Staff with more than 18 months service

 

QUEST MIDSTREAM PARTNERS, L.P.

RESTRICTED UNIT AWARD AGREEMENT

 

 

Date of Grant:

December 7, 2009

 

Number of Common Units:

______ Common Units

THIS AGREEMENT, dated as of December 7, 2009, is between Quest Midstream GP,
LLC, a Delaware limited liability company (the "Company") and _____________
("Recipient").

RECITALS:

A.        Recipient is a valued and trusted employee of the Company or one of
its Affiliates.

B.        The Company has elected to issue Recipient rights to Common Units of
Quest Midstream Partners, L.P. (the "Partnership") (as the term "Common Unit" is
defined in the Second Amended and Restated Agreement of Limited Partnership of
Quest Midstream Partners, L.P., dated November 1, 2007, and as it may be amended
from time to time (the "Partnership Agreement") pursuant to and in accordance
with this Agreement, in order that Recipient thereby may be induced to obtain an
ownership interest in the Partnership and to advance the interests of the
Partnership and its Affiliates.

AGREEMENT:

In consideration of the mutual premises and covenants contained herein and other
good and valuable consideration paid by Recipient to the Company, the Company
and Recipient agree as follows:

 

Section 1.

Promise to Deliver Units

The Company will issue and deliver to Recipient, subject to the conditions set
forth in this Agreement, that number of Common Units of the Partnership
identified above opposite the heading "Number of Common Units" (the "Units").
The Units, which will be issued by the Partnership subject to the conditions set
forth herein, will be issued in the name of Recipient or a nominee of Recipient
on the applicable Transfer Date (as identified and defined below in this Section
1) for each such Unit. Once a Unit has been transferred, the Unit will be freely
transferable under this Agreement, subject only to such further limitations on
transfer, if any, as may exist under the Partnership Agreement, applicable law
or any other agreement binding upon Recipient.

Provided Recipient's right to receive the Units has not already been forfeited
pursuant to Section 3 and subject to any exceptions listed elsewhere herein,
Recipient's rights to the Units shall vest, and the Units will be transferred,
in proportional amounts (with any number(s) not evenly divisible being allocated
to the earliest tranche), on the applicable dates identified below (the
"Transfer Dates"):

 

 

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Number of Units

Transfer Date

______ Common Units

(20% of the total number of Units)

December 23, 2009

_____ Common Units

(20% of the total number of Units)

Earlier of (i) September 23, 2010 or (ii) a Liquidity Event

_____ Common Units

(20% of the total number of Units)

Earlier of (i) September 23, 2011 or (ii) a Liquidity Event

_____ Common Units

(20% of the total number of Units)

Earlier of (i) September 23, 2012 or (ii) a Liquidity Event

_____ Common Units

(20% of the total number of Units)

Earlier of (i) September 23, 2013 or (ii) a Liquidity Event

 

For purposes of this Agreement, a "Liquidity Event" shall mean the earlier of
(i) the expiration date of any "lock up agreement" entered into by Recipient in
connection with an Initial Public Offering (as defined in the Partnership
Agreement) or (ii) the consummation date of a sale of all or substantially all
of the assets of the Partnership or the merger of the Partnership into another
entity other than a merger where the holders of voting securities of the
Partnership immediately prior to the merger own, directly or indirectly, not
less than a majority of the outstanding voting securities of the surviving
entity or its parent, provided, however, that a sale of the KPC Pipeline alone,
without any other assets, shall not constitute a Liquidity Event. In no event
will Recipient's right to one or more Units vest and be transferred prior to its
corresponding Transfer Date. None of the completion of any transaction that will
occur in the Recombination (as defined in Section 5), nor the completion of the
Recombination, is a Liquidity Event.

 

Section 2.

Consideration to the Company

In consideration of the awarding of the Units by the Company, Recipient agrees
to render faithful and efficient services as an employee of the Company or an
Affiliate. Nothing in this Agreement will confer upon Recipient any right to
continue as an employee of the Company or an Affiliate or will interfere with or
restrict in any way the rights of the Company or an Affiliate, which are hereby
expressly reserved, to terminate Recipient’s employment with the Company or an
Affiliate at any time for any reason whatsoever, with or without cause.

 

Section 3.

Forfeiture of Right to Receive Units Prior to Transfer

Unless otherwise provided herein, if the Company or its Affiliate terminates
Recipient's employment or Recipient terminates employment with the Company or
its Affiliate, for any reason, before one or more of the Transfer Dates for some
or all of the Units, all of the Recipient's right to receive additional Units
under this Agreement and all rights to receive an amount of cash equal to the
per Unit cash distribution (excluding any distribution made to holders of Units
made to cover any applicable federal, state or other tax liability) made by the
Partnership to, and to the same extent received by, the holders of Common Units
under the Partnership Agreement

 

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("UDRs"), if any, shall immediately be forfeited. Upon such forfeiture,
Recipient shall have no further rights under this Agreement.

If Recipient's employment with the Company or its Affiliate terminates as a
result of Recipient's death or Disability (as defined below), then all unvested
Units under this Agreement and all rights to receive UDRs, except those declared
but not yet paid prior to the Recipient's termination, if any, shall immediately
be forfeited. All Units under this Agreement, to the extent they have vested but
not yet been transferred, will be transferred, along with any payment related to
UDRs, to Recipient or Recipient's designated beneficiary, as the case may be,
within 60 days of the date of Recipient's death or Disability, as applicable.
For purposes of this Agreement, "Disability" shall have the meaning assigned to
it by Section 409A of the Internal Revenue Code (the "Code").

 

Section 4.

No Assignment of Rights

Subject to any exceptions set forth elsewhere herein, none of the rights to
receive the Units may be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of by Recipient, and Recipient agrees not to attempt to sell,
assign, transfer, pledge, hypothecate or otherwise dispose of such rights. Any
attempt to sell, assign, transfer, pledge, hypothecate or otherwise dispose of a
right to receive a Unit under this Agreement shall be null and void.

 

Section 5.

Acknowledgement of Rights of the Company in Event of Change in Control  

By executing this Agreement, Recipient agrees and acknowledges that in the event
of a Change in Control (as defined below), the Company shall accelerate the
Transfer Dates applicable to the Units to the date of the Change in Control. No
such action shall be taken in a manner that would cause the Units to be subject
to Code Section 409A.

For purposes of this Agreement, a "Change in 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 Securities Exchange Act of 1934, as amended,
other than an Affiliate of the Company, Swank MLP Convergence Fund, L.P. Alerian
Capital Management LLC, Tortoise Capital Resources Corporation or Huizenga
Opportunity Partners, LP, 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 Quest Resource Corporation,
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, an Affiliate of the Company,
Swank MLP Convergence Fund, L.P., Alerian Capital Management LLC, Tortoise
Capital Resources Corporation or Huizenga Opportunity Partners, LP; 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.

 

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Notwithstanding anything in this Agreement to the contrary, none of the
completion of any transaction that will occur in the "recombination" described
in the Registration Statement of PostRock Energy Corporation ("PostRock") on
Form S-4 filed with the Securities and Exchange Commission (the "SEC") on
October 6, 2009 (Registration No. 333-162366) (the "Recombination"), nor
completion of the Recombination, shall be considered a Change in Control for
purposes of this Agreement.

In the event of the completion of the Recombination, without any requirement or
obligation to obtain the Recipient’s consent, the Compensation Committee of the
Board of Directors of PostRock shall provide that any unvested Units hereunder
shall be exchanged for rights covering the equity of PostRock, with appropriate
adjustments as to the number and kind of equity interests; such rights shall be
evidenced in such manner as determined by the Compensation Committee. Any rights
with respect to UDRs or the transfer of Units upon a Liquidity Event or Change
in Control hereunder shall not apply to any PostRock equity interests received
in exchange for the Units, and such rights shall be of no further force and
effect on or after the date of the Recombination. The determinations of such
Compensation Committee with respect to the exchange, adjustments, and terms and
conditions of the PostRock equity interests received in exchange for the Units
shall be made in accordance with the Agreement and Plan of Merger, dated July 2,
2009, as amended, governing the Recombination and shall be conclusive and
binding on all parties.

 

Section 6.

Voting Rights and UDRs

Recipient shall have no voting rights with respect to any of the Units until a
Unit has been transferred to Recipient. Following a Transfer Date, Recipient
shall have such voting rights, if any, as are provided to the holders of Units
under the Partnership’s partnership agreement or as provided under applicable
law. From the Date of Grant until the Transfer Date, Recipient shall be entitled
to receive UDRs. Such UDRs will be paid to Recipient as soon as reasonably
practicable following the date such distributions are paid to holders of the
Units of the same type to which such UDRs relate, but in no event later than the
60th day after the date of such corresponding distribution. Under no
circumstances shall Recipient's right to receive the benefit of UDRs on the
Units be interpreted or construed as such Units being owned by Recipient or as
Recipient having any rights as a holder of Common Units greater than those set
forth herein. Following a Transfer Date, no UDRs shall be paid on any Unit that
has been delivered; however, Recipient shall be entitled to any distribution
made to holders of the same type of Unit under the Partnership Agreement with
respect to such unrestricted Unit. For the avoidance of doubt, at no point in
time will Participant be entitled to both actual distributions paid on Common
Units and UDRs.

 

Section 7.

Adjustments

Notwithstanding any provision herein to the contrary, in the event of any change
in the number of outstanding Common Units of the Partnership effected without
receipt of consideration therefor by the Partnership, by reason of a merger,
reorganization, consolidation, recapitalization, separation, liquidation, unit
dividend, unit split, unit combination or other change in the corporate
structure of the Partnership affecting the Common Units, the Recipient's right
to receive Units under this Agreement will be automatically adjusted to
accurately and equitably reflect the effect thereon of such change. In the event
of a dispute concerning such adjustment, the decision of the Company will be
conclusive. None of the completion of any transaction that will occur in the
Recombination, nor completion of the Recombination, is a change subject to the
provisions of this Section 7.

 

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Section 8.

Amendment and Cancellation

This Agreement may be amended or cancelled at any time provided that, to the
extent any amendment would be materially adverse to Recipient or in the event of
the cancellation of this Agreement, both the Company and Recipient consent to
the terms of such amendment or cancellation. The foregoing notwithstanding, no
amendment or cancellation shall be made or valid that would result in the Units
becoming subject to Code Section 409A.

 

Section 9.

Withholding of Tax

To the extent that the transfer of a Unit results in the receipt of compensation
by Recipient with respect to which the Company or an Affiliate has a tax
withholding obligation pursuant to applicable law, upon the vesting of any Unit,
the Company will withhold an amount of Units required to satisfy such tax
withholding obligation.

 

Section 10.

Entire Agreement

This 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
the Units granted hereby. Without limiting the scope of the preceding sentence,
all prior understandings and agreements, if any, among the parties hereto
relating to the subject matter hereof are hereby null and void and of no further
force and effect. Except as provided with respect to the exchange of the Units
for PostRock equity interests in the event of the completion of the
Recombination as set forth in Section 5, a modification of this Agreement shall
be effective only if it is in writing and signed by both Recipient and an
authorized officer of the Company.

 

Section 11.

Designation of Beneficiary

Recipient may designate a person or persons to receive, in the event of
Recipient's death, any Units then being transferred or other property then or
thereafter distributable relating to the Units. Such designation must be made
either in the space indicated at the end of this Agreement or upon forms
supplied by and delivered to the Company or its delegate and may be revoked in
writing. If Recipient fails effectively to designate a beneficiary, the estate
of Recipient will be deemed to be the beneficiary of Recipient with respect to
any such Units or other property.                

 

Section 12.

Applicable Law

This Agreement will be governed by and construed in accordance with the laws of
the State of Delaware, excluding its conflict of laws provisions.

 

Section 13.

Section 409A

The rights to, and distribution of, the Units granted hereunder are intended to
be exempt from the requirements of Section 409A of the Code under the
"short-term deferral exclusion" as defined thereunder, and this Agreement shall
be interpreted and administered in a manner consistent with that intent.

[Execution and Beneficiary Designation Page To Follow]

 

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The parties to this Agreement have executed this Agreement as of the date first
above stated.

 

 

 

QUEST MIDSTREAM GP, LLC

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

RECIPIENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Designation of Beneficiary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Relationship to Recipient)

 

 

 

 

 

 

 

 

 

 

 

(Name of Beneficiary)

 

 

 

 

 

 

 

 

(Street Address)

 

 

 

 

 

 

 

 

(City, State, Zip Code)

 

 

 

 

 

 

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