Exhibit 10.16(a)

Schedule A

LOGO [g98632ex1016a-image.jpg]

Mr. Robert R. Firth

1266 Hazel Boulevard

Tulsa, Oklahoma 74114

Mr. David D. Hall

3716 East 43 Place

Tulsa, Oklahoma 74135

Re: Incentive Compensation for Executive Group

Dear Messrs. Firth and Hall:

This letter agreement (the “Letter Agreement”) will set forth the terms and
conditions of incentive compensation which you will be eligible to receive as
members of the Executive Group of Spectrum Field Services LLC or Atlas Pipeline
Mid-Continent LLC (collectively, the “Company”) pursuant to your Employment
Agreements with Atlas America, Inc. (the “Employment Agreements”).

1. “Executive Group” shall mean (1) Robert R. Firth (“Firth”), the President and
Chief Executive Officer of the Company; (2) David D. Hall (“Hall”), the Vice
President and Chief Financial Officer of the Company; and (3) such other
officers of the Company as shall be mutually agreed upon in writing by the
President and Chief Executive, the Vice President and Chief Financial Officer,
and the Board of Directors of the Atlas Pipeline Partners GP,LLC, the sole
member of the Company. Any person becoming a member of the Executive Group
pursuant to the foregoing clause (3) shall enter into an employment agreement
with Atlas America, Inc. of its affiliates (the “Employer”) having terms
materially acceptable to such person and the Employer.

2. The Company’s Incentive Program for the Executive Group is structured in
three parts: (A) Base Incentive; (B) Additional Incentive; and (C) Acquisition
Look-Back Incentive.

A. Base Incentive.

(1) The Executive Group shall receive from Atlas Pipeline Partners, L.P. (“APL”)
that number of Common Units of Limited Partnership in APL (“Units”) equal to $1
million dollars divided by the closing price on the day before the date hereof
rounded to the

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nearest whole number (the “Base Incentive”), on the day following the earlier of
the filing of Atlas Pipeline Partners, L.P. September 30, 2007 quarterly
financial report, or a Change of Control of the Company, if and only if each of
the following conditions is met:

 

  •  

Distributable Cash Flow generated by the assets acquired by the Company from
Spectrum Field Services, Inc., as may have been expanded from time to time,
averages no less than 10.7%, on an annualized basis, of Average Gross Long Term
Assets over the 13 quarters ending September 30, 2007, including the partial
quarter ended September 30, 2004.

 

  •  

No more than two (2) quarters with Distributable Cash Flow of less than 7%, on
an annualized basis, of Gross Long Term Assets for that quarter, including the
partial quarter ended September 30, 2004.

If the above conditions are met, Units shall be issued (subject to compliance
with securities laws) promptly following the filing of the Atlas Pipeline
Partners, L.P. September 30, 2007 quarterly financial report, but in no event
later than December 31, 2007.

B. Additional Incentive.

(1) To the extent that the average annual distributable cash flow exceeds 10.7%
of Gross Long Term Assets for the 13 quarters ending September 30, 2007, the
Executive Group shall receive from APL additional Units in an amount equal to
7.42% of the Base Incentive for each one tenth of one percent (0.1%) or portion
thereof in excess of 10.7%, up to a maximum of the Base Incentive, to be issued
(subject to compliance with securities laws) promptly following the filing of
the Atlas Pipeline Partners, L.P. September 30, 2007 quarterly financial report,
but in no event later than December 31, 2007.

C. Acquisition Look-Back Incentive.

 

 

•

 

At the end of the 12th full quarter following the execution of this Agreement,
provided at least one of Firth and Hall is still employed by the Employer at
that date, the Executive Group shall be eligible for further incentive
compensation if a member of the Executive Group is actively employed by Employer
at the time and has met the requirements necessary to receive the Base
Incentive, as described above, based on the following:

 

  •  

The Executive Group as a whole shall be entitle to receive a number of Units
determined by dividing (X) the sum of (i) 1.5% of the aggregate Imputed Value
determined as provided below) of all acquisitions completed by the Company in
the Mid-continent of the United States between the date hereof and December 31,
2007 (the “measurement Period”) that were identified by members of the Executive
Group or by employees of the Company who directly report to any member of the
Executive Group and (ii) 0.5% of the aggregate Imputed Value of all acquisitions
completed by the Company in the Mid-continent of the United States during the
Measurement Period which are sourced or identified to the Company by others by
(Y) the average of the closing prices of the Units on the New York Stock
Exchange on each of the five (5) trading days preceding the Award Date (as
defined below). The aggregate number of Units to which the Executive Group shall
be entitled shall be allocated among the members of the Executive Group at the
sole discretion of the President and Chief Executive Officer of the Company.
Attached as Exhibit A hereto is a model calculation of the Acquisition Look-Back
Incentive, which is provided for illustrative purposes only.

 

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  •  

The Imputed Value of acquisition completed by the Company during the Measurement
Period shall be equal to (i) the actual Distributable Cash Flow generated by the
acquired company during the period January 1, 2008, through December 31, 2008,
divided by (ii) the Yield. For purposes of the foregoing, Yield shall mean an
amount determined by dividing (i) the amount of the regular quarterly
distribution made by APL in respect of the fourth calendar quarter of 2008
multiplied by four (4) by (ii) the closing price of a Unit on the New York Stock
Exchange on the last business day of such calendar quarter. The amount of
Distributable Cash Flow with respect to an acquisition completed during the
Measurement Period shall be based on the consolidating audited financial
statements of such acquisition for the year ending December 31, 2008.

 

  •  

Award Date means December 31, 2008.

 

  •  

Payment of Units to the Executive Group shall be made as promptly as practicable
after the Award Date and the completion of all necessary consolidating financial
statements for the year ending December 31, 2008.

 

  •  

For the avoidance of doubt, the assets of the Company (and all expansions
thereto) that represent the assets of Spectrum Field Services, Inc. which were
acquired by the company on July 16, 2004, pursuant to the certain Securities
Purchase Agreement dated July 10, 2004, shall be excluded for purposes of this
Section C and such acquisition and assets (and expansions thereto) shall not be
considered an acquisition completed during the Measurement Period.

D. Limitations on Units to be received by any Individual.

Notwithstanding any provisions of this Letter, no individual (or group of
related individuals) shall receive Units in an amount in excess of one percent
of the total number of Units outstanding. Any amount due hereunder to any
individual hereunder in excess of this amount shall be paid in cash based on the
average closing price of the Units for the five (5) trading days preceding the
date of required payment.

E. Definitions.

“Gross Long Term Assets” are defined as total assets, less current assets, less
closing costs associated with any acquisition, plus accumulated depreciation,
depletion and amortization, provided that any impairment to goodwill shall not
be deducted from gross long-term assets, in each case calculated in accordance
with GAAP.

“Distributable Cash Flow” is defined as earnings before interest, depreciation,
amortization and any direct or indirect allocation of parent, subsidiary or
affiliate overhead, less maintenance capital expenditures of those assets
acquired from Spectrum Field Services, Inc. as may have been expanded from time
to time. It does not include any contributions from preexisting Atlas Pipeline
Partners LP activities or from subsequent acquisitions. Computations will be
made separately for acquisition sourced by the Executive Group and those sourced
by others.

 

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“Executive Group” is defined as Mr. Robert Firth, Mr. David Hall and such other
officers of the Company as may be mutually agreed upon in writing from time to
time by the President and Chief Executive Officer of the Company, the Vice
President and Chief Financial Officer, and the Board of Directors of the
Company.

“Maintenance Capital Expenditures” are those capitalized costs expended to
maintain the existing integrity and capability of the assets. They specifically
do not include any costs to expand the capability of the system, including costs
necessary to connect new and/or expand existing sources of gas supply to the
system.

“Mid-continent of the United States” for purposes of this Agreement, is defined
as the states of Arkansas, Kansas, Oklahoma, New Mexico and Texas.

“Change of Control” shall mean the transaction or series of related transactions
in which the outstanding shares of the Company are exchanged for cash,
securities or other property as a result of which the current owners of the
capital shares of the Company do not own capital shares in the Company
representing at least fifty-one percent (51%) of the voting power therein.

3. Allocation of the Compensation Incentives among the members of the Executive
Group shall be determined at the discretion of the President and Chief Executive
Officer, provided, however that no individual shall be entitled to more than
sixty percent of the total compensation provided for hereunder.

4. The terms and conditions set forth in this letter agreement supersede any
prior agreements concerning incentive compensation for the Executive Group and
may be modified only by writing, executed by the President and Chief Executive
Officer and the Board of Directors of the Company.

 

    Very truly yours    

/s/ MICHAEL L. STAINES

   

Michael L. Staines

Executive Vice President

I understand and agree to the terms set forth in this Letter Agreement     ATLAS
PIPELINE PARTNERS, L.P.     By:   Atlas Pipeline Partners GP, LLC, its general
partner

/s/ ROBERT R. FIRTH

      Robert R. Firth     By:  

 

/s/ DAVID D. HALL

      David D. Hall      

 

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