Exhibit 10.8

INDUCEMENT AWARD AGREEMENT

THIS INDUCEMENT AWARD AGREEMENT (this “Award Agreement”) is made on May 1, 2009
by and between Constellation Energy Partners LLC, a Delaware limited liability
company (“CEP”), and Michael B. Hiney (“Executive”).

WHEREAS, the Board of Managers (the “Board”) of CEP has determined that it is in
the best interests of CEP to grant inducement bonuses to, among other things,
promote the interests of CEP by enhancing the ability of CEP and its
subsidiaries to attract and retain the services of individuals who are essential
for the growth and profitability of CEP and to encourage them to devote their
best efforts to advancing the business of CEP and its subsidiaries;

WHEREAS, in order to induce Executive to enter into that certain Offer Letter,
dated as of December 31, 2008, between Executive and CEP (the “Offer Letter”),
CEP agreed to make an inducement grant to Executive of a number of restricted
common units representing limited liability company interests in CEP (the
“Grant”), which restricted common units, when coupled with an amount of cash,
would equal $350,000 on the grant date; and

WHEREAS, the Board has determined that the Grant shall be comprised of 31,475
restricted common units (the “Restricted Units”) in satisfaction of CEP’s
obligation under the Offer Letter to make an inducement grant, which number of
Restricted Units is based on the closing price of the Common Units on the NYSE
Arca Equities, Inc. on December 31, 2008; and

WHEREAS, CEP (for a limited purpose), Executive and CEP Services Company, Inc.,
a Delaware corporation and CEP’s wholly owned subsidiary (“CSCI”), are entering
into that certain Employment Agreement, dated as of May 1, 2009 (the “Employment
Agreement”) contemporaneously herewith, which agreement supersedes the Offer
Letter;

WHEREAS, the Grant has been approved by the Compensation Committee of the Board
and is being made pursuant to the exemption from securityholder approval
provided in Rule 5.3(d)(5)(A) of the NYSE Arca Rules;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1. Construction.

(a) Definitions. As used herein, the following terms shall have the meanings set
forth below:

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

“Award Agreement” has the meaning set forth in the preamble hereto.

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“Board” has the meaning set forth in the recitals to this Award Agreement.

“CEP” has the meaning set forth in the preamble to this Award Agreement.

“Closing Price” means the closing sales price of a Common Unit on the applicable
date (or if there is no trading in the Common Units on such date, on the next
preceding date on which there was trading) as reported in The Wall Street
Journal (or other reporting service approved by the Committee). In the event
Common Units are not publicly traded at the time such value is required to be
made hereunder, the determination of Closing Price shall be made in good faith
by the Committee.

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

“Committee” means the Compensation Committee of the Board.

“Common Unit” means a common unit of CEP, representing limited liability company
interests.

“Employment Agreement” has the meaning set forth in the recitals to this Award
Agreement.

“Executive” has the meaning set forth in the preamble to this Award Agreement.

“Grant” has the meaning set forth in the recitals to this Award Agreement.

“Offer Letter” has the meaning set forth in the recitals to this Award
Agreement.

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

“Restricted Period” means the period from May 1, 2009 to December 31, 2010.

“Restricted Units” has the meaning set forth in the recitals to this Award
Agreement.

“Tranche” means either the First Tranche or Second Tranche, as such terms are
defined in Section 2(b).

(b) Construction. In this Award Agreement, unless a clear contrary intention
appears, (a) the words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Award Agreement as a whole and not to any
particular Section or other subdivision, (b) reference to any Section means such
Section hereof and (c) the words “including” (and with correlative meaning
“include”) means including, without limiting the generality of any description
preceding such term.

 

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2. Grant of Restricted Units; Vesting; Administration.

(a) Grant. CEP hereby grants to Executive all right, title and interest in and
to the record and beneficial ownership of the Restricted Units, subject to the
conditions described herein.

(b) Vesting. Subject to Section 3(c), all rights to the Restricted Units shall
fully vest in Executive and the restrictions set forth in Section 3(c) and
Section 3(d) shall lapse as follows:

(i) on January 1, 2010 with respect to 15,738 Restricted Units (the “First
Tranche”); and

(ii) on January 1, 2011 with respect to 15,737 Restricted Units (the “Second
Tranche”).

(c) Administration.

(i) Issuance. The Restricted Units awarded hereunder shall be evidenced in
book-entry form in the name of Executive.

(ii) Sources of Common Units Deliverable Under Grant. Any Common Units delivered
pursuant to this Award Agreement shall consist, in whole or in part, of Common
Units acquired in the open market, from any Affiliate, CEP or any other Person,
or any combination of the foregoing as determined by the Committee in its sole
discretion.

(iii) Adjustments. In the event that the Committee determines that any
distribution (whether in the form of cash, Common Units, other securities or
other property), recapitalization, split, reverse split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Units or other securities of CEP, issuance of warrants or other rights to
purchase Common Units or other securities of CEP, or other similar transaction
or event affects the Common Units such that an adjustment is determined by the
Committee to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under this Award
Agreement, then the Committee shall, in such manner as it may deem equitable,
adjust the number and type of Common Units (or other securities or property)
subject to the Award Agreement hereunder or, if deemed appropriate by the
Committee, make provision for a cash payment to Executive; provided, however,
that the number of Common Units subject to the Grant shall always be a whole
number; and, provided further, that the Committee shall not take any action
otherwise authorized under this paragraph (b) to the extent that (i) such action
would cause (A) the application of Section 409A of the Code to the Award
Agreement or (B) create adverse tax consequences under Section 409A of the Code
should that Code Section apply to the Award Agreement or (ii) except as
permitted in Section 4, materially reduce the benefit to Executive without the
consent of Executive.

 

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3. Ownership Rights; Risk of Forfeiture; Transfer Restrictions.

(a) Ownership Rights. Subject to the restrictions set forth herein, including
Section 3(b), Executive is entitled to all voting and ownership rights
applicable to the Restricted Units.

(b) Pre-vesting Distributions.

(i) Distribution Credits. Prior to vesting pursuant to Section 2(b), Executive
shall, for each Tranche, receive book-entry distribution credits (“Distribution
Credits”) for any distributions paid by CEP on Common Units.

(ii) Accumulation of Distribution Credits. Until a Tranche has vested pursuant
to Section 2(b), CEP shall, upon payment of a distribution in respect of Common
Units, record Distribution Credits in respect of that Tranche in an amount equal
to (i) the number of Restricted Units in such Tranche multiplied by the per-unit
distribution amount so paid, divided by (ii) the per-unit Closing Price on the
payment date of such distribution.

(iii) Earning and Settlement of Distribution Credits. The Distribution Credits
accumulated with respect to a Tranche shall be earned upon the vesting of such
Tranche pursuant to Section 2(b). Upon vesting of a Tranche pursuant to
Section 2(b), any Distribution Credits accumulated with respect to such Tranche
shall, at the discretion of the Committee, be settled in cash or Common Units.

(A) For Distribution Credits to be settled in cash, the amount of such payment
shall be equal to the aggregate number of earned Distribution Credits to be
settled in cash multiplied by the per-unit Closing Price on the date such
Tranche vests pursuant to Section 2(b).

(B) For Distribution Credits to be settled in Common Units, CEP shall issue a
number of whole Common Units equal to the aggregate number of earned
Distribution Credits to be settled in Common Units; provided, however, that any
Distribution Credits that would have resulted in the issuance of a fractional
Common Unit pursuant to this Section 3(b)(iii)(B), shall instead be settled in
cash in accordance with Section 3(b)(iii)(A).

(c) Risk of Forfeiture.

(i) General. Subject to Section 3(c)(ii), upon termination of Executive’s
employment with or services to CEP and its Affiliates (including CSCI) for any
reason during the applicable Restricted Period, all Restricted Units not then
vested pursuant to Section 2(b) and Distribution Credits not then earned
pursuant to Section 3(b)(iii) shall be automatically forfeited by Executive. The
Committee may, in its discretion, waive in whole or in part such forfeiture.

(ii) Employment Agreement. Notwithstanding Section 3(c)(i) and anything to the
contrary herein, if Executive’s Employment Agreement (defined below) provides

 

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for a treatment of the Restricted Units and Distribution Credits that differs
from Section 3(c)(i), the terms of Executive’s Employment Agreement shall
control upon the termination of Executive’s employment by CEP or its Affiliates
(including CSCI). “Employment Agreement” means that certain Employment
Agreement, dated as of May 1, 2009, entered into by and among CEP, CSCI and
Executive, as such agreement may be amended from time to time.

(d) Transfer Restrictions.

(i) Except as provided in Section 3(d)(iii), this Award Agreement shall be
payable only to Executive during Executive’s lifetime, or to the person to whom
Executive’s rights shall pass by will or the laws of descent and distribution.

(ii) Except as provided in Section 3(d)(iii), none of the Award Agreement, any
Restricted Units or Distribution Credits may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by Executive and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against CEP or any of its
Affiliates.

(iii) The Restricted Units and Distribution Credits may be transferred by
Executive without consideration to immediate family members or related family
trusts, family limited partnerships or similar entities.

 

4. Adjustments.

Except to the extent prohibited by applicable law, the Committee is hereby
authorized to make adjustments in the terms and conditions of, and the criteria
included in, this Award Agreement in recognition of unusual or nonrecurring
events (including the events described in Section 2(c)(iii)) affecting CEP or
the financial statements of CEP, or of changes in applicable laws, regulations,
or accounting principles, whenever the Committee determines that such
adjustments are appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available to Executive under
this Award Agreement.

 

5. General Provisions.

(a) Tax Withholding.

(i) CEP or any Affiliate is authorized to withhold from any payment due or
transfer made pursuant to this Award Agreement or from any compensation or other
amount owing to a Participant the amount (in cash, Common Units, other
securities, Common Units that would otherwise be issued pursuant to this Award
Agreement or other property) of any applicable taxes payable at the minimum
statutory rate in respect of this Award Agreement, the lapse of restrictions
thereon or any payment or transfer under the Award Agreement and to take such
other action as may be necessary in the opinion of CEP to satisfy its
withholding obligations for the payment of such taxes.

 

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(ii) All Common Units to be issued pursuant to this Award Agreement shall be net
of tax withholding, such that the tax withholding obligation of Executive in
respect of this Award Agreement and such Common Units is satisfied through the
retention by CEP of a number of Common Units equal to Executive’s aggregate tax
withholding obligation divided by the per-unit Closing Price for the date
immediately prior to the date of such issuance of Common Units.

(iii) Executive agrees that, if he or she makes an election under Section 83(b)
of the Code with regard to the Restricted Units, Executive will so notify CEP in
writing within two (2) days after making such election.

(b) No Right to Employment or Services. Nothing in this Award Agreement shall be
construed as granting Executive the right to be retained in the employ of CEP or
any of its Affiliates. Subject to the terms of the Employment Agreement, CEP or
an Affiliate may at any time dismiss Executive from employment, free from any
liability or any claim under this Award Agreement other than as provided under
Section 3(c)(ii).

(c) Governing Law. This Award Agreement is entered into under, and shall be
governed for all purposes by, the laws of the State of Delaware, without
reference to its choice of law provisions.

(d) Section 409A of the Code. Notwithstanding anything in this Award Agreement
to the contrary, this Award Agreement (i) is designed to avoid application of
Section 409A of the Code to the Award Agreement and (ii) is designed to avoid
adverse tax consequences under Section 409A of the Code should that
Section apply to this Award Agreement. If any provision hereof would result in
the imposition of an applicable tax under Section 409A of the Code and related
regulations and pronouncements, that provision will be reformed to the extent
reformation would avoid imposition of the applicable tax and no action taken to
comply with Section 409A of the Code shall be deemed to adversely affect
Executive’s rights to the Restricted Units or to require Executive’s consent.

(e) Severability. If any provision in this Award Agreement is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any
Person, or would disqualify the Award Agreement 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
Award Agreement, such provision shall be stricken as to such jurisdiction or
person and the remainder of the Award Agreement shall remain in full force and
effect.

(f) Other Laws. The Committee may refuse to issue or transfer any Common Units
or other consideration under this Award Agreement if, in its sole discretion, it
determines that the issuance or transfer of such Common Units or such other
consideration might violate any applicable law or regulation, the rules of the
principal securities exchange on which the Common Units are then traded, or
entitle CEP or an Affiliate to recover the same under Section 16(b) of the
Securities Exchange Act of 1934, as amended, and any payment tendered to CEP by
Executive, other holder or beneficiary shall be promptly refunded to the
relevant Executive, holder or beneficiary.

 

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(g) No Trust or Fund Created. This Award Agreement shall not create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between CEP or any participating Affiliate and Executive. To the
extent that any Person acquires a right to receive payments or securities from
CEP or any participating Affiliate pursuant to this Award Agreement, such right
shall be no greater than the right of any general unsecured creditor of CEP or
any participating Affiliate.

(h) No Fractional Units. No fractional Common Units shall be issued or delivered
pursuant to this Award Agreement, and the Committee shall determine whether
cash, other securities or other property shall be paid or transferred in lieu of
any fractional Common Units or whether such fractional Common Units or any
rights thereto shall be canceled, terminated or otherwise eliminated.

(i) Headings. Headings are given to the Sections and subsections of this Award
Agreement 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 this Award Agreement or any provision thereof.

(j) 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 CEP and its Affiliates shall be relieved of any
further liability for payment of such amounts.

(k) 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.

(l) No Guarantee of Tax Consequences. None of the Board, CEP, nor the Committee
makes any commitment or guarantee to Executive that any federal, state or local
tax treatment will apply or be available to any Person eligible for benefits
under this Award Agreement.

(m) Certain Restrictions. By executing this Award Agreement, Executive
acknowledges that he or she has access to all documents filed by CEP with the
Securities and Exchange Commission and has been provided a reasonable
opportunity to ask questions of and receive answers from representatives of CEP
regarding such matters. Executive agrees that he or she will enter into such
representations, warranties and agreements and shall execute such documents as
CEP may reasonably request in order to comply with the securities law or any
other applicable laws, rules or regulations or with the terms of this Award
Agreement.

(n) No Waiver. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Award Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.

 

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(o) Counterparts. This Award Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same agreement.

(p) Notices. For purposes of this Award Agreement, notices and all other
communications provided in this Award Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or when mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, or when sent by recognized overnight delivery service, addressed as
follows:

If to CEP:

Constellation Energy Partners LLC

One Allen Center

500 Dallas Street, Suite 3200

Houston, TX 77002

Attention: Legal Department

If to Executive:

Michael B. Hiney

One Allen Center

500 Dallas Street, Suite 3200

Houston, TX 77002

or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.

(q) Entire Agreement. This Award Agreement constitutes the entire agreement of
the parties with regard to the subject matter hereof, and contains all the
covenants, promises, representations, warranties and agreements between the
parties with respect to such subject matter. Without limiting the scope of the
preceding sentence, all understandings and agreements preceding the date of
execution of this Award Agreement and relating to the subject matter hereof
(including the Offer Letter) are hereby null and void and of no further force
and effect, including all prior employment and severance agreements, if any, by
and between the Company and Executive, but excluding those certain (i) Grant
Agreement Relating to Notional Units - Executives, of even date herewith, by and
between CEP and Executive and (ii) Employment Agreement, of even date herewith,
by and among CEP, Executive and CEP Services Company, Inc. Any modification of
this Award Agreement will be effective only if it is in writing and signed by
both parties.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Award Agreement to be
effective as of May 1, 2009.

 

CEP: CONSTELLATION ENERGY PARTNERS LLC By:  

 

Name:   Title:   EXECUTIVE

/s/ Michael B. Hiney

Michael B. Hiney

 

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