EX-10.8 9 dex108.htm INDUCEMENT AWARD AGREEMENT - MICHAEL B. HINEY INDUCEMENT AWARD AGREEMENT
Exhibit 10.8
THIS INDUCEMENT AWARD AGREEMENT (this “Award Agreement”) is made on May 1, 2009 by and between Constellation Energy Partners LLC, a Delaware limited liability company (“CEP”), and Xxxxxxx X. Xxxxx (“Executive”).
WHEREAS, CEP (for a limited purpose), Executive and CEP Services Company, Inc., a Delaware corporation and CEP’s wholly owned subsidiary (“CSCI”), are entering into that certain Employment Agreement, dated as of May 1, 2009 (the “Employment Agreement”) contemporaneously herewith, which agreement supersedes the Offer Letter;
1. | Construction. |
(a) Definitions. As used herein, the following terms shall have the meanings set forth below:
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
“Award Agreement” has the meaning set forth in the preamble hereto.
“Board” has the meaning set forth in the recitals to this Award Agreement.
“CEP” has the meaning set forth in the preamble to this Award Agreement.
“Closing Price” means the closing sales price of a Common Unit on the applicable date (or if there is no trading in the Common Units on such date, on the next preceding date on which there was trading) as reported in The Wall Street Journal (or other reporting service approved by the Committee). In the event Common Units are not publicly traded at the time such value is required to be made hereunder, the determination of Closing Price shall be made in good faith by the Committee.
“Code” means the Internal Revenue Code of 1986, as amended.
“Committee” means the Compensation Committee of the Board.
“Common Unit” means a common unit of CEP, representing limited liability company interests.
“Employment Agreement” has the meaning set forth in the recitals to this Award Agreement.
“Executive” has the meaning set forth in the preamble to this Award Agreement.
“Grant” has the meaning set forth in the recitals to this Award Agreement.
“Offer Letter” has the meaning set forth in the recitals to this Award Agreement.
“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.
“Restricted Period” means the period from May 1, 2009 to December 31, 2010.
“Restricted Units” has the meaning set forth in the recitals to this Award Agreement.
“Tranche” means either the First Tranche or Second Tranche, as such terms are defined in Section 2(b).
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2. | Grant of Restricted Units; Vesting; Administration. |
(i) on January 1, 2010 with respect to 15,738 Restricted Units (the “First Tranche”); and
(ii) on January 1, 2011 with respect to 15,737 Restricted Units (the “Second Tranche”).
(i) Issuance. The Restricted Units awarded hereunder shall be evidenced in book-entry form in the name of Executive.
(ii) Sources of Common Units Deliverable Under Grant. Any Common Units delivered pursuant to this Award Agreement shall consist, in whole or in part, of Common Units acquired in the open market, from any Affiliate, CEP or any other Person, or any combination of the foregoing as determined by the Committee in its sole discretion.
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3. | Ownership Rights; Risk of Forfeiture; Transfer Restrictions. |
(b) Pre-vesting Distributions.
(i) Distribution Credits. Prior to vesting pursuant to Section 2(b), Executive shall, for each Tranche, receive book-entry distribution credits (“Distribution Credits”) for any distributions paid by CEP on Common Units.
(ii) Accumulation of Distribution Credits. Until a Tranche has vested pursuant to Section 2(b), CEP shall, upon payment of a distribution in respect of Common Units, record Distribution Credits in respect of that Tranche in an amount equal to (i) the number of Restricted Units in such Tranche multiplied by the per-unit distribution amount so paid, divided by (ii) the per-unit Closing Price on the payment date of such distribution.
(iii) Earning and Settlement of Distribution Credits. The Distribution Credits accumulated with respect to a Tranche shall be earned upon the vesting of such Tranche pursuant to Section 2(b). Upon vesting of a Tranche pursuant to Section 2(b), any Distribution Credits accumulated with respect to such Tranche shall, at the discretion of the Committee, be settled in cash or Common Units.
(A) For Distribution Credits to be settled in cash, the amount of such payment shall be equal to the aggregate number of earned Distribution Credits to be settled in cash multiplied by the per-unit Closing Price on the date such Tranche vests pursuant to Section 2(b).
(B) For Distribution Credits to be settled in Common Units, CEP shall issue a number of whole Common Units equal to the aggregate number of earned Distribution Credits to be settled in Common Units; provided, however, that any Distribution Credits that would have resulted in the issuance of a fractional Common Unit pursuant to this Section 3(b)(iii)(B), shall instead be settled in cash in accordance with Section 3(b)(iii)(A).
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for a treatment of the Restricted Units and Distribution Credits that differs from Section 3(c)(i), the terms of Executive’s Employment Agreement shall control upon the termination of Executive’s employment by CEP or its Affiliates (including CSCI). “Employment Agreement” means that certain Employment Agreement, dated as of May 1, 2009, entered into by and among CEP, CSCI and Executive, as such agreement may be amended from time to time.
(i) Except as provided in Section 3(d)(iii), this Award Agreement shall be payable only to Executive during Executive’s lifetime, or to the person to whom Executive’s rights shall pass by will or the laws of descent and distribution.
(ii) Except as provided in Section 3(d)(iii), none of the Award Agreement, any Restricted Units or Distribution Credits may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by Executive and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against CEP or any of its Affiliates.
(iii) The Restricted Units and Distribution Credits may be transferred by Executive without consideration to immediate family members or related family trusts, family limited partnerships or similar entities.
4. | Adjustments. |
Except to the extent prohibited by applicable law, the Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, this Award Agreement in recognition of unusual or nonrecurring events (including the events described in Section 2(c)(iii)) affecting CEP or the financial statements of CEP, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available to Executive under this Award Agreement.
5. | General Provisions. |
(i) CEP or any Affiliate is authorized to withhold from any payment due or transfer made pursuant to this Award Agreement or from any compensation or other amount owing to a Participant the amount (in cash, Common Units, other securities, Common Units that would otherwise be issued pursuant to this Award Agreement or other property) of any applicable taxes payable at the minimum statutory rate in respect of this Award Agreement, the lapse of restrictions thereon or any payment or transfer under the Award Agreement and to take such other action as may be necessary in the opinion of CEP to satisfy its withholding obligations for the payment of such taxes.
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(ii) All Common Units to be issued pursuant to this Award Agreement shall be net of tax withholding, such that the tax withholding obligation of Executive in respect of this Award Agreement and such Common Units is satisfied through the retention by CEP of a number of Common Units equal to Executive’s aggregate tax withholding obligation divided by the per-unit Closing Price for the date immediately prior to the date of such issuance of Common Units.
(iii) Executive agrees that, if he or she makes an election under Section 83(b) of the Code with regard to the Restricted Units, Executive will so notify CEP in writing within two (2) days after making such election.
(c) Governing Law. This Award Agreement is entered into under, and shall be governed for all purposes by, the laws of the State of Delaware, without reference to its choice of law provisions.
(d) Section 409A of the Code. Notwithstanding anything in this Award Agreement to the contrary, this Award Agreement (i) is designed to avoid application of Section 409A of the Code to the Award Agreement and (ii) is designed to avoid adverse tax consequences under Section 409A of the Code should that Section apply to this Award Agreement. If any provision hereof would result in the imposition of an applicable tax under Section 409A of the Code and related regulations and pronouncements, that provision will be reformed to the extent reformation would avoid imposition of the applicable tax and no action taken to comply with Section 409A of the Code shall be deemed to adversely affect Executive’s rights to the Restricted Units or to require Executive’s consent.
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(g) No Trust or Fund Created. This Award Agreement shall not create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between CEP or any participating Affiliate and Executive. To the extent that any Person acquires a right to receive payments or securities from CEP or any participating Affiliate pursuant to this Award Agreement, such right shall be no greater than the right of any general unsecured creditor of CEP or any participating Affiliate.
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If to CEP:
Constellation Energy Partners LLC
One Xxxxx Center
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Legal Department
If to Executive:
Xxxxxxx X. Xxxxx
One Xxxxx Center
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
or to such other address as either party may furnish to the other in writing in accordance herewith, except that notices or changes of address shall be effective only upon receipt.
[Signature page follows]
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CEP: | ||
CONSTELLATION ENERGY PARTNERS LLC | ||
By: |
| |
Name: | ||
Title: | ||
EXECUTIVE | ||
/s/ Xxxxxxx X. Xxxxx | ||
Xxxxxxx X. Xxxxx |
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