QUEST MIDSTREAM PARTNERS, L.P. RESTRICTED UNIT AWARD AGREEMENT
Staff with more than 18 months service
QUEST MIDSTREAM PARTNERS, L.P.
RESTRICTED UNIT AWARD AGREEMENT
| Date of Grant: | December 7, 2009 |
| Number of Common Units: | ______ Common Units |
THIS AGREEMENT, dated as of December 7, 2009, is between Quest Midstream GP, LLC, a Delaware limited liability company (the "Company") and _____________ ("Recipient").
RECITALS:
A. Recipient is a valued and trusted employee of the Company or one of its Affiliates.
B. The Company has elected to issue Recipient rights to Common Units of Quest Midstream Partners, L.P. (the "Partnership") (as the term "Common Unit" is defined in the Second Amended and Restated Agreement of Limited Partnership of Quest Midstream Partners, L.P., dated November 1, 2007, and as it may be amended from time to time (the "Partnership Agreement") pursuant to and in accordance with this Agreement, in order that Recipient thereby may be induced to obtain an ownership interest in the Partnership and to advance the interests of the Partnership and its Affiliates.
AGREEMENT:
In consideration of the mutual premises and covenants contained herein and other good and valuable consideration paid by Recipient to the Company, the Company and Recipient agree as follows:
| Section 1. | Promise to Deliver Units |
The Company will issue and deliver to Recipient, subject to the conditions set forth in this Agreement, that number of Common Units of the Partnership identified above opposite the heading "Number of Common Units" (the "Units"). The Units, which will be issued by the Partnership subject to the conditions set forth herein, will be issued in the name of Recipient or a nominee of Recipient on the applicable Transfer Date (as identified and defined below in this Section 1) for each such Unit. Once a Unit has been transferred, the Unit will be freely transferable under this Agreement, subject only to such further limitations on transfer, if any, as may exist under the Partnership Agreement, applicable law or any other agreement binding upon Recipient.
Provided Recipient's right to receive the Units has not already been forfeited pursuant to Section 3 and subject to any exceptions listed elsewhere herein, Recipient's rights to the Units shall vest, and the Units will be transferred, in proportional amounts (with any number(s) not evenly divisible being allocated to the earliest tranche), on the applicable dates identified below (the "Transfer Dates"):
Number of Units | Transfer Date |
______ Common Units (20% of the total number of Units) | December 23, 2009 |
_____ Common Units (20% of the total number of Units) | Earlier of (i) September 23, 2010 or (ii) a Liquidity Event |
_____ Common Units (20% of the total number of Units) | Earlier of (i) September 23, 2011 or (ii) a Liquidity Event |
_____ Common Units (20% of the total number of Units) | Earlier of (i) September 23, 2012 or (ii) a Liquidity Event |
_____ Common Units (20% of the total number of Units) | Earlier of (i) September 23, 2013 or (ii) a Liquidity Event |
For purposes of this Agreement, a "Liquidity Event" shall mean the earlier of (i) the expiration date of any "lock up agreement" entered into by Recipient in connection with an Initial Public Offering (as defined in the Partnership Agreement) or (ii) the consummation date of a sale of all or substantially all of the assets of the Partnership or the merger of the Partnership into another entity other than a merger where the holders of voting securities of the Partnership immediately prior to the merger own, directly or indirectly, not less than a majority of the outstanding voting securities of the surviving entity or its parent, provided, however, that a sale of the KPC Pipeline alone, without any other assets, shall not constitute a Liquidity Event. In no event will Recipient's right to one or more Units vest and be transferred prior to its corresponding Transfer Date. None of the completion of any transaction that will occur in the Recombination (as defined in Section 5), nor the completion of the Recombination, is a Liquidity Event.
| Section 2. | Consideration to the Company |
In consideration of the awarding of the Units by the Company, Recipient agrees to render faithful and efficient services as an employee of the Company or an Affiliate. Nothing in this Agreement will confer upon Recipient any right to continue as an employee of the Company or an Affiliate or will interfere with or restrict in any way the rights of the Company or an Affiliate, which are hereby expressly reserved, to terminate Recipients employment with the Company or an Affiliate at any time for any reason whatsoever, with or without cause.
| Section 3. | Forfeiture of Right to Receive Units Prior to Transfer |
Unless otherwise provided herein, if the Company or its Affiliate terminates Recipient's employment or Recipient terminates employment with the Company or its Affiliate, for any reason, before one or more of the Transfer Dates for some or all of the Units, all of the Recipient's right to receive additional Units under this Agreement and all rights to receive an amount of cash equal to the per Unit cash distribution (excluding any distribution made to holders of Units made to cover any applicable federal, state or other tax liability) made by the Partnership to, and to the same extent received by, the holders of Common Units under the Partnership Agreement
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("UDRs"), if any, shall immediately be forfeited. Upon such forfeiture, Recipient shall have no further rights under this Agreement.
If Recipient's employment with the Company or its Affiliate terminates as a result of Recipient's death or Disability (as defined below), then all unvested Units under this Agreement and all rights to receive UDRs, except those declared but not yet paid prior to the Recipient's termination, if any, shall immediately be forfeited. All Units under this Agreement, to the extent they have vested but not yet been transferred, will be transferred, along with any payment related to UDRs, to Recipient or Recipient's designated beneficiary, as the case may be, within 60 days of the date of Recipient's death or Disability, as applicable. For purposes of this Agreement, "Disability" shall have the meaning assigned to it by Section 409A of the Internal Revenue Code (the "Code").
| Section 4. | No Assignment of Rights |
Subject to any exceptions set forth elsewhere herein, none of the rights to receive the Units may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by Recipient, and Recipient agrees not to attempt to sell, assign, transfer, pledge, hypothecate or otherwise dispose of such rights. Any attempt to sell, assign, transfer, pledge, hypothecate or otherwise dispose of a right to receive a Unit under this Agreement shall be null and void.
| Section 5. | Acknowledgement of Rights of the Company in Event of Change in Control |
By executing this Agreement, Recipient agrees and acknowledges that in the event of a Change in Control (as defined below), the Company shall accelerate the Transfer Dates applicable to the Units to the date of the Change in Control. No such action shall be taken in a manner that would cause the Units to be subject to Code Section 409A.
For purposes of this Agreement, a "Change in Control" means and shall be deemed to have occurred upon the occurrence of 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 Securities Exchange Act of 1934, as amended, other than an Affiliate of the Company, Swank MLP Convergence Fund, L.P. Alerian Capital Management LLC, Tortoise Capital Resources Corporation or Huizenga Opportunity Partners, LP, shall become the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined voting power of the equity interests in Quest Resource Corporation, the Company or the Partnership;
(ii) the limited partners of the Partnership approve, in one or a series of transactions, a plan of complete liquidation of the Partnership;
(iii) the sale or other disposition by either the Company or the Partnership of all or substantially all of its assets in one or more transactions to any Person other than the Company, an Affiliate of the Company, Swank MLP Convergence Fund, L.P., Alerian Capital Management LLC, Tortoise Capital Resources Corporation or Huizenga Opportunity Partners, LP; or
(iv) a transaction resulting in a Person other than the Company or an Affiliate of the Company being the general partner of the Partnership.
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Notwithstanding anything in this Agreement to the contrary, none of the completion of any transaction that will occur in the "recombination" described in the Registration Statement of PostRock Energy Corporation ("PostRock") on Form S-4 filed with the Securities and Exchange Commission (the "SEC") on October 6, 2009 (Registration No. 333-162366) (the "Recombination"), nor completion of the Recombination, shall be considered a Change in Control for purposes of this Agreement.
In the event of the completion of the Recombination, without any requirement or obligation to obtain the Recipients consent, the Compensation Committee of the Board of Directors of PostRock shall provide that any unvested Units hereunder shall be exchanged for rights covering the equity of PostRock, with appropriate adjustments as to the number and kind of equity interests; such rights shall be evidenced in such manner as determined by the Compensation Committee. Any rights with respect to UDRs or the transfer of Units upon a Liquidity Event or Change in Control hereunder shall not apply to any PostRock equity interests received in exchange for the Units, and such rights shall be of no further force and effect on or after the date of the Recombination. The determinations of such Compensation Committee with respect to the exchange, adjustments, and terms and conditions of the PostRock equity interests received in exchange for the Units shall be made in accordance with the Agreement and Plan of Merger, dated July 2, 2009, as amended, governing the Recombination and shall be conclusive and binding on all parties.
| Section 6. | Voting Rights and UDRs |
Recipient shall have no voting rights with respect to any of the Units until a Unit has been transferred to Recipient. Following a Transfer Date, Recipient shall have such voting rights, if any, as are provided to the holders of Units under the Partnerships partnership agreement or as provided under applicable law. From the Date of Grant until the Transfer Date, Recipient shall be entitled to receive UDRs. Such UDRs will be paid to Recipient as soon as reasonably practicable following the date such distributions are paid to holders of the Units of the same type to which such UDRs relate, but in no event later than the 60th day after the date of such corresponding distribution. Under no circumstances shall Recipient's right to receive the benefit of UDRs on the Units be interpreted or construed as such Units being owned by Recipient or as Recipient having any rights as a holder of Common Units greater than those set forth herein. Following a Transfer Date, no UDRs shall be paid on any Unit that has been delivered; however, Recipient shall be entitled to any distribution made to holders of the same type of Unit under the Partnership Agreement with respect to such unrestricted Unit. For the avoidance of doubt, at no point in time will Participant be entitled to both actual distributions paid on Common Units and UDRs.
| Section 7. | Adjustments |
Notwithstanding any provision herein to the contrary, in the event of any change in the number of outstanding Common Units of the Partnership effected without receipt of consideration therefor by the Partnership, by reason of a merger, reorganization, consolidation, recapitalization, separation, liquidation, unit dividend, unit split, unit combination or other change in the corporate structure of the Partnership affecting the Common Units, the Recipient's right to receive Units under this Agreement will be automatically adjusted to accurately and equitably reflect the effect thereon of such change. In the event of a dispute concerning such adjustment, the decision of the Company will be conclusive. None of the completion of any transaction that will occur in the Recombination, nor completion of the Recombination, is a change subject to the provisions of this Section 7.
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| Section 8. | Amendment and Cancellation |
This Agreement may be amended or cancelled at any time provided that, to the extent any amendment would be materially adverse to Recipient or in the event of the cancellation of this Agreement, both the Company and Recipient consent to the terms of such amendment or cancellation. The foregoing notwithstanding, no amendment or cancellation shall be made or valid that would result in the Units becoming subject to Code Section 409A.
| Section 9. | Withholding of Tax |
To the extent that the transfer of a Unit results in the receipt of compensation by Recipient with respect to which the Company or an Affiliate has a tax withholding obligation pursuant to applicable law, upon the vesting of any Unit, the Company will withhold an amount of Units required to satisfy such tax withholding obligation.
| Section 10. | Entire Agreement |
This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to the Units granted hereby. Without limiting the scope of the preceding sentence, all prior understandings and agreements, if any, among the parties hereto relating to the subject matter hereof are hereby null and void and of no further force and effect. Except as provided with respect to the exchange of the Units for PostRock equity interests in the event of the completion of the Recombination as set forth in Section 5, a modification of this Agreement shall be effective only if it is in writing and signed by both Recipient and an authorized officer of the Company.
| Section 11. | Designation of Beneficiary |
Recipient may designate a person or persons to receive, in the event of Recipient's death, any Units then being transferred or other property then or thereafter distributable relating to the Units. Such designation must be made either in the space indicated at the end of this Agreement or upon forms supplied by and delivered to the Company or its delegate and may be revoked in writing. If Recipient fails effectively to designate a beneficiary, the estate of Recipient will be deemed to be the beneficiary of Recipient with respect to any such Units or other property.
| Section 12. | Applicable Law |
This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, excluding its conflict of laws provisions.
| Section 13. | Section 409A |
The rights to, and distribution of, the Units granted hereunder are intended to be exempt from the requirements of Section 409A of the Code under the "short-term deferral exclusion" as defined thereunder, and this Agreement shall be interpreted and administered in a manner consistent with that intent.
[Execution and Beneficiary Designation Page To Follow]
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The parties to this Agreement have executed this Agreement as of the date first above stated.
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| QUEST MIDSTREAM GP, LLC | |
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