Exhibit 10.3

 

EMERGE ENERGY SERVICES LP
2013 LONG-TERM INCENTIVE PLAN

 

SECTION 1.                            Purpose of the Plan.

 

This Emerge Energy Services LP 2013 Long-Term Incentive Plan (the “Plan”) has
been adopted by Emerge Energy Services GP, LLC, a Delaware limited liability
company (the “Company”), the general partner of Emerge Energy Services LP, a
Delaware limited partnership (the “Partnership”).  The Plan is intended to
promote the interests of the Partnership and the Company by providing to
Employees, Consultants and Directors incentive compensation awards denominated
in or based on Units to encourage superior performance.  The Plan is also
intended to enhance the ability of the Partnership, the Company and their
Affiliates to attract and retain the services of individuals who are essential
for the growth and profitability of the Company, the Partnership and their
Affiliates and to encourage them to devote their best efforts to advancing the
business of the Company, the Partnership and their Affiliates.

 

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.

 

“ASC Topic 718” means Accounting Standards Codification Topic 718, Compensation
— Stock Compensation, or any successor accounting standard.

 

“Award” means an Option, Restricted Unit, Phantom Unit, DER, Substitute Award,
Unit Appreciation Right, Unit Award, Profits Interest Unit, or Other Unit-Based
Award granted under the Plan.

 

“Award Agreement” means the written or electronic agreement by which an Award
shall be evidenced.

 

“Board” means the board of directors or board of managers, as the case may be,
of the Company.

 

“Change in Control” means, and shall be deemed to have occurred upon one or more
of the following events:

 

(i)                                     any “person” or “group” within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act, other than the
Company or an Affiliate of the Company (as determined immediately prior to such
event), shall become the beneficial owner, by way of merger, acquisition,
consolidation, recapitalization, reorganization or otherwise, of 50% or more of
the combined voting power of the equity interests in the Company or the
Partnership;

 

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(ii)                                  the limited partners of the Partnership
approve, in one transaction 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 Partnership or an
Affiliate of the Company or the Partnership; or

 

(iv)                              a transaction resulting in a Person other than
the Company or an Affiliate of the Company (as determined immediately prior to
such event) being the sole general partner of the Partnership.

 

Notwithstanding the foregoing, if a Change in Control constitutes a payment
event with respect to any Award (or any portion of an Award) which provides for
the deferral of compensation and is subject to Section 409A of the Code, then,
to the extent required by Section 409A of the Code, the transaction or event
described in subsection (i), (ii), (iii) or (iv) above shall only constitute a
Change in Control for purposes of the payment timing of such Award (or portion
thereof) if such transaction also constitutes a “change in control event,” as
defined in Treasury Regulation Section 1.409A-3(i)(5). The Committee shall have
full and final authority to determine conclusively whether a Change in Control
has occurred pursuant to the above definition, the date of the occurrence of
such Change in Control and any incidental matters relating thereto.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Committee” means the Board or such committee as may be appointed by the Board
to administer the Plan.

 

“Consultant” means an individual who renders consulting services to the Company,
the Partnership or any of their Affiliates.

 

“DER” means a distribution equivalent right, representing a contingent right to
receive an amount in cash, Units, Restricted Units and/or Phantom Units equal in
value to the distributions made by the Partnership with respect to a Unit during
the period such Award is outstanding.

 

“Director” means a member of the board of directors or board of managers, as the
case may be, of the Company, the Partnership or any of their Affiliates who is
not an Employee or a Consultant (other than in that individual’s capacity as a
Director).

 

“Employee” means an employee of the Company, the Partnership or any of their
Affiliates.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means, as of any given date, the value of a Unit determined
as follows:

 

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(a)                                 If the Units are listed on any established
securities exchange, national market system or automated quotation system, the
Fair Market Value shall be the closing sales price of a Unit on such exchange or
system for such 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);

 

(b)                                 If the Units are not listed on an
established securities exchange, national market system or automated quotation
system, but the Units are regularly quoted by a recognized securities dealer,
the Fair Market Value shall be the mean of the high bid and low asked prices for
such date (or, if there are no high bid and low asked prices for a Unit on such
date, the high bid and low asked prices for a Unit on the last preceding date
for which such information exists), as reported in The Wall Street Journal (or
other reporting service approved by the Committee); or

 

(c)                                  If the Units are neither traded on an
established securities exchange or other system nor regularly quoted by a
recognized securities dealer at the time a determination of Fair Market Value is
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 pursuant to Section 6(a) of
the Plan.

 

“Other Unit-Based Award” means an award granted pursuant to Section 6(f) of the
Plan.

 

“Participant” means an Employee, Consultant or Director granted an Award under
the Plan (and, to the extent that an Award is validly transferred, any
authorized transferee of such individual).

 

“Partnership Agreement” means the First Amended and Restated Agreement of
Limited Partnership of Emerge Energy Services LP, as it may be amended or
amended and restated from time to time.

 

“Person” means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
governmental agency or political subdivision thereof or other entity.

 

“Phantom Unit” means a notional interest granted under the Plan that, to the
extent vested, entitles the Participant to receive a Unit or an amount of cash
equal to the Fair Market Value of a Unit, as determined by the Committee in its
discretion.

 

“Profits Interest Unit” means to the extent authorized by the Partnership
Agreement, an interest in the Partnership that is intended to constitute a
“profits interest” within the meaning of the Code, Treasury Regulations
promulgated thereunder, and any published guidance by the Internal Revenue
Service with respect thereto.

 

“Qualified Member” means a member of the Committee who is a “nonemployee
director” within the meaning of Rule 16b-3(b)(3).

 

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“Restricted Period” means the period established by the Committee with respect
to an Award during which the Award remains subject to forfeiture and is not
either exercisable by, or payable to, the Participant, as the case may be.

 

“Restricted Unit” means a Unit granted pursuant to Section 6(b) of 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.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“SEC” means the Securities and Exchange Commission, or any successor thereto.

 

“Service” means service as an Employee, Consultant or Director.  The Committee,
in its sole discretion, shall determine the effect of all matters and questions
relating to terminations of Service, including, without limitation, the question
of whether and when a termination of Service has occurred and/or resulted from a
discharge for cause, and all questions of whether particular changes in status
or leaves of absence constitute a termination of Service.

 

“Substitute Award” means an award granted pursuant to Section 6(f) of the Plan.

 

“Unit” means a Common Unit of the Partnership.

 

“Unit Appreciation Right” or “UAR” means a contingent right that entitles the
holder to receive the excess of the Fair Market Value of a Unit on the exercise
date of the UAR over the exercise price of the UAR.

 

“Unit Award” means an award granted pursuant to Section 6(c) of the Plan.

 

SECTION 3.                            Administration.

 

(a)                                 The Plan shall be administered by the
Committee, subject to subsection (b) below; provided, however, that in the event
that the Board is not also serving as the Committee, the Board, in its sole
discretion, may at any time and from time to time exercise any and all rights
and duties of the Committee under the Plan.  The governance of the Committee
shall be subject to the charter, if any, of the Committee as approved by the
Board.  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.

 

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The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or an Award Agreement in such manner and to such
extent as 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 of their Affiliates, any Participant and any
beneficiary of any Participant.

 

(b)                                 At any time that a member of the Committee
is not a Qualified Member, any action of the Committee relating to an Award
granted or to be granted to a Participant who is then subject to Section 16 of
the Exchange Act in respect of the Partnership may be taken either (i) by a
subcommittee, designated by the Committee, composed solely of two or more
Qualified Members, or (ii) by the Committee but with each such member who is not
a Qualified Member abstaining or recusing himself or herself from such action;
provided, however, that upon such abstention or recusal the Committee remains
composed solely of two or more Qualified Members. Such action, authorized by
such a subcommittee or by the Committee upon the abstention or recusal of such
non-Qualified Member(s), shall be the action of the Committee for all purposes
of the Plan. 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, without limitation, the Company, the Partnership, any
Affiliate, any Participant and any beneficiary of a Participant.

 

(c)                                  To the extent permitted by applicable law
and the rules of any securities exchange on which the Units are listed, quoted
or traded, the Board or Committee may from time to time delegate to a committee
of one or more members of the Board or one or more officers of the Company the
authority to grant or amend Awards or to take other administrative actions
pursuant to Section 3(a) above; provided, however, that in no event shall an
officer of the Company be delegated the authority to grant Awards to, or amend
awards held by, the following individuals:  (i) individuals who are subject to
Section 16 of the Exchange Act; (ii) officers of the Company (or Directors) to
whom authority to grant or amend Awards has been delegated hereunder; or
(iii) to the extent that Section 162(m) of the Code is applicable to the Company
or the Partnership, any Employee who is, or could be, a “covered employee”
within the meaning of Section 162(m) of the Code; provided, further, that any
delegation of administrative authority shall only be permitted to the extent
that it is permissible under applicable provisions of the Code and applicable
securities laws and the rules of any securities exchange on which the Units are
listed, quoted or traded.  Any delegation hereunder shall be subject to such
restrictions and limitations as the Board or Committee, as applicable, specifies
at the time of such delegation, and the Board or Committee, as applicable, may
at any time rescind the authority so delegated or appoint a new delegatee.  At
all times, the delegatee appointed under this Section 3(c) shall serve in such
capacity at the pleasure of the Board and the Committee.

 

SECTION 4.                            Units.

 

(a)                                 Limits on Units Deliverable.  Subject to
adjustment as provided in Section 4(c) below, the number of Units that may be
delivered with respect to Awards under the Plan is two

 

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million three hundred twenty-one thousand nine hundred sixty-eight (2,321,968). 
Units withheld from an Award to either satisfy the Company’s or an Affiliate’s
tax withholding obligations with respect to the Award or pay the exercise price
of an Award shall be counted against the number of Units that may be delivered
under the Plan and shall not be available for future grants of Awards.  If any
Award is forfeited, cancelled, exercised, paid, or otherwise terminates or
expires without the actual delivery of Units pursuant to such Award (for the
avoidance of doubt, the grant of Restricted Units is not a delivery of Units for
this purpose unless and until such Restricted Units vest and any restrictions
thereon have lapsed), the Units subject to such Award shall again be available
for Awards under the Plan.  To the extent permitted by applicable law and
securities exchange rules, Substitute Awards and Units issued in assumption of,
or in substitution for, any outstanding awards of any entity acquired in any
form of combination by the Partnership or any Affiliate thereof shall not be
counted against the Units available for issuance pursuant to the Plan.  There
shall not be any limitation on the number of Awards that may be paid in cash.

 

(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 Affiliate of the Partnership or
any other Person, or Units otherwise issuable by the Partnership, or any
combination of the foregoing, as determined by the Committee in its discretion.

 

(c)                                  Anti-dilution Adjustments.

 

(i)                                     Equity Restructuring.  With respect to
any “equity restructuring” event that could result in an additional compensation
expense to the Company or the Partnership pursuant to the provisions of ASC
Topic 718 if adjustments to Awards with respect to such event were
discretionary, the Committee shall equitably adjust the number and type of Units
covered by each outstanding Award and the terms and conditions, including the
exercise price and performance criteria (if any), of such Award to equitably
reflect such event and shall adjust the number and type of Units (or other
securities or property) with respect to which Awards may be granted under the
Plan after such event.  With respect to any other similar event that would not
result in an ASC Topic 718 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 and the number and type of Units (or
other securities or property) with respect to which Awards may be granted under
the Plan in such manner as it deems appropriate with respect to such other
event.

 

(ii)                                  Other Changes in Capitalization.  In the
event of any non-cash distribution, Unit split, combination or exchange of
Units, merger, consolidation or distribution (other than normal cash
distributions) of Partnership assets to unitholders, or any other change
affecting the Units, other than an “equity restructuring,” the Committee may
make equitable adjustments, if any, to reflect such change with respect to
(A) the aggregate number and kind of Units that may be issued under the Plan;
(B) the number and kind of Units (or other securities or property) subject to
outstanding Awards; (C) the terms and conditions of any outstanding Awards
(including, without limitation, any

 

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applicable performance targets or criteria with respect thereto); and (D) the
grant or exercise price per Unit for any outstanding Awards under the Plan.

 

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 and UARs.  The Committee shall have
the authority to determine the Employees, Consultants and Directors to whom
Options and/or UARs shall be granted, the number of Units to be covered by each
Option or UAR, the exercise price therefor, the Restricted Period and other
conditions and limitations applicable to the exercise of the Option or UAR,
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.  Options which are intended to comply with Treasury
Regulation Section 1.409A-1(b)(5)(i)(A) and UARs which are intended to comply
with Treasury Regulation Section 1.409A-1(b)(5)(i)(B) or any successor
regulation may be granted only if the requirements of Treasury Regulation
Section 1.409A-1(b)(5)(iii), or any successor regulation, are satisfied. 
Options and UARs that are otherwise exempt from or compliant with Section 409A
of the Code may be granted to any eligible Employee, Consultant or Director.

 

(i)                                     Exercise Price.  The exercise price per
Unit purchasable under an Option or subject to a UAR shall be determined by the
Committee at the time the Option or UAR is granted but, except with respect to a
Substitute Award, may not be less than the Fair Market Value of a Unit as of the
applicable date of grant of the Option or UAR.

 

(ii)                                  Time and Method of Exercise.  The
Committee shall determine the exercise terms and the Restricted Period (if any)
with respect to an Option or UAR, which may include, without limitation,
provisions for accelerated vesting upon the achievement of specified performance
goals or other events, and the method or methods by which payment of the
exercise price with respect to an Option or UAR may be made or deemed to have
been made, which may include, without limitation, cash, check acceptable to the
Company, withholding Units from the Award having a Fair Market Value on the
exercise date equal to the relevant exercise price, a “cashless” exercise
through procedures approved by the Company, or any combination of the above
methods.

 

(iii)                           Exercise of Options and UARs on Termination of
Service.  Each Option and UAR Award Agreement shall set forth the extent to
which the Participant shall have the right to exercise the Option or UAR
following a termination of the Participant’s Service.  Unless otherwise
determined by the Committee, if the Participant’s Service is terminated for
cause, the Participant’s right to exercise the Option or UAR shall terminate as
of the start of business on the effective date of the Participant’s
termination.  Unless otherwise determined by the Committee or set forth in an
applicable Award Agreement, to the extent the Option or UAR is not vested and
exercisable as of the termination of

 

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Service, the Option or UAR shall terminate when the Participant’s Service
terminates.  Subject to the foregoing, such provisions shall be determined in
the sole discretion of the Committee, need not be uniform among all Options and
UARs issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination of Service.

 

(iv)                              Term of Options and UARs.  The term of each
Option and UAR shall be stated in the applicable Award Agreement, provided, that
the term shall be no more than ten (10) years from the date of grant thereof.

 

(v)                                 Prohibition on Repricing.  Subject to
Section 4(c) and Section 7(c) hereof, the Committee shall not, without the
approval of the unitholders of the Partnership, (i) reduce the per Unit exercise
price of any outstanding Option or UAR, (ii) cancel any Option or UAR in
exchange for cash or another Award when the Option or UAR price per Unit exceeds
the Fair Market Value of the underlying Units, or (iii) otherwise reprice any
Option or UAR.  Subject to Sections 4(c), 7 and 8(e) hereof, the Committee shall
have the authority, without the approval of the unitholders of the Partnership,
to amend any outstanding Award to increase the exercise price per Unit or to
cancel and replace an Award with the grant of an Award having an exercise price
per Unit that is greater than or equal to the exercise price per Unit of the
original Award.

 

(b)                                 Restricted Units and Phantom Units.  The
Committee shall have the authority to determine the Employees, Consultants and
Directors to whom Restricted Units and Phantom Units shall be granted, the
number of Restricted Units or Phantom Units to be granted to each such
Participant, the applicable Restricted Period, the conditions under which the
Restricted Units or Phantom Units may become vested or forfeited and such other
terms and conditions, including, without limitation, restrictions on
transferability, as the Committee may establish with respect to such Awards.

 

(i)                                     Payment of Phantom Units.  The Committee
shall specify, or permit the Participant to elect in accordance with the
requirements of Section 409A of the Code, the conditions and dates or events
upon which the cash or Units underlying an award of Phantom Units shall be
issued, which dates or events shall not be earlier than the date on which the
Phantom Units vest and become nonforfeitable and which conditions and dates or
events shall be subject to compliance with Section 409A of the Code (unless the
Phantom Units are exempt therefrom).

 

(ii)                                  Vesting of Restricted Units.  Upon or as
soon as reasonably practical following the vesting of each Restricted Unit,
subject to satisfying the tax withholding obligations of Section 8(b) below, the
Participant shall be entitled to have the restrictions removed from his or her
Unit certificate (or book-entry account, as applicable) so that the Participant
then holds an unrestricted Unit.

 

(iii)                               Forfeitures.  Except as otherwise provided
in the terms of an Award Agreement, upon termination of a Participant’s Service
for any reason during an applicable Restricted Period, all outstanding, unvested
Restricted Units and Phantom Units awarded the Participant shall be
automatically forfeited.  The Committee may, in

 

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its discretion, waive in whole or in part such forfeiture with respect to a
Participant’s Restricted Units and/or Phantom Units; provided, that the waiver
contemplated under this Section 6(b)(iii) shall be effective only to the extent
that such waiver will not cause the Participant’s Restricted Units and/or
Phantom Units that are intended to satisfy the requirements of Section 409A of
the Code to fail to satisfy such requirements.

 

(c)                                  DERs.  The Committee shall have the
authority to determine the Employees, Consultants and/or Directors to whom DERs
are granted, whether such DERs are tandem or separate Awards, whether the DERs
shall be paid directly to the Participant or be credited to a bookkeeping
account (with or without interest in the discretion of the Committee), the
vesting restrictions and payment provisions applicable to the DER (if any), and
such other provisions or restrictions as determined by the Committee in its
discretion, all of which shall be specified in the applicable Award Agreements. 
DERs may be granted by the Committee based on distributions made with respect to
Units, to be credited as of the distribution dates during the period between the
date an Award is granted to a Participant and the date such Award vests, is
exercised, is distributed or expires, as determined by the Committee.  Such DERs
shall be converted to cash, Units, Restricted Units and/or Phantom Units by such
formula and at such time and subject to such limitations as may be determined by
the Committee.  Tandem DERs may 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. Notwithstanding
the foregoing, DERs shall only be paid in a manner that is either exempt from or
in compliance with Section 409A of the Code.

 

(d)                             Unit Awards.  Unit Awards may be granted under
the Plan (i) to such Employees, Consultants and/or Directors and in such amounts
as the Committee, in its discretion, may select and (ii) subject to such other
terms and conditions, including, without limitation, restrictions on
transferability, as the Committee may establish with respect to such Awards.

 

(e)                                  Profits Interest Units.  Any Restricted
Unit award or Unit Award consisting of Profits Interest Units may only be issued
to a Participant for the performance of services to or for the benefit of the
Partnership (i) in the Participant’s capacity as a partner of the Partnership,
(ii) in anticipation of the Participant becoming a partner of the Partnership,
or (iii) as otherwise determined by the Committee, provided that the Profits
Interest Units would constitute “profits interests” within the meaning of the
Code, Treasury Regulations promulgated thereunder and any published guidance by
the Internal Revenue Service with respect thereto.  At the time of grant, the
Committee shall specify the date or dates on which the Profits Interest Units
shall vest and become nonforfeitable, and may specify such conditions to vesting
as it deems appropriate.  Profits Interest Units shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose.

 

(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 Other Unit-Based Award.  Upon vesting, an Other
Unit-Based

 

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Award may be paid in cash, Units (including Restricted Units) or any combination
thereof as provided in the Award Agreement.

 

(g)                                  Substitute Awards.  Awards may be granted
under the Plan in substitution of similar awards held by individuals who become
Employees, Consultants or Directors as a result of a merger, consolidation or
acquisition by the Partnership or an Affiliate of another entity or the assets
of another entity.  Such Substitute Awards that are Options or UARs may have
exercise prices less than the Fair Market Value of a Unit on the date of the
substitution if such substitution complies with Section 409A of the Code and the
Treasury Regulations thereunder and other applicable laws and securities
exchange rules.

 

(h)                                 General.

 

(i)                                 Awards May Be Granted Separately or
Together.  Awards may, in the discretion of the Committee, be granted either
alone or in 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 of its Affiliates.  Awards granted in addition to or in tandem with other
Awards or awards granted under any other plan of the Company or any of its
Affiliates may be granted either at the same time as or at a different time from
the grant of such other Awards or awards.

 

(ii)                                  Limits on Transfer of Awards.

 

(A)                               Except as provided in paragraph (C) below,
each Option and UAR shall be exercisable only by 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 paragraph (C) below, no
Award and no right under any such Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant other
than by will or the laws of descent and distribution 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)                               The Committee may provide in an Award
Agreement that an Award may, on such terms and conditions as the Committee may
from time to time establish, be transferred by a Participant without
consideration to any “family member” of the Participant, as defined in the
instructions to use of the Form S-8 Registration Statement under the Securities
Act, as applicable, or any other transferee specifically approved by the
Committee after taking into account any state, federal, local or foreign tax and
securities laws applicable to transferable Awards.  In addition, vested Units
may be transferred to the extent permitted by the Partnership Agreement and not
otherwise prohibited by the Award Agreement or any other agreement restricting
the transfer of such Units.

 

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(iii)                               Term of Awards.  Subject to
Section 6(a)(iv) above, the term of each Award, if any, shall be for such period
as may be determined by the Committee.

 

(iv)                              Unit Certificates.  Unless otherwise
determined by the Committee or required by any applicable law, rule or
regulation, neither the Company nor the Partnership shall deliver to any
Participant certificates evidencing Units issued in connection with any Award
and instead such Units shall be recorded in the books of the Partnership (or, as
applicable, its transfer agent or equity plan administrator).  All certificates
for Units or other securities of the Partnership delivered under the Plan and
all Units issued pursuant to book entry procedures 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 securities 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 inscribed
on any such certificates or book entry to make appropriate reference to such
restrictions.

 

(v)                                 Consideration for Grants.  To the extent
permitted by applicable Law, Awards may be granted for such consideration,
including services, as the Committee shall determine.

 

(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, subject to compliance with Section 409A
of the Code, the Company shall not be required to issue or deliver any
certificates or make any book entries evidencing Units pursuant to the exercise
or vesting of any Award, unless and until the Board or the Committee has
determined, with advice of counsel, that the issuance of such Units is in
compliance with all applicable laws, regulations of governmental authorities
and, if applicable, the requirements of any securities exchange on which the
Units are listed or traded, and the Units are covered by an effective
registration statement or applicable exemption from registration.  In addition
to the terms and conditions provided herein, the Board or the Committee may
require that a Participant make such reasonable covenants, agreements, and
representations as the Board or the Committee, in its discretion, deems
advisable in order to comply with any such laws, regulations, or requirements. 
Without limiting the generality of the foregoing, the delivery of Units pursuant
to the exercise or vesting of an Award may be deferred for any period during
which, in the good faith determination of the Committee, the Company is not
reasonably able to obtain or deliver Units pursuant to such Award without
violating applicable law or the applicable rules or regulations of any
governmental agency or authority or securities exchange.  No Units or other
securities shall be delivered pursuant to any Award until payment in full of any
amount required to 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.

 

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SECTION 7.                            Amendment and Termination; Certain Events.

 

Except to the extent prohibited by applicable law:

 

(a)                                 Amendments to the Plan.  Except as required
by applicable law or the rules of the principal securities exchange, if any, 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 partner, Participant, other holder or
beneficiary of an Award, or any other Person.  The Board shall obtain
securityholder approval of any Plan amendment to the extent necessary to comply
with applicable law or securities exchange listing standards or rules.

 

(b)                                 Amendments to Awards.  Subject to
Section 7(a) above, the Committee may waive any conditions or rights under,
amend any terms of, or alter any Award theretofore granted, provided that no
change, other than pursuant to Section 7(c) below, in any Award shall materially
reduce the rights or benefits of a Participant with respect to an Award without
the consent of such Participant.

 

(c)                                  Actions Upon the Occurrence of Certain
Events.  Upon the occurrence of a Change in Control, any transaction or event
described in Section 4(c) above, 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 Company or the Partnership, the
Committee, in its sole discretion, without the consent of any Participant or
holder of an Award, and on such terms and conditions as it deems appropriate,
may take any one or more of the following actions:

 

(i)                                     provide for either (A) the termination
of any Award in exchange for a payment in an amount, if any, equal to the amount
that would have been attained upon the exercise of such Award or realization of
the Participant’s rights under such Award (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 (B) the replacement
of such Award with other rights or property selected by the Committee in its
sole discretion having an aggregate value not exceeding the amount that could
have been attained upon the exercise of such Award or realization of the
Participant’s rights had such Award been currently exercisable or payable or
fully vested;

 

(ii)                                  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;

 

(iii)                               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;

 

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(iv)                              provide that such Award shall vest or become
exercisable or payable, notwithstanding anything to the contrary in the Plan or
the applicable Award Agreement; and

 

(v)                                 provide that the Award cannot be exercised
or become payable after such event, i.e., shall terminate upon such event.

 

Notwithstanding the foregoing, (i) with respect to an above event that
constitutes an “equity restructuring” that would be subject to a compensation
expense pursuant ASC Topic 718, the provisions in Section 4(c) above shall
control to the extent they are in conflict with the discretionary provisions of
this Section 7; and (ii) no action shall be taken under this Section 7 which
shall cause an Award to fail to comply with Section 409A of the Code or the
Treasury Regulations thereunder, to the extent applicable to such Award.

 

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.  Unless other arrangements
have been made that are acceptable to the Company, the Company or any Affiliate
is authorized to deduct or withhold, or cause to be deducted or withheld, 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 or
Units, including Units that would otherwise be issued pursuant to such Award, or
other property) of any applicable taxes payable in respect of an Award,
including its grant, its exercise, the lapse of restrictions thereon, or any
payment or transfer thereunder 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.  In the event that Units that would
otherwise be issued pursuant to an Award are used to satisfy such withholding
obligations, the number of Units which may be so withheld or surrendered shall
be limited to the number of Units which have a fair market value (which, in the
case of a broker-assisted transaction, shall be determined by the Committee,
consistent with applicable provisions of the Code) on the date of withholding
equal to the aggregate amount of such liabilities based on the minimum statutory
withholding rates for federal, state, local and foreign income tax and payroll
tax purposes that are applicable to such supplemental taxable income.

 

(c)                                  No Right to Employment or Services.  The
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Company, the Partnership or any of their
Affiliates, continue consulting services or to remain on the Board, as
applicable.  Furthermore, the Company, the Partnership and/or any of their
Affiliates may at any time dismiss a Participant from employment or consulting
free from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan, any Award Agreement or other written agreement between any
such entity and the Participant.

 

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(d)                                 No Rights as Unitholder.  Except as
otherwise provided herein, a Participant shall have none of the rights of a
unitholder with respect to Units covered by any Award unless and until the
Participant becomes the record owner of such Units.

 

(e)                                  Section 409A.  To the extent that the
Committee determines that any Award granted under the Plan is subject to
Section 409A of the Code, the Award Agreement evidencing such Award shall
incorporate the terms and conditions required by Section 409A of the Code.  To
the extent applicable, the Plan and Award Agreements shall be interpreted in
accordance with Section 409A of the Code and Department of Treasury regulations
and other interpretive guidance issued thereunder, including without limitation
any such regulations or other guidance that may be issued after the effective
date of the Plan.  Notwithstanding any provision of the Plan to the contrary, in
the event that following the effective date of the Plan the Committee determines
that any Award may be subject to Section 409A of the Code and related Department
of Treasury guidance (including such Department of Treasury guidance as may be
issued after the effective date of the Plan), the Committee may adopt such
amendments to the Plan and the applicable Award Agreement or adopt other
policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Committee determines
are necessary or appropriate to preserve the intended tax treatment of the
Award, including without limitation, actions intended to (i) exempt the Award
from Section 409A of the Code, or (ii) comply with the requirements of
Section 409A of the Code and related Department of Treasury guidance; provided,
however, that nothing herein shall create any obligation on the part of the
Committee, the Company, the Partnership or any of their Affiliates to adopt any
such amendment, policy or procedure or take any such other action, nor shall the
Committee, the Company, the Partnership or any of their Affiliates have any
liability for failing to do so.  Notwithstanding any provision in the Plan to
the contrary, the time of payment with respect to any Award that is subject to
Section 409A of the Code shall not be accelerated, except as permitted under
Treasury Regulation Section 1.409A-3(j)(4).

 

(f)                                   Lock-Up Agreement.  Each Participant shall
agree, if so requested by the Company or the Partnership and any underwriter in
connection with any public offering of securities of the Partnership or any
Affiliate, not to directly or indirectly offer, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of or otherwise dispose of or transfer
any Units held by it for such period, not to exceed one hundred eighty (180)
days following the effective date of the relevant registration statement filed
under the Securities Act in connection with such public offering, as such
underwriter shall specify reasonably and in good faith.  The Company or the
Partnership may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such 180-day period. 
Notwithstanding the foregoing, the 180-day period may be extended for up to such
number of additional days as is deemed necessary by such underwriter or the
Company or Partnership to continue coverage by research analysts in accordance
with FINRA Rule 2711 or any successor rule.

 

(g)                              Compliance with Laws.  The Plan, the granting
and vesting of Awards under the Plan and the issuance and delivery of Units and
the payment of money under the Plan or under Awards granted or awarded hereunder
are subject to compliance with all applicable federal, state, local and foreign
laws, rules and regulations (including but not limited to state, federal and

 

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foreign securities law and margin requirements), the rules of any securities
exchange or automated quotation system on which the Units are listed, quoted or
traded, and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company or the Partnership,
be necessary or advisable in connection therewith.  Any securities delivered
under the Plan shall be subject to such restrictions, and the Person acquiring
such securities shall, if requested by the Company or the Partnership, provide
such assurances and representations to the Company or the Partnership as the
Company or the Partnership may deem necessary or desirable to assure compliance
with all applicable legal requirements.  To the extent permitted by applicable
law, the Plan and Awards granted or awarded hereunder shall be deemed amended to
the extent necessary to conform to such laws, rules and regulations.  In the
event an Award is granted to or held by a Participant who is employed or
providing services outside the United States, the Committee may, in its sole
discretion, modify the provisions of the Plan or of such Award as they pertain
to such Participant to comply with applicable foreign law or to recognize
differences in local law, currency or tax policy.  The Committee may also impose
conditions on the grant, issuance, exercise, vesting, settlement or retention of
Awards in order to comply with such foreign law and/or to minimize the Company’s
or the Partnership’s obligations with respect to tax equalization for
Participants employed outside their home country.

 

(h)                                 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 without
regard to its conflicts of laws principles.

 

(i)                                     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 law 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.

 

(j)                                    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 entitle the Partnership or an Affiliate to recover the same 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.

 

(k)                                 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, the Partnership or any
of their Affiliates and a Participant or any other Person.  To the extent that
any Person acquires a right to receive payments from the Company, the
Partnership or any of their Affiliates pursuant to an Award, such right shall be
no greater than the right of any general unsecured creditor of the Company, the
Partnership or any such Affiliate.

 

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(l)                                     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.

 

(m)                             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.

 

(n)                                 No Guarantee of Tax Consequences.  None of
the Board, the Committee, the Company nor the Partnership makes any commitment
or guarantee that any federal, state or local tax treatment will (or will not)
apply or be available to any Participant.

 

(o)                                 Clawback.  To the extent required by
applicable law or any applicable securities exchange listing standards, Awards
and amounts paid or payable pursuant to or with respect to Awards shall be
subject to clawback as determined by the Committee, which clawback may include
forfeiture, repurchase and/or recoupment of Awards and amounts paid or payable
pursuant to or with respect to Awards.

 

(p)                                 Allocation of Costs.  Nothing herein shall
be deemed to override, amend or modify any cost sharing arrangement, omnibus
agreement or other arrangement between the Partnership, the Company or any
Affiliate regarding the sharing of costs between these entities.

 

SECTION 9.                            Term of the Plan.

 

The Plan shall be effective on the date on which the Plan is adopted by the
Board and shall continue until the earliest of (i) the date terminated by the
Board, or (ii) the 10th anniversary of the date on which the Plan is adopted by
the Board.  However, 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.  The Plan shall,
within twelve (12) months after the date of the Board’s initial adoption of the
Plan, be submitted for approval by a majority of the outstanding securities of
the Partnership entitled to vote.

 

[Signature Page Follows]

 

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*  *  *  *  *

 

I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Emerge Energy Services GP, LLC on May 8, 2013.

 

Executed on this 14th day of May, 2013.

 

 

 

By:

/s/ Warren B. Bonham

 

 

Name: Warren B. Bonham

 

 

Title: Vice President

 

*  *  *  *  *

 

I hereby certify that the foregoing Plan was approved by the unitholders of
Emerge Energy Services LP on May 8, 2013.

 

Executed on this 14th day of May, 2013.

 

 

 

By:

/s/ Warren B. Bonham

 

 

Name: Warren B. Bonham

 

 

Title: Vice President

 

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