Document:

Exhibit 4.1

 

FORM OF

 

REGISTRATION RIGHTS AGREEMENT

 

THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered
into as of                    , 2010, by
and between Rhino Resource Partners LP, a Delaware limited partnership (the “Partnership”)
and Rhino Energy Holdings LLC, a Delaware limited liability company (“Holdco”).

 

WHEREAS,
this Agreement is made in connection with the transactions contemplated by the
Contribution, Conveyance and Assumption Agreement dated            , 2010 (the “Contribution
Agreement”);

 

WHEREAS,
the Partnership has agreed to provide the registration and other rights set
forth in this Agreement for the benefit of Holdco pursuant to the Contribution
Agreement; and

 

WHEREAS,
it is a condition to the obligations of Holdco under the Contribution Agreement
that this Agreement be executed and delivered;

 

NOW
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by each party hereto, the parties hereby agree as
follows:

 

ARTICLE I

DEFINITIONS

 

Section
1.01           Definitions.  Capitalized terms used herein without
definition shall have the meanings given to them in the First Amended and
Restated Agreement of Limited Partnership of the Partnership dated           , 2010, as amended from time to time
(the “LP Agreement”).  The terms
set forth below are used herein as so defined:

 

“Affiliate”
means, with respect to a specified Person, directly or indirectly controlling,
controlled by, or under direct or indirect common control with such specified
Person.  For the purposes of this
definition, “control” means the power to direct or cause the direction of the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise.

 

“Agreement”
has the meaning given to such term in the introductory paragraph.

 

“Commission”
has the meaning given to such term in Section 1.02.

 

“Contribution
Agreement” has the meaning given to such term in the recitals of this
Agreement.

 

“Effectiveness
Period” has the meaning given to such term in Section 2.01.

 

“General
Partner” means Rhino GP LLC, a Delaware limited liability company.

 

 

“Holdco”
has the meaning given to such term in the introductory paragraph.

 

“Holder”
means the record holder of any Registrable Securities.

 

“Losses”
has the meaning given to such term in Section 2.08(a) of this Agreement.

 

“Managing
Underwriter” means, with respect to any Underwritten Offering, the
book-running lead manager of such Underwritten Offering.

 

“Notice”
has the meaning given to such term in Section 2.01.

 

“Partnership”
has the meaning given to such term in the introductory paragraph.

 

“Person”
means any individual, corporation, partnership, voluntary association,
partnership, joint venture, trust, limited liability partnership,
unincorporated organization, government or any agency, instrumentality or
political subdivision thereof, or any other form of entity.

 

“Registrable
Securities” means the aggregate number of (a) Common Units issued (or
issuable) to Holdco pursuant to the Contribution Agreement (including pursuant
to the Deferred Issuance and Distribution); (b) Subordinated Units; and (c) Common
Units issuable upon conversion of the Subordinated Units or the Combined
Interests pursuant to the terms of the LP Agreement, which Registrable
Securities are subject to the rights provided herein until such rights
terminate pursuant to the provisions hereof.

 

“Registration
Statement” has the meaning given to such term in Section 2.01.

 

“Registration
Expenses” has the meaning given to such term in Section 2.06(b).

 

“Registration
Statement” has the meaning given to such term in Section 2.01.

 

“Selling
Expenses” has the meaning given to such term in Section 2.06(b).

 

“Selling
Holder” means a Holder who is selling Registrable Securities pursuant to a
Registration Statement.

 

“Underwritten
Offering” means an offering (including an offering pursuant to a
Registration Statement) in which Common Units and/or Subordinated Units are
sold to an underwriter on a firm commitment basis for reoffering to the public
or an offering that is a “bought deal” with one or more investment banks.

 

Section
1.02           Registrable Securities.  Any Registrable Security will cease to be a
Registrable Security (a) at the time a Registration Statement covering such
Registrable Security has been declared effective by the Securities and Exchange
Commission (the “Commission”), or otherwise has become effective, and
such Registrable Security has been sold or disposed of pursuant to such
Registration Statement; (b) at the time such Registrable Security has been
disposed of pursuant to Rule 144 (or any similar provision then in effect under
the Securities Act of 1933 (the “Securities Act”)); (c) 10 years after
Holdco ceases to be an Affiliate of the General

 

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Partner
(including where the General Partner ceases to be the general partner of the
Partnership); (d) if such Registrable Security is held by the Partnership or
one of its Subsidiaries; (e) at the time such Registrable Security has been
sold in a private transaction in which the transferor’s rights under this
Agreement are not assigned to the transferee of such securities; or (f) if such
Registrable Security has been sold in a private transaction in which the
transferor’s rights under this Agreement are assigned to the transferee and
such transferee is not an Affiliate of the General Partner, at the time that is
two years following the later of (i) if the Registrable Security is a
Subordinated Unit, the conversion of the Subordinated Units into Common Units
and (ii) the transfer of such Registrable Security to such transferee.

 

ARTICLE II

REGISTRATION RIGHTS

 

Section
2.01           Demand Registration.  Upon the written request (a “Notice”)
by Holders owning at least 500,000 of the then outstanding Registrable
Securities, subject to adjustment pursuant to Section 3.04, the
Partnership shall file with the Commission, as soon as reasonably practicable,
but in no event more than 90 days following the receipt of the Notice, a
registration statement under the Securities Act (a “Registration Statement”)
providing for the resale of the Registrable Securities (which may, at the
option of the Holders giving such Notice, be a registration statement under the
Securities Act that provides for the resale of the Registrable Securities
pursuant to Rule 415 from time to time by the Holders).  The Partnership shall use its commercially
reasonable efforts to cause each Registration Statement to be declared
effective by the Commission as soon as reasonably practicable after the initial
filing of the Registration Statement. 
Any Registration Statement shall provide for the resale pursuant to any
method or combination of methods legally available and requested by the Holders
of any and all Registrable Securities covered by such Registration
Statement.  The Partnership shall use its
commercially reasonable efforts to cause each Registration Statement filed
pursuant to this Section 2.01 to be continuously effective, supplemented
and amended to the extent necessary to ensure that it is available for the
resale of all Registrable Securities by the Holders until all Registrable
Securities covered by such Registration Statement have ceased to be Registrable
Securities (the “Effectiveness Period”). 
Each Registration Statement when effective (and the documents
incorporated therein by reference) shall comply as to form in all material
respects with all applicable requirements of the Securities Act and shall not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.  There shall be no limit on
the number of Registration Statements that may be required by the Holders
hereunder.

 

Section
2.02           Underwritten Offerings.

 

(a)           Request for Underwritten Offering.  In the event that one or more Holders
collectively elects to dispose of at least 125,000 Registrable Securities,
subject to adjustment pursuant to Section 3.04, under a Registration
Statement pursuant to an Underwritten Offering, the Partnership shall, upon
request by such Holders, retain underwriters in order to permit such Holders to
effect such sale though an Underwritten Offering.  The obligation of the Partnership to retain
underwriters shall include entering into an underwriting agreement in customary
form with the Managing Underwriter or underwriters, which shall include, among
other provisions, indemnities to the effect and to the extent provided in Section
2.08 and taking all reasonable

 

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actions
as are requested by the Managing Underwriter or underwriters to expedite or
facilitate the disposition of such Registrable Securities.  The Partnership shall, upon request of the
Holders, cause its management to participate in a roadshow or similar marketing
effort on behalf of the Selling Holders.

 

(b)           Limitation on Underwritten
Offerings.  In no event shall the
Partnership be required hereunder to participate in more than two Underwritten
Offerings in any 12-month period.

 

(c)           General Procedures.  In connection with any Underwritten Offering
under this Agreement, the Partnership shall be entitled to select the Managing
Underwriter or underwriters.  In
connection with any Underwritten Offering under this Agreement, each Selling
Holder and the Partnership shall be obligated to enter into an underwriting
agreement that contains such representations, covenants, indemnities and other
rights and obligations as are customary in underwriting agreements for firm
commitment offerings of securities.  No
Selling Holder may participate in such Underwritten Offering unless such
Selling Holder agrees to sell its Registrable Securities on the basis provided
in such underwriting agreement and completes and executes all questionnaires,
powers of attorney, indemnities and other documents reasonably required under
the terms of such underwriting agreement.  Each Selling Holder may, at its option,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Partnership to and for the benefit of such
underwriters also be made to and for such Selling Holder’s benefit and that any
or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement also be conditions precedent to such Selling
Holder’s obligations.  No Selling Holder
shall be required to make any representations or warranties to or agreements
with the Partnership or the underwriters other than representations, warranties
or agreements regarding such Selling Holder and its ownership of the securities
being registered on its behalf, its intended method of distribution and any
other representation required by law.  If
any Selling Holder disapproves of the terms of an underwriting, such Selling
Holder may elect to withdraw from the Underwritten Offering by notice to the
Partnership and the Managing Underwriter; provided,
however, that such withdrawal
must be made at a time prior to the time of pricing of such Underwritten
Offering.  No such withdrawal shall
affect the Partnership’s obligation to pay Registration Expenses.

 

Section 2.03           Delay
Rights.  If the General Partner or
its delegate determines that the Partnership’s compliance with its obligations
under this Article II would be materially detrimental to the Partnership
and its Partners because such registration would (a) materially interfere with
a significant acquisition, reorganization, financing or other similar
transaction involving the Partnership, (b) require premature disclosure of
material information that the Partnership has a bona fide business purpose for
preserving as confidential or (c) render the Partnership unable to comply with
applicable securities laws, then the Partnership shall have the right to
postpone compliance with its obligations under this Article II for a
period of not more than  three months, provided, that such right pursuant to this Section 2.03
may not be utilized more than twice in any 12-month period.

 

Section
2.04           Sale Procedures.  In connection with its obligations under this
Article II, the Partnership will, as expeditiously as possible:

 

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(a)           prepare and file with the Commission
such amendments and supplements to each Registration Statement and the
prospectus used in connection therewith as may be necessary to keep each
Registration Statement effective for the Effectiveness Period and as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities covered by such Registration
Statement;

 

(b)           if a prospectus supplement will be
used in connection with the marketing of an Underwritten Offering and the
Managing Underwriter notifies the Partnership in writing that, in the sole
judgment of such Managing Underwriter, inclusion of detailed information in
such prospectus supplement is of material importance to the success of the
Underwritten Offering of such Registrable Securities, the Partnership shall use
its commercially reasonable efforts to include such information in such
prospectus supplement;

 

(c)           furnish to each Selling Holder (i) as
far in advance as reasonably practicable before filing a Registration Statement
or any supplement or amendment thereto, upon request, copies of reasonably
complete drafts of all such documents proposed to be filed (including exhibits
and each document incorporated by reference therein to the extent then required
by the rules and regulations of the Commission), and provide each such Selling
Holder the opportunity to object to any information pertaining to such Selling
Holder and its plan of distribution that is contained therein and make the
corrections reasonably requested by such Selling Holder with respect to such
information prior to filing a Registration Statement or supplement or amendment
thereto, and (ii) such number of copies of such Registration Statement and the
prospectus included therein and any supplements and amendments thereto as such
Persons may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities covered by such Registration
Statement;

 

(d)           if applicable, use its commercially
reasonable efforts to register or qualify the Registrable Securities covered by
a Registration Statement under the securities or blue sky laws of such
jurisdictions as the Selling Holders or, in the case of an Underwritten
Offering, the Managing Underwriter, shall reasonably request; provided, however, that the Partnership
will not be required to qualify generally to transact business in any
jurisdiction where it is not then required to so qualify or to take any action
that would subject it to general service of process in any jurisdiction where
it is not then so subject;

 

(e)           promptly notify each Selling Holder,
at any time when a prospectus is required to be delivered under the Securities
Act, of (i) the filing of a Registration Statement or any prospectus or
prospectus supplement to be used in connection therewith, or any amendment or
supplement thereto, and, with respect to such Registration Statement or any
post-effective amendment thereto, when the same has become effective; and (ii) any
written comments from the Commission with respect to any filing referred to in
clause (i) and any written request by the Commission for amendments or
supplements to a Registration Statement or any prospectus or prospectus
supplement thereto;

 

(f)            immediately notify each Selling
Holder, at any time when a prospectus is required to be delivered under the
Securities Act, of (i) the happening of any event as a result of which the
prospectus or prospectus supplement contained in a Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be

 

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stated
therein or necessary to make the statements therein not misleading (in the case
of the prospectus contained therein, in the light of the circumstances under
which a statement is made); (ii) the issuance or threat of issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement, or the initiation of any proceedings for that purpose; or (iii) the
receipt by the Partnership of any notification with respect to the suspension
of the qualification of any Registrable Securities for sale under the
applicable securities or blue sky laws of any jurisdiction.  Following the provision of such notice, the
Partnership agrees to, as promptly as practicable, amend or supplement the
prospectus or prospectus supplement or take other appropriate action so that
the prospectus or prospectus supplement does not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing and to take such other reasonable action as is
necessary to remove a stop order, suspension, threat thereof or proceedings
related thereto;

 

(g)           upon request and subject to
appropriate confidentiality obligations, furnish to each Selling Holder copies
of any and all transmittal letters or other correspondence with the Commission
or any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating
to any offering of Registrable Securities;

 

(h)           in the case of an Underwritten
Offering, furnish upon request, (i) an opinion of counsel for the Partnership
dated the date of the closing under the underwriting agreement and (ii) a “cold
comfort” letter, dated the pricing date of such Underwritten Offering (to the
extent available) and a letter of like kind dated the date of the closing under
the underwriting agreement, in each case, signed by the independent public
accountants who have certified the Partnership’s financial statements included
or incorporated by reference into the applicable registration statement, and
each of the opinion and the “cold comfort” letter shall be in customary form
and covering substantially the same matters with respect to such Registration
Statement (and the prospectus and any prospectus supplement included therein)
as have been customarily covered in opinions of issuer’s counsel and in
accountants’ letters delivered to the underwriters in Underwritten Offerings of
securities by the Partnership and such other matters as such underwriters and
Selling Holders may reasonably request;

 

(i)            otherwise use its commercially
reasonable efforts to comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder;

 

(j)            make available to the appropriate
representatives of the Managing Underwriter and Selling Holders access to such
information and Partnership personnel as is reasonable and customary to enable
such parties to establish a due diligence defense under the Securities Act;

 

(k)           cause all Registrable Securities
registered pursuant to this Agreement to be listed on each securities exchange
or nationally recognized quotation system on which similar securities issued by
the Partnership are then listed;

 

6

 

(l)            use its commercially reasonable
efforts to cause the Registrable Securities to be registered with or approved
by such other governmental agencies or authorities as may be necessary by
virtue of the business and operations of the Partnership to enable the Selling
Holders to consummate the disposition of the Registrable Securities;

 

(m)          provide a transfer agent and registrar
for all Registrable Securities covered by a Registration Statement not later
than the effective date of such registration statement; and

 

(n)           enter into customary agreements and
take such other actions as are reasonably requested by the Selling Holders or
the underwriters, if any, in order to expedite or facilitate the disposition of
the Registrable Securities.

 

Each
Selling Holder, upon receipt of notice from the Partnership of the happening of
any event of the kind described in subsection (f) of this Section 2.04,
shall forthwith discontinue offers and sales of the Registrable Securities by
means of a prospectus or prospectus supplement until such Selling Holder’s
receipt of the copies of the supplemented or amended prospectus or prospectus
supplement contemplated by subsection (f) of this Section 2.04 or until
it is advised in writing by the Partnership that the use of the prospectus or
prospectus supplement may be resumed, and has received copies of any additional
or supplemental filings incorporated by reference in the prospectus or
prospectus supplement.

 

Section
2.05           Cooperation by Holders.  The Partnership shall have no obligation to
include in a Registration Statement, or in an Underwritten Offering pursuant to
Section 2.02(a), Registrable Securities of a Selling Holder who has
failed to timely furnish such information that determines, after consultation
with counsel, is reasonably required in order for the Registration Statement or
prospectus or prospectus supplement, as applicable, to comply with the
Securities Act.

 

Section
2.06           Expenses.

 

(a)           Expenses.  The Partnership will pay all reasonable
Registration Expenses including in the case of an Underwritten Offering,
regardless of whether any sale is made in such Underwritten Offering. The Selling
Holder shall pay all Selling Expenses in connection with any sale of
Registrable Securities hereunder. In addition, except as otherwise provided in Section
2.08, the Partnership shall not be responsible for legal fees incurred by
Holders in connection with the exercise of such Holders’ rights hereunder.

 

(b)           Certain Definitions.  “Registration Expenses” means all
expenses incident to the Partnership’s performance under or compliance with
this Agreement to effect the registration of Registrable Securities on a
Registration Statement pursuant to Section 2.01 and/or in connection
with an Underwritten Offering pursuant to Section 2.02(a), and the
disposition of such Registrable Securities, including, without limitation, all
registration, filing, securities exchange listing and securities exchange fees,
all registration, filing, qualification and other fees and expenses of
complying with securities or blue sky laws, fees of the Financial Industry
Regulatory Authority, fees of transfer agents and registrars, all word
processing, duplicating and printing expenses, any transfer taxes and the fees
and disbursements of counsel and independent public accountants for the
Partnership, including the expenses of any special audits or “cold comfort”

 

7

 

letters
required by or incident to such performance and compliance.  “Selling Expenses” means all
underwriting fees, discounts and selling commissions applicable to the sale of
Registrable Securities.

 

Section
2.07           Restrictions on Public
Sale by Holders of Registrable Securities. 
Each Holder who, along with its Affiliates, holds at least 5% of the
then outstanding Common Units, subject to adjustment pursuant to Section 3.04,
agrees to enter into a customary letter agreement with underwriters providing
such Holder will not effect any public sale or distribution of the Registrable
Securities during the 90 calendar day period beginning on the date of a
prospectus or prospectus supplement filed with the Commission with respect to
the pricing of an Underwritten Offering, provided that (i) the duration of the
foregoing restrictions shall be no longer than the duration of the shortest
restriction generally imposed by the underwriters on the Partnership or the
officers, directors or any other unitholder of the Partnership on whom a
restriction is imposed and (ii) the restrictions set forth in this Section 2.07
shall not apply to any Registrable Securities that are included in such
Underwritten Offering by such Holder.

 

Section
2.08           Indemnification.

 

(a)           By the Partnership.  In the event of a registration of any
Registrable Securities under the Securities Act pursuant to this Agreement, the
Partnership will indemnify and hold harmless each Selling Holder participating
therein, its directors, officers, employees and agents, and each Person, if
any, who controls such Selling Holder within the meaning of the Securities Act
and the Securities Exchange Act of 1934 (the “Exchange Act”), and its
directors, officers, employees or agents, against any losses, claims, damages,
expenses or liabilities (including reasonable attorneys’ fees and expenses)
(collectively, “Losses”), joint or several, to which such Selling
Holder, director, officer, employee, agent or controlling Person may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as
such Losses (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact (in the case of any prospectus or
prospectus supplement, in the light of the circumstances under which such
statement is made) contained in a Registration Statement, any preliminary
prospectus or prospectus supplement, free writing prospectus or final
prospectus or prospectus supplement contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus or
prospectus supplement, in the light of the circumstances under which they were
made) not misleading, and will reimburse each such Selling Holder, its
directors, officers, employee and agents, and each such controlling Person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss or actions or proceedings as such
expenses are incurred; provided, however,
that the Partnership will not be liable in any such case if and to the extent
that any such Loss arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by such Selling Holder, its directors, officers,
employees and agents or such controlling Person in writing specifically for use
in a Registration Statement, or prospectus or prospectus supplement or any
amendment or supplement thereto, as applicable. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such Selling Holder or

 

8

 

 

any
such directors, officers, employees agents or controlling Person, and shall
survive the transfer of such securities by such Selling Holder.

 

(b)           By Each Selling Holder.  Each Selling Holder agrees severally and not
jointly to indemnify and hold harmless the Partnership, the General Partner,
its directors, officers, employees and agents and each Person, if any, who
controls the Partnership within the meaning of the Securities Act or of the
Exchange Act, and its directors, officers, employees and agents, to the same
extent as the foregoing indemnity from the Partnership to the Selling Holders,
but only with respect to information regarding such Selling Holder furnished in
writing by or on behalf of such Selling Holder expressly for inclusion in a
Registration Statement or prospectus or prospectus supplement relating to the
Registrable Securities, or any amendment or supplement thereto; provided, however, that the liability of
each Selling Holder shall not be greater in amount than the dollar amount of
the proceeds (net of any Selling Expenses) received by such Selling Holder from
the sale of the Registrable Securities giving rise to such indemnification.

 

(c)           Notice.  Promptly after receipt by an indemnified
party hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability that it may have to any indemnified party other than under this Section 2.08.  In any action brought against any indemnified
party, it shall notify the indemnifying party of the commencement thereof.  The indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 2.08
for any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; provided, however, that, (i) if the
indemnifying party has failed to assume the defense or employ counsel
reasonably acceptable to the indemnified party or (ii) if the defendants
in any such action include both the indemnified party and the indemnifying
party and counsel to the indemnified party shall have concluded that there may
be reasonable defenses available to the indemnified party that are different
from or additional to those available to the indemnifying party, or if the
interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, then the indemnified party shall have
the right to select a separate counsel and to assume such legal defense and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other reasonable expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.  Notwithstanding any other
provision of this Agreement, no indemnified party shall settle any action
brought against it with respect to which it is entitled to indemnification
hereunder without the consent of the indemnifying party, unless the settlement thereof
imposes no liability or obligation on, and includes a complete and
unconditional release from all liability of, the indemnifying party.

 

(d)           Contribution.  If the indemnification provided for in this Section 2.08
is held by a court or government agency of competent jurisdiction to be
unavailable to any indemnified party or is insufficient to hold them harmless
in respect of any Losses, then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by

 

9

 

such
indemnified party as a result of such Loss in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and of
such indemnified party on the other in connection with the statements or
omissions that resulted in such Losses, as well as any other relevant equitable
considerations; provided, however,
that in no event shall the Selling Holder be required to contribute an
aggregate amount in excess of the dollar amount of proceeds (net of Selling
Expenses) received by such Selling Holder from the sale of Registrable
Securities giving rise to such indemnification. 
The relative fault of the indemnifying party on the one hand and the
indemnified party on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact has been made by, or
relates to, information supplied by such party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.  The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this paragraph were to be determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to herein.  The amount paid by
an indemnified party as a result of the Losses referred to in the first sentence
of this paragraph shall be deemed to include any legal and other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any Loss that is the subject of this paragraph. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who is
not guilty of fraudulent misrepresentation.

 

(e)           Other Indemnification.  The provisions of this Section 2.08
shall be in addition to any other rights to indemnification or contribution
that an indemnified party may have pursuant to law, equity, contract or
otherwise.

 

Section 2.09           Rule 144 Reporting.  With a view to making available the benefits
of certain rules and regulations of the Commission that may permit the
sale of the Registrable Securities to the public without registration, the
Partnership agrees to use its commercially reasonable efforts to:

 

(a)           make and keep public information
regarding the Partnership available, as those terms are understood and defined
in Rule 144 under the Securities Act, at all times from and after the date
hereof;

 

(b)           file with the Commission in a timely
manner all reports and other documents required of the Partnership under the
Exchange Act at all times from and after the date hereof; and

 

(c)           so long as a Holder owns any
Registrable Securities, furnish to such Holder forthwith upon request a copy of
the most recent annual or quarterly report of the Partnership, and such other
reports and documents so filed as such Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing such
Holder to sell any such securities without registration.

 

Section 2.10           Transfer or Assignment of
Registration Rights.  The rights to
cause the Partnership to register Registrable Securities granted to a Holder by
the Partnership under this Article II may be transferred or
assigned by such Holder to one or more transferee(s) or

 

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assignee(s) of
such Registrable Securities; provided,
however, that (a) unless such transferee or assignee is an
Affiliate of Holdco, each such transferee or assignee holds Registrable
Securities representing at least 500,000 of the then outstanding Registrable
Securities, subject to adjustment pursuant to Section 3.04, (b) the
Partnership is given written notice prior to any said transfer or assignment,
stating the name and address of each such transferee or assignee and
identifying the Registrable Securities with respect to which such registration
rights are being transferred or assigned, and (c) each such transferee or
assignee agrees to be bound by this Agreement.

 

ARTICLE III

MISCELLANEOUS

 

Section 3.01           Communications.  All notices and other communications provided
for or permitted hereunder shall be made in writing by facsimile, electronic
mail, courier service or personal delivery:

 

(a)           if to Holdco:

 

Rhino
Energy Holdings LLC

c/o
Wexford Capital LP

411
West Putnam Avenue

Greenwich,
Connecticut  06830

Attention:  General Counsel

Facsimile:

Email:

 

(b)           if to a
transferee of Holdco, to such Holder at the address provided pursuant to Section 2.10;
and

 

(c)           if to the
Partnership:

 

Rhino
Resource Partners LP

424
Lewis Hargett Circle, Suite 250

Lexington,
Kentucky 40503

Attention:  General Counsel

Facsimile:

Email:

 

All
such notices and communications shall be deemed to have been received at the
time delivered by hand, if personally delivered; when receipt acknowledged, if
sent via facsimile or sent via electronic mail; and when actually received, if
sent by courier service or any other means.

 

Section 3.02           Successor and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including subsequent Holders of Registrable Securities to the extent permitted
herein.

 

11

 

Section 3.03           Assignment of Rights.  All or any portion of the rights and
obligations of the Holders under this Agreement may be transferred or assigned
by the Holders in accordance with Section 2.10 hereof.

 

Section 3.04           Recapitalization, Exchanges, Etc.
Affecting the Registrable Securities. 
The provisions of this Agreement shall apply to the full extent set
forth herein with respect to any and all securities of the Partnership or any
successor or assign of the Partnership (whether by merger, consolidation, sale
of assets or otherwise) that may be issued in respect of, in exchange for or in
substitution of, the Registrable Securities, and shall be appropriately
adjusted for combinations, splits, recapitalizations, pro rata distributions
and the like occurring after the date of this Agreement.

 

Section 3.06           Specific Performance.  Damages in the event of breach of this
Agreement by a party hereto may be difficult, if not impossible, to ascertain,
and it is therefore agreed that each party, in addition to and without limiting
any other remedy or right it may have, will have the right to an injunction or
other equitable relief in any court of competent jurisdiction, enjoining any
such breach, and enforcing specifically the terms and provisions hereof, and
each of the parties hereto hereby waives any and all defenses it may have on
the ground of lack of jurisdiction or competence of the court to grant such an
injunction or other equitable relief. 
The existence of this right will not preclude any such party from
pursuing any other rights and remedies at law or in equity that such party may
have.

 

Section 3.07           Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but
one and the same Agreement.

 

Section 3.08           Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

Section 3.09           Governing Law.  The laws of the State of New York shall
govern this Agreement.

 

Section 3.10           Severability of Provisions.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting or impairing the
validity or enforceability of such provision in any other jurisdiction.

 

Section 3.11           Scope of Agreement.  The rights granted pursuant to this Agreement
are intended to supplement and not to reduce or replace any rights any Holders
may have under the LP Agreement with respect to the Registrable
Securities.  This Agreement is intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein.  Except as provided in the LP Agreement, there
are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the rights granted by the
Partnership set forth herein.  Except as
provided in the LP

 

12

 

Agreement,
this Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.

 

Section 3.12           Amendment.  This Agreement may be amended only by means
of a written amendment signed by the Partnership and the Holders of a majority
of the then-outstanding Registrable Securities; provided, however, that no such amendment shall materially
and adversely affect the rights of any Holder hereunder without the consent of
such Holder.

 

Section 3.13           No Presumption.  If any claim is made by a party relating to
any conflict, omission, or ambiguity in this Agreement, no presumption or
burden of proof or persuasion shall be implied by virtue of the fact that this
Agreement was prepared by or at the request of a particular party or its
counsel.

 

Section 3.14           Aggregation of Registrable
Securities.  All Registrable Securities held or acquired by Persons
who are Affiliates of one another shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.

 

Section 3.15           Obligations
Limited to Parties to Agreement. 
Each of the parties hereto covenants, agrees and acknowledges that no
Person other than the Partnership and the Holders (and their permitted
transferees and assignees) shall have any obligation hereunder and that, notwithstanding
that one or more of the Holders may be a corporation, partnership or limited
liability company, no recourse under this Agreement or under any documents or
instruments delivered in connection herewith or therewith shall be had against
any former, current or future director, officer, employee, agent, general or
limited partner, manager, member, stockholder or Affiliate of any of the
Holders or any former, current or future director, officer, employee, agent,
general or limited partner, manager, member, stockholder or Affiliate of any of
the foregoing, whether by the enforcement of any assessment or by any legal or
equitable proceeding, or by virtue of any applicable law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to,
be imposed on or otherwise incurred by any former, current or future director,
officer, employee, agent, general or limited partner, manager, member,
stockholder or Affiliate of any of the Holders or any former, current or future
director, officer, employee, agent, general or limited partner, manager,
member, stockholder or Affiliate of any of the foregoing, as such, for any
obligations of the Holders under this Agreement or any documents or instruments
delivered in connection herewith or therewith or for any claim based on, in
respect of or by reason of such obligation or its creation, except in each case
for any transferee or assignee of a Holder hereunder.

 

Section 3.16           Interpretation.  All references to instruments, documents,
contracts and agreements are references to such instruments, documents,
contracts and agreements as the same may be amended, supplemented and otherwise
modified from time to time, unless otherwise specified. The word “including”
shall mean “including but not limited to.” Whenever any determination, consent
or approval is to be made or given by the Holders under this Agreement, such
action shall be in the Holders’ sole discretion unless otherwise specified.

 

13

 

IN
WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the
date first above written.

 

 

	
   

  	
  RHINO
  RESOURCE PARTNERS LP

  
	
   

  	
  By:      Rhino GP LLC, its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  David Zatezalo

  
	
   

  	
  Title:    President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RHINO
  ENERGY HOLDINGS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  

  
	
   

  	
  Title:

  

 

 

SIGNATURE PAGE

REGISTRATION RIGHTS
AGREEMENTExhibit 10.11

 

FORM OF

 

RHINO LONG-TERM INCENTIVE PLAN

 

SECTION 1.           Purpose of the Plan

 

The Rhino Long-Term Incentive Plan (the “Plan”) has been adopted by
Rhino GP LLC, a Delaware limited liability company, the general partner (“General
Partner”) of Rhino Resource Partners LP, a Delaware limited partnership (the “Partnership”).  The Plan is intended to promote the interests
of the Partnership 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. 
For purposes of the preceding sentence, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”),
as used with respect to any entity or organization, shall mean the possession,
directly or indirectly, of the power (i) to vote more than 50% of the
securities or equity interests having ordinary voting power for the election of
directors of the controlled entity or organization, or (ii) to direct or
cause the direction of the management and policies of the controlled entity or
organization, whether through the ownership of voting securities or equity
interests or by contract or otherwise.

 

“Award”
means an Option, Unit Appreciation Right, Restricted Unit, Phantom Unit, Other
Unit-Based Award, or a Unit Award granted under the Plan, and includes a DER
granted in tandem 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 or Managers, as the case may be, of the General
Partner.

 

“Change
of Control” means, and shall be deemed to have occurred upon, any of the
following events:  (a) 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 (i) Wexford, the General
Partner or an Affiliate of either, (ii) any fund or other entity owned,
managed or otherwise controlled by Wexford, or (iii) any Person(s) who,
on the effective date of the Plan, is (are) an owner(s) of the General
Partner (or any Person who, subsequent to the effective date of the Plan,
through 

 

 

inheritance
from such an owner becomes a direct or indirect owner of the General Partner),
(a “Third Party”) shall become the beneficial owner, by way of merger,
consolidation, recapitalization, reorganization or otherwise, of more than 50%
of the voting power of the voting securities of either the Partnership or the
General Partner; or (b) the sale or other disposition, including by way of
liquidation, by either the Partnership or the General Partner of all or
substantially all of its assets, whether in a single or series of related
transactions, to one or more Third Parties. 
For clarity, an initial public offering of Units shall not constitute a
Change of Control.

 

“Committee”
means the Board, unless and to the extent the Board delegates its powers and
duties as provided in Section 3.

 

“Consultant”
means an individual, other than a Director or an Employee, who performs
services for the benefit of the General Partner, the Partnership or an
Affiliate of either.

 

“DER”
means a contingent right, granted in tandem with a specific Phantom Unit, to
receive with respect to a Phantom Unit subject to the Award an amount in cash,
Units, Restricted Units, and/or Phantom Units equal in value to the cash
distributions made by the Partnership with respect to a Unit during the period
such Phantom Unit is “outstanding.”

 

“Director”
means a member of the Board who is not also an Employee or a Consultant, and
shall also include any individual who is appointed a member of the Board by
Wexford (a “Wexford Director”).

 

“Disability”
means, unless provided otherwise in the Award Agreement, an illness or injury
that entitles the Participant to benefits under a long-term disability plan of
the General Partner or an Affiliate.

 

“Employee”
means an employee of the General Partner, the Partnership or an Affiliate of
either.

 

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

 

“Fair
Market Value” means the closing sales price of a Unit on the principal national
securities exchange or other market in which trading in Units occurs on the
applicable date (or, if there is no trading in the Units on such date, on the
next preceding date on which there was trading) as reported in such 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 in good faith by the
Committee.

 

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

 

“Other
Unit-Based Award” means an Award granted pursuant to Section 6(d) of
the Plan.

 

“Participant”
means an Employee or Director granted an Award under the Plan.  With respect to a Wexford Director, Wexford
or its assignee shall be deemed to be the Participant and not the individual
appointed to the Board from time to time by Wexford.

 

2

 

“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 that 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 either is 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.

 

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

 

“Unit”
means a Common Unit of the Partnership.

 

“Unit
Appreciation Right” or UAR” means a contingent right that entitles the holder
to receive all or part of the excess of the Fair Market Value of a Unit on the
exercise date of the UAR over the exercise price of the UAR.  Such excess shall be paid in Units, cash or
any combination thereof, in the discretion of the Committee.

 

“Unit
Award” means a grant of a Unit that is not subject to a Restricted Period.

 

“Wexford”
means Wexford Capital LP, a Delaware limited partnership.

 

SECTION 3.           Administration

 

The
Plan shall be administered by the Committee. 
Subject to applicable law and the following, 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 a committee comprised
solely of members of the Board and/or 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” shall
be deemed to include such delegatees; provided, however, that a delegation to
the Chief Executive Officer shall not limit the Chief Executive Officer’s right
to receive Awards under the Plan. 
Notwithstanding the foregoing, the Chief Executive Officer may not grant
Awards to, or take any action with respect to any Award previously granted to,
a person who is an officer subject to Rule 16b-3 or a member of the Board
or take any action provided in Section 7. 
Subject to the terms of the Plan and applicable law, and any limitations
provided in any delegations by the Board, the Committee shall have full power
and authority, in addition to the other express 

 

3

 

powers
and authorizations conferred on the Committee by the Plan, 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 (including after the grant
of an Award) and shall be final, conclusive, and binding upon all Persons,
including the Partnership, the General Partner, any Affiliate, any Participant,
and any beneficiary thereof.  Without
limiting the foregoing, the Committee may delegate any or all of its
administrative duties to any Person, subject to such limitations, if any, as
the Committee may provide with such delegation.

 

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 equal to 10% of the number of Common Units and subordinated units
outstanding on the closing date of the initial public offering of Units.  Units withheld from an Award to satisfy the
General Partner’s, Partnership’s or an Affiliate’s tax withholding obligations
with respect to the Award or to pay the exercise price of an Award shall be
considered Units delivered under the Plan for this purpose.  If any Award is forfeited, cancelled,
exercised, paid, 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 that were subject to such Award
shall again be available for new Awards under the Plan.  There shall not be any limitation on the
number of Awards that may be paid or settled 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 newly issued by the Partnership,
Units acquired in the open market, from any Affiliate of the Partnership or
from any other Person, or may be 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
Partnership pursuant to the provisions of Statement of Financial Accounting
Standards No. 123(R), Codified as “FASB Topic 718-Stock Compensation” (“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 reflect such
restructuring event and shall adjust the number and type of Units (or other
securities or property) with respect to which Awards may 

 

4

 

be granted under the Plan 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

 

Each
Employee, Consultant and Director shall be eligible to be designated a
Participant by the Committee and receive an Award under the Plan; provided,
however, any Award granted to a Wexford Director shall be treated, for all
purposes, as a grant to Wexford or its assignee, as Wexford may direct or
provide, and not to the individual serving on the Board on behalf of Wexford or
its assignee.

 

SECTION 6.           Awards

 

(a)           Options and UARs.  The Committee shall have the authority to
determine the Employees, Consultants and Directors to whom Options and UARs
shall be granted, the number of Units to be covered by each Option or UAR, the
exercise price therefor, the Restricted Period and other conditions and
limitations applicable to the exercise of the Option or UAR, 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 or subject to a UAR shall be determined by the Committee at the time
the Option or UAR is granted and may not be less than the Fair Market Value of
a Unit as of the date of grant of the Option or UAR.

 

(ii)           Time and Method of Exercise.  The Committee shall determine the exercise
terms and the Restricted Period with respect to an Option or UAR grant, which
may include, without limitation, (A) a provision for accelerated vesting
upon the death or Disability of a Participant, the achievement of specified
performance goals or such other events as the Committee may provide, and (B) the
method or methods by which payment of the exercise price with respect to an
Option may be made or deemed to have been made, which may include, without
limitation, cash, check acceptable to the Committee, withholding (netting)
Units from the payment of the Award, a “cashless-broker” exercise through
procedures approved by the Committee, or any combination of the above methods.

 

(iii)          Forfeitures.  Except as otherwise provided in the terms of
the Option or UAR grant, upon termination of a Participant’s employment or
consulting services with the Partnership, General Partner or their Affiliates,
or membership on the Board, whichever is applicable, for any reason during the
applicable Restricted Period, all unvested Options and UARs 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 or UARs.

 

(b)           Restricted Units and Phantom Units.  The Committee shall have the authority to
determine the Employees, Consultants and Directors to whom Restricted Units and
Phantom 

 

5

 

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 which may include, without
limitation, a provision for accelerated vesting upon the death or Disability of
a Participant, the achievement of specified performance goals and such other
events as the Committee may provide.

 

(i)            DERs.  To the extent provided by the Committee, in
its discretion, a grant of Phantom Units may include a tandem grant of DERs,
which may provide that such DERs shall be paid directly to the Participant at
the time of a distribution with respect to a Unit, be credited to a bookkeeping
account (with or without interest in the discretion of the Committee), be “reinvested”
in Restricted Units or additional Phantom Units and be subject to the same or
different 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.  DERs shall be credited to a
Participant’s DER Account at the time of the corresponding distribution with
respect to a Unit.  Absent any such
provisions in the Award Agreement with respect to DERs granted in tandem with a
Phantom Unit, upon a distribution with respect to a Unit, cash equal in value
to such Unit distribution shall be paid promptly to the Participant by the
General Partner without vesting restrictions with respect to each tandem
Phantom Unit then held.

 

(ii)           UDRs.  To the extent provided by the Committee, in
its discretion, a grant of Restricted Units may provide that the 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.  In
addition, the Committee may provide that such distributions be used to acquire
additional Restricted Units for the Participant.  Such additional Restricted Units may be
subject to such vesting and other terms as the Committee may proscribe.  Absent such a restriction on the UDRs in the
Award Agreement, upon a distribution with respect to the Restricted Unit, such
distribution shall be paid promptly to the holder of the Restricted Unit
without vesting restrictions.

 

(iii)          Forfeitures.  Except as otherwise provided in the terms of
the Restricted Units or Phantom Units grant agreement, upon termination of a
Participant’s employment or consulting services with the Partnership, General
Partner or their 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.

 

(iv)          Lapse of Restrictions.

 

(A)          Phantom Units.  Upon or as soon as reasonably practical
following the vesting of each Phantom Unit, but not later than 30 days after
such vesting unless the Award Agreement specifically provides for a later date,
subject to 

 

6

 

satisfying the tax withholding obligations of
Section 8(b), the Participant shall receive from the General Partner 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 or as soon as reasonably practical
following the vesting of each Restricted Unit, subject to satisfying the tax
withholding obligations of Section 8(b), the Participant shall have the
restrictions removed from his or her Unit certificate so that the Participant
then holds an unrestricted Unit.

 

(c)           Unit Awards.  Unit Awards may be granted under the Plan to
such Employees, Consultants and Directors and in such amounts as the Committee,
in its discretion, may select.  Such
Awards may be in addition to, or in satisfaction of, cash compensation, whether
base salary, incentive or deferred compensation or otherwise, due the
individual.

 

(d)           Other Unit-Based Awards.  Other Unit-Based Awards may be granted under
the Plan to such Employees, Consultants and Directors and in such amounts as
the Committee, in its discretion, may select. 
An Other Unit-Based Award shall be an award denominated in, valued in or
otherwise based on or related to Units, in whole or in part.  The Committee shall determine the terms and
conditions of any such Other Unit-Based Award. 
Upon vesting, an Other Unit-Based Award may be paid in cash, Units
(including Restricted Units) or any combination thereof as provided in the
Award Agreement.

 

(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, an Affiliate or
any other Person.  Awards granted in
addition to or in tandem with other Awards or awards granted under any other
plan of the Partnership, an Affiliate or any other Person 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
subparagraph (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
subparagraph (A) above or subparagraph (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 (or any permitted
transferee or successor holder of the Participant) and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the General Partner, the Partnership and
their Affiliates.

 

7

 

(C)           To the extent specifically
provided and approved by the Committee with respect to an Award, an Award may
be transferred by a Participant without consideration to immediate family
members or related family trusts, limited partnerships or similar entities 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 grant agreement (including, without limitation, any exercise
price or tax withholding) is received by the General Partner or appropriate
Affiliate.

 

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 or provided in any
Award Agreement and subject to Section 7(b) below, the Board may
amend, alter, suspend, discontinue, or terminate the Plan in any manner without
the consent of any member, Participant, other holder or beneficiary of an
Award, or any other Person.  In addition,
except in connection with a corporate transaction involving the General Partner
(including, without limitation, any unit, unit split, extraordinary cash
distribution, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination, or exchange of units), the terms of
outstanding Awards may not be amended to reduce the exercise price of outstanding
Options or SARs or cancel outstanding Options or SARs in exchange for cash,
other Awards or Options or SARs with an exercise price that is less than the
exercise price of the original Options or SARs without unitholder approval.  Notwithstanding 

 

8

 

the foregoing, the Plan may not be terminated with
respect to an Award that is subject to Section 409A of the Internal
Revenue Code of 1986, as amended, unless such termination would not result in
the Award becoming subject to the additional tax under Section 409A.

 

(b)           Amendments to Awards.  Subject to Section 7(a), the Board or
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 vested rights or
benefits (as contrasted with a contingent right or benefit) of a Participant
(or holder) with respect to an outstanding Award without the consent of such
Participant (or holder).  Notwithstanding
anything in the Plan to the contrary, no amendment may be made with respect to
an Award without the Participant’s consent that would cause the Participant to
incur the additional tax provided under Section 409A with respect to such
Award.

 

(c)           Actions Upon the Occurrence of Certain Events.  Upon the occurrence of a Change of Control, a
recapitalization, reorganization, merger, consolidation, combination, exchange
or change in the capitalization of the Partnership, 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 General Partner
or 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 then attained upon the exercise or vesting of
such Award (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 then attained upon the exercise or vesting of
such Award then such Award may be terminated by the Committee 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;

 

9

 

(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.,
the Award shall terminate upon such event.

 

Notwithstanding
the foregoing, with respect to an above event that is an “equity restructuring”
event that would result in a compensation expense pursuant 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 Participant.

 

(b)           Tax Withholding.  Unless other arrangements have been made that
are acceptable to the Committee, the General Partner and any applicable
Affiliate-employer 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
required to be withheld 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 Committee to satisfy the tax withholding obligations with respect to
such Award.  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 Continued Employment, Consulting or
Board Membership.  The grant
of an Award shall not be construed as giving a Participant the right to be
retained in the employ of or provide consulting services to 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 or services or
the Board 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, 

 

10

 

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 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 Partnership or any participating Affiliate and a
Participant or any other Person.  To the
extent that any Person acquires a right to receive payments from the
Partnership or any participating Affiliate pursuant to an Award, such right
shall be no greater than the right of any general unsecured creditor of the
Partnership or any participating 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 and all Affiliates shall
be relieved of any further liability for payment of such amounts.

 

(k)           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.

 

(l)            Compliance with IRC Section 409A.  The Plan and the Award Agreements are
intended to be exempt from Section 409A of the Internal Revenue Code of
1986, as amended, or, if not exempt, to comply with Section 409A to the
extent applicable.  To the extent Section 409A
is applicable, the terms of the Plan and Award Agreements shall be construed as
necessary to comply with Section 409A. 
The provisions of Section 409A and the Treasury regulations
thereunder required to be in the Plan or an Award Agreement are hereby
incorporated by reference and shall control over any provision in conflict
therewith, unless such provision expressly provides to the contrary.  If a payment under an Award is subject to the
provisions of Section 409A(a)(2)(B)(i), such payment shall be delayed to
comply with said Section and shall 

 

11

 

be paid in a lump sum (without interest) on (i) the
first day that is more than six months after the Participant’s separation from
service date or (ii) his death, if earlier.

 

(m)          Participation by Affiliates.  To the extent the Partnership has an
obligation to reimburse the General Partner or an Affiliate for compensation
paid for services rendered for the benefit of the Partnership, such
reimbursements may be made by the Partnership directly or indirectly to the
entity employing the Participant.

 

SECTION 9.           Term of the Plan.

 

The
Plan shall be effective on the day immediately preceding the effective date of
the initial public offering of Units; provided, however, no Award shall become
vested or exercisable prior to the closing date of the initial public offering
of Units.  Subject to the preceding
sentence, the Plan shall continue until the earliest of (i) the date it is
terminated by the Board, (ii) all Units available under the Plan have been
paid to Participants or beneficiaries, or (iii) the 10th anniversary of
the date the Plan is adopted by the Board; provided, however, any Award granted
prior to such termination, and the authority of the Board or 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.

 

12

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