Exhibit 10.7
QUEST ENERGY PARTNERS, L.P.
LONG-TERM INCENTIVE PLAN
     SECTION 1. Purpose of the Plan.
     The Quest Energy Partners, L.P. Long-Term Incentive Plan (the “Plan”) has
been adopted by Quest Energy GP, LLC, a Delaware limited liability company (the
“Company”), the general partner of Quest Energy Partners, L.P., a Delaware
limited partnership (the “Partnership”). The Plan is intended to promote the
interests of the Partnership, the Company, and their Affiliates by providing to
Employees, Consultants and Directors incentive compensation awards for superior
performance that are based on Units. The Plan is also contemplated to enhance
the ability of the Company and its Affiliates to attract and retain the services
of individuals who are essential for the growth and profitability of the
Partnership, and to encourage them to devote their best efforts to advancing the
business of the Partnership.
     SECTION 2. Definitions.
     As used in the Plan, 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” means an Option, UAR, Restricted Unit, Phantom Unit, Other
Unit-Based Award or a Unit Award granted under the Plan, and shall include any
tandem DERs granted with respect to an Award.
     “Award Agreement” means the written or electronic agreement by which an
Award shall be evidenced.
     “Board” means the Board of Directors of the Company.
     “Change of Control” means, and shall be deemed to have occurred upon the
occurrence of one or more of the following events:

  (i)   any “person” or “group” within the meaning of those terms as used in
Sections 13(d) and 14(d)(2) of the Exchange Act, other than an Affiliate of the
Company or the Parent or its Affiliates, shall become the beneficial owner, by
way of merger, consolidation, recapitalization, reorganization or otherwise, of
50% or more of the combined voting power of the equity interests in the Parent,
the Company or the Partnership;

 

--------------------------------------------------------------------------------

 

  (ii)   the limited partners of the Partnership approve, in one or a series of
transactions, a plan of complete liquidation of the Partnership;     (iii)   the
sale or other disposition by either the Company or the Partnership of all or
substantially all of its assets in one or more transactions to any Person other
than the Company, the Parent or an Affiliate of the Company, or the Parent; or  
  (iv)   a transaction resulting in a Person other than the Company or an
Affiliate of the Company being the general partner of the Partnership.

     Notwithstanding the foregoing, with respect to an Award that is subject to
Section 409A of the Code and with respect to which a Change of Control will
accelerate payment, “Change of Control” shall mean a “change of control event”
as defined in the regulations and guidance issued under Section 409A of the
Code.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Committee” means the Board, the Compensation Committee of the board of
directors of the Parent or such other committee of the Board or the board of
directors of Parent as may be appointed by the Board to administer the Plan.
     “Consultant” means an individual, other than an Employee or a Director,
providing bona fide services to the Partnership or any of its subsidiaries as a
consultant or an advisor, as applicable, provided that such individual is a
natural Person.
     “DER” or “Distribution Equivalent Right” means a right to receive an amount
in cash equal to the cash distributions made by the Partnership with respect to
a Unit during a specified period.
     “Director” means a member of the Board who is not an Employee.
     “Employee” means any employee of the Company or Affiliate who performs
direct services for the benefit of the Partnership or any of its subsidiaries.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Fair Market Value” means the closing sales price of a Unit on the
principal national securities exchange or other market in which trading in Units
occurs on the applicable date (or if there is no trading in the 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 Units are not traded on a national securities exchange or other market
at the time a determination of fair market value is required to be made
hereunder, the determination of fair market value shall be made in good faith by
the Committee.
     “Option” means an option to purchase Units granted under the Plan.
     “Other Unit-Based Award” means an award granted pursuant to Section 6(f) of
the Plan.

-2-

--------------------------------------------------------------------------------

 

     “Parent” means Quest Resource Corporation.
     “Participant” means any Employee, Consultant or Director granted an Award
under the Plan.
     “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.
     “Phantom Unit” means a phantom (notional) Unit granted under the Plan which
upon vesting entitles the Participant to receive, in the discretion of the
Committee, a Unit or an amount of cash equal to the Fair Market Value of a Unit.
     “Restricted Period” means the period established by the Committee with
respect to an Award during which the Award remains nontransferable and subject
to forfeiture and is either not exercisable by or payable to the Participant, as
the case may be.
     “Restricted Unit” means a Unit granted under the Plan that is subject to a
Restricted Period.
     “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation thereto as in effect from time to time.
     “SEC” means the Securities and Exchange Commission, or any successor
thereto.
     “Unit” means a common unit of the Partnership.
     “UDR” or “Unit Distribution Right” means a distribution made by the
Partnership with respect to a Restricted Unit.
     “Unit Appreciation Right” or “UAR” means an Award that, upon exercise,
entitles the holder to receive in cash or Units in the discretion of the
Committee, the excess of the Fair Market Value of a Unit on the exercise date
over the exercise price established for such Unit Appreciation Right.
     “Unit Award” means a grant of a Unit that is not subject to a Restricted
Period.
     SECTION 3. Administration.
     (a) Governance. The Plan shall be administered by the Committee. A majority
of the Committee shall constitute a quorum, and the acts of the members of the
Committee who are present at any meeting thereof at which a quorum is present,
or acts unanimously approved by the members of the Committee in writing, shall
be the acts of the Committee.
     (b) Delegation. Subject to the following and applicable law, the Committee,
in it sole discretion, may delegate any or all of its powers and duties under
the Plan, including the power to grant Awards under the Plan, to the Chief
Executive Officer of the Company, subject to such limitations on such delegated
powers and duties as the Committee may impose, if any. Upon any

-3-

--------------------------------------------------------------------------------

 

such delegation, all references in the Plan to the “Committee”, other than in
Section 7, shall be deemed to include the Chief Executive Officer, provided,
however, that such delegation shall not limit the Chief Executive Officer’s
right to receive Awards under the Plan. Notwithstanding the foregoing, the Chief
Executive Officer may not grant Awards to, or take any action with respect to
any Award previously granted to, a person who is an officer subject to
Rule 16b-3 or a member of the Board.
     (c) Authority and Powers. Subject to the terms of the Plan and applicable
law, and in addition to other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to a Participant; (iii) determine the number of Units to be covered by
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled,
exercised, canceled, or forfeited; (vi) interpret and administer the Plan and
any instrument or agreement relating to an Award made under the Plan;
(vii) establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (viii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconsider any
inconsistency in the Plan or an Award Agreement in such manner and extent the
Committee deems necessary or appropriate. Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive, and binding upon all Persons, including the Company, the
Partnership, any Affiliate, any Participant, and any beneficiary of any Award.
     SECTION 4. Units.
     (a) Limits on Units Deliverable. Subject to adjustment as provided in
Section 4(c), the number of Units that may be delivered with respect to Awards
under the Plan is 2,115,950, of which no more than 2,115,950 may be delivered
with respect to Unit Awards and vested Restricted Unit and Phantom Unit awards.
If any Award (including Restricted Units) is terminated, forfeited or expires
for any reason without the delivery of Units covered by such Award or Units are
withheld from an Award to satisfy the exercise price or tax withholding
obligation with respect to such Award, such Units shall again be available for
delivery pursuant to other Awards granted under the Plan. Notwithstanding the
foregoing, there shall not be any limitation on the number of Awards that may be
granted under the Plan and paid in cash, and any Units allocated to an Award
payable in cash or Units shall, to the extent paid in cash, be again available
for delivery under the Plan with respect to other Awards. With respect to UARs,
the Company shall initially allocate the full number of Units subject to the
UAR, and shall, upon settlement of the UAR, add back to the number of Units
available under the Plan, the excess of (a) the number of Units initially
allocated with respect to the UAR over (b) the number of Units, if any,
delivered in settlement of the UAR.
     (b) Sources of Units Deliverable Under Awards. Any Units delivered pursuant
to an Award shall consist, in whole or in part, of Units acquired in the open
market or from any

-4-

--------------------------------------------------------------------------------

 

Affiliate, the Partnership or any other Person, newly issued Units, or any
combination of the foregoing, as determined by the Committee in its sole
discretion.
     (c) Adjustments. In the event that the Committee determines that any
distribution (whether in the form of cash, Units, other securities, or other
property), recapitalization, split, reverse split, reorganization, merger,
Change of Control, consolidation, split-up, spin-off, combination, repurchase,
or exchange of Units or other securities of the Partnership, issuance of
warrants or other rights to purchase Units or other securities of the
Partnership, or other similar transaction or event affects the Units such that
an adjustment is determined by the Committee to be appropriate in order to
prevent the dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and type of
Units (or other securities or property) with respect to which Awards may be
granted, (ii) the number and type of Units (or other securities or property)
subject to outstanding Awards, (iii) the grant or exercise price with respect to
any Award, or (iv) if deemed appropriate, make provision for a cash payment to
the holder of an outstanding Award; provided, that the number of Units subject
to any Award shall always be a whole number. With respect to any other similar
event that would not result in a FAS 123R accounting charge if the adjustment to
Awards with respect to such event were subject to discretionary action, the
Committee shall have complete discretion to adjust Awards in such manner as it
deems appropriate with respect to such other event. Any adjustment or
modification made to an Award that is subject to or exempt from Section 409A of
the Code shall be made in a manner so as to not result in any violation of
Section 409A.
     SECTION 5. Eligibility.
     Any Employee, Consultant or Director shall be eligible to be designated a
Participant and receive an Award under the Plan.
     SECTION 6. Awards.
     (a) Options. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom Options shall be granted, the
number of Units to be covered by each Option, whether DERs are granted with
respect to such Option, the purchase price for such Units and the conditions and
limitations applicable to the exercise of the Option, including the following
terms and conditions and such additional terms and conditions, as the Committee
shall determine, that are not inconsistent with the provisions of the Plan.
     (i) Exercise Price. The exercise price per Unit under an Option shall be
determined by the Committee at the time the Option is granted but in no event
may the exercise price per share be less than its Fair Market Value as of the
date of grant.
     (ii) Time and Method of Exercise. The Committee shall determine (a) the
time or times at which an Option may be exercised in whole or in part, which may
include, without limitation, accelerated exercisability upon the achievement of
specified performance goals or other events, and, (b) in its discretion, the
method or methods by which payment of the exercise price with respect thereto
may be made or deemed to have been made, which may include, without limitation,
cash, check acceptable to the

-5-

--------------------------------------------------------------------------------

 

Company, a cashless broker-assisted exercise through a program approved by the
Company, with the consent of the Company, the withholding of Units that would
otherwise be delivered to the Participant upon the exercise of the Option, other
securities or other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant exercise price.
     (iii) Forfeitures. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participant’s employment or consulting
arrangement with the Company and its Affiliates or membership on the Board,
whichever is applicable, for any reason during the applicable Restricted Period,
all Options shall be forfeited by the Participant. The Committee may, in its
discretion, waive in whole or in part such forfeiture with respect to a
Participant’s Options.
     (iv) DERs. To the extent provided by the Committee, in its discretion, a
grant of Options may include a tandem DER grant, which may provide that such
DERs shall be paid directly to the Participant, be credited to a bookkeeping
account (with or without interest in the discretion of the Committee) subject to
the same vesting restrictions as the tandem Award, or be subject to such other
provisions or restrictions as determined by the Committee in its discretion.
DERs may not be paid in a manner that will result in an Option otherwise exempt
from Section 409A of the Code becoming subject to Section 409A of the Code.
     (b) UARs. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom Unit Appreciation Rights shall be
granted, the number of Units to be covered by each grant, whether DERs are
granted with respect to such Unit Appreciation Right, the exercise price
therefor and the conditions and limitations applicable to the exercise of the
Unit Appreciation Right, including the following terms and conditions and such
additional terms and conditions, as the Committee shall determine, that are not
inconsistent with the provisions of the Plan.
     (i) Exercise Price. The exercise price per Unit Appreciation Right shall be
determined by the Committee at the time the Unit Appreciation Right is granted
but in no event may the exercise price per UAR be less than the Fair Market
Value of a Unit as of the date of grant.
     (ii) Time of Exercise. The Committee shall determine the time or times at
which a Unit Appreciation Right may be exercised in whole or in part, which may
include, without limitation, accelerated vesting upon the achievement of
specified performance goals or other events.
     (iii) Forfeitures. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participant’s employment or consulting
arrangement with the Company and its Affiliates or membership on the Board,
whichever is applicable, for any reason during the applicable Restricted Period,
all outstanding Unit Appreciation Rights awarded the Participant shall be
automatically forfeited on such termination. The Committee may, in its
discretion, waive in whole or in part such forfeiture with respect to a
Participant’s Unit Appreciation Rights.

-6-

--------------------------------------------------------------------------------

 

     (iv) DERs. To the extent provided by the Committee, in its discretion, a
grant of Unit Appreciation Rights may include a tandem DER grant, which may
provide that such DERs shall be paid directly to the Participant, be credited to
a bookkeeping account (with or without interest in the discretion of the
Committee) subject to the same vesting restrictions as the tandem Unit
Appreciation Rights Award, or be subject to such other provisions or
restrictions as determined by the Committee in its discretion. DERs may not be
paid in a manner that will result in a UAR otherwise exempt from Section 409 of
the Code becoming subject to Section 409A of the Code.
     (c) Phantom Units. The Committee shall have the authority to determine the
Employees, Consultants, and Directors to whom Phantom Units shall be granted,
the number of Phantom Units to be granted to each such Participant, the
Restricted Period, the time or conditions under which the Phantom Units may
become vested or forfeited, which may include, without limitation, the
accelerated vesting upon the achievement of specified performance goals or other
events, and such other terms and conditions as the Committee may establish with
respect to such Awards, including whether DERs are granted with respect to such
Phantom Units.
     (i) DERs. To the extent provided by the Committee, in its discretion, a
grant of Phantom Units may include a tandem DER grant, which may provide that
such DERs shall be paid directly to the Participant, be credited to a
bookkeeping account (with or without interest in the discretion of the
Committee), be “reinvested” in Restricted Units or additional Phantom Units and
be subject to the same or different vesting restrictions as the tandem Award, or
be subject to such other provisions or restrictions as determined by the
Committee in its discretion. Absent a contrary provision in the grant agreement,
upon a cash distribution with respect to a Unit, cash equal in amount to such
distribution shall be paid to the Participant with respect to each DER without
restriction.
     (ii) Forfeitures. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participant’s employment or consulting
arrangement with the Company and its Affiliates or membership on the Board,
whichever is applicable, for any reason during the applicable Restricted Period,
all outstanding Phantom Units awarded the Participant shall be automatically
forfeited on such termination. The Committee may, in its discretion, waive in
whole or in part such forfeiture with respect to a Participant’s Phantom Units.
     (iii) Lapse of Restrictions. At the time specified in the Award Agreement,
following the vesting of each Phantom Unit and subject to the provisions of
Section 8(b), the Participant shall be entitled to receive from the Company one
Unit or cash equal to the Fair Market Value of a Unit as of the vesting date, as
determined by the Committee in its discretion. To the extent the Award Agreement
provides for a payment date of the Units or cash in a tax year other than the
tax year in which a Phantom Unit vests, the payment date must be an otherwise
eligible distribution date for nonqualified deferred compensation arrangements
in accordance with Code Section 409A. To the extent an Award Agreement is silent
as to the time following the vesting of each Phantom Unit cash or Units are to
be paid, payment will be made upon or as soon as reasonably practical following
the vesting of each Phantom Unit, subject to Section 8(b).

-7-

--------------------------------------------------------------------------------

 

     (d) Restricted Units. The Committee shall have the authority to determine
the Employees, Consultants and Directors to whom Restricted Units shall be
granted, the number of Restricted Units to be granted to each such Participant,
the Restricted Period, the conditions under which the Restricted Units may
become vested or forfeited, which may include, without limitation, the
accelerated vesting upon the achievement of specified performance goals or other
events, and such other terms and conditions as the Committee may establish with
respect to such Awards.
     (i) UDRs. To the extent provided by the Committee, in its discretion, a
grant of Restricted Units may provide that distributions made by the Partnership
with respect to the Restricted Units shall be subject to the same forfeiture and
other restrictions as the Restricted Unit and, if restricted, such distributions
shall be held, without interest, until the Restricted Unit vests or is forfeited
with the UDR being paid or forfeited at the same time, as the case may be. In
addition, the Committee may provide that such distributions be used to acquire
additional Restricted Units for the Participant. Such additional Restricted
Units may be subject to such vesting and other terms as the Committee may
proscribe. Absent such a restriction on the UDRs in the Award Agreement, UDRs
shall be paid to the holder of the Restricted Unit without restriction.
     (ii) Forfeitures. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participant’s employment or consulting with the
Company and its Affiliates or membership on the Board, whichever is applicable,
for any reason during the applicable Restricted Period, all outstanding
Restricted Units awarded the Participant shall be automatically forfeited on
such termination. The Committee may, in its discretion, waive in whole or in
part such forfeiture with respect to a Participant’s Restricted Units.
     (iii) Lapse of Restrictions. Upon or as soon as reasonably practical
following the vesting of each Restricted Unit, subject to the provisions of
Section 8(b), the Participant shall be entitled to have the restrictions removed
from his or her Unit certificate so that the Participant then holds an
unrestricted Unit.
     (e) Unit Awards. Unit Awards may be granted under the Plan to such
Employees, Consultants and/or Directors and in such amounts as the Committee, in
its discretion, may select.
     (f) Other Unit-Based Awards. Other Unit-Based Awards may be granted under
the Plan to such Employees, Consultants and/or Directors as the Committee, in
its discretion, may select. An “Other Unit-Based Award” shall be an award
denominated or payable in, valued in or otherwise based on or related to Units,
in whole or in part. The Committee shall determine the terms and conditions of
any such Other Unit-Based Award. Upon vesting, an Other Unit-Based Award may be
paid in cash, Common Units (including Restricted Units) or any combination
thereof as provided by the Committee.
     (g) General.
     (i) Awards May Be Granted Separately or Together. Except as provided below,
Awards may, in the discretion of the Committee, be granted either alone or in

-8-

--------------------------------------------------------------------------------

 

addition to, in tandem with, or in substitution for any other Award granted
under the Plan or any award granted under any other plan of the Company or any
Affiliate. Awards granted in addition to or in tandem with other Awards or
awards granted under any other plan of the Company or any Affiliate may be
granted either at the same time as or at a different time from the grant of such
other Awards or awards. Notwithstanding the foregoing, UARs may not be granted
in tandem with an Option.
     (ii) Limits on Transfer of Awards.
     (A) Except as provided in paragraph (C) below, each Award shall be
exercisable or payable only by or to the Participant during the Participant’s
lifetime, or by the person to whom the Participant’s rights shall pass by will
or the laws of descent and distribution.
     (B) Except as provided in paragraphs (A) and (C), no Award and no right
under any such Award may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company, the Partnership or any Affiliate.
     (C) To the extent specifically provided or approved by the Committee with
respect to an Award, an Award may be transferred by a Participant without
consideration to immediate family members or related family trusts, limited
partnerships or similar entities on such terms and conditions as the Committee
may from time to time establish.
     (iii) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee.
     (iv) Unit Certificates. All certificates for Units or other securities of
the Partnership delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the SEC, any stock exchange upon which such Units or other
securities are then listed, and any applicable federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
     (v) Consideration for Grants. Awards may be granted for such consideration,
including services, as the Committee determines.
     (vi) Delivery of Units or other Securities and Payment by Participant of
Consideration. Notwithstanding anything in the Plan or any Award Agreement to
the contrary, if the Company is not reasonably able to obtain Units to deliver
pursuant to such Award without violating the rules or regulations of any
applicable law or securities exchange, no delivery shall occur until such time
as the Committee, in good faith, determines that the delivery of Units may be
made without violating the rules or regulations of any applicable law or
securities exchange. No Units or other securities shall be delivered pursuant to
any Award until payment in full of any amount required to

-9-

--------------------------------------------------------------------------------

 

be paid pursuant to the Plan or the applicable Award Agreement (including,
without limitation, any exercise price or tax withholding) is received by the
Company.
     (vii) Change in Control, Similar Events. Upon the occurrence of a Change of
Control, any change in applicable law or regulation affecting the Plan or Awards
thereunder, or any change in accounting principles affecting the financial
statements of the Partnership, the Committee, in its sole discretion, without
the consent of any Participant or holder of the Award, and on such terms and
conditions as it deems appropriate, may take any one or more of the following
actions in order to either prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or an
outstanding Award or mitigate any unfavorable accounting consequences:
     (A) provide for either (i) the termination of any Award in exchange for an
amount of cash, if any, equal to the amount that would have been attained upon
the exercise of such Award or realization of the Participant’s rights (and, for
the avoidance of doubt, if as of the date of the occurrence of such transaction
or event the Committee determines in good faith that no amount would have been
attained upon the exercise of such Award or realization of the Participant’s
rights, then such Award may be terminated by the Company without payment) or
(ii) the replacement of such Award with other rights or property selected by the
Committee in its sole discretion;
     (B) provide that such award be assumed by the successor or survivor entity,
or a parent or subsidiary thereof, or be exchanged for similar options, rights
or awards covering the equity of the successor or survivor, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
equity interests and prices;
     (C) make adjustments in the number and type of Units (or other securities
or property) subject to outstanding Awards, and in the number and kind of
outstanding Awards or in the terms and conditions of (including the exercise
price), and the vesting and performance criteria included in, outstanding
Awards, or both;
     (D) provide that such Award shall be exercisable or payable,
notwithstanding anything to the contrary in the Plan or the applicable Award
Agreement; and
     (E) provide that the Award cannot be exercised or become payable after such
event, i.e., shall terminate upon such event.
     Notwithstanding the foregoing, with respect to an above event that is an
“equity restructuring” event that would be subject to a compensation expense
pursuant FAS 123R if a discretionary change is made, the provisions in Section
4(c) shall control to the extent they are in conflict with the discretionary
provisions of this Section 6.

-10-

--------------------------------------------------------------------------------

 

     SECTION 7. Amendment and Termination. Except to the extent prohibited by
applicable law:
     (a) Amendments to the Plan. Except as required by the rules of the
principal securities exchange on which the Units are traded and subject to
Section 7(b) below, the Board or the Committee may amend, alter, suspend,
discontinue, or terminate the Plan in any manner, without the consent of any
member, Participant, other holder or beneficiary of an Award, or other Person.
     (b) Amendments to Awards. Subject to Section 7(a), the Committee may waive
any conditions or rights under, amend any terms of, or alter any Award
theretofore granted, provided no change, other than pursuant to
Section 6(g)(vii) or, as determined by the Committee, in its sole discretion, as
being necessary or appropriate to comply with applicable law, including, without
limitation, Section 409A of the Code, in any Award shall materially reduce the
benefit of a Participant without the consent of such Participant.
     SECTION 8. General Provisions.
     (a) No Rights to Award. No Person shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment of
Participants. The terms and conditions of Awards need not be the same with
respect to each recipient.
     (b) Tax Withholding. The Company or any Affiliate is authorized to withhold
from any Award, from any payment due or transfer made under any Award or from
any compensation or other amount owing to a Participant the amount (in cash,
Units, other securities or property, or Units that would otherwise be issued or
delivered pursuant to such Award) of any applicable taxes payable in respect of
the grant of an Award, its exercise, the lapse of restrictions thereon, or any
payment or transfer under an Award or under the Plan and to take such other
action as may be necessary in the opinion of the Company to satisfy its
withholding obligations for the payment of such taxes.
     (c) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate or to remain on the Board or a Consultant, as applicable. Further,
the Company or an Affiliate may at any time dismiss a Participant from
employment, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.
     (d) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware law without regard to its conflict of
laws principles.
     (e) Section 409A. This Plan is intended to meet or to be exempt from the
requirements of Section 409A of the Code and may be administered in a manner
that is intended to meet those requirements and will be construed and
interpreted in accordance with such intent. All Awards granted and payments
hereunder will either be exempt from Section 409A of the Code or will be subject
to Section 409A of the Code and will be structured in a manner that will

-11-

--------------------------------------------------------------------------------

 

meet the requirements of Section 409A of the Code, including regulations or
other guidance issued with respect thereto. Any provision of this Plan that
would cause an Award or payment to fail to satisfy Section 409A of the Code will
be amended (in a manner that as closely as practicable achieves the original
intent of the Award) to comply with Section 409A of the Code on a timely basis,
which may be made on a retroactive basis, in accordance with regulations and
other guidance issued under Section 409A of the Code.
     (f) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.
     (g) Other Laws. The Committee may refuse to issue or transfer any Units or
other consideration under an Award if, in its sole discretion, it determines
that the issuance or transfer of such Units or such other consideration might
violate any applicable law or regulation, the rules of the principal securities
exchange on which the Units are then traded, or result in recoverable
short-swing profits under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary.
     (h) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any participating Affiliate and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company or any participating Affiliate pursuant to
an Award, such right shall be no greater than the right of any general unsecured
creditor of the Company or any participating Affiliate.
     (i) No Fractional Units. No fractional Units shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Units or whether such fractional Units or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
     (j) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
     (k) Facility Payment. Any amounts payable hereunder to any person under
legal disability or who, in the judgment of the Committee, is unable to properly
manage his financial affairs, may be paid to the legal representative of such
person, or may be applied for the benefit of such person in any manner which the
Committee may select, and the Company shall be relieved of any further liability
for payment of such amounts.

-12-

--------------------------------------------------------------------------------

 

     (l) Gender and Number. Words in the masculine gender shall include the
feminine gender, the plural shall include the singular and the singular shall
include the plural.
     SECTION 9. Term of the Plan.
     The Plan shall become effective on the date of its approval by the Board
and shall continue until the earlier of the date terminated by the Board or the
Committee or Units are no longer available for Awards under the Plan. However,
unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award granted prior to such termination, and the authority of the
Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under such Award,
shall extend beyond such termination date.

-13-