Exhibit 10.1

 

EXECUTION VERSION

 

Crosstex Energy, L.P.

 

Crosstex Energy Finance Corporation

 

and

 

The Guarantors Listed on Schedule B-1

 

$250,000,000

 

71/8% Senior Notes due 2022

 

PURCHASE AGREEMENT

 

dated May 10, 2012

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Wells Fargo Securities, LLC

BMO Capital Markets Corp.

Citigroup Global Markets Inc.

RBC Capital Markets, LLC

 

Joint Book-Running Managers

 

1

--------------------------------------------------------------------------------

 

PURCHASE AGREEMENT

 

May 10, 2012

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

As Representative of the several Initial Purchasers listed in Schedule A hereto

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

One Bryant Park

New York, NY 10036

 

Ladies and Gentlemen:

 

Introductory.  Crosstex Energy, L.P., a Delaware limited partnership (the
“Company”), and Crosstex Energy Finance Corporation, a Delaware corporation
(“FinCo”), propose to issue and sell to the several Initial Purchasers named in
Schedule A (the “Initial Purchasers”), acting severally and not jointly, the
respective amounts listed on Schedule A hereto of $250,000,000 aggregate
principal amount of the Company’s and FinCo’s 71/8% Senior Notes due 2022 (the
“Notes”).  The Company and FinCo are referred to collectively as the “Issuers.” 
Merrill Lynch, Pierce, Fenner & Smith Incorporated has agreed to act as the
representative of the several Initial Purchasers (the “Representative”) in
connection with the offering and sale of the Securities (as defined herein).

 

The Securities (as defined below) will be issued pursuant to an indenture, dated
as of May 24, 2012, (the “Indenture”), among the Company, FinCo, the Guarantors
(as defined below) and Wells Fargo Bank, National Association, as trustee (the
“Trustee”).  The Securities will be issued only in book-entry form in the name
of Cede & Co., as nominee of The Depository Trust Company (the “Depositary”)
pursuant to a blanket issuer letter of representations among the Company, FinCo
and the Depositary (the “DTC Agreement”).

 

The holders of the Securities will be entitled to the benefits of a registration
rights agreement, dated as of May 24, 2012 (the “Registration Rights
Agreement”), among the Issuers, the Guarantors and the Initial Purchasers,
pursuant to which the Issuers and the Guarantors will agree to file with the
Commission (as defined below), under the circumstances set forth therein, (i) a
registration statement under the Securities Act (as defined below) relating to
another series of debt securities of the Issuers with terms substantially
identical to the Securities (the “Exchange Securities”) to be offered in
exchange for the Securities (the “Exchange Offer”) and (ii) to the extent
required by the Registration Rights Agreement, a shelf registration statement
pursuant to Rule 415 of the Securities Act relating to the resale by certain
holders of the Securities, and in each case, to use their commercially
reasonable efforts to cause such registration statements to be declared
effective.

 

On or prior to the Closing Date (as defined in Section 2), the Issuers will
execute an escrow agreement, in the form and substance to be agreed between
Wells Fargo Bank, National Association, as escrow agent (the “Escrow Agent”),
the Trustee and the Initial Purchasers, which shall conform in all material
respects with the description thereof included in the Offering Memorandum (the
“Escrow Agreement”), and will direct the deposit in an escrow account (the

 

1

--------------------------------------------------------------------------------

 

“Escrow Account”) with the Escrow Agent, of the aggregate purchase price of the
Securities under Section 2. The Escrow Agreement shall provide that the escrowed
funds shall only be released and paid out pursuant to the terms of the Escrow
Agreement.

 

The payment of principal of, premium and Additional Interest (as defined in the
Indenture), if any, and interest on the Notes will be fully and unconditionally
guaranteed on a senior unsecured basis, jointly and severally by (i) the
guarantors listed in Schedule B-1 hereto and (ii) any subsidiary of the Company
formed or acquired after the Closing Date (as defined herein) that executes an
additional guarantee in accordance with the terms of the Indenture, and their
respective successors and assigns (such persons referred to in clauses (i) and
(ii) are collectively referred to as the “Guarantors”), pursuant to their
guarantees (the “Guarantees”).  The Notes and the Guarantees attached thereto
are herein collectively referred to as the “Securities.”

 

The Guarantors, the Issuers, Crosstex Energy GP, LLC, a Delaware limited
liability company (the “General Partner”), and Crosstex LIG, LLC, a Louisiana
limited liability company (“Crosstex LIG”), are referred to collectively as the
“Crosstex Entities.”

 

The Issuers understand that the Initial Purchasers propose to make an offering
of the Securities on the terms and in the manner set forth herein and in the
Pricing Disclosure Package (as defined below) and agrees that the Initial
Purchasers may resell, subject to the conditions set forth herein, all or a
portion of the Securities to purchasers (the “Subsequent Purchasers”) on the
terms set forth in the Pricing Disclosure Package (the first time when sales of
the Securities are made is referred to as the “Time of Sale”).  The Securities
are to be offered and sold to or through the Initial Purchasers without being
registered with the Securities and Exchange Commission (the “Commission”) under
the Securities Act of 1933 (as amended, the “Securities Act,” which term, as
used herein, includes the rules and regulations of the Commission promulgated
thereunder), in reliance upon exemptions therefrom. Pursuant to the terms of the
Securities and the Indenture, investors who acquire Securities shall be deemed
to have agreed that Securities may only be resold or otherwise transferred,
after the date hereof if such Securities are registered for sale under the
Securities Act or if an exemption from the registration requirements of the
Securities Act is available (including the exemptions afforded by Rule 144A
under the Securities Act (“Rule 144A”) or Regulation S under the Securities Act
(“Regulation S”)).

 

The Issuers have prepared and delivered to each Initial Purchaser copies of a
Preliminary Offering Memorandum, dated May 9, 2012 (the “Preliminary Offering
Memorandum”), and have prepared and delivered to each Initial Purchaser copies
of a Pricing Supplement, dated May 10, 2012 (the “Pricing Supplement”),
describing the terms of the Securities, each for use by such Initial Purchaser
in connection with its solicitation of offers to purchase the Securities. The
Preliminary Offering Memorandum and the Pricing Supplement are herein referred
to as the “Pricing Disclosure Package.”  Promptly after this Agreement is
executed and delivered, the Issuers will prepare and deliver to each Initial
Purchaser a final offering memorandum dated the date hereof (the “Final Offering
Memorandum”).

 

All references herein to the terms “Pricing Disclosure Package” and “Final
Offering Memorandum” shall be deemed to mean and include all information filed
under the Securities

 

2

--------------------------------------------------------------------------------

 

Exchange Act of 1934 (as amended, the “Exchange Act,” which term, as used
herein, includes the rules and regulations of the Commission promulgated
thereunder) prior to the Time of Sale and incorporated by reference in the
Pricing Disclosure Package (including the Preliminary Offering Memorandum) or
the Final Offering Memorandum (as the case may be), and all references herein to
the terms “amend,” “amendment” or “supplement” with respect to the Final
Offering Memorandum shall be deemed to mean and include all information filed
under the Exchange Act after the Time of Sale and incorporated by reference in
the Final Offering Memorandum.

 

The Issuers and the Guarantors hereby confirm their agreements with the Initial
Purchasers as follows:

 

SECTION 1.                            Representations and Warranties.  Each of
the Issuers and the Guarantors, jointly and severally, hereby represents and
warrants to each Initial Purchaser that, as of the date hereof and as of the
Closing Date (references in this Section 1 to the “Offering Memorandum” are to
(x) the Pricing Disclosure Package in the case of representations and warranties
made as of the date hereof and (y) the Final Offering Memorandum in the case of
representations and warranties made as of the Closing Date):

 

(a)                                 No Registration Required.  Subject to
compliance by the Initial Purchasers with the representations and warranties set
forth in Section 2 hereof and with the procedures set forth in Section 7 hereof,
it is not necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers and to each Subsequent Purchaser in the
manner contemplated by this Agreement, the Pricing Disclosure Package and the
Final Offering Memorandum to register the Securities under the Securities Act
or, until such time as the Exchange Securities are issued pursuant to an
effective registration statement, to qualify the Indenture under the Trust
Indenture Act of 1939 (the “Trust Indenture Act,” which term, as used herein,
includes the rules and regulations of the Commission promulgated thereunder).

 

(b)                                 No Integration of Offerings or General
Solicitation.  None of the Issuers, their respective affiliates (as such term is
defined in Rule 501 under the Securities Act) (each, an “Affiliate”), or any
person acting on its or any of their behalf (other than the Initial Purchasers,
as to whom the Issuers make no representation or warranty) has, directly or
indirectly, solicited any offer to buy or offered to sell, or will, directly or
indirectly, solicit any offer to buy or offer to sell, in the United States or
to any United States citizen or resident, any security which is or would be
integrated with the sale of the Securities in a manner that would require the
Securities to be registered under the Securities Act. None of the Issuers, their
respective Affiliates, or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Issuers make no representation or
warranty) have engaged or will engage, in connection with the offering of the
Securities, in any form of general solicitation or general advertising within
the meaning of Rule 502 under the Securities Act. With respect to those
Securities sold in reliance upon Regulation S, (i) none of the Issuers, their
respective Affiliates or any person acting on its or their behalf (other than
the Initial Purchasers, as to whom the Issuers make no representation or
warranty) has engaged or will engage in any directed selling efforts within the
meaning of Regulation S and (ii) each of the Issuers and their respective
Affiliates and any person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Issuers make no

 

3

--------------------------------------------------------------------------------

 

representation or warranty) has complied and will comply with the offering
restrictions set forth in. Regulation S.

 

(c)                                  Eligibility for Resale under Rule 144A. The
Securities are eligible for resale pursuant to Rule 144A and will not be, at the
Closing Date, of the same class as securities listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted in a U.S.
automated interdealer quotation system.

 

(d)                                 The Pricing Disclosure Package and Offering
Memorandum.  Neither the Pricing Disclosure Package, as of the Time of Sale, nor
the Final Offering Memorandum, as of its date or (as amended or supplemented in
accordance with Section 3(a), as applicable) as of the Closing Date, contains or
represents an untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Issuers by any Initial Purchaser through Merrill Lynch, Pierce,
Fenner & Smith Incorporated expressly for use therein, as the case may be. The
Pricing Disclosure Package contains, and the Final Offering Memorandum will
contain, all the information specified in, and meeting the requirements of Rule
144A.

 

(e)                                  Company Additional Written Communications. 
The Issuers have not prepared, made, used, authorized, approved or distributed
and will not prepare, make, use, authorize, approve or distribute any written
communication that constitutes an offer to sell or solicitation of an offer to
buy the Securities (each such communication by the Issuers or their respective
agents and representatives (other than a communication referred to in clauses
(i) and (ii) below) a “Company Additional Written Communication”) other than (i)
the Pricing Disclosure Package, (ii) the Final Offering Memorandum, and (iii)
any electronic road show or other written communications, in each case used in
accordance with Section 3(a). Each such Company Additional Written
Communication, when taken together with the Pricing Disclosure Package, did not,
and at the Closing Date will not, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to statements or omissions from each such Company Additional
Written Communication made in reliance upon and in conformity with information
furnished to the Issuers in writing by any Initial Purchaser through Merrill
Lynch, Pierce, Fenner & Smith Incorporated expressly for use in any Company
Additional Written Communication.

 

(f)                                   Incorporated Documents.  The documents
incorporated by reference in the Pricing Disclosure Package or the Final
Offering Memorandum, as the case may be, when they became effective or when
filed with the Commission, as the case may be (collectively, the “Incorporated
Documents”), conformed in all material respects to the applicable requirements
of the Securities Act or the Exchange Act, as applicable.  Any further documents
so filed and incorporated by reference in the Pricing Disclosure Package or the
Final Offering Memorandum or any further amendment or supplement thereto, when
such documents become effective or when filed with the Commission, as the case
may be, will conform in all material respects to the requirements of the
Securities Act and the Exchange Act, as applicable, and will not contain an

 

4

--------------------------------------------------------------------------------

 

untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.

 

(g)                                  The Purchase Agreement.  This Agreement has
been duly authorized, executed and delivered by, and is a valid and binding
agreement of the Issuers and the Guarantors, enforceable in accordance with its
terms, except as the enforcement hereof may be limited by (i) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (ii)               public
policy, applicable law relating to fiduciary duties and indemnification and
contribution and an implied covenant of good faith and fair dealing.

 

(h)                                 Operating Agreements.  The Organizational
Documents (as defined below) of Crosstex Entities, as applicable, have been duly
authorized, executed and delivered by the parties thereto and are valid and
legally binding agreements of the parties thereto, enforceable against the
parties thereto in accordance with their terms; provided, however, that the
enforceability thereof may be limited by (i) bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (ii) public policy, applicable law relating
to fiduciary duties and indemnification and contribution and an implied covenant
of good faith and fair dealing.

 

(i)                                     Formation and Qualification.  Each of
the Crosstex Entities has been duly organized or formed and is validly existing
as a corporation, limited partnership or limited liability company, as
applicable, in good standing under the laws of the jurisdiction set forth
opposite its name in Schedule B-2 attached hereto with full power and authority
to own or lease its properties and to conduct its business in all material
respects, in each case as described in the Pricing Disclosure Package and Final
Offering Memorandum.  Each of the Crosstex Entities is duly registered or
qualified to do business as a foreign corporation, limited liability company or
limited partnership, as the case may be, for the transaction of business under
the laws of each jurisdiction in which the character of the business conducted
by it or the nature or location of the properties owned or leased by it makes
such registration or qualification necessary, except where the failure to
register or qualify would not cause a Material Adverse Change (as defined
below).

 

(j)                                    Ownership.

 

(i)                                     The General Partner is the sole general
partner of the Company with a 2% general partner interest in the Company; such
general partner interest has been duly authorized and validly issued in
accordance with the Sixth Amended and Restated Agreement of Limited Partnership
of the Company (as amended, the “Partnership Agreement”); and the General
Partner owns its general partner interest free and clear of all liens,
encumbrances (except restrictions on transferability contained in Section 4.6 of
the Partnership Agreement or as described in the Pricing Disclosure Package and
the Final Offering Memorandum), security interests, equities, charges or claims.
The General Partner has all necessary limited liability company power and
authority to act as the general partner of the Company.

 

5

--------------------------------------------------------------------------------

 

(ii)                                  As of the date hereof (and prior to the
issuance of the Company common units contemplated by that certain Underwriting
Agreement between the Company and the parties thereto, dated as of May 10,
2012), the issued and outstanding limited partner interests of the Company
consist of 50,869,997 Common Units, 14,705,882 Series A Convertible Preferred
Units (the “Series A Preferred Units”) and the incentive distribution rights, as
defined in the Partnership Agreement (the “Incentive Distribution Rights”).  All
outstanding Common Units, Series A Preferred Units and Incentive Distribution
Rights and the limited partner interests represented thereby have been duly
authorized and validly issued in accordance with the Partnership Agreement and
are fully paid (to the extent required under the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by Sections
17-303, 17-607 and 17-804 of the Delaware Revised Uniform Limited Partnership
Act (the “Delaware LP Act”)).

 

(iii)                               Crosstex Energy, Inc., a Delaware
corporation (“CEI”), owns 16,414,830 Common Units (the “Sponsor Units”), and the
General Partner owns all of the Incentive Distribution Rights. CEI owns the
Sponsor Units and the General Partner owns the Incentive Distribution Rights
free and clear of all liens, encumbrances (except with respect to the Incentive
Distribution Rights, restrictions on transferability contained in Section 4.7 of
the Partnership Agreement and as described in the Pricing Disclosure Package and
the Final Offering Memorandum), security interests, equities, charges or claims.

 

(iv)                              All of the issued and outstanding equity
interests of each Guarantor, FinCo and Crosstex LIG (i) have been duly
authorized and validly issued in accordance with the bylaws, limited partnership
or limited liability company agreement (collectively, the “Operative
Agreements”) and the certificate of incorporation, limited partnership,
formation or conversion, or other similar organizational document (in each case
as in effect on the date hereof and as the same may be amended or restated on or
prior to the Delivery Date) (collectively with the Operative Agreements, the
“Organizational Documents”), as applicable, of such Guarantor, FinCo or Crosstex
LIG, are fully paid (in the case of an interest in a limited partnership or
limited liability company, to the extent required under the Organizational
Documents of such Guarantor or Crosstex LIG) and nonassessable (except as such
nonassessability may be affected by Sections 17-607 and 17-804 of the Delaware
LP Act, Sections 18-607 and 18-804 of the Delaware Limited Liability Company Act
(the “Delaware LLC Act”) or Sections 153.102, 153.202 and 153.210 of the Texas
Business Organizations Code (the “TBOC”), or comparable sections of Louisiana
limited partnership statutes and limited liability statutes, as applicable),
(ii) are owned, directly or indirectly, by the Company, free and clear of all
liens, encumbrances (except restrictions on transferability as described in the
Final Offering Memorandum and the Pricing Disclosure Package or as otherwise
contained in the Organizational Documents), security interests, equities,
charges or claims, except for such liens, encumbrances, security interests,
equities, charges and claims arising under the Amended and Restated Credit
Agreement, dated as of February 10, 2010 (as the same has been amended prior to
the date hereof, the “Credit Agreement”), among the Company, Bank of America,
N.A. and certain other parties.

 

6

--------------------------------------------------------------------------------

 

(a)                                 The Company is the sole limited partner of
Crosstex Energy Services, L.P., a Delaware limited partnership (the “Operating
Partnership”), with a 99.999% limited partner interest in the Operating
Partnership.

 

(v)                                 The Company owns 100% of the issued and
outstanding membership interests in Crosstex Operating GP, LLC, a Delaware
limited liability company (the “Operating GP”).

 

(vi)                              CEI owns 100% of the issued and outstanding
membership interests in the General Partner; such membership interests have been
duly authorized and validly issued in accordance with the Amended and Restated
Limited Liability Company Agreement of the General Partner (as amended, the “GP
LLC Agreement”) and are fully paid (to the extent required under the GP LLC
Agreement) and nonassessable (except as such nonassessability may be affected by
Sections 18-607 and 18-804 of the Delaware LLC Act); and CEI owns its membership
interests free and clear of all liens, encumbrances (except restrictions on
transferability as described in the Pricing Disclosure Package or as otherwise
contained in the GP LLC Agreement), security interests, equities, charges or
claims.

 

(vii)                           The Company has no direct or indirect
subsidiaries other than the Guarantors and Crosstex LIG that, individually or in
the aggregate, would be deemed a “significant subsidiary” as such term is
defined in Rule 405 promulgated under the Securities Act.

 

(k)                                 The Registration Rights Agreement and DTC
Agreement.  The Registration Rights Agreement has been duly authorized and, on
the Closing Date, will have been duly executed and delivered by, and (assuming
the valid execution and delivery thereof by the Initial Purchasers) will
constitute a valid and binding agreement of, the Issuers and the Guarantors,
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors and by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) and (ii)
public policy, applicable law relating to fiduciary duties and indemnification
and contribution and an implied covenant of good faith and fair dealing. The DTC
Agreement has been duly authorized and, on the Closing Date, will have been duly
executed and delivered by, and (assuming the valid execution and delivery
thereof by the Depository) will constitute a valid and binding agreement of, the
Company, enforceable in accordance with its terms, except as the enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws relating to or affecting the rights
and remedies of creditors or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and (ii) public policy, applicable law relating to fiduciary duties and
indemnification and contribution and an implied covenant of good faith and fair
dealing.

 

(l)                                     Authority and Authorization.  The
Issuers have all requisite corporate or limited partnership power and authority
to issue, sell and deliver the Notes, and each Guarantor has all requisite
limited liability company or limited partnership, as the case may be, power and
authority to issue the Guarantees.  Each of the Issuers and the Guarantors has
all requisite

 

7

--------------------------------------------------------------------------------

 

corporate, limited liability company or limited partnership, as the case may be,
power and authority to enter into this Agreement and to perform its respective
obligations hereunder.  At the Closing Date, all corporate, limited partnership
and limited liability company action, as the case may be, required to be taken
by the Issuers and the Guarantors or any of their owners, members or partners
for the authorization, issuance, sale and delivery of the Securities as
contemplated by this Agreement shall have been validly taken.  This Agreement
has been duly and validly authorized, executed and delivered by each of the
Issuers and the Guarantors.

 

(m)                             Authorization of the Indenture.  The Indenture
has been duly authorized by the Issuers and the Guarantors and, at the Closing
Date, will have been duly executed and delivered by the Issuers and the
Guarantors and, assuming the due authorization, execution and delivery by the
Trustee, will constitute a valid and binding agreement of the Issuers and the
Guarantors, enforceable against the Issuers and the Guarantors in accordance
with its terms, except as the enforcement thereof may be limited by (i)
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors and
by general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (ii) public policy,
applicable law relating to fiduciary duties and indemnification and contribution
and an implied covenant of good faith and fair dealing.

 

(n)                                 Description of the Securities and the
Indenture.  The Securities, the Exchange Securities and the Indenture will
conform in all material respects to the respective statements relating thereto
contained in the Pricing Disclosure Package and the Final Offering Memorandum.

 

(o)                                 No Material Adverse Change.  Except as set
forth in the Pricing Disclosure Package and the Final Offering Memorandum,
excluding any amendments or supplements thereto for purposes of this Section
1(o), subsequent to the respective dates as of which information is given
therein, there has not been: (i) any material adverse change in the condition,
financial or otherwise, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of business, of
the Crosstex Entities, taken as a whole (a “Material Adverse Change”); (ii) any
transaction which is material to the Crosstex Entities taken as a whole; (iii)
any obligation or liability, direct, indirect or contingent (including any
off-balance sheet obligations), incurred by any of the Crosstex Entities, which
is material to the Crosstex Entities taken as a whole; or (iv) any dividend or
distribution of any kind declared, paid or made by the Crosstex Entities or, in
respect of membership or partnership interests in any of the Crosstex Entities,
except for dividends paid to the Crosstex Entities on any class of capital stock
or repurchase or redemption by the Crosstex Entities of any class of capital
stock.

 

(p)                                 Independent Accountants.  KPMG LLP, who have
certified certain financial statements of the Company and its consolidated
subsidiaries, and have audited the effectiveness of the Company’s internal
control over financial reporting and expressed an unqualified opinion on
management’s assessment thereof, whose reports are filed with the Commission and
included in the Pricing Disclosure Package and the Final Offering Memorandum are
independent public accountants within the meaning of Regulation S-X under the
Securities Act and the Exchange Act and the rules of the Public Company
Accounting Oversight Board.

 

8

--------------------------------------------------------------------------------

 

(q)                                 Preparation of the Financial Statements. 
The historical financial statements (including the related notes and supporting
schedules) included or incorporated by reference in the Pricing Disclosure
Package or the Final Offering Memorandum (and any amendment or supplement
thereto) comply as to form in all material respects with the requirements of
Regulation S-X under the Securities Act and present fairly in all material
respects the financial condition, results of operations and cash flows of the
entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with U.S. generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, except to the extent described therein. There are no financial
statements (historical or pro forma) that are required to be included or
incorporated by reference in the Pricing Disclosure Package and the Final
Offering Memorandum that are not included or incorporated by reference as
required. The Company and its consolidated subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet obligations), not described in the Pricing Disclosure Package and the
Final Offering Memorandum; and all disclosures contained or incorporated by
reference in the Pricing Disclosure Package and the Final Offering Memorandum
regarding “non-GAAP financial measures” (as such term is defined by the rules
and regulations of the Commission) comply with Regulation G of the Exchange Act
and Item 10 of Regulation S-K under the Securities Act, to the extent
applicable.  The interactive data in eXtensible Business Reporting Language
incorporated by reference in the Pricing Disclosure Package and the Final
Offering Memorandum fairly presents in all material respects the information
contained therein and has been prepared in accordance with the Commission’s
rules and guidelines applicable thereto in all material respects.

 

(r)                                    No Conflicts; No Consents.

 

(i)                                     None of the offering, issuance and sale
of the Securities by the Issuers and the Guarantors, respectively, the
execution, delivery and performance of the Securities, the Exchange Securities,
the Indenture, the Registration Rights Agreement or this Agreement by the
Crosstex Entities or the consummation of the transactions contemplated hereby or
thereby (i) conflicts or will conflict with or constitutes or will constitute a
violation of the Organizational Documents of any of the Crosstex Entities, as
applicable, or any of their respective Operating Agreements, conflicts or will
conflict with or constitutes or will constitute a breach or violation of or a
default under (or an event which, with notice or lapse of time or both, would
constitute such a default), any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which any of the Crosstex
Entities is a party or by which any of them or any of their respective
properties may be bound, (iii) violates or will violate any statute, law or
regulation or any order, judgment, decree or injunction of any court or
governmental agency or body having jurisdiction over any of the Crosstex
Entities or any of their respective properties in a proceeding to which any of
them or their property is or was a party or (iv) results or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of any of the Crosstex Entities (other than liens created pursuant to the
Credit Agreement), which conflicts, breaches, violations, defaults or liens, in
the case of clauses (ii), (iii) or (iv), would have, individually or in the
aggregate, a Material Adverse Change or could materially impair the ability of
any of the Crosstex Entities to perform their obligations under this Agreement
or the Operative Agreements.

 

9

--------------------------------------------------------------------------------

 

(ii)                                  Except for (i) such consents, approvals,
authorizations, orders, filings, registrations or qualifications as may be
required (A) under applicable state securities or “Blue Sky” laws in connection
with the purchase and resale of the Securities by the Initial Purchasers and (B)
with respect to the Exchange Securities under the Securities Act, the Trust
Indenture Act and applicable state securities or “Blue Sky” laws as contemplated
by the Registration Rights Agreement and (ii) such consents that have been, or
prior to the Closing Date will have been, obtained, no consent, approval,
authorization or order of, or filing or registration with, any court or
governmental agency or body having jurisdiction over any of the Crosstex
Entities or any of their respective properties is required in connection with
the offering, issuance and sale of the Securities by the Crosstex Entities in
the manner contemplated herein or in the Pricing Disclosure Package and the
Final Offering Memorandum, the execution, delivery and performance of this
Agreement, the Indenture, the Securities and the Registration Rights Agreement
by the Crosstex Entities or the consummation by the Crosstex Entities of the
transactions contemplated hereby or thereby.

 

(s)                                   No Material Actions or Proceedings. 
Except as otherwise described in the Pricing Disclosure Package and the Final
Offering Memorandum, there is (i) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or foreign,
now pending or, to the knowledge of the Crosstex Entities, threatened, to which
any of the Crosstex Entities is or may be a party or to which the business or
property of any of the Crosstex Entities is or may be subject, (ii) no statute,
rule, regulation or order that has been enacted, adopted or issued by any
governmental agency or that has been formally proposed by any governmental
agency and (iii) no injunction, restraining order or order of any nature issued
by a federal or state court or foreign court of competent jurisdiction to which
any of the Crosstex Entities is or may be subject, that, in the case of clauses
(i), (ii) and (iii) above, is reasonably likely to (A) individually or in the
aggregate have a Material Adverse Change or prevent the consummation of the
transactions contemplated by this Agreement.  There are no legal or governmental
proceedings pending or, to the knowledge of the Crosstex Entities, threatened,
against any of the Crosstex Entities, or to which any of the Crosstex Entities
is a party, or to which any of their respective properties is subject, that are
required to be described in the Pricing Disclosure Package and the Final
Offering Memorandum but are not described as required, and there are no
agreements, contracts, indentures, leases or other instruments that are required
to be described in the Pricing Disclosure Package and the Final Offering
Memorandum that are not described.

 

(t)                                    No Violations or Breaches.  None of the
Crosstex Entities is (i) in violation of its Organizational Documents, (ii) in
violation of any law, statute, ordinance, administrative or governmental rule or
regulation applicable to it or of any order, judgment, decree or injunction of
any court or governmental agency or body having jurisdiction over it or (iii) in
breach, default (or an event which, with notice or lapse of time or both, would
constitute such a default) or violation in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which it is a party or by which it or any of its properties may be
bound, which breach, default or violation in the case of clause (ii) or (iii)
would, if continued, result in a Material Adverse Change or could materially
impair the ability of any of the Crosstex Entities to perform their obligations
under this Agreement or the Operative Agreements.  To the knowledge

 

10

--------------------------------------------------------------------------------

 

of the Crosstex Entities, no third party to any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which any of the
Crosstex Entities is a party or by which any of them is bound or to which any of
their properties is subject, is in default under any such agreement, which
breach, default or violation would, if continued, have a Material Adverse
Change.

 

(u)           Title to Properties.  The Crosstex Entities have good and
indefeasible title to all real property and good title to all personal property
described in the Pricing Disclosure Package and the Final Offering Memorandum as
owned by the Crosstex Entities, free and clear of all liens, claims, security
interests, or other encumbrances, except (i) as described, and subject to
limitations contained, in the Pricing Disclosure Package and the Final Offering
Memorandum or (ii) such as do not materially interfere with the use of such
properties taken as a whole as they have been used in the past and are proposed
to be used in the future as described in the Pricing Disclosure Package and the
Final Offering Memorandum, except, in each case, for such liens, security
interests, claims and encumbrances arising under the Credit Agreement.

 

(v)           Tax Law Compliance.  Each of the Crosstex Entities has filed (or
has obtained extensions with respect to) all material federal, state and foreign
income and franchise tax returns required to be filed through the date hereof
which returns are complete and correct in all material respects, and has timely
paid all taxes shown to be due, if any, pursuant to such returns, other than
those (i) which are being contested in good faith and for which adequate
reserves have been established in accordance with generally accepted accounting
principles or (ii) which, if not paid, would not have a Material Adverse Change.

 

(w)          Not an “Investment Company.”  None of the Crosstex Entities or any
of their respective subsidiaries is now, and after the sale of the Securities to
be sold by the Issuers hereunder and the application of the net proceeds from
such sale (including following the release of such proceeds from the Escrow
Account in accordance with the terms of the Escrow Agreement) as described in
the Pricing Disclosure Package and the Final Offering Memorandum under the
caption “Use of Proceeds” will be, an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.

 

(x)            Insurance.  The Crosstex Entities maintain insurance covering
their properties, operations, personnel and businesses against such losses and
risks and in such amounts as are reasonably adequate for the conduct of their
respective businesses and the value of their respective properties and as is
customary for companies engaged in similar businesses in similar industries. 
None of the Crosstex Entities has received notice from any insurer or agent of
such insurer that substantial capital improvements (relating to the Company and
its subsidiaries on a consolidated basis) or other substantial expenditures will
have to be made in order to continue such insurance and all such insurance is
outstanding and duly in force on the date hereof and will be outstanding and
duly in force at the Closing Date.

 

(y)           No Price Stabilization or Manipulation.  None of the Crosstex
Entities has taken and none of such persons shall take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Issuers to facilitate the sale or resale of the
Securities.

 

11

--------------------------------------------------------------------------------

 

(z)            No Conflict with Money Laundering Laws.  The operations of the
Crosstex Entities and their respective subsidiaries are and have been conducted
at all times in compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all applicable jurisdictions, the
rules and regulations thereunder and any related or similar rules, regulations
or guidelines issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”) and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Crosstex Entities with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company, threatened.

 

(aa)         No Conflict with OFAC Laws.  None of the Crosstex Entities, or, to
the knowledge of the Company, any director, officer, agent, employee or
affiliate of any of the Crosstex Entities is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Issuers will not directly or indirectly
use the proceeds of the offering of sale of the Securities, or lend, contribute
or otherwise make available such proceeds to any subsidiary, joint venture
partner or other person or entity, for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered by OFAC.

 

(bb)         Compliance with Sarbanes-Oxley.  The Issuers and their respective
officers and directors are in compliance in all material respects with the
applicable provisions of the Sarbanes-Oxley Act of 2002 the rules and
regulations of the Commission promulgated thereunder.

 

(cc)         Issuers’ Accounting System.  Each of the Crosstex Entities
(i) makes and keeps accurate books and records and (ii) maintains and has
maintained effective internal control over financial reporting as defined in
Rule 13a-15 under the Exchange Act and a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are executed in
accordance with management’s general or specific authorizations,
(B) transactions are recorded as necessary to permit preparation of the Crosstex
Entities’ financial statements in conformity with accounting principles
generally accepted in the United States and to maintain asset accountability,
(C) access to the Crosstex Entities’ assets is permitted only in accordance with
management’s general or specific authorization, (D) the recorded accountability
for the Crosstex Entities’ assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences and
(E) the interactive data in eXtensible Business Reporting Language incorporated
by reference in the Pricing Disclosure Package and the Final Offering Memorandum
fairly presents in all material respects the information contained therein and
has been prepared in accordance with the Commission’s rules and guidelines
applicable thereto in all material respects.

 

(dd)         Internal Control.  Since the date of the most recent balance sheet
of the Company and its consolidated subsidiaries reviewed or audited by KPMG LLP
and the audit committee of the board of directors of the General Partner,
(i) the Company has not been advised of (A) any significant deficiencies in the
design or operation of internal controls that could adversely affect the ability
of the Company and each of its subsidiaries to record, process, summarize and
report financial data, or any material weaknesses in internal controls and
(B) any fraud, whether or not

 

12

--------------------------------------------------------------------------------

 

material, that involves management or other employees who have a significant
role in the internal controls of the Company and each of its subsidiaries, and
(ii) there have been no changes in internal controls or in other factors that
could significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.

 

(ee)         Disclosure Controls and Procedures.  The Company has established
and maintains disclosure controls and procedures (as such term is defined in
Rule 13a-15 under the Exchange Act), (ii) such disclosure controls and
procedures are designed to ensure that the information required to be disclosed
by the Company in the reports it files or submits under the Exchange Act is
accumulated and communicated to management of the General Partner, including its
principal executive officers and principal financial officers, as appropriate,
to allow timely decisions regarding required disclosure to be made and
(iii) such disclosure controls and procedures are effective in all material
respects to perform the functions for which they were established.

 

(ff)           Compliance with Environmental Laws.  The Crosstex Entities
(i) are in compliance with any and all applicable federal, state and local laws
and regulations relating to the protection of human health and safety and the
environment or imposing liability or standards of conduct concerning any
Hazardous Material (as hereinafter defined) (“Environmental Laws”), (ii) have
received all permits required of them under applicable Environmental Laws to
conduct their respective businesses, (iii) are in compliance with all terms and
conditions of any such permit and (iv) do not have any liability in connection
with the release into the environment of any Hazardous Material, except where
such noncompliance with Environmental Laws, failure to receive required permits,
failure to comply with the terms and conditions of such permits or liability in
connection with such releases would not, individually or in the aggregate, have
a Material Adverse Change. The term “Hazardous Material” means (A) any
“hazardous substance” as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (B) any “hazardous waste” as
defined in the Resource Conservation and Recovery Act, as amended, (C) any
petroleum or petroleum product, (D) any polychlorinated biphenyl and (E) any
pollutant or contaminant or hazardous, dangerous or toxic chemical, material,
waste or substance regulated under or within the meaning of any other
Environmental Law.

 

(gg)         Permits.  Each of the Crosstex Entities has, and at the Closing
Date will have, such permits, consents, licenses, franchises, certificates and
authorizations of governmental or regulatory authorities (“permits”) as are
necessary to own its properties and to conduct its business in the manner
described in the Pricing Disclosure Package and the Final Offering Memorandum,
subject to such qualifications as may be set forth therein and except for such
permits which, if not obtained, would not, individually or in the aggregate,
have a Material Adverse Change. Except as set forth in the Pricing Disclosure
Package and the Final Offering Memorandum, each of the Crosstex Entities has, or
at the Closing Date will have, fulfilled and performed all its material
obligations with respect to such permits which are or will be due to have been
fulfilled and performed by such date and no event has occurred that would
prevent the permits from being renewed or reissued or which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any impairment of the rights of the holder of any such permit, except
for such revocations, terminations and impairments that would not, individually
or in the aggregate, have a Material Adverse Change.

 

13

--------------------------------------------------------------------------------

 

(hh)         Right-of-Ways.  Each of the Crosstex Entities has such consents,
easements, rights-of-way, permits or licenses from each person (collectively,
“rights-of-way”) as are necessary to conduct its business in the manner
described, and subject to the limitations contained, in the Pricing Disclosure
Package and the Final Offering Memorandum, except for (i) qualifications,
reservations and encumbrances that would not have a Material Adverse Change and
(ii) such rights-of-way that, if not obtained, would not have, individually or
in the aggregate, a Material Adverse Change; other than as set forth, and
subject to the limitations contained, in the Pricing Disclosure Package and the
Final Offering Memorandum, each of the Crosstex Entities has fulfilled and
performed all its material obligations with respect to such rights-of-way and no
event has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or would result in any impairment of the
rights of the holder of any such rights-of-way, except for such revocations,
terminations and impairments that would not have a Material Adverse Change; and,
except as described in the Pricing Disclosure Package and the Final Offering
Memorandum, none of such rights-of-way contains any restriction that is
materially burdensome to the Crosstex Entities, taken as a whole.

 

(ii)           No Labor Disturbance.  No labor disturbance by the employees of
the Crosstex Entities exists or, to the knowledge of the Company, is imminent or
threatened.

 

(jj)           Related Party Transactions.  No relationship, direct or indirect,
exists between or among any of the Issuers or any affiliate of the Issuers, on
the one hand, and any director, officer, member, stockholder, customer or
supplier of the Issuers or any affiliate of the Issuers, on the other hand,
which is required by the Securities Act to be disclosed in a registration
statement on Form S-1 which is not so disclosed in the Final Offering Memorandum
(or the documents incorporated by reference therein). There are no outstanding
loans, advances (except advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Issuers or any affiliate of the
Issuers to or for the benefit of any of the officers or directors of the Issuers
or any affiliate of the Issuers or any of their respective family members.

 

(kk)         No Unlawful Contributions or Other Payments.  None of the Crosstex
Entities or their respective subsidiaries nor, to the best of the Company’s
knowledge, any director, employee, affiliate or agent of the Crosstex Entities
or their respective subsidiaries, has made any contribution or other payment to
any official of; or candidate for, any federal, state or foreign office in
violation of any law or of the character necessary to be disclosed in Pricing
Disclosure Package and the Final Offering Memorandum in order to make the
statements therein not misleading.

 

(ll)           Regulations T, U, X.  Neither the Issuers nor any Guarantor nor
any of their respective subsidiaries nor any agent thereof acting on their
behalf has taken, and none of them will take, any action that might cause this
Agreement or the issuance or sale of the Securities to violate Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal Reserve
System.

 

(mm)       ERISA Compliance.  Except as otherwise disclosed in the Pricing
Disclosure Package and Final Offering Memorandum, the Crosstex Entities and any
“employee benefit plan” (as defined under the Employee Retirement Income
Security Act of 1974 (as amended, “ERISA,” which term, as used herein, includes
the regulations and published interpretations

 

14

--------------------------------------------------------------------------------

 

thereunder)) established or maintained by the Crosstex Entities or their ERISA
Affiliates (as defined below) are in compliance in all material respects with
ERISA, and, if applicable, the qualification requirements under Section 401 of
the Internal Revenue Code of 1986 (as amended, the “Code,” which term, as used
herein, includes the regulations and published interpretations thereunder),
except where the failure to comply would not have a Material Adverse Change. 
“ERISA Affiliate” means, with respect to the Crosstex Entities, any member of
any group of organizations described in Section 414(b), (c), (m) or (o) of the
Code with which the Crosstex Entities is treated as a single employer.  No
“reportable event” (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any “employee benefit plan” established or
maintained as of the date hereof by the Crosstex Entities or any of their ERISA
Affiliates.  No “employee benefit plan” established or maintained as of the date
hereof by the Crosstex Entities or any of their ERISA Affiliates, if such
“employee benefit plan” were terminated, would have any “amount of unfunded
benefit liabilities” (as defined under ERISA) except for such liabilities as
would not have a Material Adverse Change.  With respect to any “employee benefit
plan” established, maintained or contributed to as of the date hereof by the
Crosstex Entities or any of their ERISA Affiliates, neither the Crosstex
Entities, nor any of their ERISA Affiliates has incurred or reasonably expects
to incur any liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any such “employee benefit plan” or (ii) Sections 412,
4971, 4975 or 4980B of the Code except for such liability as would not have a
Material Adverse Change.

 

(nn)         Escrow Agreement.  The Escrow Agreement has been duly authorized by
the Issuers and, at the Closing Date, will have been duly executed and delivered
by the Issuers and, assuming the due authorization, execution and delivery by
the Escrow Agent and the Initial Purchasers, will constitute a valid and binding
agreement of the Issuers, enforceable against the Issuers in accordance with its
terms, except as the enforcement thereof may be limited by (i) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (ii) public policy,
applicable law relating to fiduciary duties and indemnification and contribution
and an implied covenant of good faith and fair dealing.

 

Any certificate signed by any officer of any of the Crosstex Entities and
delivered to the Initial Purchasers or counsel for the Initial Purchasers in
connection with the offering of the Securities shall be deemed a representation
and warranty by such Crosstex Entity, as to matters covered thereby, to each
Initial Purchaser.

 

SECTION 2.           Purchase, Sale and Delivery of the Securities.

 

(a)           The Securities.  Each of the Issuers and the Guarantors agrees to
issue and sell to the Initial Purchasers, severally and not jointly, all of the
Securities, and the Initial Purchasers agree, severally and not jointly, to
purchase from the Issuers and the Guarantors the aggregate principal amount of
Securities set forth opposite their names on. Schedule A, at a purchase price of
98.04% of the principal amount thereof payable on the Closing Date, in each
case, on the basis of the representations, warranties and agreements herein
contained, and upon the terms, subject to the conditions thereto, herein set
forth.

 

15

--------------------------------------------------------------------------------

 

(b)           The Closing Date.  Delivery of certificates for the Securities in
definitive form to be purchased by the Initial Purchasers and payment therefor
shall be made at the offices of Vinson & Elkins LLP, First City Tower, 1001
Fannin Street, Suite 2500, Houston, Texas 77002-6760 (or such other place as may
be agreed to by the Company and Merrill Lynch, Pierce, Fenner & Smith
Incorporated) at 9:00 a.m. New York City time, on May 24, 2012, or such other
time and date as Merrill Lynch, Pierce, Fenner & Smith Incorporated shall
designate by notice to the Company (the time and date of such closing are called
the “Closing Date”).

 

(c)           Delivery of the Securities.  The Issuers shall deliver, or cause
to be delivered, through the facilities of the Depositary, to Merrill Lynch,
Pierce, Fenner & Smith Incorporated for the accounts of the several Initial
Purchasers, the Securities at the Closing Date against the wire transfer in
immediately available funds to the Escrow Account for the amount of the purchase
price therefor. The Securities shall be in global form and in such denominations
and registered in the name of Cede & Co., as nominee of the Depositary, pursuant
to the DTC Agreement, and shall be delivered at the Closing Date to the Trustee,
as custodian for the Depositary. Time shall be of the essence, and delivery at
the time and place specified in this Agreement is a further condition to the
obligations of the Initial Purchasers.

 

(d)           Initial Purchasers as Qualified Institutional Buyers.  Each
Initial Purchaser severally and not jointly represents and warrants to, and
agrees with, the Issuers that:

 

(i)            it is a “qualified institutional buyer” within the meaning of
Rule 144A (a “Qualified. Institutional Buyer”); and

 

(ii)           it has not offered or sold, and will not offer or sell, any
Securities, except (i) within the United States, to those persons it reasonably
believes to be Qualified Institutional Buyers and that, in connection with each
sale, it has taken or will take reasonable steps to ensure that the purchaser of
such Securities is aware that such sale is being made in reliance on Rule 144A
or (ii) in accordance with the restrictions set forth in Annex I hereto.

 

SECTION 3.           Additional Covenants.  Each of the Issuers and the
Guarantors further covenants and agrees with each Initial Purchaser as follows:

 

(a)           Preparation of Final Offering Memorandum; Initial Purchasers’
Review of Proposed Amendments and Supplements and Company Additional Written
Communications.  As promptly as practicable following the Time of Sale and in
any event not later than the second business day following the date hereof, the
Issuers will prepare and deliver to the Initial Purchasers the Final Offering
Memorandum, which shall consist of the Preliminary Offering Memorandum as
modified only by the information contained in the Pricing Supplement. The
Issuers will not amend or supplement the Preliminary Offering Memorandum or the
Pricing Supplement. The Issuers will not amend or supplement the Final Offering
Memorandum prior to the Closing Date unless the Initial Purchasers shall
previously have been furnished a copy of the proposed amendment or supplement at
least two business days prior to the proposed use or filing, and shall not have
objected to such amendment or supplement. Before making, preparing, using,
authorizing, approving or distributing any Company Additional Written
Communication, the Issuers will furnish to the Initial Purchasers a copy of such
written communication for review

 

16

--------------------------------------------------------------------------------

 

and will not make, prepare, use, authorize, approve or distribute any such
written communication to which Merrill Lynch, Pierce, Fenner & Smith
Incorporated reasonably objects.

 

(b)           Amendments and Supplements to the Final Offering Memorandum and
Other Securities Act Matters.  If prior to the later of (x) the Closing Date and
(y) the completion of the placement of the Securities by the Initial Purchasers
with the Subsequent Purchasers, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Final Offering
Memorandum, as then amended or supplemented, in order to make the statements
therein, in the light of the circumstances when the Final Offering Memorandum is
delivered to a Subsequent Purchaser, not misleading, or if in the judgment of
the Representative or counsel for the Initial Purchasers it is otherwise
necessary to amend or supplement the Final Offering Memorandum to comply with
law, the Issuers agree to promptly prepare (subject to Section 3 hereof),
furnish at their own expense to the Initial Purchasers, amendments or
supplements to the Final Offering Memorandum so that the statements in the Final
Offering Memorandum as so amended or supplemented will not, in the light of the
circumstances at the Closing Date and at the time of sale of Securities, be
misleading or so that the Final Offering Memorandum, as amended or supplemented,
will comply with all applicable law.

 

Following the consummation of the Exchange Offer or the effectiveness of an
applicable shelf registration statement and for so long as the Securities are
outstanding it in the judgment of the Initial Purchasers, the Initial Purchasers
or any of their affiliates (as such term is defined in the Securities Act) are
required to deliver a prospectus in connection with sales of, or market-making
activities with respect to, the Securities, the Company agrees to periodically
amend the applicable registration statement so that the information contained
therein complies with the requirements of Section 10 of the Securities Act, to
amend the applicable registration statement or supplement the related prospectus
or the documents incorporated therein when necessary to reflect any material
changes in the information provided therein so that the registration statement
and the prospectus will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances existing as of the date the
prospectus is so delivered, not misleading and to provide the Initial Purchasers
with copies of each amendment or supplement filed and such other documents as
the Initial Purchasers may reasonably request.

 

The Issuers hereby expressly acknowledge that the indemnification and
contribution provisions of Sections 8 and 9 hereof are specifically applicable
and relate to each offering memorandum, registration statement, prospectus,
amendment or supplement referred to in this Section 3.

 

(c)           Copies of the Offering Memorandum.  The Issuers agree to furnish
the Initial Purchasers, without charge, as many copies of the Pricing Disclosure
Package and the Final Offering Memorandum and any amendments and supplements
thereto as they shall have reasonably requested.

 

(d)           Blue Sky Compliance.  Each of the Issuers and the Guarantors shall
cooperate with the Initial Purchasers and counsel for the Initial Purchasers to
qualify or register (or to obtain exemptions from qualifying or registering) all
or any part of the Securities for offer and sale under the securities laws of
the several states of the United States or any other jurisdictions

 

17

--------------------------------------------------------------------------------

 

reasonably designated by the Initial Purchasers, shall comply with such laws and
shall continue such qualifications, registrations and exemptions in effect so
long as required for the distribution of the Securities. None of the Issuers or
any of the Guarantors shall be required to qualify as a foreign corporation or
other entity or to take any action that would subject it to general service of
process in any such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation or other entity. The
Company will advise the Initial Purchasers promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the
Securities for offering, sale or trading in any jurisdiction or any initiation
or threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or exemption,
each of the Issuers and the Guarantors shall use its reasonable best efforts to
obtain the withdrawal thereof at the earliest possible moment.

 

(e)           Use of Proceeds.  The Issuers shall apply the net proceeds from
the sale of the Securities sold by it in the manner described under the caption
“Use of Proceeds” in the Pricing Disclosure Package.

 

(f)            The Depositary.  The Issuers will cooperate with the Initial
Purchasers and use their reasonable best efforts to permit the Securities to be
eligible for clearance and settlement through the facilities of the Depositary.

 

(g)           Additional Issuer Information.  Prior to the completion of the
placement of the Securities by the Initial Purchasers with the Subsequent
Purchasers, the Issuers shall file, on a timely basis, with the Commission and
the Nasdaq Global Select Market all reports and documents required to be filed
under Section 13 or 15 of the Exchange Act. Additionally, at any time when the
Issuers are not subject to Section 13 or 15 of the Exchange Act and the
Securities are “restricted securities” within the meaning of
Rule 144(a)(3) under the Securities Act, for the benefit of holders and
beneficial owners from time to time of the Securities, the Issuers shall
furnish, at its expense, upon request, to holders and beneficial owners of
Securities and prospective purchasers of Securities information (“Additional
Issuer Information”) satisfying the requirements of Rule 144A(d).

 

(h)           Agreement Not To Offer or Sell Additional Securities.  During the
period of 45 days following the date hereof; the Issuers will not, without the
prior written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated
(which consent may be withheld at the sole discretion of Merrill Lynch, Pierce,
Fenner & Smith Incorporated), directly or indirectly, sell, offer, contract or
grant any option to sell, pledge, transfer or establish an open “put equivalent
position” within the meaning of Rule 16a-1 under the Exchange Act, or otherwise
dispose of or transfer, or announce the offering of, or file any registration
statement under the Securities Act in respect of; any debt securities of the
Issuers similar to the Securities or securities exchangeable for or convertible
into debt securities of the Issuers similar to the Securities (other than as
contemplated by this Agreement and to register the Exchange Securities).

 

(i)            No Integration.  The Issuers agree that they will not and will
cause their Affiliates not to make any offer or sale of securities of the
Issuers of any class if, as a result of the doctrine of “integration” referred
to in Rule 502 under the Securities Act, such offer or sale would render invalid
(for the purpose of (i) the sale of the Securities by the Issuers to the Initial
Purchasers, (ii) the resale of the Securities by the Initial Purchasers to
Subsequent Purchasers or (iii) the resale of

 

18

--------------------------------------------------------------------------------

 

the Securities by such Subsequent Purchasers to others) the exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof
or by Rule 144A or by Regulation S thereunder or otherwise.

 

(j)            No Restricted Resales.  During the period of one year after the
Closing Date, the Issuers will not, and will not permit any of their respective
“affiliates” (as defined in Rule 144 under the Securities Act) to resell any of
the Securities that constitute “restricted securities” under Rule 144 that have
been reacquired by any of them.

 

(k)           Legended Securities.  Each certificate for a Security will bear
the legend contained in “Transfer Restrictions” in the Preliminary Offering
Memorandum for the time period and upon the other terms stated in the
Preliminary Offering Memorandum.

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of the several
Initial Purchasers, may, in its sole discretion, waive in writing the
performance by the Issuers or any Guarantor of any one or more of the foregoing
covenants or extend the time for their performance.

 

SECTION 4.           Payment of Expenses.  Each of the Issuers and the
Guarantors agrees, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby,
including, without limitation, (i) all expenses incident to the issuance and
delivery of the Securities (including all printing and engraving costs),
(ii) all necessary issue, transfer and other stamp taxes in connection with the
original issuance and sale of the Securities to the Initial Purchasers,
(iii) all fees and expenses of the Issuers’ and the Guarantors’ counsel,
independent public or certified public accountants and other advisors, (iv) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Pricing Disclosure Package and the
Final Offering Memorandum (including financial statements and exhibits), and all
amendments and supplements thereto, this Agreement, the Registration Rights
Agreement, the Indenture, the DTC Agreement and the Securities, (v) all filing
fees, attorneys’ fees and expenses incurred by the Issuers, the Guarantors or
the Initial Purchasers in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Securities for offer and sale under the securities laws of the several
states of the United States or other jurisdictions reasonably designated by the
Initial Purchasers (including, without limitation, the cost of preparing,
printing and mailing preliminary and final blue sky or legal investment
memoranda and any related supplements to the Pricing Disclosure Package or the
Final Offering Memorandum, (vi) the fees and expenses of the Trustee, including
the fees and disbursements of counsel for the Trustee in connection with the
Indenture, the Securities and the Exchange Securities, (vii) any fees payable in
connection with the rating of the Securities or the Exchange Securities with the
ratings agencies, (viii) all fees and expenses (including reasonable fees and
expenses of counsel) of the Issuers and the Guarantors in connection with
approval of the Securities by the Depositary for “book-entry” transfer, and the
performance by the Issuers and the Guarantors of their respective other
obligations under this Agreement and (ix) all expenses of the Company incident
to the “road show” for the offering of the Securities. Except as provided in
this Section 4 and Sections 6, 8 and 9 hereof, the Initial Purchasers shall pay
their own expenses, including the fees and disbursements of their counsel.

 

19

--------------------------------------------------------------------------------

 

SECTION 5.           Conditions of the Obligations of the Initial Purchasers. 
The obligations of the several Initial Purchasers to purchase and pay for the
Securities as provided herein on the Closing Date shall be subject to the
accuracy of the representations and warranties on the part of the Issuers and
the Guarantors set forth in Section 1 hereof as of the date hereof and as of the
Closing Date as though then made and to the timely performance by the Issuers of
their covenants and other obligations hereunder, and to each of the following
additional conditions:

 

(a)           Accountants’ Comfort Letter.  On the date hereof, the Initial
Purchasers shall have received from KPMG LLP a “comfort letter” dated the date
hereof addressed to the Initial Purchasers, in form and substance satisfactory
to the Initial Purchasers, (i) confirming that they are independent registered
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, and
(ii) covering the financial information in the Preliminary Offering Memorandum
and the Pricing Supplement, if any, and other customary matters. In addition, on
the Closing Date, the Initial Purchasers shall have received from such
accountants, a “bring-down comfort letter” dated the Closing Date addressed to
the Initial Purchasers, in form and substance satisfactory to the Initial
Purchasers, in the form of the “comfort letter” delivered on the date hereof,
except that (i) it shall cover the financial information in the Final Offering
Memorandum and any amendment or supplement thereto and (ii) procedures shall be
brought down to a date no more than 5 days prior to the Closing Date.

 

(b)           No Material Adverse Change or Ratings Agency Change.  For the
period from and after the date of this Agreement and prior to the Closing Date:

 

(i)            in the judgment of the Representative there shall not have
occurred any material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Crosstex Entities, taken
as a whole; and

 

(ii)           there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any review
for a possible change that does not indicate the direction of the possible
change, in the rating accorded any securities or indebtedness of the Issuers or
any of its consolidated subsidiaries by any “nationally recognized statistical
rating organization” as such term is defined for purposes of Section 3(a)(62) of
the Exchange Act.

 

(c)           Opinion of Counsel for the Issuers.  On the Closing Date the
Initial Purchasers shall have received the favorable opinion of (i) Baker Botts,
LLP, counsel for the Issuers, dated as of such Closing Date, the form of which
is attached as Exhibit A-1 and (ii) Taylor, Porter, Brooks & Phillips LLP, local
counsel for the Issuers, dated as of such Closing Date, the form of which is
attached as Exhibit A-2.

 

(d)           Opinion of Counsel for the Initial Purchasers.  On the Closing
Date the Initial Purchasers shall have received the favorable opinion of
Vinson & Elkins LLP, counsel for the Initial Purchasers, dated as of such
Closing Date, with respect to such matters as may be requested by the Initial
Purchasers, and the Company shall have furnished to such counsel such

 

20

--------------------------------------------------------------------------------

 

documents as they reasonably request for the purpose of enabling them to pass
upon such matters.

 

(e)           Officers’ Certificate.  On the Closing Date the Initial Purchasers
shall have received a written certificate executed by the Chairman of the Board,
Chief Executive Officer or President of each Issuer and each Guarantor and the
Chief Financial Officer or Chief Accounting Officer of each Issuer and each
Guarantor, dated as of the Closing Date, to the effect set forth in
Section 5(b)(ii) hereof and further to the effect that:

 

(i)            for the period from and after the date of this Agreement to the
Closing Date, there shall not have occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of business, of
the Crosstex Entities, taken as a whole;

 

(ii)           the representations, warranties and covenants of such entity set
forth in Section 1 hereof were true and correct as of the date hereof and are
true and correct as of the Closing Date with the same force and effect as though
expressly made on and as of the Closing Date; and

 

(iii)          such entity has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied on or prior to the
Closing Date.

 

(f)            Indenture; Registration Rights Agreement.  The Issuers and the
Guarantors shall have executed and delivered the Indenture, and the Initial
Purchasers shall have received executed copies thereof The Issuers and the
Guarantors shall have entered into the Registration Rights Agreement and the
Initial Purchasers shall have received executed counterparts thereof.

 

(g)           Absence of Changes.  Except as set forth in the Pricing Disclosure
Package, (i) none of the Crosstex Entities shall have sustained, since the date
of the latest audited financial statements included or incorporated by reference
in the Pricing Disclosure Package (exclusive of any amendment or supplement
thereto after the date hereof), any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree or
(ii) since such date there shall not have been any change in the capitalization
or long-term debt of any of the Crosstex Entities or any change, or any
development involving a prospective change, in or affecting the condition
(financial or otherwise), results of operations, unitholders’ equity,
properties, management, business or prospects of the Crosstex Entities taken as
a whole, the effect of which, in any such case described in clause (i) or (ii),
is, in the judgment of the Initial Purchasers, so material and adverse as to
make it impracticable or inadvisable to proceed with the offering or the
delivery of the Securities on the terms and in the manner contemplated in the
Offering Memorandum.

 

(h)           Escrow Agreement.  The Initial Purchasers shall have received a
counterpart of the Escrow Agreement that shall have been duly executed and
delivered by the Trustee, the Issuers and the Escrow Agent.

 

21

--------------------------------------------------------------------------------

 

(i)            Additional Documents.  On or before the Closing Date, the Initial
Purchasers and counsel for the Initial Purchasers shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Securities
as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.

 

If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Initial
Purchasers by notice to the Company at any time on or prior to the Closing Date,
which termination shall be without liability on the part of any party to any
other party, except that Sections 4, 6, 8 and 9 hereof shall at all times be
effective and shall survive such termination.

 

SECTION 6.         Reimbursement of Initial Purchasers’ Expenses.  If this
Agreement is terminated by the Initial Purchasers pursuant to Section 5 or
clauses (i), (v) and (vi) of Section 10 hereof, including if the sale to the
Initial Purchasers of the Securities on the Closing Date is not consummated
because of any refusal, inability or failure on the part of the Issuers or
Guarantors to perform any agreement herein or to comply with any provision
hereof, the Issuers agree to reimburse the Initial Purchasers, severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Initial Purchasers in connection with the proposed purchase and the
offering and sale of the Securities, including, without limitation, fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges; provided, that the Issuers shall not be obligated for any
such reimbursement if the termination of this Agreement is solely as a result of
the refusal, inability or failure to close and fund the new bank credit facility
on or prior to the Closing Date on the part of Lenders affiliated with the
Initial Purchasers notwithstanding the willingness and ability of the Company
and the Guarantors to satisfy all conditions precedent to the closing of the new
credit facility with such terms as described in the Pricing Disclosure Package.

 

SECTION 7.         Offer, Sale and Resale Procedures.  Each of the Initial
Purchasers, on the one hand, and the Issuers and each of the Guarantors, on the
other hand, hereby agree to observe the following procedures in connection with
the offer and sale of the Securities:

 

(A)          Offers and sales of the Securities will be made only by the Initial
Purchasers or Affiliates thereof qualified to do so in the jurisdictions in
which such offers or sales are made. Each such offer or sale shall only be made
to persons whom the offeror or seller reasonably believes to be Qualified
Institutional Buyers or non-U.S. persons outside the United States to whom the
offeror or seller reasonably believes offers and sales of the Securities may be
made in reliance upon Regulation S upon the terms and conditions set forth in
Annex I hereto, which Annex I is hereby expressly made a part hereof.

 

(B)          The Securities will be offered by approaching prospective
Subsequent Purchasers on an individual basis. No general solicitation or general
advertising (within the meaning of Rule 502 under the Securities Act) will be
used in the United States in connection with the offering of the Securities.

 

22

--------------------------------------------------------------------------------

 

(C)          Upon original issuance by the Issuers, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act, the Securities (and all securities issued in exchange therefor or in
substitution thereof, other than the Exchange Securities) shall bear the
following legend:

 

“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE WHICH IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR THE
DATE OF ANY SUBSEQUENT REOPENING OF THE NOTES) AND THE LAST DATE ON WHICH AN
ISSUER OR ANY AFFILIATE OF AN ISSUER WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF THIS NOTE) (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY
(A) TO AN ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE
144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER”
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
(i) PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40 DAY DISTRIBUTION
COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR
PURSUANT TO CLAUSE

 

23

--------------------------------------------------------------------------------

 

(E) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS NOTE IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF A HOLDER OR AN ISSUER ON OR AFTER THE RESALE RESTRICTION TERMINATION
DATE.”

 

Following the sale of the Securities by the Initial Purchasers to Subsequent
Purchasers pursuant to the terms hereof, the Initial Purchasers shall not be
liable or responsible to the Issuers for any losses, damages or liabilities
suffered or incurred by the Issuers, including any losses, damages or
liabilities under the Securities Act, arising from or relating to any resale or
transfer of any Security.

 

SECTION 8.         Indemnification.

 

(a)           Indemnification of the Initial Purchasers.  Each of the Issuers
and the Guarantors, jointly and severally, agrees to indemnify and hold harmless
each Initial Purchaser, its directors, officers, employees, each of the Initial
Purchasers’ affiliates (as such term is defined in Rule 501(b) under the
Securities Act), and each person, if any, who controls any Initial Purchaser
within the meaning of the Securities Act and the Exchange Act against any loss,
claim, damage, liability or expense, as incurred, to which such Initial
Purchaser, director, officer, employee, affiliate or controlling person may
become subject, under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Issuers), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue statement or alleged untrue statement of a material
fact contained in the Pricing Supplement, the Preliminary Offering Memorandum,
any Company Additional Written Communication or the Final Offering Memorandum
(or any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
and to reimburse each Initial Purchaser and each such director, officer,
employee, affiliate or controlling person for any and all expenses (including
the fees and disbursements of counsel chosen by Banc of America Securities LLC)
as such expenses are reasonably incurred by such Initial Purchaser or such
director, officer, employee, affiliate or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Issuers by the Initial Purchasers expressly for use in the Pricing
Supplement, the Preliminary Offering Memorandum, any Company Additional Written
Communication or the Final Offering Memorandum (or any

 

24

--------------------------------------------------------------------------------

 

amendment or supplement thereto). The indemnity agreement set forth in this
Section 8(a) shall be in addition to any liabilities that the Issuers may
otherwise have.

 

(b)           Indemnification of the Issuers and the Guarantors.  Each Initial
Purchaser agrees, severally and not jointly, to indemnify and hold harmless each
Issuer, each Guarantor, each of their respective directors and each person, if
any, who controls any Issuer or any Guarantor within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage, liability
or expense, as incurred, to which any Issuer, any Guarantor or any such director
or controlling person may become subject, under the Securities Act, the Exchange
Act, or other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Initial Purchaser), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in the Pricing Supplement,
the Preliminary Offering Memorandum, any Company Additional Written
Communication or the Final Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Pricing Supplement,
the Preliminary Offering Memorandum, any Company Additional Written
Communication or the Final Offering Memorandum (or any amendment or supplement
thereto), in reliance upon and in conformity with written information furnished
to the Issuers by the Initial Purchasers expressly for use therein; and to
reimburse any Issuer, any Guarantor and each such director or controlling person
for any and all expenses (including the fees and disbursements of counsel) as
such expenses are reasonably incurred by any Issuer, any Guarantor or such
director or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. Each of the Issuers and the Guarantors hereby acknowledges
that the only information that the Initial Purchasers have furnished to the
Issuers expressly for use in the Pricing Supplement, the Preliminary Offering
Memorandum, any Company Additional Written Communication or the Final Offering
Memorandum (or any amendment or supplement thereto) are the statements set forth
in the first sentence of the fourth paragraph under the caption “Plan of
Distribution” and the four paragraphs under the subcaption “Short Positions”
under the caption “Plan of Distribution” in the Preliminary Offering Memorandum
and the Final Offering Memorandum. The indemnity agreement set forth in this
Section 8(b) shall be in addition to any liabilities that each Initial Purchaser
may otherwise have.

 

(c)           Notifications and Other Indemnification Procedures.  Promptly
after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise under the
indemnity agreement contained in this Section 8 except to the extent it has been
materially prejudiced (through the forfeiture of substantive rights and
defenses) as a result of such failure and shall not relieve the indemnifying
party from any liability that the indemnifying party may have to an indemnified
party otherwise than under the provisions of this Section 8 and Section 9. In
case any such action

 

25

--------------------------------------------------------------------------------

 

is brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (Banc of America Securities LLC in the case of Sections
8(b) and 9 hereof), representing the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.

 

(d)           Settlements.  The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff; the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent (i) includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding and (ii) does not include any
statements as to or any findings of fault, culpability or failure to act by or
on behalf of any indemnified party.

 

SECTION 9.         Contribution.  If the indemnification provided for in
Section 8 hereof is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party, as incurred, as a result of any losses, claims, damages,
liabilities or expenses referred to therein (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuers and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand,

 

26

--------------------------------------------------------------------------------

 

from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers and
the Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Issuers, and the total discount received by the
Initial Purchasers bear to the aggregate initial offering price of the
Securities. The relative fault of the Issuers and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact or any such inaccurate or alleged inaccurate representation or warranty
relates to information supplied by the Issuers and the Guarantors, on the one
hand, or the Initial Purchasers, on the other hand, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or inaccuracy.

 

The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8 hereof, any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8 hereof with respect to notice of commencement of any action shall
apply if a claim for contribution is to be made under this Section 9; provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under Section 8 hereof for purposes of
indemnification.

 

The Issuers, the Guarantors and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 9.

 

Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be
required to contribute any amount in excess of the discount received by such
Initial Purchaser in connection with the Securities distributed by it. No person
guilty of fraudulent misrepresentation (within the meaning of Section 1 I of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Initial Purchasers’ obligations
to contribute pursuant to this Section 9 are several, and not joint, in
proportion to their respective commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each director, officer and employee
of an Initial Purchaser and each person, if any, who controls an Initial
Purchaser within the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as such Initial Purchaser, and each
director of the Issuers or any Guarantor, and each person, if any, who controls
the Issuers or any Guarantor with the meaning

 

27

--------------------------------------------------------------------------------

 

of the Securities Act and the Exchange Act shall have the same rights to
contribution as the Issuers and the Guarantors.

 

SECTION 10.       Termination of this Agreement.  Prior to the Closing Date,
this Agreement may be terminated by the Representative by notice given to the
Company if at any time: (i) trading or quotation in any of the Issuers’
securities shall have been suspended or limited by the Commission or by the
Nasdaq Stock Market; (ii) trading in securities generally on either the Nasdaq
Stock Market or the NYSE shall have been suspended or limited, or minimum or
maximum prices shall have been generally established on any of such quotation
system or stock exchange by the Commission or the FINRA; (iii) a general banking
moratorium shall have been declared by any of federal, New York or Delaware
authorities; (iv) there shall have occurred any outbreak or escalation of
national or international hostilities or any crisis or calamity, or any change
in the United. States or international financial markets, or any substantial
change or development involving a prospective substantial change in United
States’ or international political, financial or economic conditions, as in the
judgment of the Representative is material and adverse and makes it
impracticable or inadvisable to proceed with the offering sale or delivery of
the Securities in the manner and on the terms described in the Pricing
Disclosure Package or to enforce contracts for the sale of securities; (v) in
the judgment of the Representative there shall have occurred since the date of
the latest audited financial statements included or incorporated by reference in
the Pricing Disclosure Package, any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects, whether or not
arising from transactions in the ordinary course of business, of the Crosstex
Entities, taken as a whole, other than as disclosed in the Pricing Disclosure
Package; or (vi) the Issuers shall have sustained a loss by strike, fire, flood,
earthquake, accident or other calamity of such character as in the judgment of
the Representative may interfere materially with the conduct of the business and
operations of the Issuers regardless of whether or not such loss shall have been
insured. Any termination pursuant to this Section 10 shall be without liability
on the part of (i) the Issuers or any Guarantor to any Initial Purchaser, except
that the Issuers and the Guarantors shall be obligated to reimburse the expenses
of the Initial Purchasers in accordance with the terms of Section 6 hereof,
(ii) any Initial Purchaser to the Issuers, or (iii) any party hereto to any
other party except that the provisions of Sections 8 and 9 hereof shall at all
times be effective and shall survive such termination.

 

SECTION 11.       Representations and Indemnities to Survive Delivery.  The
respective indemnities, agreements, representations, warranties and other
statements of the Crosstex Entities, their respective officers and the several
Initial Purchasers set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of any Initial Purchaser, the Issuers, any Guarantor or any of their partners,
officers or directors or any controlling person, as the case maybe, and will
survive delivery of and payment for the Securities sold hereunder and any
termination of this Agreement.

 

SECTION 12.       Notices.  All communications hereunder shall be in writing and
shall be mailed, hand delivered, couriered or facsimiled and confirmed to the
parties hereto as follows:

 

If to the Initial Purchasers:

 

28

--------------------------------------------------------------------------------

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated

50 Rockefeller Plaza

New York, NY 10020

Facsimile:  (212) 901-7892

Attention:  HY Legal Department

 

with a copy (which shall not constitute notice) to:

 

Facsimile:  (212) 230-8730

Attention:  ECM Legal

 

Vinson & Elkins L.L.P.

1001 Fannin Street

2500 First City Tower

Houston, Texas  72002

Facsimile:  (713) 651-5861

Attention:  Jeffery K. Malonson

 

If to a Crosstex Entity:

 

Crosstex Energy, L.P.

2501 Cedar Springs, Suite 2600

Dallas, Texas  75201

Facsimile:  (214) 953-9501

Attention:  General Counsel

 

with a copy (which shall not constitute notice) to:

 

Baker Botts L.L.P.

2001 Ross Avenue

Dallas, Texas  75201-2980

Facsimile:  (214) 661-4634

Attention:  Douglass M. Rayburn

 

Any party hereto may change the address or facsimile number for receipt of
communications by giving written notice to the others.

 

In accordance with the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)), the Initial Purchasers are required
to obtain, verify and record information that identifies their respective
clients, including the Issuers, which information may include the name and
address of their respective clients, as well as other information that will
allow the Initial Purchasers to properly identify their respective clients.

 

SECTION 13.       Successors.  This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Initial Purchasers
pursuant to Section 16 hereof, and to the benefit of the indemnified parties
referred to in Sections 8 and 9 hereof, and in each case their respective
successors, and no other person will have any right or obligation hereunder.

 

29

--------------------------------------------------------------------------------

 

The term “successors” shall not include any Subsequent Purchaser of other
purchaser of the Securities as such from any of the Initial Purchasers merely by
reason of such purchase.

 

SECTION 14.       Partial Unenforceability.  The invalidity or unenforceability
of any section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other section, paragraph or provision hereof.
If any section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.

 

SECTION 15.       Governing Law Provisions.

 

(a)           THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN SUCH STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES
THEREOF.

 

(b)           Consent to Jurisdiction.  Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby (“Related Proceedings”) may be instituted in the federal courts of the
United States of America located in the City and County of New York or the
courts of the State of New York in each case located in the City and County of
New York (collectively, the “Specified Courts”), and each party irrevocably
submits to the exclusive jurisdiction (except for suits, actions, or proceedings
instituted in regard to the enforcement of a judgment of any Specified Court in
a Related Proceeding a “Related Judgment,” as to which such jurisdiction is
non-exclusive) of the Specified Courts in any Related Proceeding. Service of any
process, summons, notice or document by mail to such party’s address set forth
above shall be effective service of process for any Related Proceeding brought
in any Specified Court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any Specified Proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any Specified Court that any Related Proceeding brought in any Specified
Court has been brought in an inconvenient forum.

 

SECTION 16.       Default of One or More of the Several Initial Purchasers.  If
any one or more of the several Initial Purchasers shall fail or refuse to
purchase Securities that it or they have agreed to purchase hereunder on the
Closing Date, and the aggregate number of Securities which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase
does not exceed 10% of the aggregate number of the Securities to be purchased on
such date, the other Initial Purchasers shall be obligated, severally, in the
proportions that the number of Securities set forth opposite their respective
names on Schedule A bears to the aggregate number of Securities set forth
opposite the names of all such non-defaulting Initial Purchasers, or in such
other proportions as may be specified by the Initial Purchasers with the consent
of the non-defaulting Initial Purchasers, to purchase the Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase on the Closing Date. If any one or more of the Initial Purchasers
shall fail or refuse to purchase Securities and the aggregate number of
Securities with respect to which such default occurs exceeds 10% of the
aggregate number of Securities to be purchased on the Closing Date, and
arrangements satisfactory to the Initial Purchasers and the Issuers for the
purchase of such Securities are not

 

30

--------------------------------------------------------------------------------

 

made within 48 hours after such default, this Agreement shall terminate without
liability of any party to any other party except that the provisions of Sections
4, 6, 8 and 9 hereof shall at all times be effective and shall survive such
termination. In any such case either the Initial Purchasers or the Issuers shall
have the right to postpone the Closing Date, as the case may be, but in no event
for longer than seven days in order that the required changes, if any, to the
Final Offering Memorandum or any other documents or arrangements may be
effected.

 

As used in this Agreement, the term “Initial Purchaser” shall be deemed to
include any person substituted for a defaulting Initial Purchaser under this
Section 16. Any action taken under this Section 16 shall not relieve any
defaulting Initial Purchaser from liability in respect of any default of such
Initial Purchaser under this Agreement.

 

SECTION 17.  No Advisory or Fiduciary Responsibility.  Each of the Issuers and
the Guarantors acknowledges and agrees that: (i) the purchase and sale of the
Securities pursuant to this Agreement, including the determination of the
offering price of the Securities and any related discounts and commissions, is
an arm’s-length commercial transaction between the Issuers and the Guarantors,
on the one hand, and the several Initial Purchasers, on the other hand, and the
Issuers and the Guarantors are capable of evaluating and understanding and
understand and accept the terms, risks and conditions of the transactions
contemplated by this Agreement; (ii) in connection with each transaction
contemplated hereby and the process leading to such transaction each Initial
Purchaser is and has been acting solely as a principal and is not the agent or
fiduciary of the Issuers, Guarantors or their respective affiliates,
stockholders, creditors or employees or any other party; (iii) no Initial
Purchaser has assumed or will assume an advisory or fiduciary responsibility in
favor of the Issuers or Guarantors with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether such
Initial Purchaser has advised or is currently advising the Issuers and the
Guarantors on other matters) or any other obligation to the Issuers and the
Guarantors except the obligations expressly set forth in this Agreement; (iv)
the several Initial Purchasers and their respective affiliates may be engaged in
a broad range of transactions that involve interests that differ from those of
the Issuers and the Guarantors and that the several Initial Purchasers have no
obligation to disclose any of such interests by virtue of any fiduciary or
advisory relationship; (v) the Initial Purchasers have not provided any legal,
accounting, regulatory or tax advice with respect to the offering contemplated
hereby and the Issuers and the Guarantors have consulted their own legal,
accounting, regulatory and tax advisors to the extent they deemed appropriate;
and (y) it will not claim that the Initial Purchasers, or any of them, has
rendered advisory services of any nature or respect, or owes a fiduciary or
similar duty to the Issuers, in connection with the transactions contemplated
hereby or the process leading thereto.

 

This Agreement supersedes all prior agreements and understandings (whether
written or oral) between the Issuers, the Guarantors and the several Initial
Purchasers, or any of them, with respect to the subject matter hereof The
Issuers and the Guarantors hereby waive and release, to the fullest extent
permitted by law, any claims that the Issuers and the Guarantors may have
against the several Initial Purchasers with respect to any breach or alleged
breach of fiduciary duty.

 

SECTION 18.  General Provisions.  This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous

 

31

--------------------------------------------------------------------------------

 

oral agreements, understandings and negotiations with respect to the subject
matter hereof. This Agreement may be executed in two or more counterparts, each
one of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement may not be
amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by
each party whom the condition is meant to benefit. The section headings herein
are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.

 

32

--------------------------------------------------------------------------------

 

If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.

 

 

Very truly yours,

 

 

 

CROSSTEX ENERGY, L.P.

 

 

 

By:

Crosstex Energy GP, LLC,

 

 

its general partner

 

 

 

By:

/s/ Michael J. Garberding

 

Name:

Michael J. Garberding

 

Title:

Senior Vice President and

 

 

Chief Financial Offier

 

 

 

 

 

CROSSTEX ENERGY FINANCE CORPORATION

 

 

 

By:

/s/ Michael J. Garberding

 

Name:

Michael J. Garberding

 

Title:

Senior Vice President and

 

 

Chief Financial Officer

 

 

 

 

 

GUARANTORS

 

 

 

CROSSTEX ENERGY SERVICES, L.P.

 

 

 

By:

Crosstex Operating GP, LLC,

 

 

its general partner

 

 

 

By:

/s/ Michael J. Garberding

 

Name:

Michael J. Garberding

 

Title:

Senior Vice President and

 

 

Chief Financial Officer

 

[Signature Page to Purchase Agreement]

 

--------------------------------------------------------------------------------

 

 

CROSSTEX OPERATING GP, LLC

 

CROSSTEX ENERGY SERVICES GP, LLC

 

CROSSTEX LIG LIQUIDS, LLC

 

CROSSTEX PROCESSING SERVICES, LLC

 

CROSSTEX PELICAN, LLC

 

CROSSTEX PERMIAN, LLC

 

CROSSTEX PERMIAN II, LLC

 

 

 

By:

/s/ Michael J. Garberding

 

Name:

Michael J. Garberding

 

Title:

Senior Vice President and

 

 

Chief Financial Officer

 

 

 

 

 

CROSSTEX GULF COAST MARKETING LTD.

 

CROSSTEX CCNG PROCESSING LTD.

 

CROSSTEX NORTH TEXAS PIPELINE, L.P.

 

CROSSTEX NORTH TEXAS GATHERING, L.P.

 

CROSSTEX NGL MARKETING, L.P.

 

CROSSTEX NGL PIPELINE, L.P.

 

 

 

By:

Crosstex Energy Services GP, LLC,

 

 

General partner of each above initial

 

 

partnership

 

 

 

By:

/s/ Michael J. Garberding

 

Name:

Michael J. Garberding

 

Title:

Senior Vice President and

 

 

Chief Financial Officer

 

 

 

 

 

SABINE PASS PLANT FACILITY JOINT VENTURE

 

 

 

By:

Crosstex Processing Services, LLC,

 

 

as general partner, and

 

 

 

By:

Crosstex Pelican, LLC,

 

 

as general partner

 

 

 

By:

/s/ Michael J. Garberding

 

Name:

Michael J. Garberding

 

Title:

Senior Vice President and

 

 

Chief Financial Officer

 

[Signature Page to Purchase Agreement]

 

--------------------------------------------------------------------------------

 

The foregoing Purchase Agreement is hereby confirmed and accepted by the Initial
Purchasers as of the date first above written.

 

MERRILL LYNCH, PIERCE, FENNER & SMITH

 

INCORPORATED

 

Acting on behalf of itself and as

 

Representative of the several Initial Purchasers

 

listed in Schedule A hereto

 

 

 

MERRILL LYNCH, PIERCE, FENNER & SMITH

 

INCORPORATED

 

 

 

By:

/s/ Jeffrey Bloomquist

 

Name:

Jeffrey Bloomquist

 

Title:

Managing Director

 

 

--------------------------------------------------------------------------------

 

SCHEDULE A

 

 

 

Aggregate
Principal
Amount of
Securities to be
Purchased

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated

 

$

85,459,184

 

Wells Fargo Securities, LLC

 

$

57,397,959

 

BMO Capital Markets Corp.

 

$

25,510,204

 

Citigroup Global Markets Inc.

 

$

25,510,204

 

RBC Capital Markets, LLC

 

$

25,510,204

 

Capital One Southcoast, Inc.

 

$

7,653,061

 

Comerica Securities, Inc.

 

$

6,377,551

 

U.S. Bancorp Investments, Inc.

 

$

6,377,551

 

ABN AMRO Securities (USA) LLC

 

$

5,102,041

 

Banco Bilbao Vizcaya Argentaria, S.A.

 

$

5,102,041

 

 

 

 

 

Total

 

$

250,000,000

 

 

--------------------------------------------------------------------------------

 

SCHEDULE B-1

 

Guarantors

 

Crosstex Energy Services, L.P.

Crosstex Operating GP, LLC

Crosstex Energy Services GP, LLC

Crosstex LIG Liquids, LLC

Crosstex Processing Services, LLC

Crosstex Pelican, LLC

Crosstex Gulf Coast Marketing Ltd.

Crosstex CCNG Processing Ltd.

Crosstex North Texas Pipeline, L.P.

Crosstex North Texas Gathering, L.P.

Crosstex NGL Marketing, L.P.

Crosstex NGL Pipeline, L.P.

Sabine Pass Plant Facility Joint Venture

Crosstex Permian, LLC

Crosstex Permian II, LLC

 

--------------------------------------------------------------------------------

 

SCHEDULE B-2

 

Jurisdiction of Incorporation or Formation

 

Entity

 

Jurisdiction of Incorporation/Formation

 

 

 

Crosstex Energy, L.P.

 

Delaware

 

 

 

Crosstex Energy Finance Corporation

 

Delaware

 

 

 

Crosstex Energy Services, L.P.

 

Delaware

 

 

 

Crosstex Operating GP, LLC

 

Delaware

 

 

 

Crosstex Energy Services GP, LLC

 

Delaware

 

 

 

Crosstex LIG Liquids, LLC

 

Louisiana

 

 

 

Crosstex Processing Services, LLC

 

Delaware

 

 

 

Crosstex Pelican, LLC

 

Delaware

 

 

 

Crosstex Gulf Coast Marketing Ltd.

 

Texas

 

 

 

Crosstex CCNG Processing Ltd.

 

Texas

 

 

 

Crosstex North Texas Pipeline, L.P.

 

Texas

 

 

 

Crosstex North Texas Gathering, L.P.

 

Texas

 

 

 

Crosstex NGL Marketing, L.P.

 

Texas

 

 

 

Crosstex NGL Pipeline, L.P.

 

Texas

 

 

 

Sabine Pass Plant Facility Joint Venture

 

Texas

 

 

 

Crosstex Permian, LLC

 

Texas

 

 

 

Crosstex Permian II, LLC

 

Texas

 

--------------------------------------------------------------------------------

 

EXHIBIT A-1

 

Form of Opinion of Issuer’s Counsel

 

(a)                                 Each of the Issuers, the Guarantors formed
in the states of Delaware or Texas (the “Delaware-Texas Guarantors”) and the
General Partner (collectively, the “Crosstex Covered Entities”) has been duly
incorporated, formed or organized, as the case may be, and is validly existing
as a corporation, limited partnership or limited liability company, as
applicable, and is in good standing under the laws of its respective
jurisdiction of incorporation, formation or organization with full power and
authority necessary to own or lease its properties and to conduct its business
in all material respects, in each case, as described in the Pricing Disclosure
Package and the Final Offering Memorandum.  Each of the Crosstex Covered
Entities is duly registered or qualified as a foreign corporation, limited
liability company or limited partnership, as the case may be, for the
transaction of business under the laws of each jurisdiction set forth in
Exhibit A to such opinion.

 

(b)                                 The General Partner has all necessary
limited liability company power and authority to act as general partner of the
Company in all material respects as described in the Pricing Disclosure Package
and the Final Offering Memorandum.  The Operating GP has all necessary limited
liability company power and authority to act as general partner of the Operating
Partnership in all material respects as described in the Pricing Disclosure
Package and the Final Offering Memorandum.

 

(c)                                  The General Partner is the sole general
partner of the Company with a 2% general partner interest in the Company; such
general partner interest has been duly authorized and validly issued in
accordance with the Partnership Agreement; and the General Partner owns its
general partner interest free and clear of all liens, encumbrances (except
restrictions on transferability contained in Section 4.6 of the Partnership
Agreement, as described in the Pricing Disclosure Package and the Final Offering
Memorandum, those created by or arising under the laws of the State of Delaware
or those imposed by the Securities Act and the securities or “Blue Sky” laws of
certain jurisdictions), security interests, equities, charges or claims (i) in
respect of which a financing statement under the Uniform Commercial Code of the
State of Delaware naming the General Partner as a debtor is on file in the
office of the Secretary of State of the State of Delaware or (ii) otherwise
known to such counsel, without independent investigation, other than those
created by or arising under the Delaware LP Act.

 

(d)                                 All of the issued and outstanding equity
interests of each Delaware-Texas Guarantor and FinCo (a) have been duly
authorized and validly issued (in accordance with the applicable bylaws, limited
partnership agreement or limited liability agreement of such Delaware-Texas
Guarantor or FinCo), are fully paid (to the extent required under the applicable
limited partnership agreement or limited liability agreement of such
Delaware-Texas Guarantor) and nonassessable (except as such nonassessability may
be affected by Section 17-303, 17-607 and 17-804 of the Delaware LP Act,
Sections 18-607 and 18-804 of the Delaware LLC Act or Sections 153.102, 153.202
and 153.210 of the TBOC, as applicable) and (b) are owned, directly or
indirectly, by the Company, free and clear of all liens, encumbrances (except
(i) those created by or arising under the bylaws, limited liability company or
limited partnership laws of the jurisdiction of formation of the respective
Delaware-Texas Guarantor or FinCo, as the case may

 

--------------------------------------------------------------------------------

 

be, (ii) restrictions on transferability as described in the Pricing Disclosure
Package and the Final Offering Memorandum, (iii) those arising under the Credit
Agreement, (iv) those imposed by the Securities Act and the securities or “Blue
Sky” laws of certain jurisdictions or (v) as otherwise contained in the
applicable Organizational Document of each Delaware-Texas Guarantor or FinCo),
security interests, equities, charges or claims, except for such liens,
encumbrances, security interests, equities, charges and claims (i) in respect of
which a financing statement under the Uniform Commercial Code of the States of
Delaware or Texas naming the Company as debtor or, in the case of equity
interests of a Guarantor of FinCo owned directly by one or more other Guarantor
of FinCo, naming any such other Guarantor or FinCo as debtor(s), is on file as
of a recent date in the office of the Secretary of State of the States of
Delaware or Texas or (B) otherwise known to such counsel, without independent
investigation.

 

(e)                                  The Operative Agreements of the Crosstex
Covered Entities have been duly authorized, executed and delivered by the
Crosstex Covered Entities and CEI, as applicable, and are valid and legally
binding agreements of the Crosstex Covered Entities and CEI, as applicable,
enforceable against the Crosstex Covered Entities and CEI, as applicable, in
accordance with their terms; provided, that with respect to each such Operative
Agreements of the Crosstex Covered Entities, the enforceability thereof may be
limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors and by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) and
(ii) public policy, applicable law relating to fiduciary duties and
indemnification and contribution and an implied covenant of good faith and fair
dealing.

 

(f)                                   The Purchase Agreement has been duly and
validly authorized, executed and delivered by each of the Issuers and the
Delaware-Texas Guarantors (collectively, the “Delaware-Texas Crosstex
Entities”).

 

(g)                                  The Registration Rights Agreement has been
duly authorized, executed and delivered by each of the Delaware-Texas Crosstex
Entities, and (assuming the due authorization, execution and delivery thereof by
Crosstex LIG Liquids, LLC (the “Louisiana Guarantor”) and the Initial
Purchasers) is a valid and legally binding agreement of each of the Issuers and
Guarantors, enforceable against each of them in accordance with its terms;
provided that the enforceability thereof is subject to (i) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting the rights and remedies of creditors’
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and
(ii) public policy, applicable law relating to fiduciary duties and
indemnification and contribution and an implied covenant of good faith and fair
dealing.

 

(h)                                 The Indenture has been duly authorized,
executed and delivered by each of the Delaware-Texas Crosstex Entities, and
(assuming the due authorization, execution and delivery thereof by the Louisiana
Guarantor and the Trustee) is a valid and legally binding agreement of each of
the Issuers and Guarantors, enforceable against each of them in accordance with
its terms; provided that the enforceability thereof is subject to (i) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws relating to or affecting the rights and remedies of creditors’
rights generally and by general principles of equity (regardless of

 

--------------------------------------------------------------------------------

 

whether such enforceability is considered in a proceeding in equity or at law)
and (ii) public policy, applicable law relating to fiduciary duties and
indemnification and contribution and an implied covenant of good faith and fair
dealing.

 

(i)                                     The Notes and the Guarantees have been
duly authorized by each of the Issuers and the Delaware-Texas Guarantors,
respectively, the Notes are substantially in the form contemplated by the
Indenture and have been validly executed by each of the Issuers, and, when duly
authenticated by the Trustee in the manner provided for in the Indenture and
delivered to and paid for by the Initial Purchasers under the Purchase Agreement
and assuming the due authorization of the Guarantees by the Louisiana Guarantor
and assuming the due authorization, execution and delivery of the Indenture by
the Louisiana Guarantor, will constitute valid and binding obligations of the
Issuers and the Guarantors, respectively, enforceable against them in accordance
with their respective terms, except as enforcement thereof may be limited by
(i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting the rights and remedies of
creditors’ rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and (ii) public policy, applicable law relating to fiduciary duties and
indemnification and contribution and an implied covenant of good faith and fair
dealing.

 

(j)                                    The Exchange Securities have been duly
authorized by the Issuers and the Delaware-Texas Guarantors, respectively, and,
when the Exchange Securities have been validly issued and duly authenticated in
accordance with the terms of the Indenture, the Registration Rights Agreement
and the Exchange Offer and assuming the due authorization of the guarantees
related to the Exchange Securities by the Louisiana Guarantor, the Exchange
Securities will have been validly executed and will constitute valid and binding
obligations of the Issuers and the Guarantors, respectively, enforceable against
them in accordance with their respective terms, except as enforcement thereof
may be limited by (i) applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws relating to or affecting the rights
and remedies of creditors’ rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (ii) public policy, applicable law relating to fiduciary
duties and indemnification and contribution and an implied covenant of good
faith and fair dealing.

 

(k)                                 The statements set forth or incorporated by
reference in each of the Preliminary Offering Memorandum and the Final Offering
Memorandum (i) under the captions “The Offering” and “Description of Notes,”
insofar as they purport to constitute summaries of the terms of the Securities,
are accurate in all material respects, and (ii) under the caption “United States
Federal Income and Estate Tax Considerations,” insofar as they purport to
constitute summaries of statutes, legal, governmental and regulatory
proceedings, are accurate in all material respects.

 

(l)                                     No consent, approval, authorization or
order of or filing or registration with, any court or governmental agency or
body having jurisdiction over any of the Delaware-Texas Crosstex Entities or any
of their respective properties is required in connection with the offering,
issuance and sale of the Securities by the Delaware-Texas Crosstex Entities in
the manner contemplated by the Purchase Agreement or in the Final Offering
Memorandum, the execution, delivery and performance of this Agreement, the
Indenture and the Registration Rights

 

--------------------------------------------------------------------------------

 

Agreement by the Delaware-Texas Crosstex Entities and the consummation by the
Delaware-Texas Crosstex Entities of the transactions contemplated hereby and
thereby, except (i) with respect to the purchase and resale of the Securities by
the Initial Purchasers, under applicable states securities or “Blue Sky” laws,
as to which such counsel need express no opinion, (ii) with respect to the
Exchange Securities, as may be required under the Securities Act and applicable
state securities or “Blue Sky” laws as contemplated by the Registration Rights
Agreement, as to which such counsel need express no opinion, (iii) with respect
to the Trustee and the Indenture in respect of the Exchange Securities, as may
be required under the Trust Indenture Act, as to which such counsel need express
no opinion, (iv) for such consents that have been obtained or made, (v) for such
consents that, if not obtained, would not, individually or in the aggregate,
have a Material Adverse Change or (vi) as disclosed in the Pricing Disclosure
Package and the Final Offering Memorandum.

 

(m)                             None of the offering, issuance and sale of the
Securities by the Issuers and the Delaware-Texas Guarantors, respectively, the
execution, delivery and performance of the Securities, the Exchange Securities,
the Indenture, the Registration Rights Agreement or the Purchase Agreement by
the Delaware-Texas Crosstex Entities or the consummation of the transactions
contemplated hereby or thereby (i) constitutes or will constitute a violation of
the agreement of limited partnership, limited liability company agreement or
other organizational documents of any of the Delaware-Texas Crosstex Entities,
(ii) constitutes or will constitute a breach or violation of or a default (or an
event which, with notice or lapse of time or both, would constitute such a
default) under any agreement filed or incorporated by reference as an exhibit to
the Company’s annual report on Form 10-K for the year ended December 31, 2011,
quarterly report on Form 10-Q for the quarter ended March 31, 2012 or any
applicable current report on Form 8-K filed with the Commission since the date
of filing of the most recent Form 10-K (the “Filed Agreements”) (other than
liens created under the Credit Agreement), (iii) violates or will violate the
Delaware LP Act, the Delaware LLC Act, the DGCL, the laws of the State of Texas
or the federal laws of the United States of America, provided that such counsel
need express no opinion in this paragraph (p) as to federal or state securities
or anti-fraud laws or (iv) to our knowledge, results or will result in the
creation or imposition of any lien, charge or encumbrance on any property or
assets of the Delaware-Texas Crosstex Entities pursuant to the Filed Agreements
(other than liens created under the Credit Agreement), which breaches,
violations or defaults, in the case of clauses (ii), (iii) or (iv), would,
individually or in the aggregate, have a Material Adverse Change.

 

(n)                                 None of the Delaware-Texas Crosstex Entities
is, nor will they be following the release of proceeds from the Escrow Account
in accordance with the terms of the Escrow Agreement, an “investment company” as
such term is defined in the Investment Company Act of 1940, as amended.

 

(o)                                 Assuming the accuracy of the representations
and warranties and compliance with the agreements of the Crosstex Entities and
the Initial Purchasers contained in the Purchase Agreement and assuming the
Securities are issued and sold under the circumstances contemplated by the
Purchase Agreement and the Final Offering Memorandum, no registration of the
Securities under the Securities Act, and no qualification of an indenture under
the Trust Indenture Act, are required for the offer and sale by the Initial
Purchasers of the Securities in the manner contemplated by this Agreement.

 

--------------------------------------------------------------------------------

 

In addition, such counsel shall state that they have reviewed the Pricing
Disclosure Package and the Final Offering Memorandum and have participated in
conferences with officers and other representatives of the Issuers,
representatives of the independent registered public accounting firm of the
Company and representatives of the Initial Purchasers and their counsel, at
which the contents of the Pricing Disclosure Package and the Final Offering
Memorandum and related matters were discussed. The purpose of such counsel’s
professional engagement was not to establish or confirm factual matters set
forth in the Pricing Disclosure Package and the Final Offering Memorandum, and
such counsel has not undertaken to verify independently any of the factual
matters in such documents. Moreover, many of the determinations required to be
made in the preparation of the Pricing Disclosure Package and the Final Offering
Memorandum involve matters of a non-legal nature. Accordingly, such counsel
shall not pass upon, and shall not assume responsibility for, the accuracy,
completeness or fairness of the statements contained in, the Pricing Disclosure
Package and the Final Offering Memorandum (except as and to the extent stated in
paragraph (k) above). Subject to the foregoing, and on the basis of the
information such counsel gained in the course of performing services referred to
above, such counsel shall advise the Initial Purchasers that no facts have come
to such counsel’s attention that lead such counsel to believe that:

 

(a)                                 the Pricing Disclosure Package, as of the
Time of Sale, included an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; or

 

(b)                                 the Final Offering Memorandum, as of its
date and as of the Closing Date, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

 

it being understood that in each case such counsel has not been asked to, and
need not, express any belief with respect to (i) the financial statements and
schedules or other financial or accounting information included or incorporated
by reference therein or omitted therefrom or (ii) the representations and
warranties and other statements of fact contained in the exhibits to any
document incorporated by reference therein.

 

In rendering such opinion, such counsel may (i) rely in respect of matters of
fact on certificates of officers and employees of the Delaware-Texas Crosstex
Entities and upon information obtained from public officials, (ii) assume that
all documents submitted to them as originals are authentic, that all copies
submitted to them conform to the originals thereof and that the signatures on
all documents examined by them are genuine, (iii) state that their opinion is
limited to matters of federal law, the Delaware LLC Act, the Delaware LP Act,
the DGCL, the laws of the State of New York and the laws of the State of Texas,
(iv) with respect to the opinions expressed in paragraph (a) above as to the due
qualification or registration as a foreign corporation, limited liability
company or limited partnership, as the case may be, of each of the Issuers and
the Delaware-Texas Guarantors, state that such opinions are based upon
certificates of foreign qualification or registration provided by the Secretary
of State of the states listed on an exhibit to such opinion, (v) state that they
express no opinion with respect to state or local taxes or tax statutes to which
any of the partners of the Company or any of the Crosstex Entities may

 

--------------------------------------------------------------------------------

 

be subject and (vi) state that with respect to the opinions expressed in
paragraph (l), such counsel does not intend to express any opinions as to the
matters addressed in paragraph (o).

 

--------------------------------------------------------------------------------

 

EXHIBIT A-2

 

Form of Opinion of Issuer’s Local Louisiana Counsel

 

(a)                                 Crosstex LIG Liquids, LLC (the “Louisiana
Guarantor”) has been duly formed and is validly existing as a limited liability
company in good standing under the laws of the State of Louisiana with all
limited liability company power and authority necessary to own or lease its
properties and to conduct its business, in each case in all material respects as
described in the Pricing Disclosure Package and the Final Offering Memorandum.

 

(b)                                 Crosstex Energy Services, LP (the “Operating
Company”) directly or indirectly owns of record all of the issued and
outstanding membership interests in the Louisiana Guarantor; such outstanding
membership interests have been duly authorized and validly issued in accordance
with Louisiana law and the Louisiana Gurantor’s limited liability company
agreement (the “LLC Agreement”), and are fully paid (to the extent required
under the LLC Agreement) and nonassessable, except as may be provided in the LLC
Agreement.

 

(c)                                  Each of the Purchase Agreement, the
Registration Rights Agreement and the Indenture has been duly and validly
authorized, executed and delivered by the Louisiana Guarantor.

 

(d)                                 The Guarantee has been duly authorized by
the Louisiana Guarantor.

 

(e)                                  The guarantees relating to the Exchange
Securities have been duly authorized by the Louisiana Guarantor.

 

(f)                                   No consent, approval, authorization or
order of or filing or registration with, any court or governmental agency or
body of the State of Louisiana is required in connection with the offering,
issuance and sale of the Guarantee by the Louisiana Guarantor in the manner
contemplated by the Purchase Agreement or in the Final Offering Memorandum, the
execution, delivery and performance of this Agreement, the Indenture and the
Registration Rights Agreement by the Louisiana Guarantor and the consummation by
the Louisiana Guarantor of the transactions contemplated hereby and thereby,
except (i) with respect to the purchase and resale of the Securities by the
Initial Purchasers or with respect to the Exchange Securities, under applicable
states securities or “Blue Sky” laws, as to which such counsel expresses no
opinion, (ii) for such consents that have been obtained or made or (iii) for
such consents that, if not obtained, would not, individually or in the
aggregate, have a Material Adverse Change.

 

(g)                                  None of the offering, issuance and sale of
the Guarantee by the Louisiana Guarantor, the execution, delivery and
performance of the Guarantee, the guarantee related to the Exchange Securities,
the Indenture, the Registration Rights Agreement or the Purchase Agreement by
the Louisiana Guarantors or the consummation of the transactions contemplated
hereby or thereby (i) constitutes or will constitute a violation of the limited
liability company agreement of the Louisiana Guarantor or (ii) violates or will
violate the Louisiana Limited Liability Company Law, provided that such counsel
expresses no opinion as to federal or state securities or anti-fraud laws, which
breaches, violations or defaults, in the case of clause (ii), would,
individually or in the aggregate, have a Material Adverse Change

 

--------------------------------------------------------------------------------

 

In rendering such opinion, such counsel has (i) relied in respect of matters of
fact on certificates of officers and employees of the Louisiana Guarantor and
upon information obtained from public officials, (ii) assumed that all documents
submitted to them as originals are authentic, that all copies submitted to them
conform to the originals thereof, and that the signatures on all documents
examined by them are genuine, (iii) stated that their opinion is limited to
matters of the laws of the State of Louisiana, (iv) with respect to the opinions
expressed in paragraph (a) above as to the due qualification or registration as
a foreign limited liability company of the Louisiana Guarantor, state that such
opinions are based upon certificates of foreign qualification or registration
provided by the Secretary of State of the states listed on an exhibit to such
opinion and (v) state that they express no opinion with respect to federal,
state or local taxes or tax statutes to which the Louisiana Guarantor or any
members of the Louisiana Guarantor may be subject.

 

--------------------------------------------------------------------------------

 

ANNEX I

 

Resale Pursuant to Regulation S or Rule 144A.  Each Initial Purchaser
understands that:

 

Such Initial Purchaser agrees that it has not offered or sold and will not offer
or sell the Securities in the United States or to, or for the benefit or account
of, a U.S. Person (other than a distributor), in each case, as defined in
Rule 902 of Regulation S (i) as part of its distribution at any time and
(ii) otherwise until 40 days after the later of the commencement of the offering
of the Securities pursuant hereto and the Closing Date, other than in accordance
with Regulation S or another exemption from the registration requirements of the
Securities Act. Such Initial Purchaser agrees that, during such 40-day
restricted period, it will not cause any advertisement with respect to the
Securities (including any “tombstone” advertisement) to be published in any
newspaper or periodical or posted in any public place and will not issue any
circular relating to the Securities, except such advertisements as permitted by
and include the statements required by Regulation S.

 

Such Initial Purchaser agrees that, at or prior to confirmation of a sale of
Securities by it to any distributor, dealer or person receiving a selling
concession, fee or other remuneration during the 40-day restricted period
referred to in Rule 903 of Regulation 5, it will send to such distributor,
dealer or person receiving a selling concession, fee or other remuneration a
confirmation or notice to substantially the following effect:

 

“The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of your distribution at any time or (ii) otherwise
until 40 days after the later of the date the Securities were first offered to
persons other than distributors in reliance on Regulation S and the Closing
Date, except in either case in accordance with Regulation S under the Securities
Act (or in accordance with Rule 144A under the Securities Act or to accredited
investors in transactions that are exempt from the registration requirements of
the Securities Act), and in connection with any subsequent sale by you of the
Securities covered hereby in reliance on Regulation S under the Securities Act
during the period referred to above to any distributor, dealer or person
receiving a selling concession, fee or other remuneration, you must deliver a
notice to substantially the foregoing effect. Terms used above have the meanings
assigned to them in Regulation S under the Securities Act.”

 

Such Initial Purchaser agrees that the Securities offered and sold in reliance
on Regulation S will be represented upon issuance by a global security that may
not be exchanged for definitive securities until the expiration of the 40-day
restricted period referred to in Rule 903 of Regulation S and only upon
certification of beneficial ownership of such Securities by non-U.S. persons or
U.S. persons who purchased such Securities in transactions that were exempt from
the registration requirements of the Securities Act.

 

--------------------------------------------------------------------------------