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Exhibit 10.4    
    

 
 

AGREEMENT REGARDING 2003 REGISTRATION STATEMENT
  AND WAIVER AND TERMINATION OF STOCKHOLDERS' AGREEMENT

        THIS
AGREEMENT REGARDING 2003 REGISTRATION STATEMENT AND WAIVER AND TERMINATION OF STOCKHOLDERS' AGREEMENT, dated October    , 2003, is by and among Yorktown Energy Partners
IV, L.P., a Delaware limited partnership, Yorktown Energy Partners V, L.P., a Delaware limited partnership, Lubar Nominees, a general partnership, Barry E. Davis, A. Chris Aulds, James R. Wales,
William W. Davis, Jack M. Lafield, Michael P. Scott, Lisa M. Brecht, John W. Daugherty, Mike Hopkins, Mark E. Huff, Marc Lyons, Rodney A. Madden, Stewart McCorkle and Dale Wilson (collectively, the
"Stockholders"), and Crosstex Energy Holdings Inc., a Delaware corporation (the "Company"). 

W
I T N E S E T H: 

        WHEREAS,
the Stockholders and the Company are parties to a Stockholders' Agreement dated May 5, 2000 and amended May 2, 2001 (the "Stockholders' Agreement); 

        WHEREAS,
the Company intends to register under the Securities Act of 1933, as amended, Registrable Shares (as defined in the Stockholders' Agreement) of the Stockholders in the numbers
set forth opposite their signatures hereto (the "Offering"); 

        WHEREAS,
the Stockholders will use the proceeds from the sale of the Registrable Shares to pay off promissory notes held by the Company; 

        WHEREAS,
in connection with the Offering, the parties hereto desire to define the obligations of the Company and the Stockholders with respect to the Offering and waive and terminate
certain provisions of the Stockholders' Agreement, upon the terms and conditions contained herein; 

        NOW,
THEREFORE, in consideration such good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 

        1.    Registration.    The Company shall include in a registration statement the number of Registrable Shares of the
Stockholders set forth opposite their signatures hereto and the provisions of Article V of the Stockholders' Agreement are adopted by all the parties hereto with respect to the Offering and
agreed to in all respects. 

        2.    Waiver and Termination.    The parties agree to, and do hereby, waive the terms of any and all options and
rights to purchase, voting agreements, registration rights, and all other rights and requirements under the Stockholders' Agreement and terminate the Stockholders' Agreement effective concurrent with
the closing of the Offering, except for the provisions of Section 5.8, which shall survive such termination. Upon termination, no party shall have any further liability or obligations to any
other party under the Stockholders' Agreement except as otherwise expressly provided for herein. 

        3.    Title.    Each Stockholder represents and warrants that (a) he has not sold, transferred, assigned,
pledged or otherwise conveyed to any other party any interest in the Stockholders' Agreement and (b) he has the full right, power and authority to enter into this Termination Agreement and to
terminate the Stockholders' Agreement. 

        4.    Joinder of Spouses.    The spouses of each Stockholder hereby join in the execution and delivery of this
Agreement for the purpose of binding their respective community property interests, if any, in the Stockholders' Agreement to the terms and conditions hereof in all respects. 

        5.    Entire Agreement.    This Agreement constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. 

        6.    Binding Effect.    This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs and legal representatives. 

        7.    Amendment and Waiver.    This Agreement may be amended, superseded, cancelled, renewed or extended, and the
terms hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. 

        8.    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware. 

        9.    Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same agreement. 

        10.    Gender.    Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender,
and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

YORKTOWN ENERGY PARTNERS IV, L.P.
	

 	
 	

By:	

Yorktown IV Company LLC,

its General Partner
	

 	
 	

 	

By:	
 	

	 	 	 	 	Name:	 	

	 	 	 	 	Title:	 	

	

 	
 	

Address:

410 Park Avenue

New York, New York 10022

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

YORKTOWN ENERGY PARTNERS V, L.P.
	

 	
 	

By:	

Yorktown V Company LLC,

its General Partner
	

 	
 	

 	

By:	
 	

	 	 	 	 	Name:	 	

	 	 	 	 	Title:	 	

	

 	
 	

Address:

410 Park Avenue

New York, New York 10022

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

LUBAR NOMINEES
	

 	
 	

By:	

 David J. Lubar, a general partner
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Barry E. Davis
	

 	
 	

 Spouse of Barry E. Davis
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 A. Chris Aulds
	

 	
 	

 Spouse of A. Chris Aulds
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 James R. Wales
	

 	
 	

 Spouse of James R. Wales
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 William W. Davis
	

 	
 	

 Spouse of William W. Davis
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Jack M. Lafield
	

 	
 	

 Spouse of Jack M. Lafield
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Michael P. Scott
	

 	
 	

 Spouse of Michael P. Scott
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Lisa M. Brecht
	

 	
 	

 Spouse of Lisa M. Brecht
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 John W. Daugherty
	

 	
 	

 Spouse of John W. Daugherty
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Mike Hopkins
	

 	
 	

 Spouse of Mike Hopkins
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Mark E. Huff
	

 	
 	

 Spouse of Mark E. Huff
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Marc E. Huff
	

 	
 	

 Spouse of Marc E. Huff
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Marc Lyons
	

 	
 	

 Spouse of Marc Lyons
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Rodney A. Madden
	

 	
 	

 Spouse of Rodney A. Madden
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Stewart McCorkle
	

 	
 	

 Spouse of Stewart McCorkle
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	
 Number of Registrable Shares	 	 	 	 	 
	

 	
 	

 Dale Wilson
	

 	
 	

 Spouse of Dale Wilson
	

 	
 	

Address:

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	 	CROSSTEX ENERGY HOLDINGS INC.
	

 	

By:	
 	

	 	Name:	 	

	 	Title:	 	

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Exhibit 10.4

AGREEMENT REGARDING 2003 REGISTRATION STATEMENT AND WAIVER AND TERMINATION OF STOCKHOLDERS' AGREEMENTQuickLinks
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Exhibit 10.5    
    

        CROSSTEX ENERGY, INC.

2004 LONG-TERM INCENTIVE PLAN  

  
 

    ARTICLE I.    ESTABLISHMENT AND PURPOSE    
    

        1.1    Establishment.    Crosstex Energy, Inc., a Delaware corporation, hereby
establishes the Crosstex Energy, Inc. 2004 Long-Term Incentive Plan, as set forth in this document. 

        1.2    Purpose.    The purposes of the Plan are to attract able persons to enter the employ of the Company, to
encourage Employees to remain in the employ of the Company and to provide motivation to Employees to put forth maximum efforts toward the continued growth, profitability and success of the Company, by
providing incentives to such persons through the ownership and/or performance of the Common Stock of Crosstex. A further purpose of the Plan is to provide a means through which the Company may attract
able persons to become directors of the Company and to provide such individuals with incentive and reward opportunities. Toward these objectives, Awards may be granted under the Plan to Employees and
Outside Directors on the terms and subject to the conditions set forth in the Plan. 

        1.3    Effectiveness.    The Plan shall become effective as
of                        , 2004, the date of its adoption by the
Board, provided it is duly approved by the holders of at least a majority of the shares of Common Stock present or represented and entitled to vote at a meeting of the stockholders of Crosstex duly
held in accordance with applicable law within twelve months after the date of adoption of the Plan by the Board. If the Plan is not so approved, the Plan shall terminate and any Award granted
hereunder shall be null and void. 

 
 

ARTICLE II.    DEFINITIONS    
    

        2.1    Affiliate.    "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. With respect to an Incentive Stock Option,
"Affiliate" means a "parent corporation" or a "subsidiary corporation" of Crosstex, as those terms are defined in Section 424(e) and (f) of the Code. 

        2.2    Award.    "Award" means an award granted to a Participant in the form of an Option, Phantom Option, Restricted
Stock, SAR, or Other Incentive Award, whether granted singly, in combination or in tandem. All Awards shall be granted by, confirmed by, and subject to the terms of, an Award Agreement. 

        2.3    Award Agreement.    "Award Agreement" means a written agreement between Crosstex and a Participant that sets
forth the terms, conditions, restrictions and/or limitations applicable to an Award. 

        2.4    Board.    "Board" means the Board of Directors of Crosstex. 

        2.5    Cause.    "Cause" means the termination of a Participant's employment or service by reason of fraud,
dishonesty, any unauthorized use or disclosure by the Participant of any confidential information or trade secrets of Crosstex, or the performance of other acts detrimental to Crosstex or an
Affiliate, as determined by the Committee in its absolute discretion. 

        2.6    Change of Control.    "Change of Control" shall have the meaning set forth in Section 12.1. 

        2.7    Code.    "Code" means the Internal Revenue Code of 1986, as amended from time to time, including regulations
thereunder and successor provisions and regulations thereto. 

        2.8    Committee.    "Committee" means (i) with respect to the application of this Plan to Employees, the
Compensation Committee of the Board or such other committee of the Board as may be designated by the Board to administer the Plan, which committee shall consist of two or more 

 

non-employee
directors, each of whom is both a "non-employee director" under Rule 16b-3 of the Exchange Act and an "outside director" under
Section 162(m) of the Code, and (ii) with respect to the application of this Plan to an Outside Director, the Board. To the extent that no Committee exists that has the authority to
administer the Plan, the functions of the Committee shall be exercised by the Board. If for any reason the appointed Committee does not meet the requirements of Rule 16b-3 or
Section 162(m) of the Code, such noncompliance with such requirements shall not affect the validity of Awards, grants, interpretations or other actions of the Committee. 

        2.9    Common Stock.    "Common Stock" means the common stock, $.01 par value per share, of Crosstex, or any stock or
other securities of Crosstex hereafter issued or issuable in substitution or exchange for the Common Stock. 

        2.10    Company.    "Company" means Crosstex and its Affiliates. 

        2.11    Crosstex.    "Crosstex" means Crosstex Energy, Inc., a Delaware corporation, or any successor thereto. 

        2.12    Employee.    "Employee" means an employee of Crosstex or an Affiliate of Crosstex; provided, however, that the
term "Employee" does not include an Outside Director or an individual performing services for Crosstex or an Affiliate who is treated for tax purposes as an independent contractor at the time of
performance of the services. 

        2.13    Exchange Act.    "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        2.14    Fair Market Value.    "Fair Market Value" means the closing sales price of a share of Common Stock on the
applicable date (or if there is no trading in the Common Stock on such date, on the next preceding date on which there was trading) as reported in The Wall Street
Journal(or other reporting service approved by the Committee). In the event the Common Stock is not publicly traded at the time a determination of fair market value is required
to be made hereunder, the determination of fair market value shall be made in good faith by the Committee. 

        2.15    Grant Date.    "Grant Date" means the date an Award is granted by the Committee. 

        2.16    Incentive Stock Option.    "Incentive Stock Option" means an Option that is intended to meet the requirements
of Section 422(b) of the Code. 

        2.17    Nonqualified Stock Option.    "Nonqualified Stock Option" means an Option that is not an Incentive Stock
Option. 

        2.18    Option.    "Option" means an option to purchase shares of Common Stock granted to a Participant pursuant to
Article 7. An Option may be either an Incentive Stock Option or a Nonqualified Stock Option, as determined by the Committee. 

        2.19    Other Incentive Award.    "Other Incentive Award" means an incentive award granted to a Participant pursuant
to Article 11. 

        2.20    Outside Director.    "Outside Director" means a "non-employee director" of the Company, as defined
in Rule 16b-3. 

        2.21    Participant.    "Participant" means an Employee or Outside Director to whom an Award has been granted under
the Plan. 

        2.22    Person.    "Person" means an individual or a corporation, limited liability company, partnership, joint
venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity. 

        2.23    Phantom Option.    "Phantom Option" means a fictional option granted to a Participant pursuant to
Article 8. 

2

 

        2.24    Plan.    "Plan" means this Crosstex Energy, Inc. 2004 Long-Term Incentive Plan. 

        2.25    Restricted Stock.    "Restricted Stock" means shares of Common Stock granted to a Participant pursuant to
Article 9, which are subject to such restrictions as may be determined by the Committee. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate
purposes. 

        2.26    Rule 16b-3.    "Rule 16b-3" means Rule 16b-3
promulgated by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time. 

        2.27    SAR.    "SAR" means a stock appreciation right granted to a Participant pursuant to Article 10. 

 
 

ARTICLE III.    PLAN ADMINISTRATION    
    

        3.1    Plan Administrator.    The Plan shall be administered by the Committee. The Committee
may delegate some or all of its power to the Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate; provided, that (i) the Committee may not
delegate its power with regard to the grant of an Award to any person who is a "covered employee" within the meaning of Section 162(m) of the Code or who, in the Committee's judgment, is likely
to be a covered employee at any time during the period an Award to such employee would be outstanding, and (ii) the Committee may not delegate its power with regard to the selection for
participation in the Plan of an officer or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an Award to such an officer or other
person. 

        3.2    Authority of Administrator.    The Committee shall have total and exclusive responsibility to control, operate,
manage and administer the Plan in accordance with its terms. The Committee shall have all the authority that may be necessary or helpful to enable it to discharge its responsibilities with respect to
the Plan. Without limiting the generality of the preceding sentence, the Committee shall have the exclusive right to: (i) interpret the Plan and the Award Agreements executed hereunder;
(ii) determine eligibility for participation in the Plan; (iii) decide all questions concerning eligibility for, and the amount of, Awards granted under the Plan; (iv) construe
any ambiguous provision of the Plan or any Award Agreement; (v) prescribe the form of the Award Agreements embodying Awards granted under the Plan; (vi) correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award Agreement; (vii) issue administrative guidelines as an aid to administering the Plan and make changes in such guidelines as the
Committee from time to time deems proper; (viii) make regulations for carrying out the Plan and make changes in such regulations as the Committee from time to time deems proper;
(ix) determine whether Awards should be granted singly, in combination or in tandem; (x) to the extent permitted under the Plan, grant waivers of Plan terms, conditions, restrictions and
limitations; (xi) accelerate the exercise, vesting or payment of an Award when such action or actions would be in the best interests of the Company; (xii) grant Awards in replacement of
Awards previously granted under the Plan or any other employee benefit plan of the Company; and (xiii) take any and all other actions the Committee deems necessary or advisable for the proper
operation or administration of the Plan. 

        3.3    Discretionary Authority.    The Committee shall have full discretionary authority in all matters related to the
discharge of its responsibilities and the exercise of its authority under the Plan, including, without limitation, its construction of the terms of the Plan and its determination of eligibility for
participation and Awards under the Plan. The decisions of the Committee and its actions with respect to the Plan shall be final, conclusive and binding on all persons having or claiming to have any
right or interest in or under the Plan, including Participants and their respective estates, beneficiaries and legal representatives. 

3

 

        3.4    Liability; Indemnification.    No member of the Committee nor any person to whom authority has been delegated,
shall be personally liable for any action, interpretation or determination made in good faith with respect to the Plan or Awards granted hereunder, and each member of the Committee (or delegatee of
the Committee) shall be fully indemnified and protected by Crosstex with respect to any liability he or she may incur with respect to any such action, interpretation or determination, to the extent
permitted by applicable law. 

 
 

ARTICLE VI.    SHARES SUBJECT TO THE PLAN    
    

        4.1    Available Shares. The maximum number of shares of Common Stock that shall be available for grant
of Awards under the Plan shall not exceed a total of                        , subject to adjustment as provided in Sections 4.2
and 4.3. Shares of Common Stock issued pursuant to the Plan may be shares of
original issuance or treasury shares or a combination of the foregoing, as the Committee, in its absolute discretion, shall from time to time determine. 

        4.2    Adjustments for Recapitalizations and Reorganizations.

        (a)   The
shares with respect to which Awards may be granted under the Plan are shares of Common Stock as presently constituted, but if, and whenever, prior to the expiration
or satisfaction of an Award theretofore granted, Crosstex shall effect a subdivision or consolidation of shares of Common Stock or the payment of a stock dividend on Common Stock in the form of
Crosstex Common Stock without receipt of consideration by Crosstex, the number of shares of Common Stock with respect to which such Award may thereafter be exercised or satisfied, as applicable,
(i) in the event of an increase in the number of outstanding shares, shall be proportionately increased, and the exercise price per share shall be proportionately reduced, and (ii) in
the event of a reduction in the number of outstanding shares, shall be proportionately reduced, and the exercise price per share shall be proportionately increased. 

        (b)   If
Crosstex recapitalizes or otherwise changes its capital structure, thereafter upon any exercise or satisfaction, as applicable, of an Award theretofore granted the
Participant shall be entitled to (or entitled to purchase, if applicable) under such Award, in lieu of the number of shares of Common Stock then covered by such Award, the number and class of shares
of stock or other securities to which the Participant would have been entitled pursuant to the terms of the recapitalization if, immediately prior to such recapitalization, the Participant had been
the holder of record of the number of shares of Common Stock then covered by such Award. 

        (c)   In
the event of changes in the outstanding Common Stock by reason of a reorganization, merger, consolidation, combination, separation (including a spin-off
or other distribution of stock or property), exchange, or other relevant change in capitalization occurring after the date of grant of any Award and not otherwise provided for by this
Section 4.2, any outstanding Awards and any Award Agreements evidencing such Awards shall be subject to adjustment by the Committee in its absolute discretion as to the number, price and kind
of shares or other consideration subject to, and other terms of, such Awards to reflect such changes in the outstanding Common Stock. 

        (d)   In
the event of any changes in the outstanding Common Stock provided for in this Section 4.2, the aggregate number of shares available for grant of Awards under
the Plan may be equitably adjusted by the Committee, whose determination shall be conclusive. Any adjustment provided for in this Section 4.2 shall be subject to any required stockholder
action. 

        4.3    Adjustments for Awards.    The Committee shall have full discretion to determine the manner in which shares of
Common Stock available for grant of Awards under the Plan are counted. Without limiting the discretion of the Committee under this Section 4.3, unless otherwise determined by the 

4

 

Committee,
the following rules shall apply for the purpose of determining the number of shares of Common Stock available for grant of Awards under the Plan: 

        (a)   Options and Restricted Stock.    The grant of Options and Restricted Stock shall reduce the number of shares
available for grant of Awards under the Plan by the number of shares subject to such Award. 

        (b)   SARs and Phantom Options.    The grant of SARs and Phantom Options shall not affect the number of shares
available for grant of Awards under the Plan. 

        (c)   Other Incentive Awards.    The grant of an Other Incentive Award in the form of Common Stock or that may be
paid or settled only in Common Stock shall reduce the number of shares available for grant of Awards under the Plan by the number of shares subject to such Award. The grant of an Other Incentive Award
that may be paid or settled only for cash shall not affect the number of shares
available for grant of Awards under the Plan. The grant of an Other Incentive Award that may be paid or settled in either Common Stock or cash shall reduce the number of shares available for grant of
Awards under the Plan by the number of shares subject to such Award. 

        (d)   Termination.    If any Award referred to in paragraphs (a) and (c) above (other than an Other
Incentive Award that may be paid or settled only for cash) is canceled or forfeited, or terminates, expires or lapses, for any reason (other than the termination of a Related Option (as defined in
Section 10.1) upon exercise of its corresponding SARs), the shares then subject to such Award shall again be available for grant of Awards under the Plan. 

        (e)   Payment of Exercise Price and Withholding Taxes.    If previously acquired shares of Common Stock are used to
pay the exercise price of an Award, the number of shares available for grant of Awards under the Plan shall not be increased by the number of shares delivered as payment of such exercise price. If
previously acquired shares of Common Stock are used to pay withholding taxes payable upon exercise, vesting or payment of an Award, or shares of Common Stock that would be acquired upon exercise,
vesting or payment of an Award are withheld to pay withholding taxes payable upon exercise, vesting or payment of such Award, the number of shares available for grant of Awards under the Plan shall
not be increased by the number of shares delivered or withheld as payment of such withholding taxes. 

        (f)    Fractional Shares.    If any such adjustment would result in a fractional security being (i) available
under the Plan, such fractional security shall be disregarded or (ii) subject to an Award, Crosstex shall pay the holder of such Award, in connection with the first vesting, exercise or
settlement of such Award in whole or in part occurring after such adjustment, an amount in cash determined by multiplying (x) the fraction of such security (rounded to the nearest hundredth) by
(y) the excess, if any, of the Fair Market Value on the vesting, exercise or settlement date over the exercise price, if any, of such Award. 

 
 

ARTICLE V.    ELIGIBILITY    
    

        All Employees and Outside Directors are eligible to participate in the Plan. The Committee shall recommend, from time to time, Participants from those Employees
and Outside Directors who, in the opinion of the Committee, can further the Plan purposes. Once a Participant is recommended for an Award by the Committee, the Committee shall determine the type and
size of Award to be granted to the Participant and shall establish in the related Award Agreement the terms, conditions, restrictions and/or limitations applicable to the Award, in addition to those
set forth in the Plan and the administrative rules and regulations, if any, established by the Committee. 

5

 

 
 

ARTICLE VI.    FORM OF AWARDS    
    

        Awards may, at the Committee's sole discretion, be granted under the Plan in the form of Options pursuant to Article 7, Phantom Options pursuant to
Article 8, Restricted Stock pursuant to Article 9, SARs pursuant to Article 10, and Other Incentive Awards pursuant to Article 11, or a combination thereof. All Awards
shall be subject to the terms, conditions, restrictions and limitations of the Plan. The Committee may, in its absolute discretion, subject any Award to such other terms, conditions, restrictions
and/or limitations (including, but not limited to, the time and conditions of exercise, vesting or payment of an Award and restrictions on transferability of any shares of Common Stock issued or
delivered pursuant to an Award), provided they are not inconsistent with the terms of the Plan. Awards under a particular Article of the Plan need not be uniform, and Awards under more than one
Article of the Plan may be combined into a single Award Agreement. Any combination of Awards may be granted at one time and on more than one occasion to the same Participant. 

 
 

ARTICLE VII.    OPTIONS    
    

        7.1    General.    Awards may be granted to Employees and Outside Directors in the form of
Options. Options granted under the Plan may be Incentive Stock Options or Nonqualified Stock Options, or a combination of both; provided, however, that Incentive Stock Options may be granted only to
Employees. 

        7.2    Terms and Conditions of Options.    An Option shall be exercisable in whole or in such installments and at such
times as may be determined by the Committee. The price at which a share of Common Stock may be purchased upon exercise of a Nonqualified Stock Option shall be determined by the Committee, but such
exercise price shall not be less than 50% of the Fair Market Value per share of Common Stock on the Effective Date of the Option's grant. Except as otherwise provided in Section 7.3, the term
of each Option shall be as specified by the Committee; provided, however, that, no Options shall be exercisable later than ten years from the Effective Date of the Option's grant. Options may be
granted with respect to Restricted Stock or shares of Common Stock that are not Restricted Stock, as determined by the Committee in its absolute discretion. 

        7.3    Restrictions Relating to Incentive Stock Options.    Options granted in the form of Incentive Stock Options
shall, in addition to being subject to the terms and conditions of Section 7.2, comply with Section 422(b) of the Code. Accordingly, no Incentive Stock Options shall be granted later
than ten years from the date of adoption of the Plan by the Board. In addition, no Incentive Stock Option shall be exercisable after the expiration of ten years from the Effective Date of the Option's
grant. To the extent that the aggregate Fair Market Value (determined at the time the respective Incentive Stock Option is granted) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an individual during any calendar year under all incentive stock option plans of Crosstex and its Affiliates exceeds $100,000, such excess Incentive Stock Options
shall be treated as options which do not constitute Incentive Stock Options. The Committee shall determine, in accordance with the applicable provisions of the Code, which of a Participant's Incentive
Stock Options will not constitute Incentive Stock Options because of such limitation and shall notify the optionee of such determination as soon as practicable after such determination. The price at
which a share of Common Stock may be purchased upon exercise of an Incentive Stock Option shall be determined by the Committee, but such exercise price shall not be less than 100% of the Fair Market
Value of a share of Common Stock on the Effective Date of the Option's grant. No Incentive Stock Option shall be granted to an Employee under the Plan if, at the time such Option is granted, such
Employee owns stock possessing more than 10% of the total combined voting power of all classes of stock of Crosstex or an Affiliate, within the meaning of Section 422(b)(6) of the Code, unless
(i) on the Effective Date of grant of such Option, the exercise price of such Option is at least 110% of the Fair Market Value of the Common Stock subject to the Option and (ii) such
Option by its terms is not exercisable after the expiration of five years from the Effective Date of the Option's grant. 

6

 

        7.4    Additional Terms and Conditions.    The Committee may subject any Award of an Option to such other terms,
conditions, restrictions and/or limitations as it determines are necessary or appropriate, provided they are not inconsistent with the Plan. 

        7.5    Exercise of Options.    Subject to the terms and conditions of the Plan, Options shall be exercised by the
delivery of a written notice of exercise to Crosstex, setting forth the number of shares of Common Stock with respect to which the Option is to be exercised, accompanied by full payment for such
shares. 

        Upon
exercise of an Option, the exercise price of the Option shall be payable to Crosstex in full either: (i) in cash or an equivalent acceptable to the Committee, or
(ii) in the absolute discretion of the Committee and in accordance with any applicable administrative guidelines established by the Committee, by tendering one or more previously acquired
nonforfeitable, unrestricted shares of Common Stock that have been held by the Participant for at least six months having an aggregate Fair Market Value at the time of exercise equal to the total
exercise price (including an actual or deemed multiple series of exchanges of such shares), or (iii) in a combination of the forms of payment specified in clauses (i) and
(ii) above. 

        From
and after such time as Crosstex registers the Common Stock under Section 12 of the Exchange Act, payment of the exercise price of an Option may also be made, in the absolute
discretion of the Committee, by delivery to Crosstex or its designated agent of an executed irrevocable option exercise form together with irrevocable instructions to a broker-dealer to sell or margin
a sufficient portion of the shares with respect to which the Option is exercised and deliver the sale or margin loan proceeds directly to Crosstex to pay the exercise price and any required
withholding taxes. 

        As
soon as reasonably practicable after receipt of written notification of exercise of an Option and full payment of the exercise price and any required withholding taxes, Crosstex shall
deliver to the Participant, in the Participant's name, a stock certificate or certificates in an appropriate amount based upon the number of shares of Common Stock purchased under the Option. 

        7.6    Termination of Employment or Service.    Each Award Agreement embodying the Award of an Option shall set forth
the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's employment or service with the Company. Such provisions shall be determined
by the Committee in its absolute discretion, need not be uniform among all Options granted under the Plan and may reflect distinctions based on the reasons for termination of employment or service. In
the event a Participant's Award Agreement embodying the award of an Option does not set forth such termination provisions, the following termination provisions shall apply with respect to such Award: 

        (a)   Death or Disability.    If the employment or service of a Participant shall terminate by reason of death or
permanent and total disability (within the meaning of Section 22(e)(3) of the Code), each outstanding Option held by the Participant may be exercised, to the extent then vested, until the
earlier of (i) the expiration of one year from the date of such termination of employment or service, or (ii) the expiration of the term of such Option. 

        (b)   Other Termination.    If the employment or service of a Participant shall terminate for any reason other than a
reason set forth in paragraph (a) above or paragraph (c) below, whether on a voluntary or involuntary basis, each outstanding Option held by the Participant may be exercised, to the
extent then vested, until the earlier of (i) the expiration of three months from the date of such termination of employment or service, or (ii) the expiration of the term of such Option. 

        (c)   Termination for Cause.    Notwithstanding paragraphs (a) and (b) above, if the employment or
service of a Participant is terminated for Cause, all outstanding Options held by the Participant shall immediately be forfeited to the Company and no additional exercise period shall be allowed,
regardless of the vested status of the Options. 

7

 

        7.7    Maximum Option Grants.    Any provision of this Plan to the contrary notwithstanding, from and after such time
as Crosstex registers a class of equity securities under Section 12 of the Exchange Act, the maximum number of shares of Common Stock for which Options and SARs may be granted under the Plan to
any one Employee during a calendar year is                        . 

 
 

ARTICLE VIII.    PHANTOM OPTIONS    
    

        8.1    General.    Awards may be granted to Employees and Outside Directors in the form of
Phantom Options. Phantom Options shall be awarded in such numbers and at such times as the Committee shall determine. All Phantom Options shall be evidenced by an Award Agreement as described in
Section 8.2 below and any payment or settlement made upon exercise of a Phantom Option shall be made to the Participant in accordance with the terms and conditions set forth in the Award
Agreement. 

        8.2    Award of Phantom Options.    Each Award Agreement embodying a Phantom Option granted pursuant to the Plan shall
specify the strike price for each fictional share of Common Stock subject to the Phantom Option, the number of fictional shares subject to the Phantom Option being awarded, the manner and timing of
the vesting of the Phantom Option and of payments or transfer of shares to the Participant under such Award and such other terms and conditions not inconsistent with the provisions of the Plan as may
be approved by the Committee in its absolute discretion. The strike price of a Phantom Option shall be determined by the Committee, but such strike price shall not be less than 100% of the Fair Market
Value per share of Common Stock on the Effective Date of the Phantom Option's grant. The term of each Phantom Option shall be as specified by the Committee; provided, however, that unless otherwise
designated by the Committee, no Phantom Option shall be exercisable later than ten years after the Effective Date of the Phantom Option's grant. Except as otherwise provided in an applicable Award
Agreement, Participants holding Phantom Options shall not be entitled to any dividends, rights upon liquidation or other rights of a holder of shares of Common Stock. 

        8.3    Exercise.    Subject to the terms and conditions of the Plan, Phantom Options shall be exercised by the
delivery of a written notice of exercise to Crosstex, setting forth the number of fictional shares with respect to which the Phantom Option is to be exercised. Subject to the terms and conditions of
this Plan and the applicable Award Agreement, upon exercise each fictional share subject to a Phantom Option entitles the Participant holding such Phantom Option to receive the amount, if any, by
which the Fair Market Value as of the date of exercise exceeds the strike price, payable in one or a combination of the following forms, as determined by the Committee in its absolute discretion:
(i) a cash payment or (ii) a whole number of shares of Common Stock (with cash payable in lieu of fractional shares). 

        8.4    Termination of Employment or Service.    Upon a Participant's termination of employment or service with the
Company for any reason other than for Cause, the vested portion of such Participant's Phantom Option shall be deemed to be exercised pursuant to Section 8.3 above and the unvested portion of
such Phantom Option shall immediately be forfeited to Crosstex. If the employment or
service of a Participant shall be terminated for Cause, all outstanding Phantom Options held by the Participant shall immediately be forfeited to Crosstex, regardless of the vested status of such
Phantom Options. 

 
 

ARTICLE IX.    RESTRICTED STOCK    
    

        9.1    General.    Awards may be granted to Employees and Outside Directors in the form of
Restricted Stock. Restricted Stock shall be awarded in such numbers and at such times as the Committee shall determine. 

8

 

        9.2    Restriction Period.    At the time an Award of Restricted Stock is granted, the Committee shall establish a
period of time (the "Restriction Period") applicable to such Restricted Stock. Each Award of Restricted Stock may have a different Restriction Period, in the discretion of the Committee. The
Restriction Period applicable to a particular Award of Restricted Stock shall not be changed except as permitted by Section 6.2 or Section 9.3. 

        9.3    Other Terms and Conditions.    Restricted Stock awarded to a Participant under the Plan shall be represented by
a stock certificate registered in the name of the Participant or, at the option of Crosstex, in the name of a nominee of Crosstex. Subject to the terms and conditions of the Award Agreement, a
Participant to whom Restricted Stock has been awarded shall have the right to receive dividends thereon during the Restriction Period, to vote the Restricted Stock and to enjoy all other stockholder
rights with respect thereto, except that (i) the Participant shall not be entitled to possession of the stock certificate representing the Restricted Stock until the Restriction Period shall
have expired, (ii) Crosstex shall retain custody of the Restricted Stock during the Restriction Period, (iii) the Participant may not sell, transfer, pledge, exchange, hypothecate or
otherwise dispose of the Restricted Stock during the Restriction Period, and (iv) a breach of the terms and conditions established by the Committee pursuant to the Award of the Restricted Stock
shall cause a forfeiture of the Restricted Stock. At the time of an Award of Restricted Stock, the Committee may, in its absolute discretion, prescribe additional terms, conditions, restrictions
and/or limitations applicable to the Restricted Stock, including, but not limited to, rules pertaining to the termination of employment or service (by reason of death, permanent and total disability,
or otherwise) of a Participant prior to expiration of the Restriction Period. 

        9.4    Payment for Restricted Stock.    A Participant shall not be required to make any payment for Restricted Stock
awarded to the Participant, except to the extent otherwise required by the Committee or by applicable law. 

        9.5    Miscellaneous.    Nothing in this Article shall prohibit the exchange of shares of Restricted Stock issued
under the Plan pursuant to a plan of reorganization for stock or securities of Crosstex or another corporation that is a party to the reorganization, but the stock or securities so received for shares
of Restricted Stock shall, except as provided in Section 6.2 or Section 13.2, become subject to the restrictions applicable to the Award of such Restricted Stock. Any shares of stock
received as a result of a stock split or stock dividend with respect to shares of Restricted Stock shall also become subject to the restrictions applicable to the Award of such Restricted Stock. 

 
 

ARTICLE X.    SARs    
    

        10.1    General.    The Committee may from time to time grant SARs in conjunction with all or
any portion of any Option (the "Related Option") either (i) at the time of the initial Option grant (not including any subsequent modification that may be treated as a new grant of an Incentive
Stock Option for purposes of Section 424(h) of the Code) or (ii) with respect to Nonqualified Stock Options, at any time after the initial Option grant while the Nonqualified Stock
Option is still outstanding. SARs shall not be granted other than in conjunction with an Option granted hereunder. 

        10.2    Terms and Conditions.    SARs granted hereunder shall comply with the following conditions and also with the
terms of the Award Agreement governing the Related Option: 

        (a)   The
SAR shall expire no later than the expiration of the Related Option. 

        (b)   Upon
the exercise of an SAR, the Participant shall be entitled to receive from Crosstex or the appropriate Affiliate an amount in cash equal to the excess of the
aggregate Fair Market Value of the shares of Common Stock with respect to which the SAR is then being exercised (determined as of the date of such exercise) over the aggregate purchase price of such
shares as provided in the Related Option. 

9

 

        (c)   SARs
shall be exercisable (i) only at such time or times and only to the extent that the Related Option shall be exercisable, (ii) only when the Fair
Market Value of the shares subject to the Related Option exceeds the purchase price of the shares as provided in the Related Option, and (iii) only upon surrender of the Related Option or any
portion thereof with respect to the shares for which the SARs are then being exercised. 

        (d)   Upon
the exercise of an SAR, the Related Option shall be deemed to have been terminated to the extent of the number of shares of Common Stock with respect to which such
SARs are exercised. Upon the exercise or termination of the Related Option, the SARs with respect to such Related Option shall be deemed to have been terminated to the extent of the number of shares
of Common Stock with respect to which the Related Option was so exercised or terminated. 

        10.3    Exercise of SARs.    Each exercise of SARs, or a portion thereof, shall be evidenced by a notice in writing to
Crosstex. 

 
 

ARTICLE XI.    OTHER INCENTIVE AWARDS    
    

        Subject to the terms and provisions of the Plan, Other Incentive Awards may be granted to Employees and Outside Directors in such amounts, upon such terms and at
any time and from time to time as shall be determined by the Committee in its absolute discretion. Other Incentive Awards may be granted based upon, payable in or otherwise related to, in whole or in
part, shares of Common Stock if the Committee, in its absolute discretion, determines that such Other Incentive Awards are consistent with the purposes of the Plan. Each grant of an Other Incentive
Award shall be evidenced by an Award Agreement that shall specify the amount of the Other Incentive Award and the terms, conditions, restrictions and/or limitations applicable to such Award. Payment
of Other Incentive Awards shall be made at such times and in such form, which may be cash, shares of Common Stock or other property (or a combination thereof), as established by the Committee, subject
to the terms of the Plan. 

 
 

ARTICLE XII.    CHANGE OF CONTROL    
    

        12.1    Definition of Change of Control.    A "Change of Control" shall be deemed to have
occurred if (i) Yorktown Partners LLC, a Delaware limited liability company, or its Affiliates including any funds under its management ("Yorktown") no longer directly or indirectly owns a
controlling interest in Crosstex, (ii) any sale, lease, exchange or other transfer (in one or a series of related transactions) of all or substantially all of the assets of Crosstex to any
Person or its Affiliates, other than an Affiliates, or (iii) any merger, reorganization, consolidation or other transaction pursuant to which more than 50% of the combined voting power of the
equity interests in Crosstex ceases to be owned by Persons who own such interests as of the initial public offering date of the Common Stock. The phrase "Immediately prior to a Change of Control"
shall be understood to mean sufficiently in advance of a Change of Control to permit Participants to take all steps reasonably necessary to exercise an Award, if applicable, and to deal with the
Common Stock underlying all Awards so that all Awards and Common Stock issuable with respect thereto may be treated in the same manner as the shares of stock of other stockholders in connection with
the Change of Control. 

        12.2    Effect on Outstanding Awards.    Immediately prior to a Change or Control, all Awards shall automatically vest
and become payable or exercisable, as the case may be, in full. In this regard, all restriction periods shall terminate and all performance criteria, if any, shall be deemed to have been achieved at
the maximum level. To the extent that an Option or SAR is not exercised upon a Change of Control, the Committee may, in its discretion, cancel such Award without payment or provide for a replacement
Award with respect to such property and on such terms as it deems appropriate. 

10

 

 
 

ARTICLE XIII.    AMENDMENT AND TERMINATION    
    

        13.1    Plan Amendment and Termination.    The Board may at any time suspend, terminate, amend
or modify the Plan, in whole or in part; provided, however, that no amendment or modification of the Plan shall become effective without the approval of such amendment or modification by the
stockholders of Crosstex (i) if such amendment or modification increases the maximum number of shares subject to the Plan (except as provided in Section 6.2) or changes the designation
or class of persons eligible to receive Awards under the Plan, or (ii) if counsel for Crosstex determines that such approval is otherwise required by or necessary to comply with applicable law.
The Plan shall terminate upon the earlier of (i) the termination of the Plan by the Board, or (ii) the expiration of ten years from the date the Plan is adopted by the Board. Upon
termination of the Plan, the terms and provisions of the Plan shall, notwithstanding such termination, continue to apply to Awards granted prior to such termination. No suspension, termination,
amendment or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the consent of the Participant (or the permitted transferee)
holding such Award. 

        13.2    Award Amendment and Cancellation.    The Board may amend the terms of any outstanding Award granted pursuant
to this Plan, but no such amendment shall adversely affect in any material way the Participant's (or a permitted transferee's) rights under an outstanding Award without the consent of the Participant
(or the permitted transferee) holding such Award. The Board may, with a Participant's (or a permitted transferee's) written consent, cancel any outstanding Award held by such Participant (or permitted
transferee) in exchange for a new Award. 

 
 

ARTICLE XIV.    MISCELLANEOUS    
    

        14.1    Award Agreements.    After the Committee grants an Award under the Plan to a
Participant, Crosstex and the Participant shall enter into an Award Agreement setting forth the terms, conditions, restrictions and/or limitations applicable to the Award and such other matters as the
Committee may determine to be appropriate. The terms and provisions of the respective Award Agreements need not be identical.
All Award Agreements shall be subject to the provisions of the Plan, and in the event of any conflict between an Award Agreement and the Plan, the terms of the Plan shall govern. 

        14.2    Listing Conditions.

        (a)   As
long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association, the issuance of any shares of Common
Stock pursuant to an Award shall be conditioned upon such shares being listed on such exchange or system. Crosstex shall have no obligation to issue such shares unless and until such shares are so
listed, and the right to exercise any Option or other Award with respect to such shares shall be suspended until such listing has been effected. 

        (b)   If
at any time counsel to Crosstex or its Affiliates shall be of the opinion that any sale or delivery of shares of Common Stock pursuant to an Award is or may in the
circumstances be unlawful or result in the imposition of excise taxes on Crosstex or its Affiliates under the statutes, rules or regulations of any applicable jurisdiction, Crosstex or its Affiliates
shall have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act of 1933, as amended, or
otherwise, with respect to shares of Common Stock or Awards, and the right to exercise any Option or other Award shall be suspended until, in the opinion of said counsel, such sale or delivery shall
be lawful or will not result in the imposition of excise taxes on the Crosstex or its Affiliates. 

        (c)   Upon
termination of any period of suspension under this Section 14.2, any Award affected by such suspension which shall not then have expired or terminated shall
be reinstated as to all shares available before such suspension and as to shares which would otherwise have become 

11

 

available
during the period of such suspension, but no such suspension shall extend the term of any Award. 

        14.3    Additional Conditions.    Notwithstanding anything in the Plan to the contrary: (i) Crosstex may, if it
shall determine it necessary or desirable for any reason, at the time of grant of any Award or the issuance of any shares of Common Stock pursuant to any Award, require the recipient of the Award or
such shares of Common Stock, as a condition to the receipt thereof, to deliver to Crosstex a written representation of present intention to acquire the Award or such shares of Common Stock for his or
her own account for investment and not for distribution; (ii) the certificate for shares of Common Stock issued to a Participant may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer, and (iii) all certificates for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements of the SEC, any stock exchange upon which the Common Stock is then quoted, any applicable federal or state securities
law, and any
applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 

        14.4    Nonassignability.    No Award granted under the Plan may be sold, transferred, pledged, exchanged,
hypothecated or otherwise disposed of, other than by will or pursuant to the applicable laws of descent and distribution. Further, no such Award shall be subject to execution, attachment or similar
process. Any attempted sale, transfer, pledge, exchange, hypothecation or other disposition of an Award not specifically permitted by the Plan or the Award Agreement shall be null and void and without
effect. All Awards granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or, in the event of the Participant's legal incapacity, by his or
her guardian or legal representative. 

        14.5    Withholding Taxes.    The Company shall be entitled to deduct from any payment made under the Plan, regardless
of the form of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment, may require the Participant to pay to the Company
such withholding taxes prior to and as a condition of the making of any payment or the issuance or delivery of any shares of Common Stock under the Plan, and shall be entitled to deduct from any other
compensation payable to the Participant any withholding obligations with respect to Awards under the Plan. In accordance with any applicable administrative guidelines it establishes, the Committee may
allow a Participant to pay the amount of taxes required by law to be withheld from or with respect to an Award by (i) withholding shares of Common Stock from any payment of Common Stock due as
a result of such Award, or (ii) permitting the Participant to deliver to the Company previously acquired shares of Common Stock, in each case having a Fair Market Value equal to the amount of
such required withholding taxes. No payment shall be made and no shares of Common Stock shall be issued pursuant to any Award unless and until the applicable tax withholding obligations have been
satisfied. 

        14.6    No Fractional Shares.    No fractional shares of Common Stock shall be issued or delivered pursuant to the
Plan or any Award granted hereunder, and except as otherwise provided herein, no payment or other adjustment shall be made in respect of any such fractional share. 

        14.7    Notices.    All notices required or permitted to be given or made under the Plan or any Award Agreement shall
be in writing and shall be deemed to have been duly given or made if (i) delivered personally, (ii) transmitted by first class registered or certified United States mail, postage
prepaid, return receipt requested, (iii) sent by prepaid overnight courier service, or (iv) sent by telecopy or facsimile transmission, answer back requested, to the person who is to
receive it at the address that such person has theretofore specified by written notice delivered in accordance herewith. Such notices shall be effective (i) if delivered personally or sent by
courier service, upon actual receipt by the intended recipient, (ii) if mailed, upon the earlier of five days after deposit in the mail or the date of 

12

 

delivery
as shown by the return receipt therefor, or (iii) if sent by telecopy or facsimile transmission, when the answer back is received. Crosstex or a Participant may change, at any time and
from time to time, by written notice to the other, the address that it or such Participant had theretofore specified for receiving notices. Until such address is changed in accordance herewith,
notices hereunder or under an Award Agreement shall be delivered or sent (i) to a Participant at his or her address as set forth in the records of the Company or (ii) to Crosstex at the
principal executive offices of Crosstex clearly marked "Attention: LTIP Administrator." 

        14.8    Binding Effect.    The obligations of Crosstex under the Plan shall be binding upon any successor corporation
or organization resulting from the merger, consolidation or other reorganization of Crosstex, or upon any successor corporation or organization succeeding to all or substantially all of the assets and
business of Crosstex. The terms and conditions of the Plan shall be binding upon each Participant and his or her heirs, legatees, distributees and legal representatives. 

        14.9    Severability.    If any provision of the Plan or any Award Agreement is held to be illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining provisions of the Plan or such agreement, as the case may be, but such provision shall be fully severable and the Plan or such
agreement, as the case may be, shall be construed and enforced as if the illegal or invalid provision had never been included herein or therein. 

        14.10    No Restriction of Corporate Action.    Nothing contained in the Plan shall be construed to prevent Crosstex
or any Affiliate from taking any corporate action (including any corporate action to suspend, terminate, amend or modify the Plan) that is deemed by Crosstex or such Affiliate to be appropriate or in
its best interest, whether or not such action would have an adverse effect on the Plan or any Awards made or to be made under the Plan. No Participant or other person shall have any claim against
Crosstex or any Affiliate as a result of such action. 

        14.11    Governing Law.    The Plan shall be governed by and construed in accordance with the internal laws (and not
the principles relating to conflicts of laws) of the State of Delaware except as superseded by applicable federal law. 

        14.12    No Right, Title or Interest in Company Assets.    No Participant shall have any rights as a stockholder of
Crosstex as a result of participation in the Plan until the date of issuance of a stock certificate in his or her name and, in the case of Restricted Stock, unless and until such rights are granted to
the Participant pursuant to the Plan. To the extent any person acquires a right to receive payments from the Company under the Plan, such rights shall be no greater than the rights of an unsecured
general creditor of the Company, and such person shall not have any rights in or against any specific assets of the Company. All of the Awards granted under the Plan shall be unfunded. 

        14.13    Risk of Participation.    Nothing contained in the Plan shall be construed either as a guarantee by Crosstex
or its Affiliates, or their respective stockholders, directors, officers or employees, of the value of any assets of the Plan or as an agreement by Crosstex or its Affiliates, or their respective
stockholders, directors, officers or employees, to indemnify anyone for any losses, damages, costs or expenses resulting from participation in the Plan. 

        14.14    No Guarantee of Tax Consequences.    No person connected with the Plan in any capacity, including, but not
limited to, Crosstex and the Affiliates and their respective directors, officers, agents and employees, makes any representation, commitment or guarantee that any tax treatment, including, but not
limited to, federal, state and local income, estate and gift tax treatment, will be applicable with respect to any Awards or payments thereunder made to or for the benefit of a Participant under the
Plan or that such tax treatment will apply to or be available to a Participant on account of participation in the Plan. 

        14.15    Continued Employment or Service.    Nothing contained in the Plan or in any Award Agreement shall confer upon
any Participant the right to continue in the employ or service of the 

13

 

Company,
or interfere in any way with the rights of the Company to terminate a Participant's employment or service at any time, with or without cause. 

        14.16    Miscellaneous.    Headings are given to the articles and sections 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 of the Plan or any provisions hereof. The use of the masculine gender shall also include
within its meaning the feminine. Wherever the context of the Plan dictates, the use of the singular shall also include within its meaning the plural, and vice versa. 

        IN
WITNESS WHEREOF, this Plan has been executed as of this    day of                        2004. 

	 	 	CROSSTEX ENERGY, INC.
	

 	
 	

By:	

	 	 	 	Name:	

	 	 	 	Title:	

14

QuickLinks

Exhibit 10.5

ARTICLE I. ESTABLISHMENT AND PURPOSE

ARTICLE II. DEFINITIONS

ARTICLE III. PLAN ADMINISTRATION

ARTICLE VI. SHARES SUBJECT TO THE PLAN

ARTICLE V. ELIGIBILITY

ARTICLE VI. FORM OF AWARDS

ARTICLE VII. OPTIONS

ARTICLE VIII. PHANTOM OPTIONS

ARTICLE IX. RESTRICTED STOCK

ARTICLE X. SARs

ARTICLE XI. OTHER INCENTIVE AWARDS

ARTICLE XII. CHANGE OF CONTROL

ARTICLE XIII. AMENDMENT AND TERMINATION

ARTICLE XIV. MISCELLANEOUS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}]]