Document:

exv10w3

    Exhibit 10.3

 

    Crosstex
    Energy GP, LLC

    Amended and Restated Long-Term Incentive Plan

 

    CROSSTEX
    ENERGY GP, LLC

    LONG-TERM INCENTIVE PLAN

    (As
    Amended and Restated on March 17, 2009)
    

 

    Section 1.
    Purpose of the Plan.

 

    The Crosstex Energy GP, LLC Long-Term Incentive Plan (the
    “Plan”) is intended to promote the interests of
    Crosstex Energy, L.P., a Delaware limited partnership (the
    “Partnership”), by providing to employees and
    directors of Crosstex Energy GP, LLC (the “Company”)
    and its Affiliates who perform services for the Partnership
    incentive compensation awards for superior performance that are
    based on Units. The Plan is also contemplated 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 Partnership and to encourage them to devote
    their best efforts to the business of the Partnership, thereby
    advancing the interests of the Partnership and its partners.

 

    Section 2.
    Definitions.

 

    As used in the Plan, the following terms shall have the meanings
    set forth below:

 

    “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.

 

    “Award” means an Option or Restricted Unit granted
    under the Plan, and shall include any tandem DERs granted with
    respect to such Award.

 

    “Board” means the Board of Directors of the Company.

 

    “Cause” means (i) Participant has failed to
    perform the duties assigned to him and such failure has
    continued for thirty (30) days following delivery by the
    Company of written notice to Participant of such failure,
    (ii) Participant has been convicted of a felony or
    misdemeanor involving moral turpitude, (iii) Participant
    has engaged in acts or omissions against the Company
    constituting dishonesty, breach of fiduciary obligation, or
    intentional wrongdoing or misfeasance, (iv) Participant has
    acted intentionally or in bad faith in a manner that results in
    a material detriment to the assets, business or prospects of the
    Company, or (v) Participant has breached any obligation
    under this Agreement.

 

    “Change in Control” means: (a) the consummation
    of a merger or consolidation of the Company with or into another
    entity or any other transaction (other than a merger,
    consolidation or other transaction with or into the Partnership,
    Crosstex Energy GP, L.P. or Crosstex Energy Inc.), if Persons
    who were not holders of equity interests of the Company
    immediately prior to such merger, consolidation or other
    transaction beneficially own, immediately after such merger,
    consolidation or other transaction, 50% or more of the voting
    power of the outstanding equity interests of the continuing or
    surviving entity; (b) the sale, transfer or other
    disposition of all or substantially all of the Company’s or
    the Partnership’s assets; (c) a change in the
    composition of the Board as a result of which fewer than 50% of
    the incumbent directors are directors who either (i) had
    been directors of the Company on the date 12 months prior
    to the date of the event that may constitute a Change in Control
    (the “original directors”) or (ii) were elected,
    or nominated for election, to the Board with the affirmative
    votes of at least a majority of the aggregate of the original
    directors who were still in office at the time of the election
    or nomination and the directors whose election or nomination was
    previously so approved; or (d) the consummation of any
    transaction as a result of which any Person (other than Yorktown
    Partners LLC, a Delaware limited liability company, or its
    Affiliates including any funds under its management) becomes the
    “beneficial owner” (as defined in
    Rule 13d-3
    under the Exchange Act), directly or indirectly, of at least 50%
    of the total voting power represented by the outstanding voting
    securities of

    

    1

 

    Crosstex Energy, Inc. (“CEI”) at a time when CEI still
    beneficially owns 50% or more of the voting power of the
    outstanding equity interests of the Company.

 

    “Committee” means the Compensation Committee of the
    Board or such other committee of the Board appointed to
    administer the Plan.

 

    “DER” means a contingent right, granted in tandem with
    a specific Restricted Unit, to receive an amount in cash equal
    to the cash distributions made by the Partnership with respect
    to a Unit during the period such Restricted Unit is outstanding.

 

    “Director” means a “non-employee director”
    of the Company, as defined in
    Rule 16b-3.

 

    “Employee” means any employee of the Company or an
    Affiliate, as well as any individual providing direct consulting
    services to the Company or any Affiliate, in each case as
    determined by the Committee. Any reference to employment or
    termination of employment shall include engagement as a
    consultant or independent contractor or termination of such
    engagement, as applicable.

 

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

 

    “Fair Market Value” means the closing sales price of a
    Unit on the applicable date (or if there is no trading in the
    Units 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
    Units are 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.

 

    “Option” means an option to purchase Units granted
    under the Plan.

 

    “Participant” means any Employee or Director granted
    an Award under the Plan.

 

    “Partnership Agreement” means the Amended and Restated
    Agreement of Limited Partnership of Crosstex Energy, L.P.

 

    “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.

 

    “Qualifying Termination” means Participant’s
    employment or service with the Company or its Affiliates is
    terminated as a result of Participant’s (i) death,
    (ii) becoming disabled and qualified to receive benefits
    under the Company’s long-term disability plan or
    (iii) retirement with the approval of the Committee on or
    after reaching age 60.

 

    “Restricted Period” means the period established by
    the Committee with respect to an Award during which the Award
    either remains subject to forfeiture or is not exercisable by or
    payable to the Participant.

 

    “Restricted Unit” means a phantom unit granted under
    the Plan which upon or following vesting entitles the
    Participant to receive a Unit.

 

    “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.

 

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

 

    “Unit” means a Common Unit of the Partnership or any
    other securities or other consideration into which a Common Unit
    of the Partnership is converted pursuant to any capital
    reorganization, recapitalization, merger or other similar
    transaction.

 

    Section 3.
    Administration.

 

    The Plan shall be administered by the Committee. A majority of
    the Committee shall constitute a quorum, and the acts of the
    members of the Committee who are present at any meeting thereof
    at which a quorum is present, or acts unanimously approved by
    the members of the Committee in writing, shall be the acts of
    the Committee. Subject to the following, and any applicable law,
    the Committee, in its sole discretion, may delegate any or all
    of its powers

    

    2

 

    and duties under the Plan, including the power to grant Awards
    under the Plan, to the Chief Executive Officer of the Company
    (provided the Chief Executive Officer is a member of the Board),
    subject to such limitations on such delegated powers and duties
    as the Committee may impose, if any. Upon any such delegation
    all references in the Plan to the “Committee,” other
    than in Section 7, shall be deemed to include the Chief
    Executive Officer; provided, however, that such delegation shall
    not limit the Chief Executive Officer’s right to receive
    Awards under the Plan. Notwithstanding the foregoing, the Chief
    Executive Officer may not grant Awards to, or take any action
    with respect to any Award previously granted to himself, a
    person who is an officer subject to
    Rule 16b-3
    or a member of 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, exercised, 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 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. 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, the Partnership, any
    Affiliate, any Participant, and any beneficiary of any Award.

 

    Section 4.
    Units

 

    (a) Units Available.  Subject to
    adjustment as provided in Section 4(c), the number of Units
    with respect to which Restricted Units and Options may be
    granted under the Plan is 5,600,000. If any Option or Restricted
    Unit is forfeited or otherwise terminates or is canceled without
    the delivery of Units, then the Units covered by such Award, to
    the extent of such forfeiture, termination or cancellation,
    shall again be Units with respect to which Options or Restricted
    Units may be granted, as the case may be.

 

    (b) Sources of Units Deliverable Under
    Awards.  Any Units delivered pursuant to an Award
    shall consist, in whole or in part, of Units acquired in the
    open market, from any Affiliate, the Partnership or any other
    Person, or any combination of the foregoing, as determined by
    the Committee in its discretion.

 

    (c) Adjustments.  In the event that the
    Committee determines that any distribution (whether in the form
    of cash, Units, other securities, or other property),
    recapitalization, split, reverse split, reorganization, merger,
    consolidation,
    split-up,
    spin-off, combination, repurchase, or exchange of Units or other
    securities of the Partnership, issuance of warrants or other
    rights to purchase Units or other securities of the Partnership,
    or other similar transaction or event affects the Units such
    that an adjustment is determined by the Committee to be
    appropriate in order to prevent dilution or enlargement of the
    benefits or potential benefits intended to be made available
    under the Plan, then the Committee shall, in such manner as it
    may deem equitable, adjust any or all of (i) the number and
    type of Units (or other securities or property) with respect to
    which Awards may be granted under the Plan, (ii) the number
    and type of Units (or other securities or property) subject to
    outstanding Awards, and (iii) the grant or exercise price
    with respect to any outstanding Award or, if deemed appropriate,
    make provision for a cash payment to the holder of an
    outstanding Award; provided, that the number of Units subject to
    any Award shall always be a whole number.

 

    Section 5.
    Eligibility.

 

    Any Employee who performs services for the benefit of the
    Partnership or Director shall be eligible to be designated a
    Participant and receive an Award under the Plan.

 

    Section 6.
    Awards.

 

    (a) Options.  The Committee shall have the
    authority to determine the Employees and Directors to whom
    Options shall be granted, the number of Units to be covered by
    each Option, the purchase price therefor and the

    

    3

 

    conditions and limitations applicable to the exercise of the
    Option, including the following terms and conditions and such
    additional terms and conditions, as the Committee shall
    determine, that are not inconsistent with the provisions of the
    Plan.

 

    (i) Exercise Price.  The purchase price
    per Unit purchasable under an Option shall be determined by the
    Committee at the time the Option is granted and shall be no less
    than its Fair Market Value as of the date of grant.

 

    (ii) Time and Method of Exercise.  The
    Committee shall determine the Restricted Period, i.e., the time
    or times at which an Option may be exercised in whole or in
    part, which may include, without limitation, accelerated vesting
    upon the achievement of specified performance goals, and the
    method or methods by which payment of the exercise price with
    respect thereto may be made or deemed to have been made, which
    unless otherwise prohibited by applicable law, may include,
    without limitation, cash, check acceptable to the Company, a
    “cashless-broker” exercise through procedures approved
    by the Company, by withholding from the issuance under the
    Option Units otherwise deliverable thereunder, other securities
    or other property, or any combination thereof, having a Fair
    Market Value on the exercise date equal to the relevant exercise
    price. The Committee may adopt additional rules and procedures
    regarding the exercise of options from time to time, provided
    that such rules and procedures are not inconsistent with the
    Plan or applicable law.

 

    (iii) Term.  Subject to earlier
    termination as provided in the grant agreement or the Plan, each
    Option shall expire on the tenth anniversary of its date of
    grant.

 

    (iv) Forfeiture.  Except as otherwise
    provided in the terms of the Option grant, upon termination of a
    Participant’s employment with the Company and its
    Affiliates or membership on the Board, whichever is applicable,
    for any reason other than a Qualifying Termination during the
    applicable Restricted Period, all Options shall be forfeited by
    the Participant: (i) if such termination is for Cause, on
    the date of such termination, and (ii) in all other cases,
    thirty (30) days after the date of such termination. The
    Committee may, in its discretion, waive in whole or in part such
    forfeiture with respect to a Participant’s Options.

 

    (v) Exercise Upon Qualifying
    Termination.  In the event of a Qualifying
    Termination, an Option may be exercised at any time before the
    expiration date by: (i) Participant; (ii) the personal
    representative of Participant’s estate or the person who
    acquires the Option by will or the laws of descent and
    distribution in the event of Participant’s death; or
    (iii) Participant’s legal guardian in the event one is
    appointed as a result of Participant’s disability.

 

    (vi) Option Exchanges.   The Committee
    shall have the authority to implement a program under which
    (i) outstanding Awards are surrendered or cancelled in
    exchange for Awards of the same type (which may have lower
    exercise prices and different terms), Awards of a different type
    and/or cash,
    and/or
    (ii) the exercise price of an outstanding Award is reduced.
    The terms and conditions of any exchange program will be
    determined by the Committee in its sole discretion.

 

    (b) Restricted Units.  The Committee shall
    have the authority to determine the Employees and Directors to
    whom Restricted Units shall be granted, the number of Restricted
    Units to be granted to each such Participant, the Restricted
    Period, the conditions under which the Restricted Units may
    become vested or forfeited, which may include, without
    limitation, the accelerated vesting upon the achievement of
    specified performance goals, and such other terms and conditions
    as the Committee may establish with respect to such Awards,
    including whether DERs are granted with respect to such
    Restricted Units.

 

    (i) DERs.  To the extent provided by the
    Committee, in its discretion, a grant of Restricted Units may
    include a tandem DER grant, which may provide that such DERs
    shall be paid directly to the Participant, be credited to a
    bookkeeping account (with or without interest in the discretion
    of the Committee) subject to the same vesting restrictions as
    the tandem Award, or be subject to such other provisions or
    restrictions as determined by the Committee in its discretion.

 

    (ii) Forfeiture.  Except as otherwise
    provided in the terms of the Restricted Units grant, upon
    termination of a Participant’s employment with the Company
    and its Affiliates or membership on the Board, whichever is
    applicable, for any reason other than a Qualifying Termination
    during the applicable Restricted

    

    4

 

    Period, all Restricted Units shall be forfeited by the
    Participant. In the event of a Qualifying Termination occurring
    during the Restricted Period, the Restricted Units shall become
    fully vested and the Restricted Period shall terminate. The
    Committee may, in its discretion, waive in whole or in part such
    forfeiture with respect to a Participant’s Restricted Units.

 

    (iii) Lapse of Restrictions.  Upon or
    following the vesting of each Restricted Unit, the Participant
    shall be entitled to receive from the Company one Unit, subject
    to the provisions of Section 8(b).

 

    (c) General.

 

    (i) 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. 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.

 

    (ii) Limits on Transfer of Awards.

 

    (A) Except as provided in (C) below, each Option shall
    be exercisable only by the Participant during the
    Participant’s lifetime, or by the person to whom the
    Participant’s rights shall pass by will or the laws of
    descent and distribution.

 

    (B) Except as provided in (C) below, no Award and no
    right under any such Award may be assigned, alienated, pledged,
    attached, sold or otherwise transferred or encumbered by a
    Participant and any such purported assignment, alienation,
    pledge, attachment, sale, transfer or encumbrance shall be void
    and unenforceable against the Company or any Affiliate.

 

    (C) To the extent specifically provided by the Committee
    with respect to an Option grant, an Option may be transferred by
    a Participant without consideration to immediate family members
    or related family trusts, limited partnerships or similar
    entities or on such terms and conditions as the Committee may
    from time to time establish. In addition, Awards may be
    transferred by will and the laws of descent and distribution.

 

    (iii) Term of Awards.  The term of each
    Award shall be for such period as may be determined by the
    Committee.

 

    (iv) Unit Certificates.  All certificates
    for Units or other securities of the Partnership delivered under
    the Plan 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 other requirements of the SEC, any stock
    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 put on any such
    certificates to make appropriate reference to such restrictions.

 

    (v) Consideration for Grants.  Awards may
    be granted for no cash consideration or for such consideration
    as the Committee determines.

 

    (vi) Delivery of Units or other Securities and Payment
    by Participant of Consideration.  Notwithstanding
    anything in the Plan or any grant agreement to the contrary,
    delivery of Units pursuant to the exercise or vesting of 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 Units to deliver pursuant to such
    Award without violating the rules or regulations of any
    applicable law 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 grant agreement (including,
    without limitation, any exercise price or tax withholding) is
    received by the Company. Unless otherwise prohibited by
    applicable law, such payment may be made by such method or
    methods and in such form or forms as the Committee shall
    determine, including, without limitation, cash, other Awards,
    withholding of Units, cashless- broker exercises with
    simultaneous sale, or any combination thereof; provided that the
    combined value, as determined by the Committee, of all cash and
    cash equivalents and the Fair Market Value of any such Units or
    other property so tendered to the Company, as of the

    

    5

 

    date of such tender, is at least equal to the full amount
    required to be paid to the Company pursuant to the Plan or the
    applicable Award agreement.

 

    (vii) Change in Control.  Upon a Change in
    Control, or such period prior thereto as may be established by
    the Committee, all Awards shall automatically vest and become
    payable or exercisable, as the case may be, in full. In this
    regard, all Restricted Periods shall terminate and all
    performance criteria, if any, shall be deemed to have been
    achieved at the maximum level. Notwithstanding the foregoing,
    payment of any Award subject to Section 409A shall not be
    accelerated upon a Change of Control unless such Change of
    Control qualifies as a “change in control event”
    within the meaning of Treas. Reg.
    Section 1.409A-3(i)(5).
    To the extent that an Option is not exercised upon a Change in
    Control, the Committee may, in its discretion, cancel such Award
    without payment or provide for a replacement grant with respect
    to such property and on such terms as it deems appropriate.

 

    Section 7.
    Amendment and Termination.

 

    Except to the extent prohibited by applicable law and unless
    otherwise expressly provided in an Award agreement or in the
    Plan:

 

    (a) Amendments to the Plan.  Except as
    required the rules of the principal securities exchange 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, including increasing the
    number of Units available for Awards under the Plan, without the
    consent of any partner, Participant, other holder or beneficiary
    of an Award, or other Person.

 

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

 

    (c) Adjustment of Awards Upon the Occurrence of Certain
    Unusual or Nonrecurring Events.  The Committee is
    hereby authorized to make adjustments in the terms and
    conditions of, and the criteria included in, Awards in
    recognition of unusual or nonrecurring events (including,
    without limitation, the events described in Section 4(c) of
    the Plan) affecting the Partnership or the financial statements
    of the Partnership, or of changes in applicable laws,
    regulations, or accounting principles, whenever the Committee
    determines that such adjustments are appropriate in order to
    prevent dilution or enlargement of the benefits or potential
    benefits intended to be made available under the Plan.

 

    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.
    The terms and conditions of Awards need not be the same with
    respect to each recipient.

 

    (b) Withholding.  The Company or any
    Affiliate is authorized to withhold 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, Units, other securities, Units that would otherwise be
    issued pursuant to such Award or other property) of any
    applicable taxes payable in respect of the grant of an Award,
    its exercise, the lapse of restrictions thereon, or any payment
    or transfer under an Award or under the Plan and to take such
    other action as may be necessary in the opinion of the Company
    or Affiliate to satisfy its withholding obligations for the
    payment of such taxes.

 

    (c) No Right to Employment.  The grant of
    an Award shall not be construed as giving a Participant the
    right to be retained in the employ of the Company or any
    Affiliate or to remain on the Board, as applicable. Further, the
    Company or an Affiliate may at any time dismiss a Participant
    from employment, free from any liability or any claim under the
    Plan, unless otherwise expressly provided in the Plan or in any
    Award agreement.

    

    6

 

    (d) 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 conflict of laws principles.

 

    (e) 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
    laws, 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.

 

    (f) 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 or 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 Partnership 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.

 

    (g) 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 participating Affiliate and a Participant or any other
    Person. To the extent that any Person acquires a right to
    receive payments from the Company or any participating Affiliate
    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.

 

    (h) No Fractional Units.  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.

 

    (i) 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 thereof.

 

    (j) Facility Payment.  Any amounts payable
    hereunder to any person under legal disability or who, in the
    judgment of the Committee, is unable to properly manage his
    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 which the Committee may select, and the Company shall
    be relieved of any further liability for payment of such amounts.

 

    (k) Gender and Number.  Words in the
    masculine gender shall include the feminine gender, the plural
    shall include the singular and the singular shall include the
    plural.

 

    (l) Section 409A.  All Awards under
    this Plan are intended either to be exempt from, or to comply
    with the requirements of Section 409A, and this Plan and
    all Awards shall be interpreted and operated in a manner
    consistent with that intention. Notwithstanding anything in this
    Plan to the contrary, if any Plan provision or Award under this
    Plan would result in the imposition of an applicable tax under
    Section 409A, that Plan provision or Award shall be
    reformed to avoid imposition of the applicable tax and no such
    action shall be deemed to adversely affect the
    Participant’s rights to an Award.

 

    Section 9.
    Term of the Plan.

 

    This amendment and restatement of the Plan shall be effective on
    the date of its approval by the unitholders of the Partnership
    and shall continue until the date 10 years following such
    approval, the date terminated by the Board or the date Units are
    no longer available for grants of Awards under the Plan,
    whichever occurs first. However, unless otherwise expressly
    provided in the Plan or in an applicable Award Agreement, 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.

    

    7exv10w1

Exhibit 10.1

EIGHTH AMENDMENT TO CREDIT AGREEMENT

     THIS EIGHTH AMENDMENT TO CREDIT AGREEMENT (this “ Amendment”) is entered into effective
as of the 31st day of December, 2008, but executed as of March 16, 2009 by and among the lenders
listed on the signature pages hereof (the “ Lenders”), PENSON WORLDWIDE, INC., a Delaware
corporation (“ Borrower”), GUARANTY BANK, as Administrative Agent, Swing Line Lender,
Arranger and Letter of Credit Issuer for the Lenders (the “ Administrative Agent”), and
Wachovia Bank, National Association, as Documentation Agent (the “ Documentation Agent”),
each to the extent and in the manner provided for in the Credit Agreement (defined below and herein
so called).

BACKGROUND

     A. The Lenders, the Borrower, the Documentation Agent and the Administrative Agent are parties
to that certain Credit Agreement dated as of May 26, 2006 (as it may be amended, extended, renewed,
or restated from time to time, the “ Credit Agreement”). Capitalized terms defined in the
Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit
Agreement.

     B. The Borrower has requested an amendment to the certain provisions of the Credit Agreement
regarding the calculation of Consolidated Tangible Net Worth and the Consolidated Leverage Ratio,
and the Administrative Agent and the Required Lenders have agreed to such amendment in order to
provide clarification, subject to the terms and conditions contained herein.

     NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set
forth, and for other good and valuable consideration, the receipt and adequacy of which are all
hereby acknowledged, the parties hereto covenant and agree as follows:

     1. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement is hereby amended as
follows:

     (a) Section 1.01 of the Credit Agreement is hereby amended so that the
definition of “Applicable Rate” contained therein is restated in its entirety to read as
follows:

“Applicable Rate” means the following percentages per annum,
based upon the Consolidated Leverage Ratio as set forth in the most recent
Compliance Certificate received by the Administrative Agent pursuant to
Section 6.02(b):

EIGHTH AMENDMENT TO CREDIT AGREEMENT — Page 1 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Rate
	 	 	 	 	 	 	 	 	 	 	LIBOR	 	 
	 	 	 	 	 	 	 	 	 	 	Rate/	 	 
	Pricing	 	Consolidated	 	Commitment	 	Letters of	 	Base
	Level	 	Leverage Ratio	 	Fee	 	Credit	 	Rate
	 
	 	1	 	 	Greater than or equal to *** to ***
	 	 	*	**%	 	 	*	**%	 	 	*	**%
	 	2	 	 	Greater than or equal to *** to *** but less than *** to ***
	 	 	*	**%	 	 	*	**%	 	 	*	**%
	 	3	 	 	Less than *** to ***
	 	 	*	**%	 	 	*	**%	 	 	*	**%

     Any increase or decrease in the Applicable Rate resulting from a
change in the Consolidated Leverage Ratio shall become effective as of the
first Business Day immediately following the date a Compliance Certificate
is delivered pursuant to Section 6.02(b); provided,
however, that if a Compliance Certificate is not delivered when due
in accordance with such Section, then Pricing Level 1 shall apply as of the
first Business Day after the date on which such Compliance Certificate was
required to have been delivered.

     (b) Section 1.01 of the Credit Agreement is hereby amended by amending the
definition of “Base Rate” by adding the following sentence to the end of such definition:

Notwithstanding anything contained herein to the contrary, the Base Rate
shall never be less than ***%.

     (c) Section 1.01 of the Credit Agreement is hereby amended so that the
definition of “Consolidated EBITDA” contained therein is restated in its entirety to read as
follows:

     “Consolidated EBITDA” means, for any period, for the Borrower
and its Subsidiaries on a consolidated basis, an amount equal to
Consolidated Net Income for such period plus (a) the following to
the extent deducted in calculating such Consolidated Net Income: (i)
Interest Charges for such period, (ii) the provision for Federal, state,
local and foreign income taxes payable by the Borrower and its Subsidiaries
for such period, and (iii) depreciation and amortization expense and
minus (b) the following to the extent included in calculating such
Consolidated Net Income: (i) Federal, state, local and foreign income tax
credits of the Borrower and its Subsidiaries for such period and (ii) all
non-cash items increasing Consolidated Net Income for such period. For
purposes of calculating the Consolidated Leverage Ratio, all calculations
shall exclude the correspondent asset loss of $26,421,000 related to
Evergreen Capital Partners, Inc. when calculating Consolidated EBITDA.

EIGHTH AMENDMENT TO CREDIT AGREEMENT — Page 2 

 

     (d) Section 1.01 of the Credit Agreement is hereby amended by amending the
definition of “LIBOR Rate” by adding the following sentence to the end of such definition:

Notwithstanding anything contained herein to the contrary, the LIBOR Rate
shall never be less than ***%.

     (e) Section 7.16(a) of the Credit Agreement is hereby restated in its entirety
to read as follows:

     (a) Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
Worth at any time to be less than $***; increasing quarterly by the sum of
(i) ***% of the Consolidated Net Income earned in each full fiscal quarter
ending hereafter (with no deduction for a net loss in any such fiscal
quarter) and (ii) an amount equal to ***% of the net aggregate increases in
Shareholders’ Equity of the Borrower and its Subsidiaries after the date
hereof by reason of the issuance and sale of Equity Interests of the
Borrower or any Subsidiary (other than issuances to the Borrower or a
wholly-owned Subsidiary), including upon any conversion of debt securities
of the Borrower into such Equity Interests.

     (f) Section 7.16(c) of the Credit Agreement is hereby restated in its entirety
to read as follows:

     (c) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio at any time during any period of four fiscal quarters of the Borrower
set forth below to be greater than the ratio set forth below opposite such
period:

EIGHTH AMENDMENT TO CREDIT AGREEMENT — Page 3 

 

	 	 	 	 	 
	 	 	Maximum Consolidated	 	Maximum Consolidated
	 	 	Leverage Ratio if Net	 	Leverage Ratio if Net
	Four Fiscal Quarters	 	Cash Proceeds of IPO are	 	Cash Proceeds of IPO are
	Ending	 	less than $***	 	greater than $***
	 
	Closing Date through
December 30, 2006

	 	*** to ***
	 	*** to ***
	 
	 	 	 	 
	December 31,
2006

through December 30, 2007

	 	*** to ***
	 	*** to ***
	 
	 	 	 	 
	December 31, 2007

through December 30, 2008

	 	*** to ***
	 	*** to ***
	 
	 	 	 	 
	December 31, 2008 and
thereafter

	 	*** to ***
	 	*** to ***

Notwithstanding anything to the contrary contained herein, Net Cash
Proceeds as determined in connection with this Section 7.16(c) shall
not include any consideration in connection with the SAMCO Split-Off.

     2. CONDITIONS OF EFFECTIVENESS. This Amendment shall not be effective until each of
the following conditions precedent shall have been met to the satisfaction of the Administrative
Agent:

     (a) Since the date of the most recent financial statements provided to the Lenders,
there shall have been no event or circumstance, either individually or in the aggregate,
that has had or would reasonably be expected to have a Material Adverse Effect;

     (b) No Default shall exist after giving effect to this Amendment;

     (c) The Administrative Agent shall have received, for the account of each Lender
consenting to this Amendment, an amendment fee equal to 0.125% of each such consenting
Lender’s Commitment;

     (d) The Administrative Agent shall have received confirmation that the Borrower has
paid all expenses and fees arising in connection with all matters undertaken or performed at
the request of the Administrative Agent; and

     (e) The Administrative Agent shall have received, in form and substance satisfactory to
the Administrative Agent, a duly executed copy of this Amendment and the other applicable
Loan Documents, together with such additional documents, instruments and certificates as the
Administrative Agent shall require in connection therewith, all in form and substance
satisfactory to the Administrative Agent.

EIGHTH AMENDMENT TO CREDIT AGREEMENT — Page 4 

 

     3. LIMITATION ON ACQUISITIONS. Notwithstanding anything to the contrary contained
within the Credit Agreement, no acquisitions, including Permitted Acquisitions or any other
acquisitions permitted under Section 7.02 of the Credit Agreement, shall be made through
the Maturity Date.

     4. REPRESENTATIONS AND WARRANTIES. The representations and warranties contained
herein and in all other Loan Documents, as amended hereby, shall be true and correct as of the date
hereof as if made on the date hereof.

     5. REFERENCE TO CREDIT AGREEMENT. Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to “this Agreement,” “hereunder,” or words of like import shall
mean and be a reference to the Credit Agreement, as affected and amended by this Amendment.

     6. COUNTERPARTS; EXECUTION VIA FACSIMILE OR ELECTRONIC TRANSMITTAL. This Amendment
may be executed in one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Amendment may be validly
executed and delivered by facsimile or other electronic transmission.

     7. GOVERNING LAW: BINDING EFFECT. This Amendment shall be governed by and construed
in accordance with the laws of the State of Texas and shall be binding upon the Borrower, the
Administrative Agent, the Documentation Agent, each Lender and their respective successors and
assigns.

     8. HEADINGS. Section headings in this Amendment are included herein for convenience
of reference only and shall not constitute a part of this Amendment for any other purpose.

     9. LOAN DOCUMENT. This Amendment is a Loan Document and is subject to all provisions
of the Credit Agreement applicable to Loan Documents, all of which are incorporated in this
Amendment by reference the same as if set forth in this Amendment verbatim.

     10. SEVERABILITY. Any provisions of this Amendment held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this
Amendment and the effect thereof shall be confined to the provisions so held to be invalid or
unenforceable.

     11. RATIFICATIONS. Except as expressly modified and superseded by this Amendment, the
terms and provisions of the Credit Agreement and the other Loan Documents are ratified and
confirmed and shall continue in full force and effect. The representations and warranties
contained herein and in all other Loan Documents, as amended hereby, shall be true and correct as
of, and as if made on, the date hereof. The Credit Agreement as amended hereby shall continue to
be legal, valid, binding and enforceable in accordance with its respective terms.

     12. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,

EIGHTH AMENDMENT TO CREDIT AGREEMENT — Page 5 

 

CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

[Remainder of page left intentionally blank. Signature pages follow.]

EIGHTH AMENDMENT TO CREDIT AGREEMENT — Page 6 

 

     IN WITNESS WHEREOF, the Borrowers, the Required Lenders, the Documentation Agent and the
Administrative Agent have executed this Amendment as of the date first above written.

	 	 	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 	 	 
	 	 	PENSON WORLDWIDE, INC.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Roger J. Engemoen, Jr.
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Roger J. Engemoen, Jr.
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Chairman
	 

	 	 	 	 	 	 

SIGNATURE PAGE TO EIGHTH AMENDMENT TO CREDIT AGREEMENT

 

 

	 	 	 	 	 	 	 
	 	 	GUARANTY BANK,
	 
	 	 	 	 	 	 
	 	 	as Administrative Agent, a Lender, Letter of Credit Issuer and Swing Line Lender
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Amanda Cone
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Amanda Cone
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Senior Vice President
	 

	 	 	 	 	 	 

SIGNATURE PAGE TO EIGHTH AMENDMENT TO CREDIT AGREEMENT

 

 

	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL
	 	 	ASSOCIATION, as Documentation Agent and a Lender
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Erik Habres
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Erik Habres
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President
	 

	 	 	 	 	 	 

SIGNATURE PAGE TO EIGHTH AMENDMENT TO CREDIT AGREEMENT

 

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Garfield Johnson	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Garfield Johnson
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Senior Vice President
	 

	 	 	 	 	 	 

SIGNATURE PAGE TO EIGHTH AMENDMENT TO CREDIT AGREEMENT

 

 

	 	 	 	 	 	 	 
	 	 	REGIONS BANK
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robin Ingari
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Robin Ingari
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Senior Vice President
	 

	 	 	 	 	 	 

SIGNATURE PAGE TO EIGHTH AMENDMENT TO CREDIT AGREEMENT

 

 

	 	 	 	 	 	 	 
	 	 	SOVEREIGN BANK
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	 
	 

	 	 	 	 	 	 

SIGNATURE PAGE TO EIGHTH AMENDMENT TO CREDIT AGREEMENT

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