Exhibit 10.3

SOUTHCROSS ENERGY PARTNERS GP, LLC

SOUTHCROSS GP MANAGEMENT HOLDINGS, LLC

2014 EQUITY INCENTIVE PLAN

SECTION 1. Purpose of the Plan.

This Southcross Energy Partners GP, LLC and Southcross GP Management Holdings,
LLC 2014 Equity Incentive Plan (the “Plan”) has been adopted by Southcross
Energy Partners GP, LLC, a Delaware limited liability company (“Southcross GP”)
and Southcross GP Management Holdings, LLC, a Delaware limited liability company
(“Management Holdings”). The Plan is intended to promote the interests of
Southcross GP and its Affiliates by providing incentive compensation Awards to
Employees, Consultants and Directors to encourage superior performance. The Plan
is also intended to enhance the ability of the Company and its Affiliates to
attract and retain the services of individuals who are essential for the growth
and profitability of the Company and its Affiliates and to encourage them to
devote their best efforts to advancing the business of the Company and its
Affiliates.

SECTION 2. Definitions.

As used in the Plan, the following terms shall have the meanings set forth in
this Section 2. Without limiting the provisions of the definitions set forth
below, to the extent applicable to Awards of or covering GP Units (e.g.,
Downstairs Unit Awards), references to the Board or the Committee shall be
deemed to refer to the Board or the applicable committee of Southcross GP and to
the extent applicable to awards of or covering Management Holdings Units (e.g.,
Upstairs Unit Awards), references to the Board or the Committee shall be deemed
to refer to the Board or the applicable committee of Management Holdings.

“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.

“ASC Topic 718” means Accounting Standards Codification Topic 718, Compensation
– Stock Compensation, or any successor accounting standard.

“Award” means collectively a Unit Award or an Other Unit-Based Award granted or
purchased under the Plan.

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

“Board” means the board of directors or board of managers or similar governing
body or Person, as the case may be, of the Company, and in the event there is no
such board of directors or board of managers, “Board” means the managing
member(s) of the Company or such other Person having authority under the
applicable Limited Liability Company Agreement to direct the management and
policies of the Company.

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“Cause” means, unless otherwise set forth in an Award Agreement or other written
agreement between the Company and the applicable Participant, a finding by the
Committee, before or after the Participant’s termination of Service, of: (i) any
material failure by the Participant to perform the Participant’s duties and
responsibilities; (ii) any act of fraud, embezzlement, theft or misappropriation
by the Participant relating to the Company, the Partnership or any of their
Affiliates; (iii) the Participant’s commission of a felony or a crime involving
moral turpitude; (iv) any gross negligence or intentional misconduct on the part
of the Participant in the conduct of the Participant’s duties and
responsibilities with the Company or any Affiliate(s) of the Company or which
adversely affects the image, reputation or business of the Company, the
Partnership or their Affiliates; or (v) any material breach by the Participant
of any agreement between the Company or any of its Affiliates, on the one hand,
and the Participant on the other. The findings and decision of the Committee
with respect to such matter, including those regarding the acts of the
Participant and the impact thereof, will be final for all purposes.

“Change in Control” has the meaning set forth in the Partnership Plan.

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

“Committee” means the Board, except that it shall mean such committee of the
Board as is appointed by the Board to administer the Plan.

“Company” “ means collectively Southcross GP and Management Holdings, or any
successor thereto, except that where the context requires, “Company” shall be
deemed individually to refer to either Southcross GP or Management Holdings (or
any successor thereto), as applicable, subject to the principles set forth in
the introductory paragraph of this Section 2.

“Consultant” means an individual who renders consulting services to the Company
or any of its Affiliates.

“Director” means a member of the board of directors or board of managers, or
similar governing body, as the case may be, of the Company, any of its managing
members or any of their respective Affiliates who is not an Employee or a
Consultant (other than in that individual’s capacity as a Director).

“Disability” means, as determined by the Committee of Southcross GP in its
discretion exercised in good faith, a physical or mental condition of a
Participant that would entitle him or her to payment of disability income
payments under the Company’s, the Partnership’s or one of their Affiliates’
long-term disability insurance policy or plan for employees as then in effect;
or in the event that a Participant is not covered, for whatever reason, under
any such long-term disability insurance policy or plan for employees or the
Company, the Partnership or one of their Affiliates does not maintain such a
long-term disability insurance policy, “Disability” means a total and permanent
disability within the meaning of Section 22(e)(3) of the Code. A determination
of Disability may be made by a physician selected or approved by the Committee
of Southcross GP and, in this respect, Participants shall submit to an
examination by such physician upon request by the Committee of Southcross GP.

 

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“Downstairs Unit Award” means an award of GP Units granted to or purchased by
Management Holdings under the Plan, which award may be subject to certain
vesting conditions and other restrictions and which shall be granted in tandem
with an Upstairs Unit Award.

“Employee” means an employee of the Company or any of its Affiliates.

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

“Fair Market Value” means, as of any given date, the volume weighted average
price for sales of the Units or other related securities on such date during
normal trading hours (or, if there are no reported sales on such date, on the
last date prior to such date on which there were sales) of the Units or other
related securities on the applicable national securities exchange or national
inter-dealer quotation system on which such securities are listed, in any case,
as reported in such source as the Committee of Southcross GP shall select. If
there is no regular public trading market for the Units or other securities or
property, the Fair Market Value of such Units, securities or property shall be
determined by the Committee of Southcross GP in good faith and in compliance
with the applicable requirements of the Code.

“GP Unit” means a Class B Unit as defined in the Limited Liability Company
Agreement of Southcross GP.

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

“Management Holdings Unit” means a Class B Unit as defined in the Limited
Liability Company Agreement of Management Holdings.

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

“Participant” means an Employee, Consultant or Director who is granted or who
purchases an Upstairs Unit Award or an Other Unit-Based Award under the Plan and
any authorized transferee of such individual.

“Partnership” means Southcross Energy Partners, L.P or its successor.

“Partnership Plan” means the Southcross Energy Partners, L.P. 2012 Long Term
Incentive Plan.

“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group”
as defined in Section 13(d) thereof.

“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.

“Securities Act” means the Securities Act of 1933, as amended.

 

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

“Section 409A” means Section 409A of the Code and the Department of Treasury
Regulations and other interpretive guidance issued thereunder, including without
limitation any such regulations or other guidance that may be issued after the
Effective Date (as defined in Section 9 below).

“Service” means service as an Employee, Consultant or Director. The Committee of
Southcross GP, in its sole discretion, shall determine the effect of all matters
and questions relating to terminations of Service, including, without
limitation, the questions of whether and when a termination of Service occurred
and/or resulted from a discharge for Cause, and all questions of whether
particular changes in status or leaves of absence constitute a termination of
Service. The Committee of Southcross GP, in its sole discretion, subject to the
terms of any applicable Award Agreement, may determine that a termination of
Service has not occurred in the event of (a) a termination where there is
simultaneous commencement by the Participant of a relationship with the Company
or any of its Affiliates as an Employee, Director or Consultant or (b) a
termination which results in a temporary severance of the service relationship.

“Unit” means collectively, a GP Unit and a Management Holdings Unit, except that
where the context requires, “Unit” shall be deemed individually to refer to
either a GP Unit or a Management Holdings Unit, as applicable, subject to the
principles set forth in the introductory paragraph of this Section 2.

“Unit Award” means collectively, an Upstairs Unit Award and the corresponding
Downstairs Unit Award.

“Upstairs Unit Award” means an award of Management Holdings Units granted to or
purchased by a Participant under the Plan, which award may be subject to certain
vesting conditions and other restrictions and which shall be granted in tandem
with a Downstairs Unit Award.

SECTION 3. Administration.

(a) The Plan shall be administered by the Committee, subject to subsection
(b) below; provided, however, that in the event that the Board is not also
serving as the Committee, the Board, in its sole discretion, may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan. The governance of the Committee shall be subject to the charter, if
any, of the Committee as approved by the Board. 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, redeemed, 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

 

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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 the Company any of its Affiliates, any Participant
and any beneficiary of any Participant.

(b) To the extent permitted by applicable law and the rules of any securities
exchange on which the Units are listed, quoted or traded, the Board or Committee
may from time to time delegate to a committee of one or more members of the
Board or one or more officers of the Company or its Affiliates the authority to
grant or amend Awards or to take other administrative actions pursuant to
Section 3(a); provided, however, that in no event shall an officer of the
Company be delegated the authority to grant awards to, or amend awards held by,
the following individuals: (i) individuals who are subject to Section 16 of the
Exchange Act, or (ii) officers of the Company (or Directors) to whom authority
to grant or amend Awards has been delegated hereunder; provided, further, that
any delegation of administrative authority shall only be permitted to the extent
that it is permissible under applicable provisions of the Code and applicable
securities laws and the rules of any securities exchange on which the Units are
listed, quoted or traded. Any delegation hereunder shall be subject to such
restrictions and limitations as the Board or Committee, as applicable, specifies
at the time of such delegation, and the Board or Committee, as applicable, may
at any time rescind the authority so delegated or appoint a new delegatee. At
all times, the delegatee appointed under this Section 3(b) shall serve in such
capacity at the pleasure of the Board and the Committee.

SECTION 4. Units.

(a) No Limit on Units Deliverable. Except as may be set forth in the applicable
Limited Liability Company Agreement, there shall be no limit on the number of GP
Units and Management Holdings Units that may be granted pursuant to Awards under
the Plan.

(b) Anti-dilution Adjustments

(i) Equity Restructuring. 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 ASC Topic 718 if adjustments to Awards
with respect to such event were discretionary, the Committee shall equitably
adjust the number and type of Units (or other securities or property) covered by
each outstanding Award and the terms and conditions, including the exercise
price and performance criteria (if any), of such Award to equitably reflect such
event and shall adjust the number and type of Units (or other securities or
property) with respect to which Awards may be granted under the Plan after such
event. With respect to any other similar event that would not result in an ASC
Topic 718 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 and the number and type of Units (or other
securities or property) with respect to which Awards may be granted under the
Plan in such manner as it deems appropriate with respect to such other event.

 

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(ii) Other Changes in Capitalization. In the event of any non-cash distribution,
Unit split, combination or exchange of Units, merger, consolidation or
distribution (other than normal cash distributions) of assets to unitholders, or
any other change affecting the Units, other than an “equity restructuring,” the
Committee may make equitable adjustments, if any, to reflect such change with
respect to (A) the aggregate number and kind of Units that may be issued under
the Plan; (B) the number and kind of Units (or other securities or property)
subject to outstanding Awards; (C) the terms and conditions of any outstanding
Awards (including, without limitation, any applicable performance targets or
criteria with respect thereto); and (D) the grant or exercise price per Unit for
any outstanding Awards under the Plan.

SECTION 5. Eligibility.

Any Employee, Consultant or Director shall be eligible to be designated a
Participant and receive or purchase an Award under the Plan.

SECTION 6. Awards.

(a) Unit Awards.

(i) In General. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom Unit Awards shall be granted or
sold, the number of Units to be granted or sold to with respect to each such
Unit Award, the applicable Restricted Period, if any, the conditions under which
the Units subject to a Unit Award may become non-forfeitable or forfeited, the
purchase price, if any, to be paid for the subject Units and such other terms
and conditions, including, without limitation, restrictions on transferability,
as the Committee may establish with respect to such Awards.

(ii) Removal of Restrictions on Restricted Units. Upon or as soon as reasonably
practicable following the lapse of all forfeiture restrictions with respect to
each Unit Award, the Participant shall be entitled to have the restrictions
removed from his or her Management Holdings Unit certificate (or book-entry
account, as applicable) so that the Participant then holds an unrestricted
Management Holdings Unit (and any corresponding restrictions shall be removed
from the corresponding GP Unit held by Management Holdings), provided that an
unrestricted Unit may remain subject to such terms and conditions as may be set
forth in an applicable Award Agreement, including, without limitation,
repurchase, transfer or other restrictions or limitations.

(b) Other Unit-Based Awards. Other Unit-Based Awards may be granted under the
Plan to such Employees, Consultants and/or Directors as the Committee, in its
discretion, may select. An Other Unit-Based Award shall be an award denominated
or payable in, valued in or

 

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otherwise based on or related to GP Units and/or Management Holdings Units or
other securities of Southcross GP or Management Holdings, in whole or in part.
The Committee shall determine the terms and conditions of any Other Unit-Based
Award. Upon or following the vesting or lapse of forfeiture or other
restrictions, an Other Unit-Based Award may be paid in cash, GP Units and/or
Management Holdings Units (including Unit Awards that may be subject to such
forfeiture or other terms and conditions as may be established by the
Committee), or any combination thereof, as provided in the Award Agreement.

(c) General.

(i) Forfeitures. Except as otherwise provided in the terms of an Award
Agreement, upon termination of a Participant’s Service for any reason during an
applicable Restricted Period, all outstanding awards held by such Participant
(and Awards corresponding thereto), to the extent then subject to forfeiture,
shall be automatically forfeited. The Committee may, in its discretion, waive in
whole or in part such forfeiture with respect to any such Award.

(ii) 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 Company or any Affiliate, provided however that each
Downstairs Award shall be granted in tandem with a corresponding Upstairs Award
covering an equivalent number of Units and each Upstairs Award shall be granted
in tandem with a corresponding Downstairs Award covering an equivalent number of
Units. Awards granted in addition to or in tandem with other Awards or awards
granted under any other plan of the Company 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.

(iii) Limits on Transfer of Awards. Except as may be permitted by the terms of
the Limited Liability Company Agreement, no Award and no right under any such
Award may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant other than by will or the laws of
descent and distribution and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate.

(iv) Unit Certificates. Unless otherwise determined by the Committee or required
by any applicable law, rule or regulation, the Company shall not deliver to any
Participant certificates evidencing Units issued in connection with any Award
and instead such Units shall be recorded in the books of the Company (or, as
applicable, its transfer agent or equity plan administrator). All certificates
for Units or other securities of the Company delivered under the Plan and all
Units issued pursuant to book entry procedures 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/or other requirements of the SEC, any securities 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 or book entry to make appropriate reference to such
restrictions.

 

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(v) Consideration for Grants. To the extent permitted by applicable law, Awards
may be granted for such consideration, including services, as the Committee
shall determine.

(vi) Delivery of Units or other Securities and Payment by Participant of
Consideration. Notwithstanding anything in the Plan or any Award Agreement to
the contrary, subject to compliance with Section 409A, the Company shall not be
required to issue or deliver any certificates or make any book entries
evidencing Units in connection with any Award, unless and until the Board or the
Committee has determined that the issuance of such securities is in compliance
with all applicable laws, regulations of governmental authorities and, if
applicable, the requirements of any securities exchange on which the securities
are listed or traded, and the securities are covered by an effective
registration statement or applicable exemption from registration. In addition to
the terms and conditions provided herein, the Board or the Committee may require
that a Participant make such reasonable covenants, agreements, and
representations as the Board or the Committee, in its discretion, deems
advisable in order to comply with any such laws, regulations, or requirements.
Without limiting the generality of the foregoing, the delivery of Units in
connection with an Award may be deferred for any period during which, in the
good faith determination of the Committee, the Company is not reasonably able to
obtain or deliver Units 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 is received by the Company.

SECTION 7. Amendment and Termination; Certain Transactions.

Except to the extent prohibited by applicable law:

(a) Amendments to the Plan. Except as required by applicable law or the rules of
the principal securities exchange, if any, on which the Units are traded and
subject to Section 7(b) below, the Board or the Committee may amend, alter,
suspend, discontinue, or terminate the Plan in any manner without the consent of
any partner, Participant, other holder or beneficiary of an Award, or any other
Person, except if such amendment, alteration, suspension, discontinuance or
termination would be materially prejudicial to any Participant, other holder or
beneficiary of an Award.

(b) Amendments to Awards. Subject to Section 7(a) above, the Committee may waive
any conditions or rights under, amend any terms of, or alter any Award
theretofore granted, provided that no change, other than pursuant to
Section 4(b) above or 7(c) below, in any Award shall materially reduce the
rights or benefits of a Participant with respect to an Award without the consent
of such Participant.

 

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(c) Actions Upon the Occurrence of Certain Events. Upon the occurrence of a
Change in Control, any transaction or event described in Section 4(b) above, any
change in applicable laws or regulations affecting the Plan or Awards hereunder,
or any change in accounting principles affecting the financial statements of the
Company or the Partnership, the Committee, in its sole discretion, without the
consent of any Participant or holder of an Award, and on such terms and
conditions as it deems appropriate, may take any one or more of the following
actions:

(i) provide for either (A) the termination or cancellation of any Award in
exchange for a payment in an amount, if any, equal to the amount that would have
been attained upon the exercise of such Award or realization of the
Participant’s rights under such Award (which, with respect to a Unit Award shall
be the Fair Market Value of the applicable Unit), 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 payable upon
the exercise of such Award or realization of the Participant’s rights, then such
Award may be terminated by the Company without payment or (B) the replacement of
such Award with other rights or property selected by the Committee in its sole
discretion having an aggregate value not exceeding the amount that could have
been attained upon the exercise of such Award or realization of the
Participant’s rights had such Award been currently exercisable or payable or
fully vested;

(ii) provide that such Award be assumed by the successor or survivor entity, or
a parent or subsidiary thereof, or be exchanged for similar rights or awards
covering the equity of the successor or survivor, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of equity
interests and prices;

(iii) make adjustments in the number and type of Units (or other securities or
property) subject to outstanding Awards, the number and kind of outstanding
Awards, the terms and conditions of (including the exercise price), and/or the
vesting and performance criteria included in, outstanding Awards; or

(iv) provide that such Award shall vest or become exercisable or payable,
notwithstanding anything to the contrary in the Plan or the applicable Award
Agreement.

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, including the treatment upon termination of Service. 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 Southcross GP, Southcross GP or any Affiliate thereof is
authorized to deduct or withhold, or cause to be deducted or withheld, 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 or
Units, including Units that would otherwise be issued pursuant

 

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to such Award or other property) of any applicable taxes payable in respect of
an Award, including its grant, its exercise, the lapse of restrictions thereon,
or any payment or transfer thereunder or under the Plan, and to take such other
action as may be necessary in the opinion of the Company to satisfy its
withholding obligations for the payment of such taxes. In the event that Units
that would otherwise be issued pursuant to an Award are used to satisfy such
withholding obligations, the number of Units which may be so withheld or
surrendered shall be limited to the number of Units which have a Fair Market
Value on the date of withholding equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for federal, state,
local and foreign income tax and payroll tax purposes that are applicable to
such supplemental taxable income.

(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
Southcross GP or any of its Affiliates, continue consulting services or to
remain on the Board, as applicable. Furthermore, Southcross GP or one of its
Affiliates may at any time dismiss a Participant from employment or consulting
free from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan, any Award Agreement or other written agreement between any
such entity and the Participant.

(d) Section 409A. To the extent that the Committee determines that any Award
granted under the Plan is subject to Section 409A, the Award Agreement
evidencing such Award shall include the terms and conditions required by
Section 409A. To the extent applicable, the Plan and Award Agreements shall be
interpreted in accordance with Section 409A. Notwithstanding any provision of
the Plan to the contrary, in the event that following the Effective Date (as
defined in Section 9 below), the Committee determines that any Award may be
subject to Section 409A, the Committee may adopt such amendments to the Plan and
the applicable Award Agreement, adopt other policies and procedures (including
amendments, policies and procedures with retroactive effect), and/or take any
other actions that the Committee determines are necessary or appropriate to
preserve the intended tax treatment of the Award, including without limitation,
actions intended to (i) exempt the Award from Section 409A, or (ii) comply with
the requirements of Section 409A; provided, however, that nothing herein shall
create any obligation on the part of the Committee or the Company or any of its
Affiliates to adopt any such amendment, policy or procedure or take any such
other action, nor shall the Committee or the Company or any of its Affiliates
have any liability for failing to do so. Notwithstanding any provision in the
Plan to the contrary, the time of payment with respect to any Award that is
subject to Section 409A shall not be accelerated, except as permitted under
Treasury Regulation Section 1.409A-3(j)(4) or other applicable regulatory
guidance.

(e) Compliance with Laws. The Plan, the granting of and lapse of forfeiture
restrictions with respect to Awards under the Plan and the issuance and delivery
of Units and the payment of money under the Plan or under Awards granted or
awarded hereunder are subject to compliance with all applicable federal, state,
local and foreign laws, rules and regulations (including but not limited to
state, federal and foreign securities law and margin requirements), the rules of
any securities exchange or automated quotation system on which the Units are
listed, quoted or traded, and to such approvals by any listing, regulatory or
governmental authority as may be necessary or advisable in connection therewith.
Any securities delivered under the Plan

 

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shall be subject to such restrictions, and the Person acquiring such securities
shall, if requested by the Company, provide such assurances and representations
to the Company as the Company may deem necessary or desirable to assure
compliance with all applicable legal requirements. To the extent permitted by
applicable law, the Plan and Awards granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.
In the event an Award is granted to or held by a Participant who is employed or
providing services outside the United States, the Committee may, in its sole
discretion, modify the provisions of the Plan or of such Award as they pertain
to such Participant to comply with applicable foreign law or to recognize
differences in local law, currency or tax policy. The Committee may also impose
conditions on the grant, issuance, exercise, lapse of forfeiture restrictions,
settlement or retention of Awards in order to comply with such foreign law
and/or to minimize the Company’s obligations with respect to tax equalization
for Participants employed outside their home country.

(f) Governing Law. The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware without regard to its conflicts of laws
principles.

(g) 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.

(h) 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 Company or an Affiliate to
recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to the Company 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.

(i) 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 Company or any of its Affiliates, on the one hand, and
a Participant or any other Person, on the other hand. To the extent that any
Person acquires a right to receive payments pursuant to an Award, such right
shall be no greater than the right of any general unsecured creditor of the
Company or any participating Affiliate of the Company.

(j) No Fractional Units. Unless otherwise determined by the Committee, 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.

 

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(k) 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 hereof.

(l) No Guarantee of Tax Consequences. None of the Board, the Committee or the
Company or any Affiliate thereof (or any employee or officer of the Company or
any Affiliate) provides or has provided any tax advice to any Participant or any
other Person or makes or has made any assurance, commitment or guarantee that
any federal, state or local tax treatment will (or will not) apply or be
available to any Participant or other Person.

(m) Clawback; Misconduct. To the extent required by applicable law or any
applicable securities exchange listing standards, Awards and amounts paid or
payable pursuant to or with respect to Awards shall be subject to clawback as
determined by the Committee, which clawback may include forfeiture, repurchase
and/or recoupment of Awards and amounts paid or payable pursuant to or with
respect to Awards. In addition, and without limiting the foregoing, except as
otherwise provided by the Committee, if at any time (including after an award
has vested) the Committee or any person designated by the Committee (each such
person, an “Authorized Officer”) reasonably believes that a Participant may have
committed an Act of Misconduct as described in this Section 8(m), the Authorized
Officer, the Committee or the Board may suspend the Participant’s rights to
exercise or to vest in an Award, and/or to receive payment for or receive Units
in settlement of an Award pending a determination of whether an Act of
Misconduct has been committed.

If the Committee or an Authorized Officer determines that a Participant has
committed an act of embezzlement, fraud, dishonesty, nonpayment of any
obligation owed to the Company or any Affiliate of the Company, breach of
fiduciary duty, violation of ethics policy or code of conduct, or deliberate
disregard of the Company’s or Affiliate of the Company’s rules resulting in
loss, damage or injury to the Company or any Affiliate of the Company, or if a
Participant makes an unauthorized disclosure of any trade secret or confidential
information, solicits any Employee or other service provider to leave the employ
or cease providing services to the Company or any Affiliate of the Company,
breaches any intellectual property or assignment of inventions covenant, engages
in any conduct constituting unfair competition, breaches any non-competition
agreement, induces any customer to breach a contract with the Company or any
Affiliate of the Company or to cease doing business with the Company or any
Affiliate of the Company, or induces any principal for whom the Company or any
Affiliate of the Company acts as agent to terminate such agency relationship
(any of the foregoing acts, an “Act of Misconduct”), then except as otherwise
provided by the Committee, (i) neither the Participant nor his or her estate nor
transferee shall be entitled to vest in or have the restrictions on an Award
lapse, or otherwise receive any payment in respect of an Award, (ii) the
Participant will forfeit all outstanding Awards and (iii) the Participant may be
required, at the Committee’s sole discretion, to return and/or repay to the
Company any then vested Units previously granted under the Plan. In making such
determination, the Committee or an Authorized Officer may, in its discretion,
give the Participant an opportunity to appear and present evidence on his or her
behalf at a hearing before the Committee or its designee or an opportunity to
submit written comments, documents, information and arguments to be considered
by the Committee.

 

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(n) 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 or her 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 Company its Affiliates shall be relieved
of any further liability for payment of such amounts.

SECTION 9. Term of the Plan.

The Plan shall be effective on the date on which the Plan is adopted by the
Board (the “Effective Date”) and shall continue indefinitely until terminated by
the Board. However, any Award granted prior to such termination, and the
authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under such Award, shall extend beyond such termination date.

 

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SOUTHCROSS ENERGY PARTNERS GP, LLC

SOUTHCROSS GP MANAGEMENT HOLDINGS, LLC

UNIT AWARD AGREEMENT

PARTICIPANT GRANT NOTICE

All capitalized terms used in this Unit Award Agreement, which includes the
“Participant Grant Notice,” the “Joinder” and the attachment hereto titled
“Terms and Conditions of Unit Award” (collectively, the “Agreement”) but not
defined herein shall have the meanings provided in the Southcross Energy
Partners GP, LLC and Southcross GP Management Holdings, LLC 2014 Equity
Incentive Plan (the “Plan”) and the Limited Liability Company Agreement, as
applicable. In the event of any conflict between the terms of this Agreement and
the Plan, the terms of the Plan shall control. The award provided for under this
Agreement (including the Upstairs Unit Award described in the Participant Grant
Notice and the Downstairs Unit Award described in Section 6 of the Terms and
Conditions of Unit Award) is intended to constitute a Unit Award under and
subject to all of the terms and conditions of the Plan. Except where the context
requires otherwise, all references to “Units” in this Agreement shall mean the
Management Holdings Units granted to the Participant under this Agreement.

You have been granted an Award of Units of Southcross GP Management Holdings,
LLC (the “Company”), subject to the terms and conditions of this Agreement and
the Plan. The principal features of this Award are as follows:

Name of Participant: [            ]

Number of Units: [            ] Units

Grant Date: [            ], 2014

Fair Market Value of the Units as of the Grant Date: [            ]. For
additional information, terms and conditions, See Section 9 of the Terms and
Conditions of Unit Award.

Vesting Units: The Units are 100% vested as of the Grant Date.

Forfeiture of Units: In the event of a termination of the Participant’s Service
by Southcross GP or one of its Affiliates for Cause, all of the Units shall
thereupon automatically be forfeited by the Participant without further action
and without payment of consideration therefor.

JOINDER

By execution of this Joinder, the Participant hereby agrees to become a party
to, and to be bound by the obligations of, and receive the benefits of, that
certain Limited Liability Company Agreement of Management Holdings (the
“Management Holdings LLC Agreement”), dated as of [            ], 2014, by and
among Southcross Holdings LP, a Delaware limited partnership and the sole
managing member of the Company (the “Managing Member”), and the other parties
thereto, as a “Member” under the Management Holdings LLC Agreement. The
Participant hereby represents and warrants to the Company and the Managing
Member that it has received, reviewed and understands the Management Holdings
LLC Agreement and that each representation and warranty set forth in Section 2.1
of the Management Holdings LLC Agreement is true, accurate and not misleading as
to the Participant as of the date hereof.

[Signature Page to Agreement Follows]

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Whereas the undersigned parties to this Agreement have executed this Agreement
as of the Grant Date identified in the Participant Grant Notice Above. The
Signature of the Participant and the Company below indicates his or its
acceptance of this Award and agreement and understanding that the Units (and GP
Units) are subject to all of the terms and conditions contained in the Agreement
(including the Participant Grant Notice, the Joinder and the Terms and
Conditions of Unit Award that follows these signature pages), the Limited
Liability Company Agreement and the Plan.

 

PARTICIPANT    [NAME] SOUTHCROSS GP MANAGEMENT HOLDINGS, LLC By:   Southcross
Holdings LP, its managing member By:   Southcross Holdings GP LLC, its general
partner By:       Name:   Title: SOUTHCROSS ENERGY PARTNERS GP, LLC By:  
Southcross Holdings LP, its general partner By:   Southcross Holdings GP LLC,
its general partner By:       Name:   Title:

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TERMS AND CONDITIONS OF UNIT AWARD

1. Grant. The Company hereby grants to the Participant, as of the Grant Date, an
award of Units of the Company as set forth in the Grant Notice, subject to all
of the terms and conditions contained in this Agreement, the Limited Liability
Company Agreement and the Plan.

2. Vesting and Termination; Distributions.

(a) The Units shall be vested or shall vest in such amounts and at such times as
are set forth in, and shall be subject to forfeiture as set forth in, the
Participant Grant Notice above.

(b) Distributions with respect to the Units will be made as set forth in the
Limited Liability Company Agreement.

3. Taxes; Withholding. Southcross GP or one if its Affiliates may withhold from
the Participant’s wages, or require the Participant to pay to Southcross GP or
one of its Affiliates, the Participant’s portion of any applicable withholding
or employment taxes resulting from the issuance of the Units hereunder or from
the lapse of any restrictions imposed on the Units, as required by law.
Notwithstanding anything in the Plan or any Limited Liability Company Agreement
to the contrary, the Participant shall be solely responsible for and shall
satisfy all tax consequences associated with the Unit Award represented by this
Agreement. For the avoidance of doubt, the Participant shall be solely
responsible for and shall satisfy all taxes and tax consequences that may be
incurred by or with respect to the Company in connection with the Downstairs
Award described in Section 6 below or the GP Units represented by such
Downstairs Award.

4. Non-Transferability. Neither the Units nor any right of the Participant under
the Units may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by the Participant (or any permitted transferee) other
than by will or the laws of descent and distribution or as otherwise permitted
by the terms of the Limited Liability Company Agreement and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company and any of their Affiliates.

5. Repurchase.

(a) Company Repurchase Right.

(i) During the period beginning on the date of a Participant’s termination of
Service and ending on the first anniversary of such date (the “Repurchase
Period”), the Company shall have the option (the “Call Right”) to repurchase the
Participant’s vested Units. The Call Right may be exercised more than once and
for some or all of the Units held by the Participant. The Company may assign the
Call Right to any Person determined in the discretion of the Committee.

(ii) The Company (or its assignee) shall exercise the Call Right (if so elected)
by written notice to Participant (and/or, if applicable, any permitted
transferees) within the Repurchase Period, specifying a date within such period
on which the Call Right shall be exercised and the number of Units as to which
the Call Right is being exercised. Upon such notification, the Participant and
any permitted transferees shall promptly surrender to the Company (or its
assignee) any certificates or other documents representing the Units being
purchased, free and clear of any liens or encumbrances. Except as provided
below, upon the Company’s (or its assignee’s) receipt of any such certificates
or documents from the Participant or any permitted transferees, the Company (or
its assignee) shall deliver to him, her or them payment of the Repurchase Price
(as defined below) for the Units being purchased.

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(iii) The purchase price payable by the Company (or its assignee) upon exercise
of the Call Right (the “Repurchase Price”) shall be the Fair Market Value, as of
the date the Call Right is being exercised, of the Units with respect to which
the Call Right [or Put Right (as defined below)] is being exercised.

(b) [Company Repurchase Obligation.

(i) In the event the Participant’s Service terminates as a result of the
Participant’s resignation for Good Reason (as defined below) and the Units are
not listed on a national securities exchange or a national inter-dealer
quotation system (or are not otherwise publicly tradable), then during the
Repurchase Period, the Participant shall have the option (the “Put Right”) to
cause the Company or one of its Affiliates to repurchase all, but not less than
all, of the Participant’s vested Units, provided, however, that the Put Right
shall be subject to the Committee’s good faith determination that the Company
and its Affiliates possess sufficient liquidity at the applicable time such that
the Put Right will not have a material negative impact on the operations or
financial position of the Company and its Affiliates.

(ii) The Participant shall exercise the Put Right (if so elected) by written
notice to the Company within the Repurchase Period (and before the 30th day
prior to the expiration of the Repurchase Period), specifying a date more than
30 days after the date of such written notice and within the Repurchase Period
on which the Put Right shall be exercised. Upon the time of such repurchase, the
Participant and any permitted transferees shall promptly surrender to the
Company any certificates or other documents representing the Units being
purchased, free and clear of any liens or encumbrances. Except as provided
below, upon the Company’s receipt of any such certificates or documents from the
Participant or any permitted transferees, the Company shall deliver to him, her
or them payment of the Repurchase Price for the Units.

(iii) For purposes of this Agreement, “Good Reason” means the occurrence of one
or more of the following actions by Southcross GP or its Affiliates without the
Participant’s consent: (1) a material reduction in the duties and
responsibilities held by the Participant, except in connection with a
termination of the Participant’s Service for Cause; (2) a material reduction in
the Participant’s base salary or guideline (target) bonus; or (3) a material
change in the geographic location at which the Participant must perform services
for Southcross GP or its Affiliates; provided, however, that no termination of
Service by the Participant shall constitute a termination for Good Reason unless
(a) the Participant has first provided Southcross GP with written notice
specifically identifying the acts or omissions constituting the grounds for Good
Reason within thirty (30) days after the Participant has or should reasonably be
expected to have had knowledge of the occurrence thereof, (b) Southcross GP has
not cured such acts or omissions within thirty (30) days of its actual receipt
of such notice, and (c) the effective date of the Participant’s termination for
Good Reason occurs no later than ninety (90) days after the initial existence of
the facts or circumstances constituting Good Reason.]1

 

 

1  Note: Put right TBD.

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(c) Repurchase Limitation. Notwithstanding anything herein to the contrary, no
payment shall be made under this Section that would cause the Company,
Southcross GP or any if their Affiliates to violate any applicable law, or any
rights or preference of other unitholders, any banking agreement or loan or
other financial covenant or cause default of any indebtedness, regardless of
when such agreement, covenant or indebtedness was created, incurred or assumed.
Any payment under this Section 5 that would cause such violation or default
shall result in an extension of the Repurchase Period, in the sole discretion of
the Committee, until thirty days after the date such payment shall no longer
cause any such violation or default and at which time the Call Right or Put
Right, as applicable, may be exercised with the Repurchase Price calculated as
of the date the Call Right or Put Right is actually exercised.

6. Downstairs Award. A Downstairs Unit Award covering that number of GP Units
equal to the number of Units subject to the Award granted pursuant to this
Agreement (as set forth in the Participant Grant Notice) is hereby granted by
Southcross GP to the Company on the Grant Date (the “Downstairs Award”). Each
time a portion of the Upstairs Award is vested, forfeited, adjusted or
repurchased pursuant to this Agreement or the Plan, a corresponding portion of
the Downstairs Award shall be vested, forfeited, adjusted or repurchased, as
applicable, provided that Southcross GP shall have the right to assign its right
[or obligation] to repurchase any GP Units to any Person as determined in the
discretion of the Committee of Southcross GP. In furtherance of the foregoing,
the Company and Southcross GP may, in their discretion, effect any repurchase
contemplated by this agreement in such manner whereby (i) the Company redeems
all or a portion of the Participant’s Upstairs Units in exchange for the
corresponding Downstairs Units, and (ii) Southcross GP (or its assignee)
subsequently repurchases the Downstairs Units from the Participant.

7. No Effect on Service. Nothing in this Agreement or in the Plan shall be
construed as giving the Participant the right to be retained in the employ or
service of Southcross GP or any Affiliate thereof. Furthermore, Southcross GP
and its Affiliates may at any time dismiss the Participant from employment or
consulting free from any liability or any claim under the Plan or this
Agreement, unless otherwise expressly provided in the Plan, this Agreement or
any other written agreement between the Participant and Southcross GP or an
Affiliate thereof.

8. Severablility. If any provision of this Agreement is or becomes or is deemed
to be invalid, illegal, or unenforceable in any jurisdiction, 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 this Agreement, such provision
shall be stricken as to such jurisdiction, and the remainder of this Agreement
shall remain in full force and effect.

9. Tax Consultation. None of the Board, the Committee, nor the Company or
Southcross GP has made any warranty or representation to Participant with
respect to the income tax consequences of the issuance of the Units or the
transactions contemplated by this Agreement, and the Participant represents that
he or she is in no manner relying on such entities or their representatives for
tax advice or an assessment of such tax consequences. The Participant
understands that the Participant may suffer adverse tax consequences in
connection with the Units granted pursuant to this Agreement. The

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Participant represents that the Participant has consulted with any tax
consultants that the Participant deems advisable in connection with the Units.
Without limiting the foregoing and notwithstanding any provision of this
Agreement to the Contrary (including the statements set forth in the Participant
Grant Notice), neither the Company nor Southcross GP make any representations to
any Person with respect to the Fair Market Value of the Units as of the Grant
Date.

10. Amendments, Suspension and Termination. Subject to Section 7(a) of the Plan,
the Committee may waive any conditions or rights under, amend any terms of, or
alter this Agreement at any time, provided that no such change, other than
pursuant to Section 7(c) of the Plan, shall materially reduce the rights or
benefits of the Participant without the Participant’s consent.

11. Lock-Up Agreement. The Participant shall agree, if so requested by the
Company or Southcross GP and any underwriter in connection with any public
offering of securities of the Company, Southcross GP or any Affiliate thereof,
not to directly or indirectly offer, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of or otherwise dispose of or transfer any
securities held by him or her for such period, not to exceed one hundred eighty
(180) days following the effective date of the relevant registration statement
filed under the Securities Act in connection with such public offering, as such
underwriter shall specify reasonably and in good faith. The Company or
Southcross GP may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of such 180-day period.

12. Conformity to Securities Laws. The Participant acknowledges that the Plan
and this Agreement are intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act, any and all regulations
and rules promulgated by the Securities and Exchange Commission thereunder, and
all applicable state securities laws and regulations. Notwithstanding anything
herein to the contrary, the Plan shall be administered, and the Units are
granted, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

13. Successors and Assigns. The Company and Southcross GP may assign any of its
rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company and
Southcross GP. Subject to the restrictions on transfer contained herein, this
Agreement shall be binding upon the Participant and his or her heirs, executors,
administrators, successors and assigns.

14. Governing Law. The validity, construction, and effect of this Agreement and
any rules and regulations relating to this Agreement shall be determined in
accordance with the laws of the State of Delaware without regard to its
conflicts of laws principles.

15. Headings. Headings are given to the sections and subsections of this
Agreement 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 this Agreement or any provision hereof.

***