Document:

exv10w1

 

Exhibit 10.1

Execution Copy

 

OMNIBUS AGREEMENT

AMONG

EAGLE ROCK ENERGY PARTNERS, L.P.

EAGLE ROCK ENERGY G&P, LLC

EAGLE ROCK ENERGY GP, L.P.

AND

EAGLE ROCK HOLDINGS, L.P.

 

 

 

OMNIBUS AGREEMENT

     THIS OMNIBUS AGREEMENT (“Agreement”) is entered into on, and effective as of, the Closing Date
(as defined herein), and is by and among Eagle Rock Energy Partners, L.P., a Delaware limited
partnership (the “MLP”), Eagle Rock Energy G&P, LLC, a Delaware limited liability company (“G&P”),
Eagle Rock Energy GP, L.P., a Delaware limited partnership (the “General Partner”) and Eagle Rock
Holdings, L.P., a Texas limited partnership (“Holdings”). The above-named entities are sometimes
referred to in this Agreement each as a “Party” and collectively as the “Parties.”

R E C I T A L S:

     The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article II and Article III of this Agreement, with respect to certain
indemnification and reimbursement obligations of the Parties.

     In consideration of the premises and the covenants, conditions, and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

Definitions

     1.1 Definitions. (a) Capitalized terms used herein but not defined shall have the meanings
given them in the MLP Agreement.

          (b) As used in this Agreement, the following terms shall have the respective meanings set
forth below:

     “Agreement” means this Omnibus Agreement, as it may be amended, modified or
supplemented from time to time in accordance with the terms hereof.

     “Basket” has the meaning given such term in Section 2.3(b).

     “Cause” has the meaning ascribed thereto in the MLP Agreement.

     “Change of Control” means, with respect to any Person (the “Applicable Person”), any of
the following events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the Applicable Person’s
assets to any other Person, unless immediately following such sale, lease, exchange or other
transfer such assets are owned, directly or indirectly, by the Applicable Person; (ii) the
dissolution or liquidation of the Applicable Person; (iii) the consolidation or merger of
the Applicable Person with or into another Person pursuant to a transaction in which the
outstanding Voting Securities of the Applicable Person are changed into or exchanged for
cash, securities or other property, other than any such
transaction where (a) the outstanding Voting Securities of the Applicable Person are
changed into or exchanged for Voting Securities of the surviving Person or its parent and

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(b) the holders of the Voting Securities of the Applicable Person immediately prior to such
transaction own, directly or indirectly, not less than a majority of the outstanding Voting
Securities of the surviving Person or its parent immediately after such transaction; and
(iv) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange
Act) becoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act) of more than 50% of all of the then outstanding Voting Securities of the Applicable
Person, except in a merger or consolidation which would not constitute a Change of Control
under clause (iii) above.

     “Closing Date” means the date of the closing of the initial public offering of Common
Units.

     “Common Unit” has the meaning given such term in the MLP Agreement.

     “Conflicts Committee” has the meaning given such term in the MLP Agreement.

     “Covered Environmental Losses” means all environmental Losses, (including, without
limitation, costs and expenses of any Environmental Activity) of any and every kind or
character, by reason of or arising out of:

     (i) any violation or correction of violation, including without limitation performance
of any Environmental Activity, of Environmental Laws; or

     (ii) any event, omission or condition associated with ownership or operation of the MLP
Assets (including, without limitation, the exposure to or presence of Hazardous Substances
on, under, about or migrating to or from the MLP Assets or the exposure to or Release of
Hazardous Substances arising out of operation of the MLP Assets at non-MLP Asset locations),
including, without limitation, (A) the cost and expense of any Environmental Activities, and
(B) the cost and expense for any environmental or toxic tort pre-trial, trial or appellate
legal or litigation support work, but only to the extent that such violation described in
clause (i), or such events, omissions or conditions described in clause (ii), occurred
before the Closing Date.

     “Environmental Activities” shall mean any investigation, study, assessment, evaluation,
sampling, testing, monitoring, containment, removal, disposal, closure, corrective action,
remediation (regardless of whether active or passive), natural attenuation, restoration,
bioremediation, response, repair, corrective measure, cleanup or abatement that is required
or necessary under any applicable Environmental Law, including, without limitation,
institutional or engineering controls or participation in a governmental voluntary cleanup
program to conduct voluntary investigatory and remedial actions for the clean-up, removal or
remediation of Hazardous Substances that exceed actionable levels established pursuant to
Environmental Laws, or participation in a supplemental environmental project in partial or
whole mitigation of a fine or penalty.

     “Environmental Laws” means all federal, state, and local laws, statutes, rules,
regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental
Permits and other legally enforceable requirements and rules of common law relating to

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(a) pollution or protection of the environment or natural resources including, without
limitation, the federal Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Oil Pollution Act of 1990, the Federal Hazardous Materials
Transportation Law, the Marine Mammal Protection Act, the Endangered Species Act, the
National Environmental Policy Act and other environmental conservation and protection laws,
each as amended through the Closing Date, (b) any Release or threatened Release of, or any
exposure of any Person or property to, any Hazardous Substances and (c) the generation,
manufacture, processing, distribution, use, treatment, storage, transport or handling of any
Hazardous Substances.

     “Environmental Permit” means any permit, approval, identification number, license,
registration, consent, exemption, variance or other authorization required under or issued
pursuant to any applicable Environmental Law.

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

     “G&P” has the meaning given such term in the introduction to this Agreement.

     “General Partner” has the meaning given such term in the introduction to this
Agreement.

     “Hazardous Substance” means (a) any substance that is designated, defined or classified
under any Environmental Law as a hazardous waste, solid waste, hazardous material,
pollutant, contaminant or toxic or hazardous substance, or terms of similar meaning, or that
is otherwise regulated under any Environmental Law, including, without limitation, any
hazardous substance as defined under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, (b) oil as defined in the Oil Pollution Act of 1990, as
amended, including, without limitation, oil, gasoline, natural gas, fuel oil, motor oil,
waste oil, diesel fuel, jet fuel and other refined petroleum hydrocarbons and petroleum
products and (c) radioactive materials, asbestos containing materials or polychlorinated
biphenyls.

     “Holdings” has the meaning given such term in the introduction to this Agreement.

     “Indemnified Party” means the Partnership Group in their capacity as the parties
entitled to indemnification in accordance with Article II.

     “Indemnifying Party” means the General Partner, G&P and Holdings, collectively in their
capacity as the parties from whom indemnification may be required in accordance with Article
II.

     “Losses” means any losses, damages, liabilities, claims, demands, causes of action,
judgments, settlements, fines, penalties, costs and expenses (including, without

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limitation,
court costs and reasonable attorney’s and experts’ fees) of any and every kind or character.

     “MLP” has the meaning given such term in the introduction to this Agreement.

     “MLP Agreement” means the First Amended and Restated Agreement of Limited Partnership
of the MLP, dated as of the Closing Date, as such agreement is in effect on the Closing
Date, to which reference is hereby made for all purposes of this Agreement. An amendment or
modification to the MLP Agreement subsequent to the Closing Date shall be given effect for
the purposes of this Agreement only if it has received the approval of the Conflicts
Committee that would be required, if any, pursuant to Section 4.6 hereof if such amendment
or modification were an amendment or modification of this Agreement.

     “MLP Assets” means the pipelines, processing plants or related equipment or assets, or
portions thereof, conveyed, contributed or otherwise transferred or intended to be conveyed,
contributed or otherwise transferred to any member of the Partnership Group, or owned by,
leased by or necessary for the operation of the business, properties or assets of any member
of the Partnership Group, prior to or as of the Closing Date.

     “Organizational Documents” means certificates of incorporation, by-laws, certificates
of formation, limited liability company operating agreements, certificates of limited
partnership or limited partnership agreements or other formation or governing documents of a
particular entity.

     “Partnership Entities” means G&P, the General Partner and each member of the
Partnership Group.

     “Partnership Group” means the MLP and any Subsidiary of the MLP.

     “Party” or “Parties” have the meaning given such terms in the introduction to this
Agreement.

     “Person” means an individual, corporation, partnership, joint venture, trust, limited
liability company, unincorporated organization or any other entity.

     “Registration Statement” has the meaning given such term in the MLP Agreement.

     “Release” means any depositing, spilling, leaking, pumping, pouring, placing, emitting,
discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching,
dumping or disposing into the environment.

     “Subsidiary” has the meaning given such term in the MLP Agreement.

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     “Voting Securities” means securities of any class of a Person entitling the holders
thereof to vote in the election of, or to appoint, members of the board of directors or
other similar governing body of the Person.

ARTICLE II

Indemnification

     2.1 Environmental Indemnification. Subject to the provisions of Section 2.3 and Section 2.4,
the Indemnifying Party shall indemnify, defend and hold harmless the Indemnified Party from and
against any Covered Environmental Losses suffered or incurred by the Indemnified Party and arising
from or relating to the MLP Assets for a period of two (2) years from the Closing Date.

     2.2 Additional Indemnification. Subject to the provisions of Section 2.3 and Section 2.4, the
Indemnifying Party shall indemnify, defend and hold harmless the Indemnified Party from and against
any Losses suffered or incurred by the Indemnified Party by reason of or arising from:

          (a) the failure of the Partnership Group to be the owner of valid and indefeasible easement
rights, leasehold and/or fee ownership interests in and to the lands on which are located any MLP
Assets, and such failure renders the Partnership Group liable to a third party or unable to use or
operate the MLP Assets in substantially the same manner that the MLP Assets were used and operated
by Holdings and its Subsidiaries immediately prior to the Closing Date;

          (b) the failure of the Partnership Group to have on the Closing Date any consent or
governmental permit necessary to allow (i) the transfer of any of the MLP Assets to the Partnership
Group on the Closing Date or (ii) the Partnership Group to use or operate the MLP Assets in
substantially the same manner that the MLP Assets were owned and operated by Holdings and its
Subsidiaries immediately prior to the Closing Date;

          (c) all federal, state and local income tax liabilities attributable to the ownership or
operation of the MLP Assets prior to the Closing Date, including any such income tax liabilities of
Holdings and its Subsidiaries that may result from the consummation of the formation transactions
for the Partnership Entities, but excluding any such liabilities attributable to federal, state and
local income taxes reserved on the books of the Partnership Group as of the Closing Date;

          (d) all liabilities, other than Covered Environmental Losses and other than liabilities
incurred in the ordinary course of business conducted in compliance with applicable laws, that
arise out of the operation of the MLP Assets prior to the Closing Date; and

          (e) all liabilities attributable to any assets or liabilities retained by the Indemnifying
Party.

provided, however, that, in the case of clauses (a), (b) and (d) above, such indemnification
obligations shall survive for two (2) years from the Closing Date; and that in the case of clauses

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(c) and (e) above, such indemnification obligations shall survive until sixty (60) days after the
expiration of any applicable statute of limitations.

     2.3 Limitations Regarding Indemnification.

          (a) The aggregate liability of the Indemnifying Party under Section 2.1 shall not exceed $7.5
million and the aggregate liability of the Indemnifying Party under Section 2.2(d) shall not exceed
$5.0 million.

          (b) Subject to the limitations of Section 2.3(a), no claims may be made against the
Indemnifying Party for indemnification pursuant to Section 2.1 unless the aggregate dollar amount
of the Losses suffered or incurred by the Indemnified Party exceed $750,000, but the Indemnifying
Party shall be liable for the full amount of such claims in excess of $750,000 (the “Basket”),
provided, however, that individual claims or a series of related claims that do not exceed $25,000
shall not be charged against the Basket.

          (c) Subject to the limitations of Section 2.3(a), no claims may be made against the
Indemnifying Party for indemnification pursuant to Section 2.2(d) unless the aggregate dollar
amount of the Losses suffered or incurred by the Indemnified Party exceed $500,000, but the
Indemnifying Party shall be liable for the full amount of such claims in excess of $500,000.

          (d) Notwithstanding anything herein to the contrary, in no event shall the Indemnifying Party
have any indemnification obligations under this Agreement for claims made as a result of additions
to or modifications of Environmental Laws promulgated after the Closing Date.

          (e) Notwithstanding anything herein to the contrary, the liability of the Indemnifying Party
for any indemnification obligations under this Agreement will be subject to reduction for (i) any
insurance proceeds realized by the Indemnified Party with respect to the indemnified matter, net of
any premium that becomes due and payable as a result of such claim, (ii) any amounts recovered by
the Indemnified Party under contractual indemnities from third parties and (iii) up to $2.1 million
of costs incurred by the MLP to conduct environmental investigations, implement spill prevention,
control and countermeasure (“SPCC”) plans and perform selected cavern closures on 11 properties, in
each case as described under the heading “Business–Environmental Matters” in the Registration
Statement. The MLP hereby agrees to use commercially reasonable efforts to realize any applicable
insurance proceeds and amounts recoverable under such contractual indemnities.

          (f) The liability of the Indemnifying Party for any indemnification obligations under Section
2.2(d) of this Agreement will be reduced by any amounts reserved or accrued for such Losses on the
balance sheet of the MLP as of December 31, 2005.

     2.4 Indemnification Procedures.

          (a) The Indemnified Party agrees that within a reasonable period of time after it becomes
aware of facts giving rise to a claim for indemnification pursuant to this Article II, it will
provide notice thereof in writing to the Indemnifying Party specifying the nature of and

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specific basis for such claim; provided, however, that the Indemnified Party shall not submit
claims more frequently than once a calendar quarter (or twice in the case of the last calendar
quarter prior to the expiration of the applicable indemnity coverage under this Agreement).

          (b) The Indemnifying Party shall have the right to control all aspects of the defense of (and
any counterclaims with respect to) any claims brought against the Indemnified Party that are
covered by the indemnification set forth in this Article II, including, without limitation, the
selection of counsel (provided that if such claim involves Covered Environmental Losses, such
counsel shall be reasonably acceptable to the Indemnified Party), determination of whether to
appeal any decision of any court and the settling of any such matter or any issues relating
thereto; provided, however, that no such settlement shall be entered into without the consent
(which consent shall not be unreasonably withheld, conditioned or delayed) of the Indemnified Party
unless it includes a full release of the Indemnified Party from such matter or issues, as the case
may be.

          (c) The Indemnified Party agrees to cooperate fully with the Indemnifying Party with respect
to all aspects of the defense of any claims covered by the indemnification set forth in Article II,
including, without limitation, the prompt furnishing to the Indemnifying Party of any
correspondence or other notice relating thereto that the Indemnified Party may receive, permitting
the names of the Indemnified Party to be utilized in connection with such defense, the making
available to the Indemnifying Party of any files, records or other information of the Indemnified
Party that the Indemnifying Party considers relevant to such defense and the making available to
the Indemnifying Party of any employees of the Indemnified Party; provided, however, that in
connection therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact
thereof on the operations of the Indemnified Party and further agrees to maintain the
confidentiality of all files, records and other information furnished by the Indemnified Party
pursuant to this Section 2.4. In no event shall the obligation of the Indemnified Party to
cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be
construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in
connection with the defense of any claims covered by the indemnification set forth in this Article
II; provided, however, that the Indemnified Party may, at its own option, cost and expense, hire
and pay for counsel in connection with any such defense. The Indemnifying Party agrees to keep any
such counsel hired by the Indemnified Party reasonably informed as to the status of any such
defense, but the Indemnifying Party shall have the right to retain sole control over such defense.

          (d) The indemnification obligations under this Article II shall continue with respect to any
claim for indemnification pursuant to this Article II that is pending as of the end of the
applicable survival period notwithstanding the expiration of such survival period.

ARTICLE III

Reimbursement Obligations

     3.1 Reimbursement for Operating and General and Administrative Expenses.

          (a) Each of G&P and Holdings hereby agrees to continue to provide, or cause to be provided,
the Partnership Group with general and administrative services, such as legal,

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accounting,
treasury, insurance administration and claims processing, risk management, health, safety and
environmental, information technology, human resources, credit, payroll, internal audit, taxes and
engineering, that are substantially identical in nature and quality to the services of such type
previously provided by each of G&P and Holdings in connection with their management and operation
of the MLP Assets during the one-year period prior to the Closing Date.

          (b) The Partnership Group hereby agrees to reimburse each of G&P and Holdings for all expenses
and expenditures they incur or payments they make on behalf of the Partnership Group in connection
with the business and operations of the Partnership Group, including, but not limited to, (i)
salaries of operational personnel performing services on the Partnership Group’s behalf and the
cost of employee benefits for such personnel, (ii) capital expenditures and (iii) maintenance and
repair costs.

          (c) The General Partner shall be entitled to allocate any such expenses and expenditures
between the Partnership Group, on the one hand, and G&P and Holdings, on the other hand, in
accordance with the foregoing provision on any reasonable basis.

     3.2 Reimbursement for Insurance. The Partnership Group hereby agrees to reimburse each of G&P
and Holdings for all expenses they incur or payments they make on behalf of the Partnership Group
for (i) insurance coverage with respect to the MLP Assets, (ii) insurance coverage with respect to
claims related to fiduciary obligations of officers, directors and control persons of the
Partnership Group and (iii) insurance coverage with respect to claims under federal and state
securities laws related to any of the officers, directors and control persons thereof.

ARTICLE IV

Miscellaneous

     4.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be subject to and governed
by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might
refer the construction or interpretation of this Agreement to the laws of another state. Each Party
hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to
venue in Texas.

     4.2 Notice. All notices, requests or consents provided for or permitted to be given pursuant
to this Agreement must be in writing and must be given by depositing same in the United States
mail, addressed to the Person to be notified, postpaid, and registered or certified with return
receipt requested or by delivering such notice in person or by telecopier or telegram to such
Party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice
given by telegram or telecopier shall be effective upon actual receipt if received during the
recipient’s
normal business hours, or at the beginning of the recipient’s next business day after receipt
if not received during the recipient’s normal business hours. All notices to be sent to a Party
pursuant to this Agreement shall be sent to or made at the address set forth below or at such other
address as such Party may stipulate to the other Parties in the manner provided in this Section
4.2.

EAGLE ROCK ENERGY PARTNERS, L.P.

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14950 Heathrow Forest Parkway, Suite 111

Houston, Texas 77032

Phone: (832) 329-8000

Fax: (832) 327-8009

Attention: Alex A. Bucher, Jr.

     4.3 Entire Agreement. This Agreement constitutes the entire agreement of the Parties relating
to the matters contained herein, superseding all prior contracts or agreements, whether oral or
written, relating to the matters contained herein.

     4.4 Termination. Notwithstanding any other provision of this Agreement, if the General Partner is
removed as general partner of the MLP under circumstances where Cause does not exist and Common
Units held by the General Partner and its Affiliates are not voted in favor of such removal, this
Agreement may immediately thereupon be terminated by either G&P or Holdings. This Agreement shall
also terminate upon a Change of Control of G&P, the General Partner or the MLP.

     4.5 Effect of Waiver or Consent. No waiver or consent, express or implied, by any Party to or
of any breach or default by any Person in the performance by such Person of its obligations
hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such Person of the same or any other obligations of such Person
hereunder. Failure on the part of a Party to complain of any act of any Person or to declare any
Person in default, irrespective of how long such failure continues, shall not constitute a waiver
by such Party of its rights hereunder until the applicable statute of limitations period has run.

     4.6 Amendment or Modification. This Agreement may be amended or modified from time to time
only by the written agreement of all the Parties; provided, however, that the MLP may not, without
the prior approval of the Conflicts Committee, agree to any amendment or modification of this
Agreement that, in the reasonable discretion of the General Partner, will have a material adverse
effect on the holders of Common Units. Each such instrument shall be reduced to writing and shall
be designated on its face an “Amendment” or an “Addendum” to this Agreement.

     4.7 Assignment; Third Party Beneficiaries. No Party shall have the right to assign its rights or obligations under this Agreement
without the prior written consent of the other Parties. Each of the Parties hereto specifically
intends that Holdings and each entity comprising the Partnership Entities, as applicable, whether
or not a Party to this Agreement, shall be entitled to assert rights and remedies hereunder as
third-party beneficiaries hereto with respect to those provisions of this Agreement affording a
right, benefit or privilege to any such entity.

     4.8 Counterparts. This Agreement may be executed in any number of counterparts with the same
effect as if all signatory Parties had signed the same document. All counterparts shall be
construed together and shall constitute one and the same instrument.

     4.9 Severability. If any provision of this Agreement or the application thereof to any Person
or circumstance shall be held invalid or unenforceable to any extent, the remainder of this

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Agreement and the application of such provision to other Persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.

     4.10 Gender, Parts, Articles and Sections. Whenever the context requires, the gender of all
words used in this Agreement shall include the masculine, feminine and neuter, and the number of
all words shall include the singular and plural. All references to Article numbers and Section
numbers refer to Articles and Sections of this Agreement.

     4.11 Further Assurances. In connection with this Agreement and all transactions contemplated
by this Agreement, each Party agrees to execute and deliver such additional documents and
instruments and to perform such additional acts as may be necessary or appropriate to effectuate,
carry out and perform all of the terms, provisions and conditions of this Agreement and all such
transactions.

     4.12 Withholding or Granting of Consent. Each Party may, with respect to any consent or
approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or
approval in its sole and uncontrolled discretion, with or without cause, and subject to such
conditions as it shall deem appropriate.

     4.13 Laws and Regulations. Notwithstanding any provision of this Agreement to the contrary, no
Party shall be required to take any act, or fail to take any act, under this Agreement if the
effect thereof would be to cause such Party to be in violation of any applicable law, statute, rule
or regulation.

     4.14 Negation of Rights of Limited Partners, Assignees and Third Parties. Except as set forth
in Section 4.7, the provisions of this Agreement are enforceable solely by the Parties, and no
limited partner, member, or assignee of Holdings or the MLP or other Person shall have the right,
separate and apart from Holdings or the MLP, to enforce any provision of this Agreement or to
compel any Party to comply with the terms of this Agreement.

     4.15 No Recourse Against Officers or Directors. For the avoidance of doubt, the provisions of
this Agreement shall not give rise to any right of recourse against any officer or director of
Holdings or any Partnership Entity.

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     IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the
Closing Date.

	 	 	 	 	 	 	 	 	 
	 	 	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/ ALEX A. BUCHER 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Alex A. Bucher	 	 
	 

	 	 	 	Title:
	 	President and Chief Executive
Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	EAGLE ROCK ENERGY G&P, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ ALEX A. BUCHER
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Alex A. Bucher	 	 
	 

	 	 	 	Title:
	 	President and Chief Executive
 Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	EAGLE ROCK ENERGY GP, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	EAGLE ROCK ENERGY G&P, LLC, its
 general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ ALEX A. BUCHER
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Alex A. Bucher	 	 
	 

	 	 	 	Title:
	 	President and Chief Executive
Officer	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	EAGLE ROCK HOLDINGS, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	EAGLE ROCK GP, L.L.C., its general 
partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ ALEX A. BUCHER	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Alex A. Bucher	 	 
	 

	 	 	 	Title:
	 	President and Chief Executive
 Officer	 	 

EAGLE ROCK ENERGY PARTNERS, L.P.

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Exhibit 10.2

EAGLE ROCK ENERGY PARTNERS

LONG-TERM INCENTIVE PLAN

     SECTION 1. Purpose of the Plan.

     The Eagle Rock Energy Partners Long-Term Incentive Plan (the “Plan”) has been adopted 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”). 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 or 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 Section 409A of the
Internal Revenue Code, “Change of Control” shall have the meaning ascribed to “change of control
events” in the regulations issued with respect to Section 409A.

     “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

-2-

 

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.

     “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

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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 1,000,000.
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

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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.

     SECTION 6. Awards.

     (a) Options. The Committee shall have the authority to determine the Employees,
Consultants and Directors to whom Options shall be granted, 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.

     (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

-5-

 

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.

     (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.

     (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.

     (iv) Lapse of Restrictions.

     (A) Phantom Units. Upon or as soon as reasonably practical following
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 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 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

-6-

 

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 such substitution.

     (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.

-7-

 

     (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.

     (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:

     (A) provide for either (i) 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

-8-

 

such Award may be terminated by the Company without payment) or (ii) the
replacement of such Award with other rights or property selected by the Committee in
its sole discretion;

     (B) 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;

     (C) 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;

     (D) provide that such Award shall be exercisable or payable, notwithstanding
anything to the contrary in the Plan or the applicable Award Agreement; and

     (E) provide that the Award cannot be exercised or become payable after such
event, i.e., shall terminate upon such event.

Notwithstanding the foregoing, with respect to an above event that is an “equity
restructuring” event that would be subject to a compensation expense pursuant FAS 123R, the
provisions in Section 4c 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

-9-

 

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.

-10-

 

     (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.

     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.

-11-

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