FORM OF PERFORMANCE UNIT AGREEMENT
EXHIBIT 10.1
FORM OF PERFORMANCE UNIT AGREEMENT
Crosstex Energy GP, LLC (“Company”) hereby agrees to award to the participant named below
(“Participant”) the number of common units representing limited partner interests of Crosstex
Energy, L.P. (the “Units”), in accordance with and subject to the terms, conditions and
restrictions of this Agreement. If the conditions described below are satisfied, such award will
be made under the terms of the Crosstex Energy GP, LLC Long Term Incentive Plan (the “Plan”) on the
Future Award Date.
1. Definitions. Capitalized terms used herein and not otherwise defined herein shall
have the meaning ascribed to them in the Plan.
(a) The basic terms of this Award include the following:
“Participant”
|
_______ | |
“Target Number of Units”
|
___ Units | |
“Minimum Number of Units”
|
___% of Target | |
“Maximum Number of Units”
|
___% of Target | |
“Commencement Date”
|
______, 20___ | |
“Grant Date”
|
______, 20___ | |
“Future Award Date”
|
______, 20___ | |
“Vesting Date”
|
___, 20___ | |
“Target Growth Rate”
|
___% | |
“Minimum Growth Rate”
|
___% | |
“Maximum Growth Rate”
|
___% |
(b) Other definitions include the following:
“Cause” means (i) Participant has failed to perform the duties assigned to him and such
failure has continued for thirty (30) days following delivery by Company of written notice to
Participant of such failure, (ii) Participant has been convicted of a felony or misdemeanor
involving moral turpitude, (iii) Participant has engaged in acts or omissions against Company
constituting dishonesty, breach of fiduciary obligation, or intentional wrongdoing or misfeasance,
(iv) Participant has acted intentionally or in bad faith in a manner that results in a material
detriment to the assets, business or prospects of Company, or (v) Participant has breached any
obligation under this Agreement.
“DCF/U” means the distributable cash flow per unit of Crosstex Energy, L.P. Any units that do
not require quarterly distributions are ignored for purposes of this calculation. The DCF/U for
each calendar quarter is determined by the Company and approved by the Board each quarter in
connection with the determination of quarterly earnings.
“Disability” shall mean a physical or mental condition of Participant that, in the good faith
judgment of not less than a majority of the entire membership of the Board (excluding Participant,
if then a member of the Board), based upon certification by a licensed physician reasonably
acceptable to Participant and the Board, (i) prevents Participant from being able to perform the
services required under this Agreement, (ii) has continued for a period of at least 180 days during
any 12-month period, and (iii) is expected to continue.
“Growth Rate” is the percentage increase (or decrease) in DCF/U during a particular calendar
year compared to DCF/U in the immediately preceding year. The “Average Growth Rate” is equal to the
sum of the annual Growth Rates divided by the number of years in the Measurement Period.
“Good Reason” means any of the following: (i) the assignment to Participant of any duties
materially inconsistent with Participant’s position, authority, duties or responsibilities; (ii)
Company requiring Participant to be based at any office other than offices in the greater Dallas,
Texas area; or (iii) a breach or violation by Company of any material provision of any written
agreement with Participant, which breach or violation remains unremedied for more than 30 days
after written notice thereof is given to Company by Participant. For purposes of this definition,
no act or failure to act on Company’s part shall be considered a “Good Reason” unless Participant
has given Company written notice of such act or failure to act within 30 days thereof and Company
fails to remedy such act or failure to act within 30 days of its receipt of such notice.
“Measurement Period” means the period beginning on the Commencement Date and ending on the
Future Award Date.
“Qualifying Termination” means Participant’s employment or service with Company or its
Affiliates is terminated (i) by Company without Cause, (ii) by Participant for Good Reason, (iii)
due to Participant’s death, or (iv) due to Participant’s Disability.
2. Award of Performance Units. An award of Restricted Units under the Plan will be
made to Participant effective as of the Future Award Date if Participant on such date is, and has
continuously been, employed by Company or an Affiliate since the Grant Date. Subject to the terms
hereof, no Units will be credited to Participant until such Future Award Date. After such future
award is made, the Units will be released from restrictions on the Vesting Date only upon the
satisfaction of all terms and conditions set forth in this Agreement.
(a) The number of Units will be determined using the following formulas:
If the Average Growth Rate is less than the Target Growth Rate, the formula is as
follows:
| T x (100% - (___% x | B - A)) | |||||
| C |
If the Average Growth Rate is more than the Target Growth Rate, the formula is as
follows:
| T x (100% + (___% x | A - B)) | |||||
| D |
Legend:
|
A = | Average Growth Rate (which will not be less than Minimum Growth Rate nor more than Maximum Growth Rate) | ||
| B = | Target Growth Rate | |||
| C = | Spread between Target Growth Rate and Minimum Growth Rate | |||
| D = | Spread between Maximum Growth Rate and Target Growth Rate | |||
| T = | Target Number of Units |
(b) Except as otherwise provided in this Section 2, provided Participant has continuously
been employed by Company or an Affiliate since the Grant Date, unrestricted ownership of the Units
will occur on the Vesting Date and the Units will be delivered to Participant shortly thereafter by
electronic transfer or the issuance of one or more certificates representing the Units.
(c) If Participant ceases to be employed by Company or an Affiliate before the Vesting Date
for any reason other than a Qualifying Termination, this Agreement shall become null and void and
no awards or payments will be due to Participant.
(d) If Participant’s employment is terminated due to a Qualifying Termination before the
Vesting Date, the terms of this subparagraph will apply. If the Qualifying Termination occurs
before the first April 1 following the Commencement Date, no award will be made and no payments
will be due under this Agreement. If the Qualifying Termination occurs at any time thereafter,
Participant or Participant’s estate will receive an award of the number of shares determined below
on the 90th day following the Qualifying Termination:
(i) The Average Growth Rate that is achieved with respect to a short period ending on
the Qualifying Termination date will be based upon the Growth Rates of (x) each full
calendar year from the Commencement Date and (y) each short year during such period that
consists of at least one full calendar quarter (in which event, the Growth Rate for such
short year will be determined by annualizing the DCF/U for each of the full calendar
quarters during such short year).1
(ii) The number of Units will be determined using the Average Growth Rate established
in subsection 2(d)(i) and the formula described in subsection 2(a). In the case of a
Qualifying Termination due to Participant’s death or Disability, Participant or
Participant’s estate will be entitled to the full number of Units without pro-ration. In
all other cases involving a Qualifying Termination, the number of Units will be pro-rated by
multiplying the full number of Units by a fraction with the numerator being the full number
of months Participant was employed by Company during the Measurement Period and the
denominator being the original number of months in the Measurement Period.
(e) Until vesting, Participant shall have no rights with respect to the Units, including but
not limited to, rights to sell, vote, exchange, transfer, pledge, hypothecate or otherwise dispose
of the Units. This Award is not assignable or transferable by Participant.
(f) During the period between the Grant Date and the Vesting Date, Participant will receive
quarterly cash payments, less all applicable taxes, equal to the distributions that would have been
paid on the Target number of Units Participant is entitled to hereunder, beginning with
distributions that are made in the second calendar quarter of the year that includes the
Commencement Date; provided, however, no cash distributions will be payable to or on behalf of
Participant with respect to any payment date occurring after Participant has forfeited a right to
receive the Units pursuant to the terms of this Agreement or the Plan.
(g) Notwithstanding anything contained herein to the contrary, (i) the Committee shall have
the right to accelerate the Future Award Date and/or cancel all or any portion of any outstanding
restrictions prior to the termination of such restrictions with respect to any or all of the Units
on such
| 1 | An example of this calculation is as follows: Assume that Participant’s employment is terminated in a Qualifying Termination on July 15 in the year following the year of the Commencement Date and that the DCF/U in year 0 was $2.50, in year 1 was $2.75, in the first quarter of year 2 was $0.75, and in the second quarter of year 2 was $0.80. The annualized DCF/U for year 2 would be $3.10 (total DCF/U for two quarters of $1.55 multiplied by 2 to calculate an annualized total). The Growth Rate for year 1 would be 10% ($0.25 growth over year 0 DCF/U of $2.50) and the Growth Rate for year 2 would be 12.73% ($0.35 growth over year 1 DCF/U of $2.75). The Average Growth Rate would be 11.36% (10% plus 12.73% divided by 2 years). |
terms and conditions as the Committee may deem appropriate and (ii) in the event of a Change
in Control, the maximum award contemplated by this Agreement shall be made and automatically vested
in full as of the date of the Change in Control.
(h) In the event that the number of Units, as a result of a split or unit distribution or
combination of units or any other change or exchange for other securities, by reclassification,
reorganization or otherwise, are increased or decreased or changed into or exchanged for a
different number or kind of units or other securities of Crosstex Energy, L.P. or of another
entity, the number of Units to be awarded under this Agreement shall be adjusted to reflect such
change in such manner as the Board or the Committee may deem appropriate. If any such adjustment
shall result in a fractional unit, such fraction shall be disregarded.
3. Each notice relating to this award shall be in writing. All notices to Company shall be
addressed to the Secretary, at Company’s headquarters. All notices to Participant shall be
addressed to Participant in accordance with Company’s payroll records.
4. Taxes. PARTICIPANT REPRESENTS THAT PARTICIPANT IS NOT RELYING ON COMPANY FOR ANY
TAX ADVICE IN CONNECTION WITH THIS AWARD. Participant will pay to Company, or make arrangements
satisfactory to the Committee regarding payment of, any federal, state or local taxes of any kind
required by law to be withheld with respect to (i) distributions received, and (ii) the termination
of restrictions with respect to the Units (in which case arrangements will be made no later than
the date of the termination of the restrictions). Participant shall, to the extent permitted by
law, have the right to deliver to Company or its Affiliates Units to which Participant shall be
entitled upon the vesting thereof (or other Units owned by Participant), valued at the fair market
value of such Units at the time of such delivery to Company or its Affiliates, to satisfy the
obligation of Participant under this Agreement. Any provision of this Agreement to the contrary
notwithstanding, if Participant does not otherwise satisfy the obligation of Participant under this
Section, then Company and its Affiliates shall, to the extent permitted by law, have the right to
deduct from any payments of any kind otherwise due from Company or its Affiliates to or with
respect to Participant, whether or not pursuant to this Agreement or the Plan and regardless of the
form of payment, any federal, state or local taxes of any kind required by law to be withheld with
respect to the ownership of the Units (with respect to which the restrictions set forth herein have
terminated).
5. Entirety and Modification. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof and supersedes any and all
prior agreements, whether written or oral, between such parties relating to such subject matter.
No modification, alteration, amendment or supplement to this Agreement shall be valid or effective
unless the same is in writing and signed by the party against whom it is sought to be enforced.
6. Severability. If any provision of this Agreement is held to be unenforceable, this
Agreement shall be considered divisible, and such provision shall be deemed inoperative to the
extent it is unenforceable, and in all other respects this Agreement shall remain in full force and
effect; provided, however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be enforceable to the
maximum extent permitted by applicable law.
7. This Agreement has been made in and shall be construed under and in accordance with
the laws of the State of Delaware.
| CROSSTEX ENERGY GP, LLC | ||||||||
| By: | ||||||||
| Title: | ||||||||
| PARTICIPANT: | ||||||||
