                growth is weighted 33 1/3% and determined based on a comparison of
                return
                on equity for the year prior to the beginning of the cycle (2005)
                to
                return on equity for the final year of the cycle (2008).
                

            

    

    

    
      	·  	
              Sales
                growth will also be weighted 33 1/3% and based on gross investment
                deposits plus life and annuity sales.

            

    

    

    e. Payout
      Adjustments

     

    The
      Compensation Committee retains the right to adjust individual targets during
      the
      cycle, and to modify payouts at the end of the cycle based on extraordinary
      circumstances during the cycle.

    

    In
      deciding whether to adjust an individual target, or to modify a payout, the
      Committee can consider factors impacting results such as changing economic
      and
      market conditions, mergers or acquisitions, sale of a business, restructuring
      charges, reserve strengthening or release, or extraordinary natural occurrences
      or man-made events (e.g. acts of war). 

    

    In
      making
      such changes, the Committee may consider investor reaction, stock price
      performance, performance of peers and the CEO’s recommendation. The guiding
      principle in making adjustments and modifications should be to encourage and
      reward management for consistently high financial and shareholder return
      performance relative to peers, while taking into consideration creation of
      shareholder value.

    

    f. Form
      of LTIP Compensation

     

    The
      Compensation Committee shall designate both the award target and range for
      each
      LTIP participant. Participants who receive target compensation awards within
      the
      thirty (30) day period beginning on the date that the 2006-2008 LTIP Performance
      Cycle was approved (April 12, 2006 to May 12, 2006) may elect to receive his
      or
      her ultimate LTIP award (if any) in one of two forms:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	 	
              ●

            	
              100%
                shares of LNC common stock; or

            

    

     

    
      
        	 	
                ●

              	
                75%
                  shares of LNC common stock and 25% in cash (if ownership guidelines
                  have
                  been satisfied)

              

      

    Participants
      who fail to make an election by May 12, 2006, or who become an LTIP participant
      any time after April 12, 2006 will receive their LTIP award entirely in
      performance shares. Performance shares will be paid out in shares of LNC common
      stock. The number of shares of LNC common stock, if any, ultimately issued
      to an
      LTIP participant will be calculated based on the individual’s target
      compensation award at the beginning of the cycle, divided by the Fair Market
      Value of LNC common stock on April 12, 2006 (as determined under the ICP),
      and
      the performance levels achieved with respect to the cycle. Dividends will
      accumulate with respect to the performance shares during the performance cycle
      and vest based on LTIP performance. 

    

    Changes
      in stock prices during the performance cycle will be to the participant’s
      advantage or disadvantage. No adjustments will be made at the end of the cycle
      for stock price changes 

     

    

    III. Participants

     

    All
      individuals designated by the CEO and approved by the Compensation Committee
      will participate in the award program. 

    

    
      	1.  	
              Individuals
                who are hired or promoted to a position on the Senior Management
                Committee
                during a performance cycle may receive a pro-rated LTIP target award.
                Current LTIP participants who are promoted or demoted (to positions
                of
                greater or lesser responsibility) during a particular performance
                cycle
                may have their award targets pro-rated to reflect the new target
                award
                amount.

            

    

    

    
      	2.  	
              Individuals
                who are removed from the award program because of a change in
                responsibilities, death, Total Disability or Retirement, or because
                of
                involuntary termination other than for Cause (all capitalized terms
                shall
                have the definitions set forth in the applicable Award Agreement)
                will
                receive an award pro-rated award based on the ratio of days of employment
                during the three-year performance cycle (usually 1,095 days {3 x
                365
                days}; for the 2006-2008 LTIP cycle = 1,083
                days).

            

    

    

    
      	3.  	
              Individuals
                who voluntarily terminate employment forfeit any payout for the 2006-2008
                LTIP Performance Cycle regardless of how many days they have completed
                in
                the cycle.

            

    

    

    
      	4.  	
              Awards
                for individuals who are “covered employees” under IRC Section 162(m) may
                not exceed the specified maximum amounts set forth in the Amended
                and
                Restated ICP. In addition, payouts to “covered employees” may not exceed
                the specified maximum amounts established by the Compensation Committee
                for the applicable long-term performance
                cycle.

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