Exhibit 10.5

 

Constellation Energy Partners LLC
2009 Omnibus Incentive Compensation Plan

Grant Agreement Relating to
2014 Retention Award
in the Form of Notional Units

Grantee: [●] 

Grant Date:  May 6, 2014

1. Grant of Notional Units.

(a) Grant.  Constellation Energy Partners LLC, a Delaware limited liability
company (the “Company”), hereby grants to you [●] Notional Units  (each, a
 “Notional Unit”) under the Constellation Energy Partners LLC 2009 Omnibus
Incentive Compensation Plan (the “Plan”) on the terms and conditions set forth
herein and in the Plan, which is attached hereto as Appendix A and incorporated
herein by reference as a part of this agreement (the “Grant Agreement”). 

(b) General.  In the event of any conflict between the terms of this Grant
Agreement and the Plan, the Plan shall control.  Capitalized terms used in this
Grant Agreement but not defined herein shall have the meanings ascribed to such
terms in the Plan, unless the context requires otherwise.

2. Vesting of the Award.    Subject to the other provisions of this Grant
Agreement, the Notional Units shall vest, if at all, on the earliest of (the
earliest of such dates, the “Vesting Date”):

(a) March  15, 2015, 

(b) the occurrence of the In-Service Date (as defined below), or

(c) the consummation of a Change of Control (as defined below).    

3. Settlement of Award.  Subject to vesting of the Notional Units and to the
other provisions of this Grant Agreement, no more than 10 days after vesting,
but in all events no later than March 15, 2015, the Company shall deliver to you
in a single lump sum a number of vested Units equal to the number of vested
Notional Units hereunder in full settlement of such vested Notional Units.

4. Definitions.  As used herein, the following terms shall have the following
meanings:

(a) “Change of Control” means:

(i) the consummation of any transaction (including, without limitation, any
merger, consolidation, tender offer, or exchange offer) the result of which is
that any “person” (as such term is defined in Section 3(a)(9) of the Exchange
Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company’s then outstanding securities eligible
to vote for the election of the Board (the “CEP Voting Securities”);

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(ii) consummation of a reorganization, merger, consolidation, statutory equity
exchange or similar form of business transaction involving the Company or any
subsidiary of the Company (a “Business Combination”), unless immediately
following such Business Combination: (A) more than 60% of the total voting power
of (x) the organization resulting from such Business Combination (the “Surviving
Organization”), or (y) if applicable, the ultimate parent organization that
directly or indirectly has beneficial ownership of at least 95% of the voting
securities eligible to elect managers or directors of the Surviving Organization
(the “Parent Organization”), is represented by CEP Voting Securities that were
outstanding immediately prior to such Business Combination (or, if applicable,
is represented by equity interests into which such CEP Voting Securities were
converted pursuant to such Business Combination), and such voting power among
the holders thereof is in substantially the same proportion as the voting power
of such CEP Voting Securities among the holders thereof immediately prior to the
Business Combination, (B) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Organization or the
Parent Organization), is or becomes the beneficial owner, directly or
indirectly, of 25% or more (the “Applicable Percentage”) of the total voting
power of the outstanding voting securities eligible to elect managers or
directors of the Parent Organization (or, if there is no Parent Organization,
the Surviving Organization) except where such person held the Applicable
Percentage of CEP Voting Securities immediately prior to the consummation of the
Business Combination and (C) at least a majority of the members of the board of
managers or directors of the Parent Organization (or, if there is no Parent
Organization, the Surviving Organization) following the consummation of the
Business Combination were Managers at the time of the Board’s approval of the
execution of the initial agreement providing for such Business Combination;

(iii) the equity holders of the Company approve a plan of complete liquidation
or dissolution of the Company; or

(iv) the consummation of a sale or disposition by the Company of all or
substantially all of the Company’s assets, other than a sale or disposition
where the holders of CEP Voting Securities outstanding immediately prior thereto
hold securities immediately thereafter that represent more than 60% of the
combined voting power of the voting securities of the acquiror, or parent of the
acquiror, of such assets.

(b) “In-Service Date” means the “In-Service Date,” as defined in that certain
Shared Services Agreement between SP Holdings, LLC and the Company, dated as of
May 8, 2014.

5. Forfeiture.    

(a) Any Notional Unit that is then unvested shall become forfeited, null and
void on the date on which Grantee’s employment by the Company or its Affiliates
is terminated.  Vested Notional Units shall not be forfeited as a result of
Grantee’s employment with the Company or its Affiliates being terminated
following vesting.    

(b) The Committee may, in its discretion, waive in whole or in part any
forfeiture of unvested Notional Units pursuant to this Section 5.

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6. Termination of Employment.    For all purposes of this Grant Agreement,
Grantee shall be considered to have terminated employment with the Company when
the Committee determines in its sole discretion that that Grantee’s employment
with the Company has ceased.   If any payment under this Grant Agreement would
be payable as a result of a “separation from service” within the meaning of
Section 409A of the Code and would be subject to additional taxes under Section
409A of the Code because the timing of such payment is not delayed as provided
in Section 409A(a)(2)(B) of the Code, then such payment shall be paid on the
date that is the first day of the seventh (7th) calendar month after the date of
Grantee’s termination of employment with the Company (or if such payment date
does not fall on a business day of the Company, the next following business day
of the Company), or such earlier date upon which such payment can be paid under
Section 409A of the Code without being subject to such additional taxes.

7. Withholding of Tax.

(a) The Company or any Affiliate is authorized to withhold from any delivery of
Units made pursuant to this Grant Agreement or from any compensation or other
amount owing to Grantee the amount (in cash, Units, other securities or other
property) of any applicable taxes payable at the applicable statutory rate in
respect of this Grant Agreement, the vesting or any payment or transfer under
the Grant Agreement 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, and in this regard, such withholding obligation may be satisfied by
Grantee timely remitting (in cash, check or wire transfer) to the Company or the
Internal Revenue Service, at the Company’s election, the amount of any such
applicable taxes (as determined by the Company). 

(b) Net Units.  Unless Grantee satisfies the tax withholding obligation set
forth above by timely remitting such amounts to the Company or the Internal
Revenue Service (at the Company’s election) by cash, check or wire transfer, all
Units to be issued pursuant to this Grant Agreement shall be net of tax
withholding, such that the tax withholding obligation of Grantee in respect of
this Grant Agreement and such Units is satisfied through the retention by the
Company of a number of Units equal to Grantee’s aggregate tax withholding
obligation divided by the per-unit Fair Market Value for the date immediately
prior to the date of such issuance of Units.

8. Limitations on Transfer.  All rights under this Grant Agreement shall belong
to Grantee alone and may not be transferred, assigned, pledged or hypothecated
by Grantee in any way (whether by operation of law or otherwise), other than by
will or the laws of descent and distribution and shall not be subject to
execution, attachment or similar process.  Upon any attempt by Grantee to
transfer, assign, pledge, hypothecate or otherwise dispose of such rights
contrary to the provisions in this Grant Agreement or the Plan, or upon the levy
of any attachment or similar process upon such rights, such rights shall
immediately become null and void.

9. Binding Effect.  This Grant Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and upon any person
lawfully claiming under Grantee.

10. Entire Agreement and Amendment.  This Grant Agreement constitutes the entire
agreement of the parties with regard to the subject matter hereof, and contains
all of the covenants, promises, representations, warranties and agreements
between the parties with respect to the Award 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
made null and void and of no further force and effect.  Grantee and the Company
agree that, with respect to the Award, the vesting provisions set forth in this
Grant Agreement supersede, and govern and control over, any performance criteria
achievement and vesting provisions set forth in the Plan.

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11. Notices.  Any notices given in connection with this Grant Agreement shall,
if issued to Grantee, be delivered to Grantee’s current address on file with the
Company, or if issued to the Company, be delivered to the Company’s principal
offices. 

12. Execution of Receipts and Releases.  Payment of cash or other property to
Grantee, or to Grantee’s legal representatives, heirs, legatees or distributees,
in accordance with the provisions hereof, shall, to the extent thereof, be in
full satisfaction of all claims of such persons hereunder.  The Company may
require Grantee or Grantee’s legal representatives, heirs, legatees or
distributees, as a condition precedent to such payment or issuance, to execute a
release and receipt therefor in such form as it shall reasonably determine.

13. Reorganization of the Company.  The existence of this Grant Agreement shall
not affect in any way the right or power of the Company and its Affiliates or
their respective unitholders, stockholders or other equity holders to make or
authorize (a) any or all adjustments, recapitalizations, reorganizations or
other changes in the respective capital structures or businesses of any of the
Company and its Affiliates; (b) any merger or consolidation of any of the
Company and its Affiliates; (c) any issue of bonds, debentures or securities
affecting the Award or the rights thereof; (d) the dissolution or liquidation of
any of the Company and its Affiliates, or any sale or transfer of all or any
part of their assets or business; or (e) any other corporate act or proceeding,
whether of a similar character or otherwise.

14. No Unitholder Rights. The Notional Units granted pursuant to this Grant
Agreement do not and shall not entitle Grantee to any rights of a holder of
Units.

15. No Guarantee of Tax Consequences.  None of the Board, the Company, nor the
Committee makes any commitment or guarantee that any federal, state or local tax
treatment will apply or be available to any person participating or eligible to
participate in the Plan.  This Grant Agreement and the Notional Units granted
hereunder are intended to exempt from Section 409A of the Code and will be
construed and interpreted in accordance with such intention.

16. Certain Restrictions.  By executing this Grant Agreement, Grantee
acknowledges that he or she has received a copy of the Plan and agrees that
Grantee will enter into such written representations, warranties and agreements
and execute such documents as the Company may reasonably request in order to
comply with the securities laws or any other applicable laws, rules or
regulations or with this document or the terms of the Plan.

17. Amendment and Termination.  No amendment or termination of this Grant
Agreement that adversely affects the rights of the Grantee shall be made by the
Company at any time without the prior written consent of Grantee.

18. Governing Law.  This grant shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to conflicts of laws
principles thereof.

[Signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Grant Agreement to be
effective as of May 6, 2014.

Constellation Energy Partners LLCGrantee

 

By:By:

     Name:    Name:

     Title:        Title:   

 

 

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Exhibit 10.5

 

APPENDIX A

CONSTELLATION ENERGY PARTNERS LLC

2009 OMNIBUS INCENTIVE COMPENSATION PLAN

 

 

 

 

 

 

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