Exhibit 10.5
QRE GP, LLC
LONG TERM INCENTIVE PLAN
     Section 1. Purpose of the Plan. The QRE GP, LLC Long-Term Incentive Plan
(the “Plan”) has been adopted on December 22, 2010 (the “Effective Date”) by QRE
GP, LLC, a Delaware limited liability company, the general partner (“General
Partner”) of QR Energy, LP, a Delaware limited partnership (the “Partnership”).
The Plan is intended to promote the interests of the General Partner, the
Partnership and their Affiliates by providing to Employees, Consultants and
Directors incentive compensation awards based on Units to encourage superior
performance. The Plan is also contemplated to enhance the ability of the General
Partner, the Partnership and their Affiliates to attract and retain the services
of individuals who are essential for the growth and profitability of the
Partnership and to encourage them to devote their best efforts to advancing the
business of the Partnership.
     Section 2. Definitions. As used in the Plan, the following terms shall have
the meanings set forth below:
     (a) “409A Award” has the meaning specified in Section 6(h)(vii).
     (b) “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.
     (c) “Award” means an Option, Unit Appreciation Right, Restricted Unit,
Phantom Unit, Substitute Award, Unit Award or Other Unit Based Award granted
under the Plan, and shall include any tandem DERs granted with respect to an
Award.
     (d) “Award Agreement” means the written or electronic agreement by which an
Award shall be evidenced.
     (e) “Board” means the Board of Directors of the General Partner.
     (f) “Change of 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 those terms as used in Sections 13(d) and 14(d)(2) of the Exchange
Act, other than members of the General Partner, the Partnership, or an Affiliate
of either the General Partner or the Partnership, shall become the beneficial
owner, by way of merger, consolidation, recapitalization, reorganization or
otherwise, of 50% or more of the voting power of the voting securities of the
General Partner or the Partnership; (ii) the limited partners of the General
Partner or the Partnership approve, in one or a series of transactions, a plan
of complete liquidation of the General Partner or the Partnership; (iii) the
sale or other disposition by the General Partner or the Partnership of all or
substantially all of its assets in one or more transactions to any Person other
than an Affiliate; or (iv) the General Partner or an Affiliate of the General
Partner or the Partnership ceases to be the general partner of the Partnership.
     (g) “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     (h) “Committee” means the Board or such committee as may be appointed by
the Board to administer the Plan.

 

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     (i) “Consultant” means an individual who renders consulting or advisory
services to the General Partner or an Affiliate thereof.
     (j) “DER” means a distribution equivalent right, being a contingent right,
granted in tandem with a specific Award (other than a Restricted Unit or Unit
Award), to receive with respect to each Unit subject to the Award an amount in
cash equal to the cash distributions made by the Partnership with respect to a
Unit during the period such Award is outstanding.
     (k) “Director” means a member of the Board or the board of an Affiliate of
the General Partner who is not an Employee or a Consultant (other than in that
individual’s capacity as a Director).
     (l) “Effective Date” has the meaning set forth in Section 1.
     (m) “Employee” means an employee of the General Partner or an Affiliate of
the General Partner.
     (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     (o) “Fair Market Value” means, on any relevant date, the closing sales
price of a Unit on the principal national securities exchange or other market in
which trading in Units occurs on the last market trading day prior to the
applicable day (or, if there is no trading in the Units on such date, on the
next preceding day on which there was trading) as reported in The Wall Street
Journal (or other reporting service approved by the Committee). If Units are not
traded on a national securities exchange or other market at the time a
determination of Fair Market Value is required to be made hereunder, the
determination of Fair Market Value shall be made by the Committee in good faith
using a “reasonable application of a reasonable valuation method” within the
meaning of Treasury Regulation Section 1.409A-l(b)(5)(iv)(B).
     (p) “General Partner” has the meaning set forth in Section 1.
     (q) “Option” means an option to purchase Units granted under the Plan.
     (r) “Other Unit Based Awards” means Awards granted to an Employee, Director
or Consultant pursuant to Section 6(e).
     (s) “Participant” means an Employee, Consultant or Director granted an
Award under the Plan.
     (t) “Partnership” has the meaning set forth in Section 1.
     (u) “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.
     (v) “Phantom Unit” means a notional Unit granted under the Plan which upon
vesting 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.
     (w) “Plan” has the meaning set forth in Section 1.

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     (x) “Restricted Period” means the period established by the Committee with
respect to an Award during which the Award remains subject to forfeiture and is
either not exercisable by or payable to the Participant, as the case may be.
     (y) “Restricted Unit” means a Unit granted under the Plan that is subject
to a Restricted Period.
     (z) “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.
     (aa) “SEC” means the Securities and Exchange Commission, or any successor
thereto.
     (bb) “Substitute Award” means an award granted pursuant to Section 6(g) of
the Plan.
     (cc) “UDR” means a distribution made by the Partnership with respect to a
Restricted Unit.
     (dd) “Unit” means a common unit representing a limited partnership interest
of the Partnership.
     (ee) “Unit Appreciation Right” means a contingent right granted to an
Employee, Director or Consultant pursuant to Section 6(b) that entitles the
holder to receive, in cash or Units, as determined by the Committee in its sole
discretion, an amount equal to the excess of the Fair Market Value of a Unit on
the exercise date of the Unit Appreciation Right (or another specified date)
over the exercise price of the Unit Appreciation Right.
     (ff) “Unit Award” means an award granted pursuant to Section 6(d) of the
Plan.
     Section 3. Administration.
     (a) Authority of the Committee. The Plan shall be administered by the
Committee. A majority of the Committee shall constitute a quorum, and the acts
of the members of the Committee who are present at any meeting thereof at which
a quorum is present, or acts unanimously approved by the members of the
Committee in writing, shall be the acts of the Committee. Subject to the
following and any applicable law, the Committee, in its sole discretion, may
delegate any or all of its powers and duties under the Plan, including the power
to grant Awards under the Plan, to the Chief Executive Officer of the General
Partner, subject to such limitations on such delegated powers and duties as the
Committee may impose, if any. Upon any such delegation all references in the
Plan to the “Committee”, other than in Section 7, shall be deemed to include the
Chief Executive Officer. Any such delegation shall not limit the Chief Executive
Officer’s right to receive Awards under the Plan; provided, however, the Chief
Executive Officer may not grant Awards to himself, a Director or any executive
officer of the General Partner or an Affiliate, or take any action with respect
to any Award previously granted to himself, an individual who is an executive
officer or a Director. 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

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the Committee deems necessary or desirable for the administration of the Plan.
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,
without limitation, the General Partner, the Partnership, any Affiliate, any
Participant, and any beneficiary of any Participant.
     (b) Limitation of Liability. The Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or employee of the General Partner, the
Partnership or their Affiliates, the General Partner’s or the Partnership’s
legal counsel, independent auditors, consultants or any other agents assisting
in the administration of the Plan. Members of the Committee and any officer or
employee of the General Partner, the Partnership or any of their Affiliates
acting at the direction or on behalf of the Committee shall not be personally
liable for any action or determination taken or made in good faith with respect
to this Plan, and shall, to the fullest extent permitted by law, be indemnified
and held harmless by the General Partner with respect to any such action or
determination.
     Section 4. Units.
     (a) Limits on Units Deliverable. Subject to adjustment as provided in
Section 4(c), the number of Units that may be delivered with respect to Awards
under the Plan is 1,800,000. Units withheld from an Award or surrendered by a
Participant to satisfy the Partnership’s or an Affiliate’s tax withholding
obligations or to satisfy the payment of any exercise price with respect to the
Award (including the withholding of Units with respect to Restricted Units)
shall not be considered to be Units delivered under the Plan for this purpose.
If any Award is forfeited, cancelled, exercised, or otherwise terminates or
expires without the actual delivery of Units pursuant to such Award (the grant
of Restricted Units is not a delivery of Units for this purpose), the Units
subject to such Award shall again be available for Awards under the Plan
(including Units not delivered in connection with the exercise of an Option or
Unit Appreciation Right). There shall not be any limitation on the number of
Awards that may be granted and 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, from any Affiliate, the Partnership or any other Person, or any
combination of the foregoing, as determined by the Committee in its discretion.
     (c) Anti-dilution Adjustments. With respect to any “equity restructuring”
event that could result in an additional compensation expense to the General
Partner or the Partnership pursuant to the provisions of FASB Accounting
Standards Codification, 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 restructuring event and shall adjust the number and type
of Units (or other securities or property) with respect to which Awards may be
granted after such event. With respect to any other similar event that would not
result in an accounting charge under FASB Accounting Standards Codification,
Topic 718 if the adjustment to Awards with respect to such event were subject to
discretionary action, the Committee shall have complete discretion to adjust
Awards in such manner as it deems appropriate with respect to such other event.

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     Section 5. Eligibility. Any Employee, Consultant or Director shall be
eligible to be designated a Participant and receive an Award under the Plan.
Notwithstanding the foregoing, Employees, Consultants and Directors that provide
services to Affiliates that are not considered a single employer with the
Partnership under Code Section 414(b) or Code Section 414(c) shall not be
eligible to receive Awards which are subject to Code Section 409A until the
Affiliate adopts this Plan as a participating employer in accordance with
Section 10. Further, if the Units issuable pursuant to an Award are intended to
be registered with the SEC on Form S-8, then only Employees, Consultants, and
Directors of the Partnership or a parent or subsidiary of the Partnership
(within the meaning of General Instruction A.1(a) to Form S-8) will be eligible
to receive such an Award.
     Section 6. Awards.
     (a) Options. The Committee may grant Options which are intended to comply
with Treasury Regulation Section 1.409A-l(b)(5)(i)(A) only to Employees,
Consultants or Directors performing services for the Partnership or a
corporation or other type of entity in a chain of corporations or other entities
in which each corporation or other entity has a “controlling interest” in
another corporation or entity in the chain, starting with the Partnership and
ending with the corporation or other entity for which the Employee, Consultant
or Director performs services. For purposes of this Section 6(a), “controlling
interest” means (i) in the case of a corporation, ownership of stock possessing
at least 50% of total combined voting power of all classes of stock of such
corporation entitled to vote or at least 50% of the total value of shares of all
classes of stock of such corporation; (ii) in the case of a partnership,
ownership of at least 50% of the profits interest or capital interest of such
partnership; (iii) in the case of a sole proprietorship, ownership of the sole
proprietorship; or (iv) in the case of a trust or estate, ownership of an
actuarial interest (as defined in Treasury Regulation Section
1.414(c)-2(b)(2)(ii)) of at least 50% of such trust or estate. The Committee may
grant Options that are otherwise exempt from or compliant with Code Section 409A
to any eligible Employee, Consultant or Director. The Committee shall have the
authority to determine the number of Units to be covered by each Option, the
purchase price therefor and the Restricted Period and other conditions and
limitations applicable to the exercise of the Option, 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.
     (i) Exercise Price. The exercise price per Unit purchasable under an Option
that does not provide for the deferral of compensation under Treasury
Regulation Section 1.409A-1(b)(5)(i)(A) shall be determined by the Committee at
the time the Option is granted but, except with respect to Substitute Awards,
may not be less than the Fair Market Value of a Unit as of the date of grant of
the Option. The exercise price per Unit purchasable under an Option that does
not provide for the deferral of compensation by reason of satisfying the
short-term deferral rule set forth in Treasury Regulation Section 1.409A-1(b)(4)
or that is compliant with Code Section 409A shall be determined by the Committee
at the time the Option is granted.
     (ii) Time and Method of Exercise. The Committee shall determine the
exercise terms and the Restricted Period with respect to an Option grant, which
may include, without limitation, a provision 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 thereto may be made
or deemed to have been made, which may include, without limitation, cash, check
acceptable to the General Partner, withholding Units from an Award, a
“cashless-broker” exercise through procedures approved by the General Partner,
or any combination of methods, having a Fair Market Value on the exercise date
equal to the relevant exercise price.

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     (iii) Forfeitures. Except as otherwise provided in the terms of the Option
grant, upon termination of a Participant’s employment with the General Partner
and its Affiliates or membership on the Board, whichever is applicable, for any
reason during the applicable Restricted Period, all unvested Options shall be
forfeited by the Participant. The Committee may, in its discretion, waive in
whole or in part such forfeiture with respect to a Participant’s Options;
provided that the waiver contemplated under this Section 6(a)(iii) shall be
effective only to the extent that such waiver will not cause the Participant’s
Options that are designed to satisfy Code Section 409A to fail to satisfy such
section.
     (b) Unit Appreciation Rights. The Committee shall have the authority to
determine the Employees, Consultants and Directors to whom Unit Appreciation
Rights shall be granted, the number of Units to be covered by each grant,
whether Units or cash shall be delivered upon exercise, the exercise price
therefor and the conditions and limitations applicable to the exercise of the
Unit Appreciation Rights, 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.
     (i) Exercise Price. The exercise price per Unit Appreciation Right shall be
determined by the Committee at the time the Unit Appreciation Right is granted
and may be more or less than the Fair Market Value of a Unit as of the date of
grant of the Award. Notwithstanding the foregoing, the exercise price per Unit
that may be acquired under a Unit Appreciation Right that does not provide for
the deferral of compensation under Treasury
Regulation Section 1.409A-1(b)(5)(i)(A) shall not be less than the Fair Market
Value of a Unit as of the date of grant of the Unit Appreciation Right.
     (ii) Time of Exercise. The Committee shall determine the Restricted Period
and the time or times at which a Unit Appreciation Right may be exercised in
whole or in part, which may include, without limitation, accelerated vesting
upon the achievement of specified performance goals or other events.
     (iii) Forfeitures. Except as otherwise provided in the terms of the Unit
Appreciation Right grant, upon termination of a Participant’s employment with or
service to the General Partner, the Partnership and their Affiliates or
membership on the Board, whichever is applicable, for any reason during the
applicable Restricted Period, all outstanding Unit Appreciation Rights awarded
to the Participant shall be automatically forfeited on such termination. The
Committee may, in its discretion, waive in whole or in part such forfeiture with
respect to a Participant’s Unit Appreciation Rights.
     (c) Restricted Units and Phantom Units. The Committee shall have the
authority to determine the Employees, Consultants and Directors to whom
Restricted Units or Phantom Units shall be granted, the number of Restricted
Units or Phantom Units to be granted to each such Participant, the Restricted
Period, the conditions under which the Restricted Units or Phantom Units may
become vested or forfeited and such other terms and conditions as the Committee
may establish with respect to such Awards.
     (i) UDRs. To the extent provided by the Committee, in its discretion, a
grant of Restricted Units may provide that distributions made by the Partnership
with respect to the Restricted Units shall be subject to the same forfeiture and
other restrictions as the Restricted Unit and, if restricted, such distributions
shall be held, without interest, until the Restricted Unit vests or is forfeited
with the UDR being paid or forfeited at the same time, as the case may be.
Absent such a restriction on the UDRs in the Award Agreement, UDRs shall be paid
to the holder of the

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Restricted Unit without restriction at the same time as cash distributions are
paid by the Partnership to its unitholders. Notwithstanding the foregoing, UDRs
shall only be paid in a manner that is either exempt from or in compliance with
Code Section 409A.
     (ii) Forfeitures. Except as otherwise provided in the terms of the
Restricted Units or Phantom Units Award Agreement, upon termination of a
Participant’s employment with, or consultant services to, the General Partner
and its Affiliates or membership on the Board, whichever is applicable, for any
reason during the applicable Restricted Period, all outstanding, unvested
Restricted Units and Phantom Units awarded the Participant shall be
automatically forfeited on such termination. The Committee may, in 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(c)(ii) shall be effective only to the extent
that such waiver will not cause the Participant’s Restricted Units and/or
Phantom Units that are designed to satisfy Code Section 409A to fail to satisfy
such section.
     (iii) Lapse of Restrictions.
               (A) Phantom Units. Upon the vesting of each Phantom Unit, subject
to the provisions of Section 8(b), the Participant shall be entitled to receive
one Unit or cash equal to the Fair Market Value of a Unit, as determined by the
Committee in its discretion.
               (B) Restricted Units. Upon the vesting of each Restricted Unit,
subject to satisfying the tax withholding obligations of Section 8(b), the
Participant shall be entitled to have the restrictions removed from his or her
Unit certificate so that the Participant then holds an unrestricted Unit.
     (d) Unit Awards. A Unit Award of Units not subject to a Restricted Period
may be granted under the Plan to any Employee, Consultant or Director as a bonus
or additional compensation or in lieu of cash compensation the individual is
otherwise entitled to receive, in such amounts as the Committee determines to be
appropriate.
     (e) Other Unit Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Units, as deemed by the Committee to
be consistent with the purposes of this Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Units, purchase rights for Units, Awards with value and
payment contingent upon performance of the Partnership or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Units or the value of securities of or the performance of specified Affiliates
of the General Partner or the Partnership. The Committee shall determine the
terms and conditions of such Awards. Units delivered pursuant to an Award in the
nature of a purchase right granted under this Section 6(e) shall be purchased
for such consideration, paid for at such times, by such methods, and in such
forms, including, without limitation, cash, Units, other Awards, or other
property, as the Committee shall determine. Cash awards, as an element of or
supplement to any other Award under this Plan, may also be granted pursuant to
this Section 6(e).
     (f) DERs. To the extent provided by the Committee, in its discretion, an
Award (other than a Restricted Unit or Unit Award) may include a tandem DER
grant, which may provide that such DERs shall be paid directly to the
Participant, be credited to a bookkeeping account (with or without interest in
the discretion of the Committee) subject to the same vesting restrictions as the
tandem Award, or be subject to such other provisions or restrictions as
determined by the Committee in its discretion.

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Absent a contrary provision in the Award Agreement, DERs shall be paid to the
Participant without restriction at the same time as cash distributions are paid
by the Partnership to its unitholders. Notwithstanding the foregoing, DERs shall
only be paid in a manner that is either exempt from or in compliance with Code
Section 409A.
     (g) Substitute Awards. Awards may be granted under the Plan in substitution
for 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 may have exercise prices less than the
Fair Market Value of a Unit on the date of the substitution if such substitution
complies with Code Section 409A and the Treasury Regulations thereunder.
     (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 Partnership or any Affiliate.
Awards granted in addition to or in tandem with other Awards or awards granted
under any other plan of the Partnership or any Affiliate 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 Section 6(h)(ii)(C) below, each Option
and Unit Appreciation Right 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 Section 6(h)(ii)(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 and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the General Partner, the
Partnership or any Affiliate.
               (C) To the extent specifically provided by the Committee with
respect to an Option or Unit Appreciation Right, an Option or Unit Appreciation
Right may be transferred by a Participant without consideration to immediate
family members or related family trusts, limited partnerships or similar
entities or on such terms and conditions as the Committee may from time to time
establish.
     (iii) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee.
     (iv) Unit Certificates. All certificates for Units or other securities of
the Partnership delivered under the Plan 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 stock 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
to make appropriate reference to such restrictions.

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     (v) Consideration for Grants. 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, 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 General Partner is not reasonably able to obtain Units to
deliver 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 General Partner.
     (vii) Change of Control. No Award that constitutes a “deferral of
compensation” within the meaning of Treasury Regulation Section 1.409A-1(b),
whether by design, due to a subsequent modification in the terms and conditions
of such Award or as a result of a change in applicable law following the date of
grant of such Award, and that is not exempt from Section 409A of the Code
pursuant to an applicable exemption (any such Award, a “409A Award”) shall
become exercisable, or be settled or otherwise paid or distributed, pursuant to
the Plan or the applicable Award Agreement, as a result of a Change of Control,
unless the event constituting such Change of Control also constitutes a “change
in the ownership or effective control” or “a change in the ownership of a
substantial portion of the assets” of the General Partner or the Partnership
within the meaning of Treasury Regulation Section 1.409A-3(i)(5); except that,
to the extent permitted under Section 409A and the Treasury Regulations
promulgated thereunder, the time of exercise, payment or settlement of a 409A
Award shall be accelerated, or payment shall be made under the Plan in respect
of such Award, upon the occurrence of a Change of Control, as determined by the
Committee in its discretion, to the extent necessary to pay income, withholding,
employment or other taxes imposed on such 409A Award. To the extent any 409A
Award does not become exercisable or is not settled or otherwise payable upon a
Change of Control as a result of the limitations described in the preceding
sentence, it shall become exercisable or be settled or otherwise payable upon
the occurrence of an event that qualifies as a permissible time of distribution
in respect of such 409A Award under Section 409A and the Treasury Regulations
promulgated thereunder, the Plan and the terms of the governing Award Agreement.
     (viii) Additional Agreements. Each Employee, Consultant or Director to whom
an Award is granted under this Plan may be required to agree in writing, as a
condition to the grant of such Award or otherwise, to subject an Award that is
exercised or settled following such Person’s termination of services with the
General Partner, the Partnership or their Affiliates to a general release of
claims and/or a noncompetition agreement in favor of the General Partner, the
Partnership, and their Affiliates, with the terms and conditions of such
agreement(s) to be determined in good faith by the Committee.
     Section 7. Amendment and Termination. Except to the extent prohibited by
applicable law:
     (a) Amendments to the Plan. Except as required by the rules of the
principal securities exchange on which the Units are traded and subject to
Section 7(b) below, the Board may amend, alter, suspend, discontinue, or
terminate the Plan in any manner, including increasing the number of Units

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available for Awards under the Plan, without the consent of any partner,
Participant, other holder or beneficiary of an Award, or any other Person.
     (b) Amendments to Awards. Subject to Section 7(a), the Committee may waive
any conditions or rights under, amend any terms of, or alter any Award
theretofore granted, provided no change, other than pursuant to Section 4(c) or
7(c), in any Award shall materially reduce the benefit to a Participant without
the consent of such Participant. Notwithstanding the foregoing, the Board may
amend the Plan or an Award to cause such Award to be exempt from Code
Section 409A or to comply with the requirements of Code Section 409A or any
other applicable law.
     (c) Actions Upon the Occurrence of Certain Events. Upon the occurrence of a
Change of Control, 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 Partnership, the Committee, in its sole discretion,
without the consent of any Participant or holder of the Award, and on such terms
and conditions as it deems appropriate, may take any one or more of the
following actions in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or an
outstanding Award:
     (i) provide for either (A) the termination of any Award in exchange for an
amount of cash, if any, equal to the amount that would have been attained upon
the exercise of such Award or realization of the Participant’s rights (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 General Partner without
payment); provided, that, in the event the occurrence giving rise to the
Committee’s exercise of its powers under this Section 7(c) is a transaction
pursuant to which the Partnership or the General Partner is survived by a
successor entity with a readily tradable security, the Committee shall not have
the authority to terminate and cash out any such Award pursuant to this
Section 7(c)(i)(A) but will instead but required to provide for the assumption
of such Awards by the successor or survivor entity in accordance with Section
7(c)(ii) below, or (B) the replacement of such Award with other rights or
property selected by the Committee in its sole discretion;
     (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;
     (iv) provide that such Award shall be 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) any such action contemplated under this
Section 7 shall be effective only to the extent that such action will not cause
any Award that is designed to satisfy Code Section 409A to fail to satisfy such
section, and (ii) with respect to an above event that is an “equity
restructuring” event

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that would be subject to a compensation expense pursuant to FASB Accounting
Standards Codification, Topic 718, the provisions in Section 4(c) shall control
to the extent they are in conflict with the discretionary provisions of this
Section 7.
     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 General Partner or an Affiliate, the Partnership or Affiliate
is authorized to withhold 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, Units, Units that would otherwise be issued pursuant to
such Award or other property) of any applicable taxes payable in respect of the
grant of an Award, its exercise, the lapse of restrictions thereon, or any
payment or transfer under an Award or under the Plan and to take such other
action as may be necessary in the opinion of the General Partner or Affiliate to
satisfy its withholding obligations for the payment of such taxes.
Notwithstanding the foregoing, with respect to any Participant who is subject to
Rule 16b-3, such tax withholding automatically shall be effected by the General
Partner “netting” or withholding Units otherwise deliverable to the Participant
on the vesting or payment of such Award.
     (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
General Partner or any Affiliate or to remain on the Board, as applicable.
Furthermore, the General Partner or an Affiliate may at any time dismiss a
Participant from employment free from any liability or any claim under the Plan,
unless otherwise expressly provided in the Plan, any Award Agreement or other
agreement.
     (d) 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.
     (e) 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.
     (f) 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 General Partner 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.
     (g) 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 General Partner or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a

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right to receive payments from the General Partner or any Affiliate pursuant to
an Award, such right shall be no greater than the right of any general unsecured
creditor of the General Partner or such Affiliate.
     (h) 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.
     (i) 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.
     (j) Facility Payment. Any amounts payable hereunder to any person under
legal disability or who, in the judgment of the Committee, is unable to manage
properly 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 that the
Committee may select, and the General Partner shall be relieved of any further
liability for payment of such amounts.
     (k) Participation by Affiliates. In making Awards to Employees employed by
an entity other than the General Partner, the Committee shall be acting on
behalf of the Affiliate, and to the extent the Partnership has an obligation to
reimburse the Affiliate for compensation paid for services rendered for the
benefit of the Partnership, such payments or reimbursement payments may be made
by the Partnership directly to the Affiliate.
     (l) 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.
     (m) Code Section 409A. Notwithstanding any other provision of the Plan to
the contrary, any Award subject to Code Section 409A is intended to satisfy the
application of Code Section 409A to the Award and the Plan should be construed
as such.
     (n) No Guarantee of Tax Consequences. None of the Board, the Committee, the
Partnership nor the General Partner 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) Specified Employee under Code Section 409A. Subject to any other
restrictions or limitations contained herein, in the event that a “specified
employee” (as defined under Code Section 409A and the Treasury Regulations
thereunder) becomes entitled to a payment under an Award which is a 409A Award
on account of a “separation from service” (as defined under Code Section 409A
and the Treasury Regulations thereunder), such payment shall not occur until the
date that is six months plus one day from the date of such separation from
service. Any amount that is otherwise payable within the six month period
described herein will be aggregated and paid in a lump sum without interest.
     Section 9. Term of the Plan. The Plan shall be effective on the date of its
approval by the Board and shall continue until the earliest of (i) the date
terminated by the Board, (ii) all Units available under the Plan have been paid
to Participants, or (iii) the 10th anniversary of the date the Plan, as amended
and restated, is approved by the Board. Unless otherwise expressly provided in
the Plan or in an applicable Award Agreement, however, any Award granted prior
to such termination, and the authority of 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.

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     Section 10. Adoption by Affiliates. With the consent of the Committee, any
Affiliate that is not considered a single employer with the Partnership under
Code Section 414(b) or Code Section 414(c) may adopt the Plan for the benefit of
its Employees, Consultants or Directors by written instrument delivered to the
Committee before the grant to such Affiliate’s Employees, Consultants or
Directors under the Plan of any 409A Award.

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