Exhibit 10.7

ATLAS ENERGY, L.P.

2006 LONG-TERM INCENTIVE PLAN

PHANTOM UNIT GRANT AGREEMENT

THIS AGREEMENT, made as of this      day of                     , 20     (the
“Date of Grant”) by and between                     , (the “Participant”) and
ATLAS ENERGY, L.P. (together with its successors and assigns hereinafter
referred to as the “Partnership”).

WHEREAS, the Partnership’s 2006 Long-Term Incentive Plan (the “Plan”) provides
for the grant of phantom units in accordance with the terms and conditions of
the Plan; and

WHEREAS, the Committee has determined that it would be in the best interest of
the Partnership to grant the phantom units described herein on the terms and
conditions hereinafter set forth; and

WHEREAS, capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed thereto in the Plan.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree
as follows:

 

  1. Grant of Phantom Units.

Subject to the terms and conditions set forth in this Agreement and the Plan,
the Partnership hereby grants the Participant                      phantom
units, subject to the restrictions set forth below and in the Plan (the “Phantom
Units”).

 

  2. Phantom Unit Account.

Phantom Units represent hypothetical common units of the Partnership (“Units”),
and not actual Units. The Partnership shall establish and maintain a Phantom
Unit account, as a bookkeeping account on its records, for the Participant and
shall record in such account the number of Phantom Units granted to the
Participant. No Units shall be issued to the Participant at the time the grant
is made, and the Participant shall not be, nor have any of the rights or
privileges of, a unitholder of the Partnership with respect to any Phantom Units
recorded in the account. The Participant shall not have any interest in any fund
or specific assets of the Partnership by reason of this grant or the Phantom
Unit account established for the Participant.

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  3. Vesting.

The Phantom Units shall be subject to forfeiture until the Phantom Units vest.
The Phantom Units shall become vested according to the following schedule, if
the Participant continues to be employed by, or provide service to Atlas Energy
GP, LLC, the Partnership or one of their Affiliates (collectively, “Atlas”) on
the applicable vesting date:

 

Vesting Date

   Vested
Phantom
units  

[First anniversary of the Date of Grant

          % 

Second anniversary of the Date of Grant

          % 

Third anniversary of the Date of Grant

          % 

Fourth anniversary of the Date of Grant

          %] 

The vesting of the Phantom Units shall be cumulative, but shall not exceed 100%
of the Phantom Units.

 

  4. Termination of Phantom Units.

(a) Except as provided below, upon the Participant’s termination of employment
with Atlas (“Termination of Employment”) or termination of service (“Termination
of Service”) to Atlas for any reason before all of the Phantom Units vest, any
unvested Phantom Units shall automatically terminate and shall be forfeited as
of the date of the Participant’s Termination of Employment. No issuance of Units
shall be made with respect to any unvested Phantom Units that terminate as
described in this Section 4.

(b) Upon the Participant’s Termination of Employment or Termination of Service
by reason of death, any unvested Phantom Units shall immediately vest.

(c) Upon the Participant’s Termination of Employment or Termination of Service
by reason of Disability, the unvested Phantom Units shall immediately vest.
“Disability” (i) shall have the meaning set forth in any individual employment
agreement to which the Participant is a party, or (ii) if there is no such
individual employment agreement or it does not define “Disability,” shall mean
“permanent and total disability” as defined in Section 22(e)(3) of the of the
Internal Revenue Code of 1986, as amended (the “Code”). Notwithstanding the
above, with respect to any Award, to the extent necessary to avoid accelerated
taxation or tax penalties under Section 409A of the Code, Disability shall mean
“disability” within the meaning of Section 409A of the Code.

 

  5. Payment of Phantom Units.

(a) If and when the Phantom Units vest, the Partnership shall issue to the
Participant one Unit for each vested Phantom Unit, subject to the Participant’s
payment of withholding taxes, to the extent required, as described below.
Issuance of Units shall be made within 30 days after the vesting date, subject
to the Participant’s payment of withholding taxes, to the extent required, as
described below.

(b) All distributions under this Agreement may be subject to applicable federal
(including FICA), state and local tax withholding, in accordance with
Section 8(b) of the Plan. Unless the Committee determines otherwise, the
Participant or other person entitled to payment under this Agreement shall be
required to pay to Atlas the amount of any taxes that

 

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Atlas is required to withhold with respect to the Phantom Units. Atlas may also
deduct from any compensation or other amounts owing to the Participant,
including by payroll deduction or withholding of Units, the amount of any
applicable taxes with respect to the Phantom Units. If the Committee determines
that Units may be used to satisfy tax withholding, such Units shall be valued
based on their Fair Market Value at the time the tax withholding is required to
be made; provided, however, that not more than the legally required minimum tax
withholding amount may be settled by Unit withholding. If Atlas fails to pay any
required tax withholding amount in the manner specified by Atlas or its agent
when the Phantom Units become taxable, after receiving written notice from Atlas
or its agent, Atlas is authorized to cancel such Phantom Units, in which case
the Phantom Units shall be forfeited and shall not be paid to the Participant.

(c) The obligation of the Partnership to deliver Units shall also be subject to
the condition that if at any time the Committee shall determine in its
discretion that the listing, registration or qualification of the Units upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issue of Units, the Units may not be
issued in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Committee. The issuance of Units to Participant pursuant
to this Agreement is subject to any applicable taxes and other laws or
regulations of the United States or of any state having jurisdiction thereof.

 

  6. Distribution Equivalent Rights with respect to Phantom Units.

Until such time as the Phantom Units are paid or forfeited, if a distribution is
paid by the Partnership on its Units, the Partnership shall pay to the
Participant, in cash, the amount of the corresponding Distribution Equivalent
attributable to the Participant’s then outstanding Phantom Units. The
Distribution Equivalent shall be paid to the Participant on the date on which
the distribution is paid by the Partnership on Units.

 

  7. Change in Control.

(a) General Authority. In connection with any Change in Control, the Committee
may, subject to the terms of any employment agreements between the Company or
any Affiliate and any Participant, take one or more of the following actions:

(i) Cause the Phantom Units to be assumed or a substantially equivalent award to
be substituted by the surviving or successor entity or a parent, subsidiary, or
affiliate of such successor entity;

(ii) Accelerate the vesting of the Phantom Units as of immediately prior to the
consummation of the transaction that constitutes such Change in Control so that
the Phantom Units shall vest in a manner which allows the resulting Units to
participate in such transaction;

(iii) Arrange or otherwise provide for the payment of cash or other
consideration to Participants in exchange for the cancellation of outstanding
Phantom Units (with the Committee determining the amount payable to each
Participant);

 

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(iv) Make such other modifications, adjustments, or amendments to outstanding
Phantom Units as the Committee deems necessary or appropriate.

(b) Vesting in Connection With a Change in Control. In the case of Participants
who are Employees, upon the Participant’s termination of employment by the
Company without “Cause” (as defined herein), or upon any other type of
termination specified in this Agreement, in any case following a Change in
Control, any unvested portion of an Award shall immediately vest in full.
“Cause” means Cause (or a term of similar import) as defined in the employment,
consulting, or similar agreement to which a Participant is party, or, if there
is no such agreement, “Cause” means the Participant’s: (i) commission of a
felony or a crime of moral turpitude; (ii) commission of any act of malfeasance
or wrongdoing against the Partnership, the Company or any Affiliate; (iii) a
material breach of the Company’s or any Affiliate’s applicable policies or
procedures; (iv) willful and continued failure to perform the Participant’s
material duties; (v) willful misconduct that causes material harm to the
Partnership, the Company or any Affiliate or their respective business
reputations, including due to any adverse publicity; or (vi) material breach of
the Participant’s obligations under any agreement (including any covenant not to
compete) entered into between the Participant and the Company or any Affiliate.
Notwithstanding Section 3 of the Plan, following a Change in Control, any
determination by the Committee as to whether “Cause” exists shall be subject to
de novo review.

 

  8. Grant Subject to Plan Provisions.

This grant is made pursuant to the Plan, the terms of which are incorporated
herein by reference, and in all respects shall be interpreted in accordance with
the Plan. The grant and payment of the Phantom Units are subject to
interpretations, regulations and determinations concerning the Plan established
from time to time by the Committee in accordance with the provisions of the
Plan, including, but not limited to, provisions pertaining to (i) the
registration, qualification or listing of the Units, (ii) changes in
capitalization of the Partnership and (iii) other requirements of applicable
law. The Committee shall have the authority to interpret and construe the
Phantom Units pursuant to the terms of the Plan, and its decisions shall be
conclusive as to any questions arising hereunder.

 

  9. Restrictive Covenants.

If Participant is subject to an existing or future employment or services
agreement with Atlas (an “Employment Agreement”) which addresses the subject
matter of Section 9, then such Employment Agreement shall supersede this
Section 9. If Participant is not subject to an Employment Agreement, then as a
condition of this grant, the Participant agrees as follows:

(a) The Participant agrees, at all times, to hold in strict confidence all
Confidential Information (as defined below) and never, during the course of the
Participant’s employment with Atlas or thereafter, to make any use of such
information except as (and then, only to the extent) required to perform the
Participant’s duties. The restrictions of this paragraph (a) shall not apply to
information or data that the Participant can establish is or has become known to
the public generally through no fault of the Participant or has come into the
Participant’s possession lawfully and not through the Participant’s employment
or service as the case may be.

 

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(i) For purposes of this Agreement, “Confidential Information” means all
commercially sensitive information and data, in whatever format, originated by,
or on behalf of, or within the knowledge or possession of, Atlas, or any
independent contractor performing services on behalf of Atlas. Without limiting
the foregoing, Confidential Information includes, but is not limited to,
information that has been designated as proprietary or confidential; information
constituting trade secrets; information that, by the nature of the surrounding
circumstances, should be treated as proprietary or confidential; and information
or data conceived, discovered or developed in whole or in part by the
Participant while employed by or providing services to Atlas.

(ii) The Participant acknowledges that the Participant’s relationship with Atlas
is one of confidence and trust such that the Participant has in the past been,
and may in the future be, privy to Confidential Information of Atlas.

(b) The Participant agrees that during the Participant’s employment or provision
of services with Atlas and for a period of 12 months following termination of
the Participant’s employment with or provision of services to Atlas, regardless
of the reason for such termination:

(i) The Participant will not, directly or indirectly, solicit, or attempt to
solicit, for employment, with the Participant or with any other person or
entity, any employee, consultant, and/or other independent contractor of Atlas,
nor will the Participant, directly or indirectly, solicit or induce, or attempt
to solicit or induce, any such individual to leave his or her employment with
Atlas or to terminate his or her agreement to provide services to Atlas.
Additionally, during the Participant’s employment with Atlas and for a period of
12 months following the termination of Participant’s employment with Atlas,
regardless of the reason for such termination, Participant will not, directly or
indirectly, interfere with the business of Atlas, including but not limited to,
any relationship or agreement between Atlas and another person or entity.

(ii) The Participant will not, directly or indirectly, solicit, or attempt to
solicit, any lease or other interest in oil and gas or real property benefitting
oil and gas operations for the Participant, or for any other person or entity,
from any lessor and/or transferor or holder of oil and gas rights (or holder of
any right of way) or prospective lessor and/or transferor or holder of such
rights (or holder of any right of way) of Atlas with which/whom the Participant
had contact within the 12 months prior to the termination of the Participant’s
employment with, or provision of services to, Atlas or concerning which the
Participant had access to Confidential Information, during and by virtue of the
Participant’s employment or service with Atlas.

(c) The Participant acknowledges and agrees that the restrictions contained in
this Section 9 are reasonable and necessary to protect the legitimate business
interests of Atlas and that the Partnership would not have entered into this
Agreement in the absence of such restrictions.

 

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(d) The Participant acknowledges and agrees that any breach by the Participant
of any of the covenants or agreements contained in this Section 9 will result in
irreparable injury to Atlas, for which Atlas may be entitled to any remedy at
law or equity, including specific performance of the Participant’s obligations
under this Section 9, as well as injunctive relief without the posting of any
bond, such as may be granted by a court with competent jurisdiction.

(e) In addition to the foregoing remedies, the Participant agrees that in the
event the Participant breaches any of the covenants or agreements contained in
this Section 9:

(i) The Committee may determine that the Participant’s unvested Phantom Units
shall be cancelled and forfeited without payment by the Partnership, and

(ii) The Committee may require that the Participant return to the Partnership
any vested Units paid to the Participant (or the Fair Market Value of such
Units) pursuant to this Agreement at such date and on such terms and conditions
as the Committee deems appropriate. Atlas shall exercise the right of recoupment
provided in this Section 9(e)(ii) within two years after the Participant’s
breach of any of the covenants or agreements contained in this Section 9, and
the Partnership shall be entitled to set off against the amount of any such gain
any amounts owed to the Participant by Atlas.

(f) If any provision of this Section 9 or the application hereof is determined
by any court with competent jurisdiction to be invalid or unenforceable, the
other portions of this Section 9 or the application thereof shall not be
affected and shall be given full force and effect without regard to the invalid
or unenforceable portions to the fullest extent possible. If any court of
competent jurisdiction determines that any provision of this Section 9 is
unenforceable, then the Participant agrees to the reformation of any such
covenant or agreement by the court to limits that the courts finds to be
enforceable.

(g) The provisions of this Section 9 shall survive the termination of this
Agreement and termination of the Participant’s employment with or the provision
of services to Atlas, as the case may be.

 

  10. Adjustment of and Changes in Units of the Partnership.

In the event that any transaction or event affects the Units such that an
adjustment is necessary in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan, the
Committee or the Board shall make such adjustment to this grant of Phantom Units
as is provided for in Section 4(a) of the Plan.

 

  11. No Employment or Other Rights.

The grant shall not confer upon the Participant any right to be retained by or
in the employ or service of Atlas and shall not interfere in any way with the
right of Atlas to terminate the Participant’s employment or service at any time.
The right of Atlas to terminate at will the Participant’s employment or service
pursuant to or in the absence of a contract at any time for any reason is
specifically reserved.

 

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  12. No Unitholder Rights.

Neither the Participant, nor any person entitled to receive payment in the event
of the Participant’s death, shall have any of the rights and privileges of a
unitholder, until the Units have vested and have been issued to Participant.

 

  13. Assignment and Transfers.

Except as the Committee may otherwise permit pursuant to the Plan, the rights
and interests of the Participant under this Agreement may not be sold, assigned,
encumbered or otherwise transferred except, in the event of the death of the
Participant, by will or by the laws of descent and distribution. In the event of
any attempt by the Participant to alienate, assign, pledge, hypothecate, or
otherwise dispose of the Phantom Units or any right hereunder, except as
provided for in this Agreement, or in the event of the levy or any attachment,
execution or similar process upon the rights or interests hereby conferred, the
Partnership may terminate the Phantom Units by notice to the Participant, and
the Phantom Units and all rights hereunder shall thereupon become null and void.
The rights and protections of Atlas hereunder shall extend to any successors or
assigns of Atlas. This Agreement may be assigned to a third party by the Atlas
without the Participant’s consent.

 

  14. Applicable Policies.

The grant made pursuant to this Agreement shall be subject to any applicable
clawback and other policies established by the Board from time to time.

 

  15. Applicable Law.

The validity, construction, interpretation and effect of this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to the conflicts of laws provisions thereof, except that
Section 9 shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, without giving effect to the conflicts of laws
provisions thereof.

 

  16. Section 409A.

This Agreement is intended to comply with Section 409A of the Code, or an
exemption, and payments may only be made under this Agreement upon an event and
in a manner permitted by Section 409A of the Code, to the extent applicable. To
the maximum extent permitted under Section 409A of the Code, the benefits
provided under this Agreement are intended to be subject to a “substantial risk
of forfeiture” under Section 409A of the Code, and will be paid within the
“short term deferral period” following the lapse of the applicable forfeiture
conditions. In no event may the Participant, directly or indirectly, designate
the calendar year of a payment. Notwithstanding anything in this Agreement to
the contrary, if required by Section 409A of the Code, if the Participant is
considered a “specified employee” for purposes of Section 409A of the Code and
if payment of any amounts under this Agreement is required to be delayed for a
period of six months after separation from service pursuant to Section 409A of
the Code, payment of such amounts shall be delayed as required by Section 409A
of the Code, and the accumulated amounts shall be paid in a lump sum payment
within ten days after the end of the six-month

 

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postponement period. If the Participant dies during the six-month postponement
period prior to the payment of benefits, the amounts withheld on account of
Section 409A of the Code shall be paid to the personal representative of the
Participant’s estate within 60 days after the date of the Participant’s death.

 

  17. Amendment.

This Agreement may be amended by the Board or the Committee at any time, subject
to the provisions of Section 7 of this Agreement and Section 7(b) of the Plan.
Notwithstanding anything herein to the contrary, to the extent that Participant
is subject to an Agreement which is inconsistent herewith, such Agreement shall
prevail as long as it does not violate the Plan.

 

  18. Notice.

Any notice to the Partnership provided for in this Agreement shall be addressed
to the Partnership in care of its Chief Legal Officer at its executive offices
at 1845 Walnut Street, 10th Floor, Philadelphia, Pennsylvania 19103 or at such
other address as to which the Partnership shall have notified Participant in
writing, and any notice to the Participant shall be addressed to such
Participant at the current address shown on the payroll of Atlas, or to such
other address as the Participant may designate to Atlas. Any notice shall be
delivered by hand or by a recognized courier service such as FedEx or UPS, sent
by telecopy or enclosed in a properly sealed envelope addressed as stated above,
registered and deposited, postage prepaid, in a post office regularly maintained
by the United States Postal Service.

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, this Phantom Unit Grant Agreement has been duly executed as
of the Date of Grant.

 

ATLAS ENERGY, L.P. By:   Atlas Energy GP, LLC, its general partner By:  

 

  Lisa Washington, Chief Legal Officer

I hereby accept the award of Phantom Units described in this Agreement, and I
agree to be bound by the terms of the Plan and this Agreement. I hereby agree
that all of the decisions and determinations of the Committee or Board with
respect to the Phantom Units shall be final and binding.

 

 

     

 

Date       , Participant

 

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