ex10_20.htm


    
      

      

    

    Exhibit
10.20

     

    EAGLE
ROCK ENERGY PARTNERS

    LONG-TERM
INCENTIVE PLAN

    (Amended
and Restated Effective February 4, 2009)

    


    


    The Eagle
Rock Energy Partners Long-Term Incentive Plan (the “Plan”) is hereby amended and
restated effective February 4, 2009, by Eagle Rock Energy G&P, LLC, a
Delaware limited liability company (the “General Partner”), the general partner
of Eagle Rock Energy GP, L.P., which is, in turn, the general partner of Eagle
Rock Energy Partners, L.P., a Delaware limited partnership (the
“Partnership”).

    


    RECITALS

    


    WHEREAS, the Plan was adopted October
25, 2006 and was subsequently amended effective May 15, 2008; and

    


    WHEREAS, the General Partner desires to
amend and restate the Plan for compliance with Code Section 409A and the
Treasury Regulations and other authoritative guidance issued thereunder, and to
incorporate certain previous amendments;

    


    NOW, THEREFORE, the Plan is hereby
amended and restated in its entirety, effective February 4, 2009.

    


    SECTION
1.                                Purpose of the
Plan.

    


    The Plan
is intended to promote the interests of the Partnership and its 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 Partnership and its 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:

    


    “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.

    


    “Award”
means an Option, Restricted Unit, Phantom Unit, Substitute Award or Unit Award
granted under the Plan, and shall include any tandem DERs granted with respect
to a Phantom Unit.

    


    “Award
Agreement” means the written or electronic agreement by which an Award shall be
evidenced.

    


    “Board”
means the Board of Directors of the General Partner.

    


    “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 NRG Group, 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.

    


    For
purposes of this Plan, “NRG Group” shall mean Natural Gas Partners VII, L.P.,
Natural Gas Partners VIII, L.P., Natural Gas Partners, L.L.C. d/b/a NGP Energy
Capital Management, and their respective Affiliates (other than the Partnership,
the General Partner, the general partner of the Partnership and their respective
subsidiaries) and their Affiliate’s respective directors, officers,
shareholders, members, managers, representatives of management committees and
employees (and members of their respective families and trusts for the primary
benefit of such family members).

    


    Notwithstanding
the foregoing, with respect to an Award that is subject to Code
Section 409A, “Change of Control” shall have the meaning ascribed to
“change in control events” in Treasury Regulation Section
1.409A-3(i)(5).

    


    “Code” means the Internal Revenue Code
of 1986, as amended from time to time.

    


    “Committee”
means the Board, the Compensation Committee of the Board or such other committee
as may be appointed by the Board to administer the Plan.

    


    “Consultant”
means an individual who renders consulting or advisory services to General
Partner or an Affiliate thereof, other than a member of the NRG
Group.

    


    “DER”
means a distribution equivalent right, being a contingent right, granted in
tandem with a specific Phantom Unit, 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.

    


    “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).

    


    “Employee”
means an employee of the Partnership or an Affiliate of the Partnership, other
than a member of the NRG Group.

    


    “Exchange
Act” means the Securities Exchange Act of 1934, as amended.

    


    “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-1(b)(5)(iv)(B).

    


    “Option”
means an option to purchase Units granted under the Plan.

    


    “Participant”
means an Employee, Consultant or Director granted an Award under the
Plan.

    


    “Partnership
Agreement” means the Agreement of Limited Partnership of the Partnership, as it
may be amended or amended and restated from time to time.

     

    “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.

    


    “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.

    


    “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.

    


    “Restricted
Unit” means a Unit granted under the Plan that is subject to a Restricted
Period.

    


    “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.

    


    “SEC”
means the Securities and Exchange Commission, or any successor
thereto.

    


    “Substitute
Award” means an award granted pursuant to Section 6(d) of the Plan.

    


    “UDR”
means a distribution made by the Partnership with respect to a Restricted
Unit.

    


    “Unit”
means a Common Unit of the Partnership.

    


    “Unit
Award” means an award granted pursuant to Section 6(c) of the Plan.

    


    SECTION
3.                                Administration.

    


    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, a person 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 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.

    


    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
2,000,000. Units withheld from an Award to satisfy the Partnership’s or an
Affiliate’s tax withholding obligations with respect to the Award 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. 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 Company or the Partnership
pursuant to the provisions of FAS 123R 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 a FAS 123R accounting charge 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.

    


    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.

    


    SECTION
6.                                Awards.

    


    (a)            Options. The
Committee may grant Options which are intended to comply with Treasury
Regulation Section 1.409A-1(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, “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 entitled to vote of such corporation 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 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.

    


    (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, 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.

    


    (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 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)            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)           DERs. To the extent
provided by the Committee, in its discretion, a grant of Phantom Units 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 Phantom Unit Award, or be subject to such other
provisions or restrictions as determined by the Committee in its discretion.
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.

    


    (ii)           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 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.

    


    (iii)           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 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.

    


    (iv)           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.

    


    (c)            Unit Awards. 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.

    


    (d)            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.

    


    (e)            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 Paragraph (C) below, each Option 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 Paragraph (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, an
Option 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.

    


    (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.
Unless specifically provided otherwise in the Award Agreement, upon a Change of
Control all outstanding Awards shall automatically vest and be payable at their
maximum level (all performance criteria, if any, shall be deemed fully achieved
at the maximum level) or become exercisable in full, as the case may
be.

    


    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 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 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.

    


    (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 Company without payment), 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 that
would be subject to a compensation expense pursuant to FAS 123R, 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.

    


    (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 Texas 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 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.

    


    (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 subject to Code Section 409A 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 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.

    


    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 Award subject to Code Section 409A.

    


    IN WITNESS WHEREOF, this amended and
restated Plan has been executed on February 4, 2009.

    


    EAGLE ROCK ENERGY PARTNERS,
L.P.

    
       

      


      
        	
                                                BY:

              	
                  Eagle Rock Energy GP,
      L.P., its general partner

              
	
                                                BY:

              	
                  Eagle Rock Energy
      G&P, LLC, its general partner

              


      

      


      


      
        	
                                                        By:

              	
                 /s/ Joseph A. Mills                

              
	
                                                        Name:

              	
                 Joseph A. Mills                  

              
	
                                                        Title:

              	
                 Chief Executive Officer