exv10w3






Exhibit 10.3




Regency GP LLC

Long-Term Incentive Plan




Grant of Phantom Units

with DERs



	 	 	 	 	 

	Grantee:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Grant Date:
	 	 	 	 
	 

	 	 

	 	 







	1.	 	Grant of Phantom Units with DERs. Regency GP LLC (the “Company”) hereby grants to
you ___ Phantom Units (subject to adjustment as provided in Attachment A) under the Regency
GP LLC Long-Term Incentive Plan (the “Plan”) on the terms and conditions set forth in this
agreement (the “Agreement”) and in the Plan. Each Phantom Unit includes a tandem distribution
equivalent right (“DER”), as defined in Paragraph 2 below. In the event of any conflict
between the terms of this Agreement and the Plan, which is incorporated herein by reference as
a part of this Agreement, the terms of the Plan shall control. Capitalized terms used in this
Agreement but not defined herein shall have the meanings ascribed to such terms in the Plan,
unless the context requires otherwise.
	 
	2.	 	Vesting. Subject to Paragraph 3 below, if and to the extent the Performance Goal set
forth on Attachment A hereto is achieved, effective on the last day of the Performance Period
the Phantom Units shall vest in accordance with the Vested Percentage as set forth on
Attachment A. If the Performance Goal is not achieved, the Phantom Units automatically shall
be forfeited without payment effective on the last day of the Performance Period.
	 
	 	 	The Company shall establish, with respect to each Phantom Unit, a bookkeeping account (a
“DER Account”) to which it shall credit (without interest) an amount equal to any cash
distributions made by the Partnership with respect to a Common Unit during the Performance
Period — a DER. Upon the vesting of a Phantom Unit, the DER Account with respect to such
vested Phantom Unit shall also become vested. Similarly, upon the forfeiture of a Phantom
Unit, the DER Account with respect to such forfeited Phantom Unit shall also be forfeited.
	 
	3.	 	Events Occurring Prior to the End of the Performance Period.






	 	(a)	 	Death or Disability. If, prior to the end of the Performance Period,
your employment with the Company terminates as a result of your death or a disability
that entitles you to benefits under the Company’s long-term disability plan
(“Disability”), then, if and to the extent the Performance Goal is achieved for the
Performance Period, a “prorata portion” of the Vested
Percentage of your Phantom Units and DER Accounts that would have become vested had your




 









 






	 	 	 	 employment
continued through the end of the Performance Period will become vested on the last
day of the Performance Period. The “prorata portion” shall be a fraction, the
numerator of which is the number of days in the Performance Period that have elapsed
as of the date of your death or Disability, and the denominator of which is the
total number of days in the Performance Period.
	 
	 	(b)	 	Other Terminations. If, prior to the end of the Performance Period,
your employment with the Company terminates for any reason other than as provided in
Paragraph 3(a) above or Paragraph 3(d) below, all of your Phantom Units and DER
Accounts automatically shall be forfeited without payment upon such termination.
	 
	 	(c)	 	Change of Control. Except as otherwise provided in Paragraph 3(d)
below, upon and following a Change of Control prior to the end of the Performance
Period, your Phantom Units and DER Accounts will remain outstanding and will only vest
as otherwise set forth in this Agreement.
	 
	 	(d)	 	Change of Control Termination. Notwithstanding Paragraph 3(c) above,
if, upon or within 12 months following a Change of Control and prior to the end of the
Performance Period, your employment with the Company is terminated by the Company
without “Cause” (as defined below) or you resign for “Good Reason” (as defined below)
(such termination or resignation, a “Change of Control Termination”), then,
notwithstanding anything in the Plan to the contrary, all of your Phantom Units and DER
Accounts automatically shall become vested at the Maximum Vested Percentage level as
provided in Attachment A.






	 	 	For purposes of this Agreement:






	 	(i)	 	“employment with the Company” means being an Employee, Consultant or a
Director of the Company or any of its Affiliates and a change of status
between being an Employee, Consultant or Director or between being an
Employee, Consultant or a Director of the Company and/or any of its
Affiliate(s) shall not constitute a termination of “employment with the
Company”;
	 
	 	(ii)	 	“Cause” means the Company (which, for purposes of this definition,
shall include the Company and any of its Affiliates) having “Cause” to
terminate your employment with the Company, as defined in any employment or
similar agreement between you and the Company; provided that, in the absence
of an agreement containing such a definition, the Company shall have “Cause”
to terminate your employment with the Company upon (A) your willful failure
to substantially perform your duties (other than any such failure resulting
from your Disability) which is not remedied within thirty (30) days after
receipt of written notice from the Company specifying such failure, (B) your
willful failure to carry out, or comply with, in any material respect, any
lawful and reasonable
directive of the Board, which is not remedied within thirty (30) days after




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	 	 	 	receipt of written notice from the Company specifying such failure, (C) your
commission at any time of any act or omission that results in, or may
reasonably be expected to result in, a conviction, plea of no contest, plea
of nolo contendere, or imposition of unadjudicated probation for any felony
or crime involving moral turpitude, (D) your unlawful use (including being
under the influence) or possession of illegal drugs on the Company’s
premises or while performing your duties and responsibilities, or (E) your
commission at any time of any act of fraud, embezzlement, misappropriation,
material misconduct, or breach of fiduciary duty against the Company (or any
predecessor thereto or successor thereof); and
	 
	 	(iii)	 	“Good Reason” means a material reduction in your annual base salary or
target bonus following a Change of Control; provided, however, that,
notwithstanding the foregoing, you may not resign for Good Reason unless you
have provided the Company with 30 days prior written notice of your intent
to resign for Good Reason and the Company has not remedied such reduction
within such 30-day period.






	4.	 	Payments.






	 	(a)	 	Phantom Units. Subject to Paragraph 5, as soon as reasonably practical
and not later than 15 days following the end of the Performance Period or a Change of
Control Termination, as applicable, the Company shall pay you, with respect to each
vested Phantom Unit, one Unit, unless the Committee, in its discretion, elects to pay
you an amount of cash equal to the Fair Market Value of a Unit determined on the last
day of the Performance Period or the date of the Change of Control Termination, as
applicable. If more than one Phantom Unit vests at the same time, the Company may pay
such vested Phantom Units in any combination of Units and cash as the Company, in its
discretion, elects.
	 
	 	(b)	 	DER Accounts. Subject to Paragraph 5, as soon as reasonably practical
and not later than 15 days following the vesting of a Phantom Unit, the Company shall
pay you an amount of cash equal to the amount credited to your DER Account maintained
with respect to such Phantom Unit.






	5.	 	Withholding of Taxes. To the extent that the vesting or payment of a Phantom Unit
or cash with respect to a DER Account results in the receipt of compensation by you with
respect to which the Company or an Affiliate has a tax withholding obligation pursuant to
applicable law, the Company or Affiliate shall withhold from the cash and from the Units
otherwise to be delivered, that amount of cash and that number of Units having a Fair Market
Value equal to the Company’s or Affiliate’s tax withholding obligations with respect to such
cash and Unit payments, respectively. No payment of a vested Phantom Unit or a cash
distribution with respect to a DER Account shall be made pursuant to this Agreement until the
applicable tax withholding requirements with respect to such event have been satisfied in
full.




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	6.	 	Limitations Upon Transfer. All rights under this Agreement shall belong to you alone
and may not be transferred, assigned, pledged, or hypothecated by you in any way (whether by
operation of law or otherwise), other than by will or the laws of descent and distribution or
a qualified domestic relations order and shall not be subject to execution, attachment, or
similar process. Upon any attempt by you to transfer, assign, pledge, hypothecate, or
otherwise dispose of such rights contrary to the provisions in this Agreement or the Plan, or
upon the levy of any attachment or similar process upon such rights, such rights shall
immediately become null and void.
	 
	7.	 	Binding Effect. This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company and upon any person lawfully claiming under you.
	 
	8.	 	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 Phantom
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.
	 
	9.	 	Modifications. Any modification of this Agreement shall be effective only if it is
in writing and signed by both you and an authorized individual on behalf of the Company.
	 
	10.	 	Governing Law. This grant shall be governed by, and construed in accordance with,
the laws of the State of Texas, without regard to conflicts of laws principles thereof.





	 	 	 	 	 
	 	Regency GP LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Byron R. Kelley 	 
	 	 	Title:  	Chairman, President and Chief Executive Officer 	 
	 




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ATTACHMENT A




Performance Goal and Performance Vesting



          Except as otherwise provided in the Grant Agreement, the provisions of this Attachment A to
the Grant Agreement shall determine whether, and the extent, if any, that the Phantom Units (and
DER Accounts) become vested at the end of the Performance Period.




	I.	 	Performance Period
	 
	 	 	The Performance Period shall be the period beginning
                    , 20___ and ending
                    , 20___.
	 
	II.	 	Performance Goal
	 
	 	 	The vesting of your Phantom Units (and DER Accounts) will be determined based on the
comparison of (i) the TUR (as defined below) of the Partnership’s common units for the
Performance Period to (ii) the TUR of the common units of each of the members of the Peer
Group for the Performance Period.
	 
	 	 	“TUR” or “Total Unitholder Return” shall be measured as the sum of (i) the change
(increase/decrease) in the “average price” per unit at the end of the Performance Period
compared to the “average price” at the beginning of the Performance Period plus (ii) the
cash distributions made per unit during the Performance Period, divided by the “average
price” of the unit at the beginning of the Performance Period. The beginning and ending
“average price” per unit is the average closing price of the unit for the last 20
consecutive trading days (x) prior to the beginning of the Performance Period and (y) of the
Performance Period, respectively, adjusted to take into account any unit splits, unit
distributions or other similar events. Such determinations and adjustments shall be made by
the Committee in its discretion.
	 
	III.	 	Peer Group
	 
	 	 	The Peer Group shall consist of the following companies:





	 	 	 

	ATLAS PIPELINE PARTNERS LP

	 	HOLLY ENERGY PARTNERS LP
	BOARDWALK PIPELINE PARTNERS, LP

	 	MAGELLAN MIDSTREAM PARTNERS LP
	BUCKEYE PARTNERS LP

	 	MARKWEST ENERGY PARTNERS LP
	COPANO ENERGY, L.L.C.

	 	MARTIN MIDSTREAM PARTNERS LP
	CROSSTEX ENERGY LP

	 	NUSTAR ENERGY L.P.
	DCP MIDSTREAM PARTNERS, LP

	 	PLAINS ALL AMERICAN PIPELINE LP
	EAGLE ROCK ENERGY PARTNERS LP

	 	QUICKSILVER GAS SERVICES LP
	ENERGY TRANSFER PARTNERS, L.P.

	 	SUNOCO LOGISTICS PARTNERS LP
	ENTERPRISE PRODUCTS PARTNERS LP

	 	TARGA RESOURCES PARTNERS LP







	 	 	No company shall be added to, or removed from, the Peer Group during the Performance
Period, except that a company shall be removed from the Peer Group if, prior to the end of
the Performance Period, such company ceases to maintain publicly available




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	 	 	statements of operations prepared in accordance with GAAP. However, if a Peer Group company
is merged into or becomes acquired by another entity that maintains such public statements,
the surviving public company shall continue to be a Peer Group company unless the Committee,
in its discretion, determines otherwise.
	 
	IV.	 	Determination of the Vested Percentage of the Phantom Units (and the DER Accounts)





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	<Threshold	 	Threshold	 	Target	 	Maximum
	Vested Percentage	 	0%	 	50%	 	100%	 	150%
	Percentile Ranking of
Company’s TUR against
Peer Group Members’
TURs

	 	<40%
	 	 	40	%	 	 	50	%	 	 	75	%







	 	 	For results between Threshold and Target and Target and Maximum, the Vested Percentage
shall be determined by linear interpolation between the two applicable standards based on
the TUR results. As soon as reasonably practical following the end of the Performance
Period, but not later than 10 days thereafter, the Committee shall determine the Performance
Goal results for the Performance Period. However, the requirement for the Committee’s
determination of Performance Goal results shall not apply in the event of a Change of
Control Termination.
	 
	 	 	Notwithstanding the foregoing, for purposes of determining the Vested Percentage upon a
Change of Control Termination occurring prior to the end of the Performance Period, the
Performance Goal shall be deemed to have been met at the Maximum level (150%).
	 
	 	 	If the Vested Percentage as determined in the above table is in excess of 100% (or, if a
Change of Control Termination occurs during the Performance Period), the number of Phantom
Units granted to you on the Grant Date automatically shall be increased, retroactively
effective as of the Grant Date, so that the number of Phantom Units hereby deemed granted to
you as of the Grant Date equals the product of (i) the number of Phantom Units stated in
Paragraph 1 and (ii) the Vested Percentage applicable to you. The “additional” Phantom
Units hereby credited to you retroactively effective as of the Grant Date shall each include
a tandem DER, which also shall be deemed credited retroactively effective as of the Grant
Date.
	 
	V.	 	Adjustments to Performance Goal for Significant Events
	 
	 	 	If, after the beginning of the Performance Period, there is a change in accounting standards
required by the Financial Accounting Standards Board or the occurrence of a significant or unusual
event with respect to the Partnership or a Peer Group company, the TUR results for the Partnership
or such Peer Group company, as the case may be, may be adjusted by the Committee, in its sole
discretion, as it determines to be appropriate.




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APPENDIX A




     This Appendix A is attached to the Form of Grant of Phantom Units – Performance Vesting
between the Company and certain of its executive officers and other employees or service providers.
The form of Grant of Phantom Units – Performance Vesting between the Company and certain of its
other executive officers varies from this Exhibit 10.2 by modifying certain provisions of Section 3
as described below:



     1. The Form of Grant of Phantom Units between the Company and Byron R. Kelley also provides
for accelerated pro rata vesting of Mr. Kelley’s Phantom Units and DER Accounts upon his retirement
from the Company on or after Mr. Kelley reaches age 62. The pro rata portion subject to
accelerated vesting upon Mr. Kelley’s retirement from the Company on or after he reaches age 62
will be determined on the same basis as described in Section 3(a) of this Exhibit 10.2 with respect
to a termination due to death or disability. In addition, if, prior to the end of a performance
period, Mr. Kelley’s employment with the Company terminates as a result of his retirement on after
reaching age 65, then his Phantom Units and DER Accounts will continue to be eligible to vest at
the end of the performance period based on the performance actually achieved during such period.



     2. The Form of Grant of Phantom Units between the Company and Dennie W. Dixon also provides
for accelerated pro rata vesting of the Phantom Units and DER Accounts subject to the award
agreement upon Mr. Dixon’s retirement from the Company on or after reaching age 62. The pro rata
portion subject to accelerated vesting upon Mr. Dixon’s retirement will be determined on the same
basis as described in Section 3(a) of this Exhibit 10.2 with respect to a termination due to death
or disability.



Appendix A to

Exhibit 10.2