Exhibit 10.2
 
VANGUARD NATURAL RESOURCES, LLC
 
LONG-TERM INCENTIVE PLAN
 
RESTRICTED UNIT AWARD AGREEMENT
 

To: Britt Pence
Date of Grant: June 13, 2010
Number of Units: 12,500

 
THIS RESTRICTED UNIT AWARD AGREEMENT (the “Agreement”) is made as of June 13,
2010 between Vanguard Natural Resources, LLC (the “Company”), and Britt Pence
(the “Executive”) pursuant to the terms and conditions of the Company’s
Long-Term Incentive Plan (the “Plan”) and that certain Employment Agreement
between Executive and the Company effective as of May 15, 2010 (the “Employment
Agreement”).  A copy of the Plan is being furnished to the Executive
concurrently with the execution of this Agreement which shall be deemed a part
of this Agreement as if fully set forth herein.  By the execution of this
Agreement, the Executive acknowledges receipt of a copy of the Plan.  Unless the
context otherwise requires, all terms defined in the Plan shall have the same
meaning when used herein.
 
WHEREAS, the Board of Directors of the Company (the “Board”) has adopted the
Plan to encourage and enable certain employees and consultants of the Company to
acquire Awards the value of which is tied to the performance of the common unit
(a “Unit”) of the Company, thus providing them with a more direct concern in the
welfare of the Company and assuring a closer identification of their interests
with those of the Company; and
 
WHEREAS, the Executive is one of such eligible employees.
 
NOW THEREFORE, the parties agree as follows:
 
1. Restricted Unit Award.  The Company hereby grants to the Executive (the
“Award”), effective as of June 13, 2010 (the “Date of Grant”), an award of
12,500 restricted Units, subject to the terms and conditions set forth in the
Plan, which is incorporated herein by reference, and in this Agreement,
including, without limitation, those restrictions described in Section 2 (the
“Restricted Units”).  The Award is specifically made subject to execution by the
Executive of this Agreement.
 
2. Forfeiture Restrictions.  The Restricted Units are restricted in that they
may be forfeited to the Company and in that they may not, except as otherwise
provided in this Agreement or in the Plan, be transferred or otherwise disposed
of by the Executive until such restrictions are removed or expire as described
in Section 3 of this Agreement.  The Company shall issue in the Executive’s name
the Restricted Units and shall retain the Restricted Units until the
restrictions on such Restricted Units expire or until the Restricted Units are
forfeited as described in Section 3 of this Agreement.  The Executive agrees
that the Company will hold the Restricted Units pursuant to the terms of this
Agreement until such time as the Restricted Units are either delivered to the
Executive or forfeited pursuant to this Agreement.
 
 
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3. Vesting and Forfeiture of Restricted Units.  Subject to the terms and
conditions of this Agreement, the restrictions described in Section 2 shall
lapse and the Restricted Units shall become vested and nonforfeitable, provided
the Executive has continuously provided services to the Company, without
interruption, from the Date of Grant through each applicable vesting date (each,
a “Vesting Date”), in accordance with the following schedule:
 
 
Vesting Date
 
Percentage of Restricted Units Vested
May 15, 2011
33 1/3%
May 15, 2012
66 2/3%
May 15, 2013
100%

 
 
Restricted Units that may be settled pursuant to the schedule above are “Vested
Units.”  Restricted Units that may not be settled pursuant to the schedule above
are “Unvested Units.”
 
(a) Termination of Employment for Other Than Cause, or by Executive for Good
Reason.  In the event the Company terminates the Executive’s employment for any
reason other than for Cause, or Executive voluntarily resigns for Good Reason
(both terms as defined in the Employment Agreement, as the same may be amended
from time to time), all Unvested Units shall immediately become Vested Units and
thereafter this Award may be settled pursuant to Section 4 below with respect to
the number of Vested Units held by the Executive.
 
(b) Termination Employment for Cause.  In the event the Executive’s employment
is terminated for Cause all Restricted Units (both Vested Units and Unvested
Units) that have not been settled as of the date of such removal shall be
forfeited.
 
(c) Termination by Reason of Death or Disability.  For purposes of this
Agreement, termination by reason of the Executive’s death or Disability (as
defined in the Employment Agreement, as the same may be amended from time to
time) shall be deemed to be a termination pursuant to Section 3(a) above.
 
(d) Change in Control.  Upon the occurrence of a Change in Control, all Unvested
Units shall immediately become Vested Units held by the Executive.
 
4. Settlement of Restricted Units.  Subject to Section 10 below, the Executive
shall be entitled to have the restrictions removed from his Unit certificate(s)
as to the number of Restricted Units that become Vested Units on any given
Vesting Date or any date of accelerated vesting pursuant to Sections 3(a), 3(c)
or 3(d) above, so that the Executive then holds an unrestricted Unit.
 
 
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5. Transferability and Assignment.  This Agreement and the Restricted Units
granted hereunder will not be transferable by the Executive other than by will
or the laws of descent and distribution. Any attempt by the Executive
to  transfer, assign, pledge, hypothecate, or otherwise dispose of such rights
contrary to the provisions in this 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.
 
6. Recapitalization or Reorganization.
 
(a) Existence of Plan and Award. The existence of the Plan and the Award shall
not affect in any way the right or power of the Board or the Company to make or
authorize any adjustment, recapitalization, reorganization or other change in
the Company’s capital structure or its business, any merger or consolidation of
the Company, any issue of debt or equity securities ahead of or affecting Units
or the rights thereof, the dissolution or liquidation of the Company or any
sale, lease, exchange or other disposition of all or any part of its assets or
business or any other corporate act or proceeding.
 
(b) Subdivision or Consolidation of Units.  The terms of this Award shall be
subject to adjustment from time to time, in accordance with the following
provisions:
 
(i) If at any time, or from time to time, the Company shall subdivide as a whole
(by reclassification, by a unit split, by the issuance of a dividend on Units
payable in Units, or otherwise) the number of shares of Units then outstanding
into a greater number of shares of Units, then the number of shares of
Restricted Units specified in Section 1 above shall be increased
proportionately.
 
(ii) If at any time, or from time to time, the Company shall consolidate as a
whole (by reclassification, reverse unit split, or otherwise) the number of
shares of Units then outstanding into a lesser number of shares of Units, the
number of shares of Restricted Units specified in Section 1 above shall be
decreased proportionately.
 
(iii) Whenever the number of shares of Units subject to this Award are required
to be adjusted as provided in this Section 6(b), the Company shall promptly
prepare and deliver to the Executive a notice setting forth, in reasonable
detail, the event requiring adjustment, the amount of the adjustment, the method
by which such adjustment was calculated, and the change in the number of shares
of Restricted Units specified in Section 1 above after giving effect to the
adjustments.  The Company shall promptly give the Executive such a notice.
 
(iv) Adjustments under Sections 6(b)(i) and (ii) shall be made by the Company,
and its determination as to what adjustments shall be made and the extent
thereof shall be final, binding, and conclusive.
 
7. No Multiple Payments.  Settlement of the Restricted Units shall not occur
under more than one provision of this Agreement.
 
8. Information Confidential.  As partial consideration for the granting of the
Restricted Units hereunder, the Executive hereby agrees with the Company that
the Executive will keep confidential all information and knowledge that the
Executive has relating to the terms and conditions of this Agreement; provided,
however, that such information may be disclosed as required by law and may be
given in confidence to the Executive’s spouse, tax and financial advisors, or to
a financial institution to the extent that such information is necessary to
secure a loan.  In the event any breach of this promise comes to the attention
of the Company, it shall take into consideration that breach in determining
whether to recommend the grant of any future similar award to the Executive, as
a factor militating against the advisability of granting any such future award
to the Executive.
 
 
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9. No Right to Continued Employment.  This Agreement shall not be construed to
confer upon the Executive any right to continue as an employee of the
Company.  Any question as to whether there has been a termination of such
employment, and the cause of such termination, shall be determined by the Chief
Executive Officer or the Board and its determination shall be final and binding.
 
10. Payment of Taxes.  The Company may from time to time, in its discretion,
require the Executive to pay the Company the amount that the Company deems
necessary to satisfy the Company’s current or future obligation to withhold
federal, state or local income or other taxes incurred by the Executive as a
result of the vesting or settlement of the Award.  With respect to any required
tax withholding, (a) the Company may withhold from any Unit settlement the
number of Units necessary to satisfy the Company’s obligation to withhold taxes,
(b) with the Company’s consent, the Executive may deliver sufficient cash to the
Company to satisfy its tax withholding obligations, or (c) the withholding
obligations may be met by any such other arrangement that is acceptable to the
Company and the Executive.  In the event that the Company subsequently
determines that the amount withheld as payment of any tax withholding obligation
is insufficient to discharge that tax withholding obligation, then the Executive
shall pay to the Company, immediately upon the Company’s request, the amount of
that deficiency.
 
11. Administration.  This Agreement shall at all times be subject to the terms
and conditions of the Plan.  The Company shall have sole and complete discretion
with respect to all matters reserved to it by the Plan and all decisions of the
Company with respect thereto and this Agreement shall be final and binding upon
the Executive and the Company.  In the event of any conflict between the terms
and conditions of this Agreement and the Plan, the provisions of the Plan shall
control.
 
12. Unfunded Arrangement.  This Agreement and the Plan shall not give a
Executive any security or other interest in any assets of the Company; rather
the Executive’s right to the Award is that of a general unsecured creditor of
the Company.
 
13. No Liability for Good Faith Determinations.  The Company and the members of
the Board shall not be liable for any act, omission or determination taken or
made in good faith with respect to this Agreement or the Restricted Units
granted hereunder.
 
14. No Guarantee of Interests.  The Company and the members of the Board do not
guarantee the Units from loss or depreciation.
 
 
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15. Company Records.  Records of the Company regarding the Executive’s period of
service, termination of service and the reason therefor, leaves of absence, and
other matters shall be conclusive for all purposes hereunder, unless determined
by the Company to be incorrect.
 
16. Company Action.  Any action required of the Company shall be by resolution
of its Board or by a person authorized to act by resolution of the Board.
 
17. Severability.  If any provision of this Agreement is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions hereof, but such provision shall be fully severable and
this Agreement shall be construed and enforced as if the illegal or invalid
provision had never been included herein.
 
18. Notices.  All notices required or permitted under this Agreement must be in
writing and personally delivered or sent by mail and shall be deemed to be
delivered on the date on which it is actually received by the person to whom it
is properly addressed.  A notice shall be effective when actually received by
the Company in writing and in conformance with this Agreement and the Plan.
 
19. Waiver of Notice.  Any person entitled to notice hereunder may waive such
notice.
 
20. Successors.  This Agreement shall be binding upon the Executive, the
Executive’s legal representatives, heirs, legatees and distributees, and upon
the Company, its successors and assigns.
 
21. Headings.  The titles and headings of Sections are included for convenience
of reference only and are not to be considered in construction of the provisions
hereof.
 
22. Governing Law.  All questions arising with respect to the provisions of this
Agreement shall be determined by application of the laws of the State of
Delaware without regard to choice of law provisions thereunder, except to the
extent Delaware law is preempted by federal law.
 
23. Word Usage.  Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Agreement dictates, the plural
shall be read as the singular and the singular as the plural.
 
24. Amendment.  This Agreement may be amended by the Company; provided, however,
that no amendment may decrease Executive’s rights inherent in this Agreement
prior to such amendment without Executive’s express written
consent.  Notwithstanding the provisions of this Section 24, this Agreement may
be amended by the Company, without the consent of the Executive, to the extent
necessary to comply with applicable laws and regulations and to conform the
provisions of this Agreement to any changes thereto or to settle the Award
pursuant to all applicable provisions of the Plan.
 
 
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25. Nonqualified Deferred Compensation Rules.  In the event this Award fails to
meet the limitations, requirements or exemptions of or from Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), or the laws, rules, and
regulations promulgated in connection with Section 409A of the Code, then this
Award shall be modified by the Company, in its sole discretion, to the limited
extent necessary to satisfy such nonqualified deferred compensation rules.

 
 
 
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer effective as of June 13, 2010.
 

VANGUARD NATURAL RESOURCES, LLC

 

By: /s/ Scott W. Smith

Name: Scott W. Smith

Title: Chief Executive Officer and President

EXECUTIVE

/s/ Britt Pence
Britt Pence