FORM] EAGLE ROCK ENERGY PARTNERS LONG-TERM INCENTIVE PLAN RESTRICTED UNIT AGREEMENT FOR OFFICERS
Exhibit 10.2
[FORM]
EAGLE ROCK ENERGY PARTNERS
LONG-TERM INCENTIVE PLAN
LONG-TERM INCENTIVE PLAN
This Restricted Unit Agreement (this “Agreement”) is made and entered into by and between
EAGLE ROCK ENERGY G&P, LLC, a Delaware limited liability company (the “Company”), and
(the
“Officer”). This Agreement is entered into as of the ___ day of
, 200___ (the “Date of Grant”). Capitalized terms used in this Agreement but not
otherwise defined herein shall have the meanings ascribed to such terms in the Plan (as defined
below), unless the context requires otherwise.
WITNESSETH:
WHEREAS, the Company has adopted the EAGLE ROCK ENERGY PARTNERS LONG-TERM INCENTIVE PLAN (the
“Plan”) to attract, retain and motivate employees, officers, directors and consultants; and
WHEREAS, the Board of Directors of the Company (the “Board”) has authorized the grant to
employees and officers of restricted units of EAGLE ROCK ENERGY PARTNERS, L.P., a Delaware limited
partnership (the “Partnership”), as part of their compensation for services performed for the
Company, the Partnership, or any other entity which is an affiliate (within the meaning of such
term under the Exchange Act and the rules promulgated thereunder) of the foregoing entities
(collectively, the “Partnership Entities”).
NOW, THEREFORE, in consideration of the Officer’s agreement to provide or to continue
providing services to the Partnership Entities, the Officer and the Company agree as follows:
SECTION 1. Grant.
The Company hereby grants to the Officer as of the Date of Grant an award of
Units, subject to the terms and conditions set forth in the Plan, which is incorporated
herein by reference, and in this Agreement, including, without limitation, those
restrictions described in Section 2 (the “Restricted Units”).
SECTION 2. Restricted Units.
The Restricted Units are restricted in that they may be forfeited to the Company and in
that they may not, except as otherwise provided in Section 5, be transferred or otherwise
disposed of by the Officer until such restrictions are removed or expire as described in
Section 4 of this Agreement. The Company shall issue in the Officer’s name
the Restricted Units and shall retain the Restricted Units until the restrictions on
such Restricted Units expire or until the Restricted Units are forfeited as described in
Section 4
of this Agreement. The Officer agrees that the Company will hold the Restricted
Units pursuant to the terms of this Agreement until such time as the Restricted Units are
either delivered to the Officer or forfeited pursuant to this Agreement.
SECTION 3. Rights of Officer; Unit Distribution Rights.
Effective as of the Date of Grant, the Officer shall be treated for all purposes as a
Unit holder with respect to all of the Restricted Units granted to him pursuant to Section 1
(except that the Officer shall not be treated as the owner of the Units for federal income
tax purposes until the Restricted Units vest (unless the Officer makes an election under
section 83(b) of the Code, in which case the Officer shall be treated as the owner of the
Units for all purposes on the Date of Grant)) and shall, except as provided herein, have all
of the rights and obligations of a unit holder with respect to all such Restricted Units,
including any right to vote with respect to such Restricted Units and to receive any UDRs
thereon if, as, and when declared and paid by the Partnership, including, without
limitation, any UDRs consisting of the distribution of special purchase or other rights,
such as pursuant to the contemplated rights offering in connection with the Natural Gas
Partners transaction currently anticipated to occur in 2010. Notwithstanding the preceding
provisions of this Section 3, the Restricted Units shall be subject to the restrictions
described herein, including, without limitation, those described in Section 2.
SECTION 4. Forfeiture and Expiration of Restrictions.
(a) Vesting Schedule. Subject to the terms and conditions of this Agreement, the restrictions
described in Section 2 shall lapse and the Restricted Units shall become vested and nonforfeitable
(“Vested Units”), provided the Officer has continuously provided services to the Partnership
Entities, without interruption, from the Date of Grant through each applicable vesting date (each,
a “Vesting Date”), in accordance with the following schedule:
| Vesting Date | Cumulative Vested Percentage | |||
On November 15, 2010 |
33 | % | ||
On November 15, 2011 |
66 | % | ||
On November 15, 2012 |
100 | % | ||
(b) Termination of Service.
(i) Termination For Cause or Without Good Reason. If, at any time prior to the final
Vesting Date, the Officer ceases providing services to the Partnership Entities by reason of
the Officer’s voluntary termination of service without Good Reason or if the Officer’s
service relationship is terminated by a Partnership Entity for Cause, then all Restricted
Units granted pursuant to this Agreement that have not yet vested as of the date of the
Officer’s termination shall become null and void as of the date of such
termination, shall be forfeited to the Company and the Officer shall cease to have any
rights with respect thereto; provided, however, that the portion, if any, of the Restricted
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Units for which forfeiture restrictions have lapsed as of the Officer’s date of termination
shall survive.
(ii) Termination due to Death or Disability. If, at any time prior to the final
Vesting Date, the Officer ceases providing services to the Partnership Entities by reason of
the Officer’s death or Disability, then all Restricted Units granted pursuant to this
Agreement that remain unvested as of the date of the Officer’s termination shall immediately
become fully vested and nonforfeitable as of the date of such termination.
(iii) Termination Without Cause or For Good Reason. If, at any time prior to the final
Vesting Date, the Officer ceases providing services to the Partnership Entities by reason of
a termination of the Officer’s services by the Officer for Good Reason or by a Partnership
Entity without Cause, then all Restricted Units granted pursuant to this Agreement that have
not yet vested as of the date of the Officer’s termination shall become null and void as of
the date of such termination, shall be forfeited to the Company and the Officer shall cease
to have any rights with respect thereto; provided, that, the Committee, in its sole and
absolute discretion, may decide to vest all or any portion of the Restricted Units granted
pursuant to this Agreement that remain unvested as of the date of the Officer’s termination.
The portion of the Restricted Units, if any, for which restrictions do not lapse in
accordance with the foregoing shall become null and void as of the date of termination;
provided, that the portion, if any, of the Restricted Units for which forfeiture
restrictions lapse as of the date of termination shall survive.
(c) Termination Following a Change of Control. In the event of termination of the Officer’s
service relationship with the Partnership Entities by the Officer for Good Reason or by a
Partnership Entity without Cause, in either case within 2 years following a Change of Control and
prior to the final Vesting Date, all restrictions described in Section 2 shall lapse and all
Restricted Units granted pursuant to this Agreement shall become immediately vested and
nonforfeitable.
(d) Definitions. For purposes of this Agreement, the following terms shall have the meanings
set forth below:
(i) Cause. The term “Cause” means a determination made in good faith by two-thirds
(2/3) of the Board that the Officer (A) willfully and continually failed to substantially
perform the Officer’s duties with the Partnership Entities (other than a failure resulting
from the Officer’s incapacity due to physical or mental illness) which failure continued for
a period of at least thirty (30) days after a written notice of demand for substantial
performance has been delivered to the Officer specifying the manner in which the Officer has
failed to substantially perform or (B) willfully engaged in conduct which is demonstrably
and materially injurious to the Partnership Entities, monetarily or otherwise; provided,
however, that no termination of the Officer’s services shall be for Cause as set forth in
clause (B) above until (1) there shall have been delivered to the Officer a copy of a
written notice setting forth that the Officer was guilty of the conduct described in clause
(B) above and specifying the particulars thereof in detail and (2) the Officer shall have
been provided an opportunity to be heard by the Board (with the
assistance of the Officer’s counsel if the Officer so desires). No act or failure to
act on the part of the Officer shall be considered “willful” unless the Officer has
intentionally or
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deliberately acted or failed to act with knowledge that such action or
failure to act was likely to be materially injurious to the Partnership Entities.
Notwithstanding anything contained herein or in the Plan to the contrary, no failure to
perform by the Officer after a notice of termination is given shall constitute Cause.
(ii) Change of Control. The term “Change of Control” has the meaning given such term
in the Plan; provided, however, that in no event will (1) the exercise, if any, by the
Partnership of its option to acquire all of the issued and outstanding limited partner
interests in Eagle Rock Energy GP, L.P. (“ERGP”) and membership interests in the Company, or
any change resulting therefrom (the “GP Option”) or (2) the conversion of the Partnership
into a corporation or a limited liability company, constitute a Change of Control for
purposes of this Agreement; provided, further, that on and after the earlier to occur of (a)
the exercise of the GP Option or (b) the conversion of the Partnership into a corporation or
a limited liability company (in which case the term “Partnership” below shall refer to such
converted entity and subclause (B) below shall cease to be applicable), the term “Change of
Control” shall mean only the occurrence of one of the following:
(A) the consummation of an agreement to acquire or a tender offer for beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) by any “person” or
“group” (within the meaning of those terms as used in Sections 13(d) and 14(d)(2) of the
Exchange Act) such that afterwards such person or group has 40% or more of either (1) the
then outstanding common equity securities of the Partnership (the “Outstanding Equity”) or
(2) the combined voting power of the then outstanding voting securities of the Partnership
(the “Outstanding Voting Securities”); provided, however, that for purposes of this Section
4(d)(ii)(A), the following acquisitions shall not constitute a Change of Control: (a) any
acquisition directly from the Partnership, (b) any acquisition by the Partnership, (c) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained by the
Partnership or any of its Affiliates, (d) any acquisition by any entity pursuant to a
transaction that complies with clauses (1), (2) or (3) of Section 4(d)(ii)(D) below, or (e)
any acquisition by any member of the NGP Group unless, prior to such acquisition but
following the Date of Grant, the aggregate ownership of members of the NGP Group has been
reduced to less than 20% of both the Outstanding Equity and the Outstanding Voting
Securities; or
(B) the acquisition of beneficial ownership by any person or group of 40% or more of
the combined voting power of the then outstanding voting securities of ERGP and/or the
Company (the “ERGP/Company Outstanding Voting Securities”); provided, however, that for
purposes of this Section 4(d)(ii)(B), the following acquisitions shall not constitute a
Change of Control: (a) any acquisition by the Partnership or any of its subsidiaries, (b)
any transaction that is subject to Section 4(d)(ii)(D) or (c) any acquisition of beneficial
ownership of ERGP/Company Outstanding Voting Securities solely by virtue of an acquisition
of Outstanding Equity or Outstanding Voting Securities; or
(C) the limited partners of the Partnership approve, in one or a series of
transactions, a plan of complete liquidation of the Partnership; or
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(D) consummation of a reorganization, merger or consolidation involving the Partnership
or a sale or other disposition by the Partnership of all or substantially all of its assets
or an acquisition of assets of another entity (a “Business Combination”), in each case,
unless, following such Business Combination: (1) the Outstanding Equity and Outstanding
Voting Securities immediately prior to such Business Combination represent or are converted
into or exchanged for securities that represent or are convertible into more than 50% of,
respectively, the then outstanding equity securities and the combined voting power of the
then outstanding voting securities, as the case may be, of the entity resulting from such
Business Combination or the resulting public parent thereof (including, without limitation,
any entity that as a result of such transaction owns the Partnership, or all or
substantially all of the assets of the Partnership either directly or through one or more
subsidiaries), as the case may be, (2) no Person (excluding any employee benefit plan (or
related trust) of the Partnership or the entity resulting from the Business Combination or
the resulting public parent thereof, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding equity securities of the
entity resulting from such Business Combination or the resulting public parent thereof, as
the case may be, or the combined voting power of the then outstanding voting securities of
such entity, except to the extent that such ownership existed with respect to the
Partnership prior to the Business Combination, and (3) at least a majority of the members of
the board of directors or similar governing entity of the entity resulting from such
Business Combination or the resulting public parent thereof, as the case may be, 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; provided, however,
subclauses (1) through (3) of this Section 4(d)(ii)(D) shall not apply if the entity
resulting from the Business Combination or the resulting public parent thereof, as the case
may be, is a limited partnership unless 100% of the combined voting power of the voting
securities of the general partner thereof is owned, directly or indirectly, by such limited
partnership; or
(E) individuals who constitute the Incumbent Board cease for any reason to constitute
at least a majority of the Board. For these purposes, “Incumbent Board” means the portion
of the Board constituted of the individuals who are members of the Board effective as of any
Board reconstitution affected in connection with the GP Option (or, in the event of a
conversion of the Partnership to a corporation or a limited liability company, as of any
such conversion) and any individual who becomes a director after the such date and whose
election or appointment by the Board was approved by a vote of at least a majority of the
directors then comprising 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 election contest or solicitation of proxies or consents by or on behalf of a
Person other than the Incumbent Board.
(iii) Disability. The term “Disability” means (A) a physical or mental impairment of
sufficient severity that, in the opinion of the Board, the Officer is unable to continue
performing the duties assigned to the Officer prior to such impairment or the
Officer’s condition entitles the Officer to disability benefits under any insurance or
employee benefit plan of any Partnership Entity in which the Officer participates, and (B)
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the impairment or condition is cited by the employing Partnership Entity as the reason for
the Officer’s termination.
(iv) Good Reason. The term “Good Reason” means the occurrence of any of the following
events or conditions: (A) a change in the Officer’s status, title, position or
responsibilities (including reporting responsibilities) which represents a substantial
reduction of the status, title, position or responsibilities as in effect immediately prior
thereto, the assignment to the Officer of any duties or responsibilities that are
inconsistent with such status, title, position or responsibilities, or any removal of the
Officer from or failure to reappoint or reelect the Officer to any of such positions, except
in connection with the termination of the Officer’s services for Cause, due to the Officer’s
Disability or death, or by the Officer voluntarily without Good Reason, (B) a reduction in
the Officer’s annual base salary, (C) a change in the geographic location at which the
Officer must perform services (without the consent of the Officer) to a location more than
thirty-five (35) miles from the location at which the Officer normally performs such
services as of the Date of Grant, except for reasonably required business travel that is not
materially greater than such travel requirements prior to the Date of Grant, (D) the failure
by the Partnership Entities to continue in effect any material compensation or benefit plan
in which the Officer was participating as of the Date of Grant or to provide the Officer
with compensation and benefits at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each employee benefit plan, program and practice
as in effect immediately prior to the Date of Grant (or as in effect following the Date of
Grant, if greater), (E) any material breach by a Partnership Entity of any provision of the
Plan or of any provision of the Officer’s employment agreement, if any, or (F) any purported
termination of the Officer’s employment for Cause by a Partnership Entity that does not
otherwise comply with the terms of the Plan, this Agreement or the Officer’s employment
agreement, if any. In the case of the Officer’s allegation of Good Reason, (1) the Officer
shall provide notice to the Committee of the event alleged to constitute Good Reason within
90 days of the occurrence of such event, and (2) the Partnership Entities shall have the
opportunity to remedy the alleged Good Reason event within 30 days from receipt of notice of
such allegation.
SECTION 5. Limitations on Transfer.
The Officer agrees that he shall not dispose of (meaning, without limitation, sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of) any Restricted Units hereby
acquired prior to the applicable Vesting Dates, including pursuant to a domestic relations
order issued by a court of competent jurisdiction, unless such transfer is expressly
approved in writing by the Committee. Any attempted disposition of the Restricted Units in
violation of the preceding sentence shall be null and void.
SECTION 6. Nontransferability of Agreement.
This Agreement and all rights under this Agreement shall not be transferable by the
Officer other than by will or pursuant to applicable laws of descent and distribution.
Any rights and privileges of the Officer in connection herewith shall not be
transferred, assigned, pledged or hypothecated by the Officer or by any other person or
persons, in
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any way, whether by operation of law, or otherwise, and shall not be subject to
execution, attachment, garnishment or similar process. In the event of any such occurrence,
the Restricted Units shall automatically be forfeited. Notwithstanding the foregoing, all
or some of the Restricted Units or rights under this Agreement may be transferred if such
transfer is approved in writing by the Committee.
SECTION 7. Adjustment of Restricted Units.
The number of Restricted Units granted to the Officer pursuant to this Agreement shall
be adjusted to reflect distributions of the Partnership paid in Units, unit splits or other
changes in the capital structure of the Partnership, all in accordance with the Plan. All
provisions of this Agreement shall be applicable to such new or additional or different
units or securities distributed or issued pursuant to the Plan to the same extent that such
provisions are applicable to the Units with respect to which they were distributed or
issued.
SECTION 8. Delivery of Vested Units.
Promptly following the expiration of the restrictions on the Restricted Units as
contemplated in Section 4 of this Agreement, and subject to Section 9, the Company shall
cause to be issued and delivered to the Officer or the Officer’s designee the number of
Restricted Units as to which restrictions have lapsed, free of any restrictive legend
relating to the lapsed restrictions, and shall pay to the Officer any previously unpaid UDRs
distributed with respect to the Restricted Units. Neither the value of the Restricted Units
nor the UDRs shall bear any interest owing to the passage of time.
SECTION 9. Securities Act.
The Company shall have the right, but not the obligation, to cause the Restricted Units
to be registered under the appropriate rules and regulations of the SEC. The Company shall
not be required to deliver any Units hereunder if, in the opinion of counsel for the
Company, such delivery would violate the Securities Act of 1933 or any other applicable
federal or state securities laws or regulations. By accepting this grant, the Officer
agrees that any Units that the Officer may acquire upon vesting of this Award will not be
sold or otherwise disposed of in any manner that would constitute a violation of any
applicable federal or state securities laws.
SECTION 10. Copy of Plan.
By the execution of this Agreement, the Officer acknowledges receipt of a copy of the
Plan. If any provision of this Agreement is held to be illegal, invalid or unenforceable
under any applicable law, then such provision will be deemed to be modified to the minimum
extent necessary to render it legal, valid and enforceable; and if such provision cannot be
so modified, then this Agreement will be construed as if not containing the provision held
to be invalid, and the rights and obligations of the parties will be construed and enforced
accordingly.
SECTION 11. Notices.
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Whenever any notice is required or permitted hereunder, such notice must be in writing
and personally delivered or sent by mail. Any such notice required or permitted to be
delivered hereunder shall be deemed to be delivered on the date on which it is personally
delivered or, whether actually received or not, on the third business day (on which banking
institutions in the State of Texas are open) after it is deposited in the United States
mail, certified or registered, postage prepaid, addressed to the person who is to receive it
at the address which such person has theretofore specified by written notice delivered in
accordance herewith. The Company or the Officer may change at any time and from time to
time by written notice to the other, the address which it or he previously specified for
receiving notices. The Company and the Officer agree that any notices shall be given to the
Company or to the Officer at the following addresses:
Company:
|
Eagle Rock Energy G&P, LLC | |
| Attn: Xxxxxxx Xxxxxxxxx | ||
| X.X. Xxx 0000 | ||
| Xxxxxxx, Xxxxx 00000-0000 | ||
| Phone: (000) 000-0000 | ||
| Fax: (000) 000-0000 | ||
Officer:
|
At the Officer’s current address as shown in the Company’s records. |
SECTION 12. General Provisions.
(a) Administration. This Agreement shall at all times be subject to the terms and conditions
of the Plan. The Committee shall have sole and complete discretion with respect to all matters
reserved to it by the Plan and decisions of the Committee with respect thereto and with respect to
this Agreement shall be final and binding upon the Officer and the Company. In the event of any
conflict between the terms and conditions of this Agreement and the Plan, the provisions of the
Plan shall control.
(b) Continuation of Service. This Agreement shall not be construed to confer upon the Officer
any right to continue in the service of the Partnership Entities.
(c) Governing Law. This Agreement shall be interpreted and administered under the laws of the
State of Texas, without giving effect to any conflict of laws provisions.
(d) Amendments. This Agreement may be amended only by a written agreement executed by the
Company and the Officer, except that the Committee may unilaterally waive any conditions or rights
under, amend any terms of, or alter this Agreement provided no such change (other than pursuant to
Section 4(c) or 7(c) of the Plan) materially reduces the rights or benefits of the Officer with
respect to the Restricted Units without his consent.
(e) Binding Effect. This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company and upon any person lawfully claiming under the
Officer.
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(f) Entire Agreement. This Agreement constitutes the entire agreement of the parties with
regard to this subject matter hereof, and contains all the covenants, promises, representations,
warranties and agreements between the parties with respect to the Restricted Units granted hereby.
Without limiting the scope of the preceding sentence, all prior understandings and agreements, if
any, among the parties hereto relating to the subject matter hereof are hereby null and void and of
no further force and effect.
(g) No Liability for Good Faith Determinations. Neither the Partnership Entities, nor the
members of the Committee or the Board shall be liable for any act, omission or determination taken
or made in good faith with respect to this Agreement or the Restricted Units granted hereunder.
(h) No Guarantee of Interests. The Board and the Partnership Entities do not guarantee the
Units from loss or depreciation.
(i) Withholding Taxes. To the extent that the grant or vesting of a Restricted Unit or
distribution thereon results in the receipt of compensation by the Officer with respect to which
any Partnership Entity has a tax withholding obligation pursuant to applicable law, unless other
arrangements have been made by the Officer that are acceptable to such Partnership Entity, the
Officer shall deliver to the Partnership Entity such amount of money as the Partnership Entity may
require to meet its withholding obligations under applicable law. No issuance of an unrestricted
Unit shall be made pursuant to this Agreement until the Officer has paid or made arrangements
approved by the Partnership Entity to satisfy in full the applicable tax withholding requirements
of the Partnership Entity with respect to such event.
(j) Xxxxxxx Xxxxxxx Policy. The terms of the Company’s Xxxxxxx Xxxxxxx Policy with respect to
Units are incorporated herein by reference.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officer
thereunto duly authorized, and the Officer has set his hand as to the date and year first above
written.
| EAGLE ROCK ENERGY G&P, LLC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Officer | ||||
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