Exhibit 10.1
EXECUTION VERSION
SERIES A CONVERTIBLE PREFERRED UNIT
PURCHASE AGREEMENT
among
CROSSTEX ENERGY, L.P.
and
THE PURCHASER PARTY HERETO

 

 

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TABLE OF CONTENTS

              Page  
 
       
ARTICLE I DEFINITIONS
    1  
 
       
Section 1.01 Definitions
    1  
Section 1.02 Accounting Procedures and Interpretation
    6  
 
       
ARTICLE II AGREEMENT TO SELL AND PURCHASE
    6  
 
       
Section 2.01 Authorization of Sale of Series A Preferred Units
    6  
Section 2.02 Sale and Purchase
    6  
Section 2.03 Closing
    6  
Section 2.04 Conditions of the Parties’ Obligations at the Closing
    6  
Section 2.05 Further Assurances
    9  
 
       
ARTICLE III REPRESENTATIONS AND WARRANTIES AND COVENANTS RELATED TO CROSSTEX
    10  
 
       
Section 3.01 Existence
    10  
Section 3.02 Capitalization and Valid Issuance of Purchased Units
    11  
Section 3.03 Crosstex SEC Documents; Crosstex Financial Statements
    13  
Section 3.04 No Material Adverse Change
    14  
Section 3.05 Litigation
    14  
Section 3.06 No Conflicts; Compliance with Laws
    15  
Section 3.07 Authority; Enforceability
    15  
Section 3.08 Approvals
    16  
Section 3.09 MLP Status
    16  
Section 3.10 Investment Company Status
    16  
Section 3.11 Certain Fees
    16  
Section 3.12 Insurance
    17  
Section 3.13 Books and Records; Sarbanes-Oxley Compliance
    17  
Section 3.14 Listing and Maintenance Requirements
    17  
Section 3.15 Confidential Information
    18  
Section 3.16 Taxes
    18  
Section 3.17 Compliance with Laws; Permits
    18  
Section 3.18 Title to Property
    19  
Section 3.19 Rights-of-Way
    20  
Section 3.20 No Labor Dispute
    20  
Section 3.21 Material Agreements
    20  
Section 3.22 Form S-3 Eligibility
    20  
Section 3.23 Pre-Closing Covenants of the Crosstex Entities
    21  
 
       
ARTICLE IV REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PURCHASER
    21  
 
       
Section 4.01 Existence
    21  
Section 4.02 Authorization, Enforceability
    21  
Section 4.03 No Breach
    21  

 

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              Page  
 
       
Section 4.04 Certain Fees
    21  
Section 4.05 Unregistered Securities
    22  
 
       
ARTICLE V INDEMNIFICATION, COSTS AND EXPENSES
    23  
 
       
Section 5.01 Indemnification by Crosstex
    23  
Section 5.02 Indemnification by the Purchaser
    23  
Section 5.03 Indemnification Procedure
    24  
Section 5.04 Tax Matters
    25  
 
       
ARTICLE VI TERMINATION
    25  
 
       
Section 6.01 Termination
    25  
Section 6.02 Certain Effects of Termination
    26  
 
       
ARTICLE VII MISCELLANEOUS
    26  
 
       
Section 7.01 Expenses
    26  
Section 7.02 Interpretation
    26  
Section 7.03 Survival of Provisions
    27  
Section 7.04 No Waiver; Modifications in Writing
    27  
Section 7.05 Binding Effect; Assignment
    28  
Section 7.06 Non-Disclosure
    29  
Section 7.07 Communications
    29  
Section 7.08 Removal of Legend
    30  
Section 7.09 Entire Agreement
    30  
Section 7.10 Governing Law; Submission to Jurisdiction
    31  
Section 7.11 Waiver of Jury Trial
    31  
Section 7.12 Execution in Counterparts
    31  

             
EXHIBIT A
 —  Form of Board Representation Agreement        
EXHIBIT B
 —  Form of Registration Rights Agreement        
EXHIBIT C
 —  Form of Opinion of Baker Botts L.L.P.        
EXHIBIT D
 —  Form of Amendment No. 3 to Sixth Amended and Restated Agreement of Limited
Partnership of Crosstex Energy, L.P.        
EXHIBIT E
 —  Form of General Partner Waiver        

 

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SERIES A CONVERTIBLE PREFERRED UNIT PURCHASE AGREEMENT
This SERIES A CONVERTIBLE PREFERRED UNIT PURCHASE AGREEMENT, dated as of
January 6, 2010 (this “Agreement”), is entered into by and among CROSSTEX
ENERGY, L.P., a Delaware limited partnership (“Crosstex”), and the purchaser set
forth in Schedule A hereto (the “Purchaser”).
WHEREAS, Crosstex desires to sell to the Purchaser, and the Purchaser desires to
purchase from Crosstex, certain of Crosstex’s Series A Preferred Units (as
defined below), in accordance with the provisions of this Agreement; and
WHEREAS, Crosstex has agreed to provide the Purchaser with certain registration
rights with respect to the Common Units underlying the Series A Preferred Units
acquired pursuant hereto.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the following terms have
the meanings indicated:
“Affiliate” means, with respect to a specified Person, any other Person,
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
“control” (including, with correlative meanings, “controlling,” “controlled by”
and “under common control with”) means the power to direct or cause the
direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.
“Agreement” has the meaning set forth in the introductory paragraph of this
Agreement.
“Basic Documents” means, collectively, this Agreement, the Registration Rights
Agreement, the Partnership Agreement, the Board Representation Agreement, the
Non-Disclosure Agreement and any and all other agreements or instruments
executed and delivered to the Purchaser by the Crosstex Entities hereunder or
thereunder.
“Board Representation Agreement” means the Board Representation Agreement, to be
entered into at the Closing, between Crosstex, the General Partner, Crosstex GP
LLC, Crosstex Energy, Inc. and the Purchaser in substantially the form attached
hereto as Exhibit A.
“Business Day” means any day other than a Saturday, Sunday, any federal legal
holiday or day on which banking institutions in the State of New York or State
of Texas are authorized or required by Law or other governmental action to
close.
“Closing” shall have the meaning specified in Section 2.03.

 

 

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“Closing Date” shall have the meaning specified in Section 2.03.
“Code” shall have the meaning specified in Section 3.09.
“Commission” means the United States Securities and Exchange Commission.
“Common Units” means common units representing limited partner interests in
Crosstex.
“Contract” means any contract, agreement, indenture, note, bond, mortgage, deed
of trust, loan, instrument, lease, license, commitment or other arrangement,
understanding, undertaking, commitment or obligation, whether written or oral.
“Conversion Units” means the Common Units issuable upon conversion of the
Purchased Units.
“Crosstex” has the meaning set forth in the introductory paragraph of this
Agreement.
“Crosstex Credit Facility” means the Fourth Amended and Restated Credit
Agreement, dated November 1, 2005, as amended as of the date hereof and from
time to time, by and among Crosstex, Crosstex Energy Services, L.P. and the
lenders named therein, as amended as of the date hereof.
“Crosstex Entities” means, collectively, Crosstex, the General Partner, Crosstex
GP LLC and their respective Subsidiaries.
“Crosstex Financial Statements” shall have the meaning specified in
Section 3.03(a).
“Crosstex GP LLC” means Crosstex Energy GP, LLC, a Delaware limited liability
company and the general partner of the General Partner.
“Crosstex Material Adverse Effect” means any material and adverse effect on
(a) the assets, liabilities, financial condition, business, results of
operations, affairs or prospects of the Crosstex Entities taken as a whole;
(b) the ability the Crosstex Entities taken as a whole to carry on their
business as such business is conducted as of the date hereof or to meet their
obligations under the Basic Documents on a timely basis; or (c) the ability of
Crosstex or any of its Subsidiaries to consummate the transactions under any
Basic Document to which it is a party or the ability of any of the General
Partner, Crosstex GP LLC or any of their respective Subsidiaries to consummate
the transactions under any Basic Document to which it is a party; provided,
however, that a Crosstex Material Adverse Effect shall not include any material
and adverse effect on the foregoing to the extent such material and adverse
effect results from, arises out of, or is attributable to (x) a general
deterioration in the economy or changes in the general state of the industries
in which the Crosstex Entities operate, except to the extent that the
Partnership Entities, taken as a whole, or the GP Entities, taken as a whole,
are adversely affected in a disproportionate manner as compared to other
industry participants, (y) the outbreak or escalation of hostilities involving
the United States, the declaration by the United States of a national emergency
or war or the occurrence of any other calamity or crisis affecting the national
economy as a whole, including acts of terrorism, or (z) any change in applicable
Law, or the interpretation thereof.

 

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“Crosstex Permits” shall have the meaning specified in Section 3.17(b).
“Crosstex Related Parties” shall have the meaning specified in Section 5.02.
“Crosstex SEC Documents” shall have the meaning specified in Section 3.03(a).
“Delaware LLC Act” shall have the meaning specified in Section 3.02(d).
“Delaware LP Act” shall have the meaning specified in Section 3.02(a).
“Environmental Law” means any Law applicable to the Partnership Entities or the
operation of their business in any way relating to the protection of human
health and safety, the environment, natural resources or the safety of owning,
operating or managing liquid pipelines or other facilities used for processing,
storing or transporting natural gas or its by-products, including the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. §
1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et
seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42
U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136
et seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), the
Pipeline Inspection, Protection, Enforcement and Safety Act (49 U.S.C.
Chapter 601), the Hazardous Liquid Pipeline Safety Act (49 U.S.C. Chapter 601),
the Natural Gas Pipeline Safety Act (49 U.S.C. Chapter 601), the Pipeline Safety
Improvement Act (49 U.S.C. Chapter 601), the Natural Gas Policy Act (15 U.S.C. §
3301 et seq.) and the Natural Gas Act (15 U.S.C. 717 et seq.).
“Environmental Permits” means all Permits required under any Environmental Laws
for the operation of the business of the Partnership Entities.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.
“GAAP” means generally accepted accounting principles in the United States of
America as of the date hereof; provided that for the Crosstex Financial
Statements prepared as of a certain date, GAAP referenced therein shall be GAAP
as of the date of such Crosstex Financial Statements.
“General Partner” means Crosstex Energy GP, L.P., a Delaware limited partnership
and the general partner of Crosstex.
“General Partner Partnership Agreement” means the Agreement of Limited
Partnership of the General Partner, dated as of July 12, 2002.
“Governmental Authority” means, with respect to a particular Person, any
country, state, county, city and political subdivision in which such Person or
such Person’s Property is located or which exercises valid jurisdiction over any
such Person or such Person’s Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them and any monetary
authority which exercises valid jurisdiction over any such Person or such
Person’s

 

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Property. Unless otherwise specified, all references to Governmental Authority
herein with respect to Crosstex means a Governmental Authority having
jurisdiction over Crosstex, its Subsidiaries or any of their respective
Properties.
“GP Entities” means the General Partner and Crosstex GP LLC.
“GP LLC Agreement” means the Amended and Restated Limited Liability Company
Agreement of Crosstex GP LLC, dated as of December 17, 2002.
“Hazardous Substances” 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.
“Incentive Distribution Rights” shall have the meaning specified in
Section 3.02(a).
“Indemnified Party” shall have the meaning specified in Section 5.03(b).
“Indemnifying Party” shall have the meaning specified in Section 5.03(b).
“Law” means any federal, state, local or foreign order, writ, injunction,
judgment, settlement, award, decree, statute, law (including common law), rule
or regulation.
“Lien” means any mortgage, claim, encumbrance, pledge, lien (statutory or
otherwise), security agreement, conditional sale or trust receipt or a lease,
consignment or bailment, preference or priority, assessment, deed of trust,
charge, easement, servitude or other encumbrance upon or with respect to any
property of any kind.
“LTIP” shall have the meaning specified in Section 3.02(b).
“Master Shelf Agreement” means the Amended and Restated Note Purchase Agreement,
dated as of July 25, 2006, as amended as of the date hereof and from time to
time by and among Crosstex, Prudential Investment Management, Inc. and certain
other parties together with the notes issued thereunder.
“Material Agreements” shall have the meaning specified in Section 3.21.
“NASDAQ” means the NASDAQ Global Select Market.
“Non-Disclosure Agreement” means the Confidentiality Agreement, dated July 23,
2009 among Crosstex, Blackstone Management Partners L.L.C. and GSO Capital
Partners LP.
“Operative Agreements” shall have the meaning specified in Section 3.01(f).
“Outside Date” shall have the meaning specified in Section 6.01(b).

 

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“Partnership Agreement” means the Sixth Amended and Restated Agreement of
Limited Partnership of Crosstex, dated as of March 23, 2007, as amended through
the date hereof.
“Partnership Entities” means Crosstex and its Subsidiaries.
“Permits” means any approvals, authorizations, consents, licenses, permits,
variances, waivers, grants, franchises, concessions, exemptions, orders,
registrations or certificates of a Governmental Authority.
“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization, government or any agency, instrumentality or political subdivision
thereof or any other form of entity.
“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible (including intellectual property
rights).
“Purchase Price” means $124,999,997.
“Purchased Units” means, with respect to the Purchaser, the number of Series A
Preferred Units as set forth opposite the Purchaser’s name on Schedule A hereto.
“Purchaser Related Parties” has the meaning specified in Section 5.01.
“Purchaser” has the meaning set forth in the introductory paragraph of this
Agreement.
“Registration Rights Agreement” means the Registration Rights Agreement, to be
entered into at the Closing, between Crosstex and the Purchaser in substantially
the form attached hereto as Exhibit B.
“Representatives” means, with respect to a specified Person, the officers,
directors, managers, employees, agents, counsel, accountants, investment bankers
and other representatives of such Person.
“Rights-of-Way” has the meaning specified in Section 3.19.
“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the Commission promulgated thereunder.
“Series A Preferred Units” means Crosstex’s Series A Convertible Preferred
Units.
“Subsidiary” means, as to any Person, any corporation or other entity of which:
(i) such Person or a Subsidiary of such Person is a general partner or manager;
(ii) at least a majority of the outstanding equity interest having by the terms
thereof ordinary voting power to elect a majority of the board of directors or
similar governing body of such corporation or other entity (irrespective of
whether or not at the time any equity interest of any other class or classes of
such corporation or other entity shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly owned
or controlled by such Person or one

 

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or more of its Subsidiaries; or (iii) any corporation or other entity as to
which such Person consolidates for accounting purposes.
“Tax Return” shall have the meaning specified in Section 3.16(b).
“Taxes” shall have the meaning specified in Section 3.16(b).
“Third Party Claim” shall have the meaning specified in Section 5.03(b).
Section 1.02 Accounting Procedures and Interpretation. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all Crosstex Financial Statements and certificates and reports as to financial
matters required to be furnished to the Purchaser hereunder shall be prepared,
in accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q promulgated by the Commission)
and in compliance as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto.
ARTICLE II
AGREEMENT TO SELL AND PURCHASE
Section 2.01 Authorization of Sale of Series A Preferred Units. Crosstex has
authorized the issuance and sale to the Purchaser of the Purchased Units on the
terms and subject to the conditions set forth in this Agreement.
Section 2.02 Sale and Purchase. Subject to the terms and conditions hereof,
Crosstex hereby agrees to issue and sell to the Purchaser, free and clear of any
and all Liens, and the Purchaser hereby agrees to purchase from Crosstex, the
number of Purchased Units as set forth on Schedule A, and the Purchaser agrees
to pay Crosstex the Purchase Price.
Section 2.03 Closing. Subject to the terms and conditions hereof, the
consummation of the purchase and sale of the Purchased Units hereunder (the
“Closing”) shall take place at a time and on a date to be specified by the
parties, which shall be no later than the second Business Day after the
satisfaction or waiver of the latest to occur of the conditions set forth in
Section 2.04 (other than such conditions which by their nature cannot be
satisfied until the Closing Date or are to be delivered at Closing, which shall
be required to be so satisfied, waived or delivered on the Closing Date) (the
“Closing Date”) at the offices of Andrews Kurth LLP, 600 Travis, Suite 4200,
Houston, Texas 77002. The parties agree that the Closing may occur via delivery
of facsimiles of this Agreement and cross-receipts; provided, that originals of
such documents are sent via overnight delivery to be received by the other party
(or designee of such other party) on the first Business Day immediately
following the Closing Date.
Section 2.04 Conditions of the Parties’ Obligations at the Closing.
(a) Mutual Conditions. The respective obligations of each party to consummate
the purchase and issuance and sale of the Purchased Units shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions (any or all of which may be waived

 

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by a particular party on behalf of itself in writing, in whole or in part, to
the extent permitted by applicable Law):
(i) No statute, rule, order, decree or regulation shall have been enacted or
promulgated, and no action shall have been taken, by any Governmental Authority
which temporarily, preliminarily or permanently restrains, precludes, enjoins or
otherwise prohibits the consummation of the transactions contemplated hereby or
makes the transactions contemplated hereby illegal; and
(ii) There shall not be pending any suit, action or proceeding by any
Governmental Authority seeking to restrain, preclude, enjoin or prohibit the
transactions contemplated by this Agreement.
(b) Conditions of the Purchaser’s Obligations at the Closing. The obligation of
the Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction (or waiver by the Purchaser) on or prior to the
Closing of the following conditions:
(i) All of the representations and warranties of Crosstex contained in this
Agreement shall be true and correct in all material respects on and as of the
date hereof and as of the Closing (other than the representations and warranties
as of a specified date, which shall be true and correct in all material respects
on and as of such date) as if such representations and warranties were made on
and as of that date, except that those representations and warranties that are
qualified by materiality, Crosstex Material Adverse Effect or similar phrase
shall be true and correct in all respects as written on and as of the Closing.
(ii) Each of the Crosstex Entities shall have performed in all material respects
all of the covenants required to be performed by it hereunder prior to the
Closing.
(iii) From the date hereof until the Closing Date, no material changes,
developments or events shall have occurred with respect to the assets,
liabilities, financial condition, business, results of operations, affairs or
prospects of the Crosstex Entities that would cause a Crosstex Material Adverse
Effect.
(iv) The Purchaser shall have received from Baker Botts L.L.P., counsel for the
Crosstex Entities, an opinion in substantially the form attached hereto as
Exhibit C hereto, which shall be addressed to the Purchaser and dated the date
of the Closing.
(v) The General Partner shall have entered into an Amendment No. 3 to the
Partnership Agreement in the form attached hereto as Exhibit D, and the
Partnership Agreement, as amended, shall be in full force and effect.
(vi) The delivery by Crosstex of all of the following documents:
(A) a certificate or certificates representing the Purchased Units and meeting
the requirements of the Partnership Agreement, free and clear of any Liens,
other than the transfer restrictions under applicable federal and state
securities laws and other than those arising under the Partnership Agreement or
the Delaware LP Act, registered in such name(s) as the Purchaser has designated;

 

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(B) an Officer’s Certificate, signed by (x) the Chief Executive Officer and
(y) the Chief Financial Officer of Crosstex GP LLC, in their respective
capacities as such, dated as of the date of the Closing, stating that the
conditions in Sections 2.04(a)(ii), 2.04(b)(i), 2.04(b)(ii), 2.04(b)(iii) and
2.04(b)(vii) have been fully satisfied;
(C) a certificate of the Secretary or Assistant Secretary of Crosstex GP LLC, on
behalf of Crosstex, certifying as to and attaching (1) the Partnership
Agreement, as amended, (2) board resolutions authorizing the execution and
delivery of the Basic Documents and the consummation of the transactions
contemplated thereby, including the issuance of the Purchased Units, and (3) the
incumbency of the officers authorized to execute the Basic Documents on behalf
of Crosstex, setting forth the name and title and bearing the signatures of such
officers;
(D) a duly executed waiver of the General Partner with respect to certain of its
rights under the Partnership Agreement, in substantially the form attached
hereto as Exhibit E;
(E) copies of (i) the Certificate of Limited Partnership of Crosstex and all
amendments thereto, (ii) the Certificate of Limited Partnership of the General
Partner and all amendments thereto and (iii) the Certificate of Formation of
Crosstex GP LLC and all amendments thereto, each of (i), (ii) and
(iii) certified by the Secretary of State of the jurisdiction of its formation
as of a recent date;
(F) a certificate of the Secretary of State of the State of Delaware, the
Secretary of State of the State of Louisiana or the Secretary of State of the
State of Texas, as applicable, dated as of a recent date, that each of the
Crosstex Entities is in good standing in their respective jurisdiction of
incorporation or formation;
(G) a certificate of the Secretary of State (or corresponding state official) of
each of the jurisdictions listed on Schedule B hereto, dated as of a recent
date, evidencing the qualification and good standing of the Crosstex Entities as
a foreign corporation, limited partnership or limited liability company, as
applicable, in good standing;
(H) cross-receipt executed by Crosstex and delivered to the Purchaser certifying
that it has received the Purchase Price as of the Closing Date;
(I) the Registration Rights Agreement in substantially the form attached hereto
as Exhibit B, which shall have been duly executed by Crosstex;
(J) the Board Representation Agreement in substantially the form attached hereto
as Exhibit A, which shall have been duly executed by Crosstex, the General
Partner, Crosstex GP LLC and Crosstex Energy, Inc.; and
(K) such other documents relating to the transactions contemplated by this
Agreement as the Purchaser or its special counsel may reasonably request.

 

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(vii) Crosstex shall have filed with the NASDAQ a “Notification Form: Listing of
Additional Shares” and supporting documentation, if required, related to the
Conversion Units.
(viii) The investment funds which, directly or indirectly, own the Purchaser
shall have called and received capital from their limited partners equal in the
aggregate to the Purchase Price and shall have distributed such funds to the
Purchaser (provided, however, that this condition shall be deemed waived by the
Purchaser upon the expiration of the ten (10)-Business Day period following the
date of this Agreement).
(c) Conditions of Crosstex’s Obligations at the Closing. The obligation of
Crosstex to consummate the transactions contemplated by this Agreement is
subject to satisfaction (or waiver by Crosstex) on or prior to the Closing of
the following conditions:
(i) All of the representations and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material respects on and as of the
date hereof and as of the Closing (other than the representations and warranties
as of a specified date, which shall be true and correct in all material respects
on and as of such date) as if such representations and warranties were made on
and as of that date, except those representations and warranties that are
qualified by materiality or similar phrase shall be true and correct in all
respects as written on and as of the Closing.
(ii) The Purchaser shall have performed in all material respects all of the
covenants required to be performed by it hereunder prior to the Closing.
(iii) The delivery by the Purchaser of all of the following documents:
(A) an Officer’s Certificate, dated as of the date of the Closing, stating that
the conditions in Sections 2.04(a)(ii), 2.04(c)(i) and 2.04(c)(ii) have been
fully satisfied;
(B) the Registration Rights Agreement in substantially the form attached hereto
as Exhibit B, which shall have been duly executed by the Purchaser;
(C) the Board Representation Agreement in substantially the form attached hereto
as Exhibit A, which shall have been duly executed by the Purchaser; and
(D) a cross-receipt executed by the Purchaser and delivered to Crosstex
certifying that it has received the Purchased Units as of the Closing Date.
(iv) Crosstex shall have received payment of the Purchase Price from the
Purchaser by wire transfer of immediately available funds to an account
designated by Crosstex prior to the Closing Date.
Section 2.05 Further Assurances. From time to time after the date hereof,
without further consideration, Crosstex and the Purchaser shall use its
commercially reasonable efforts to take, or cause to be taken, all actions
necessary or appropriate to consummate the transactions contemplated by this
Agreement.

 

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ARTICLE III
REPRESENTATIONS AND WARRANTIES AND
COVENANTS RELATED TO CROSSTEX
Crosstex represents and warrants to and covenants with the Purchaser as follows:
Section 3.01 Existence.
(a) Crosstex is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Delaware, has all requisite power and
authority, and has all governmental licenses, authorizations, consents and
approvals necessary, to own, lease, use and operate its Properties and carry on
its business as its business is now being conducted, except where the failure to
obtain such licenses, authorizations, consents and approvals would not be
reasonably likely to have a Crosstex Material Adverse Effect.
(b) Crosstex GP LLC is a limited liability company duly formed, validly existing
and in good standing under the laws of the State of Delaware, has all power and
authority, and has all governmental licenses, authorizations, consents and
approvals necessary, to own, lease, use and operate its Properties and carry on
its business as its business is now being conducted, except where the failure to
obtain such licenses, authorizations, consents and approvals would not be
reasonably likely to have a Crosstex Material Adverse Effect.
(c) The General Partner is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware, has all requisite
power and authority, and has all governmental licenses, authorizations, consents
and approvals necessary, to own, lease, use and operate its Properties and carry
on its business as its business is now being conducted, except where the failure
to obtain such licenses, authorizations, consents and approvals would not be
reasonably likely to have a Crosstex Material Adverse Effect.
(d) Each of Crosstex’s Subsidiaries has been duly incorporated or formed, as the
case may be, and is validly existing and in good standing under the laws of the
state or other jurisdiction of its incorporation or organization, as the case
may be. Each of Crosstex’s Subsidiaries has all requisite power and authority,
and has all governmental licenses, authorizations, consents and approvals
necessary, to own, lease, use or operate its respective Properties and carry on
its business as now being conducted, except where the failure to obtain such
licenses, authorizations, consents and approvals would not be reasonably likely
to have a Crosstex Material Adverse Effect.
(e) None of the Partnership Entities is in default in the performance,
observance or fulfillment of any provision of, in the case of Crosstex, the
Partnership Agreement or its Certificate of Limited Partnership or, in the case
of any Subsidiary of Crosstex, its respective certificate of incorporation,
certification of formation, certificate of limited partnership, bylaws, limited
liability company agreement, partnership agreement or other similar
organizational documents. None of the GP Entities is in default in the
performance, observance or fulfillment of any provision of its respective
certificate of incorporation, certification of formation, certificate of limited
partnership, bylaws, limited liability company agreement, partnership agreement
or other similar organizational documents. Each of the Crosstex Entities is duly

 

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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 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 (i) have a Crosstex Material Adverse Effect or
(ii) subject the limited partners of Crosstex to any material liability or
disability.
(f) The Partnership Agreement has been, and in the case of Amendment No. 3 to
the Partnership Agreement at the Closing will be, duly authorized, executed and
delivered by the General Partner and is (or, in the case of Amendment No. 3 to
the Partnership Agreement, as of the Closing Date will be) a valid and legally
binding agreement of the General Partner, enforceable against the General
Partner in accordance with its terms; the General Partner Partnership Agreement
has been duly authorized, executed and delivered by the parties thereto and is a
valid and legally binding agreement of the parties thereto, enforceable against
the parties thereto in accordance with its terms; the GP LLC Agreement has been
duly authorized, executed and delivered by the parties thereto and is a valid
and legally binding agreement of the parties thereto, enforceable against the
parties thereto in accordance with its terms; the bylaws, limited partnership
agreement or limited liability company agreement, as applicable, of each of the
Subsidiaries of Crosstex (collectively with the Partnership Agreement, the
General Partner Partnership Agreement and the GP LLC Agreement, the “Operative
Agreements”) has been duly authorized, executed and delivered by the parties
thereto and is a valid and legally binding agreement of such parties and
enforceable against such parties in accordance with its terms; provided that,
with respect to each Operative Agreement, the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting 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 provided further, that
the indemnity, contribution and exoneration provisions contained in any of such
Operative Agreements may be limited by applicable laws and public policy.
Section 3.02 Capitalization and Valid Issuance of Purchased Units.
(a) As of the date of this Agreement, prior to the issuance and sale of the
Purchased Units, as contemplated hereby, the issued and outstanding limited
partner interests of Crosstex consist of 49,674,770 Common Units and the
incentive distribution rights (as defined in the Partnership Agreement, the
“Incentive Distribution Rights”), excluding non-vested restricted units and
performance units under the LTIP. All outstanding Common 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
matters described in Sections 17-303, 17-607 and 17-804 of the Delaware Revised
Uniform Limited Partnership Act (the “Delaware LP Act”)).
(b) Other than the Crosstex GP LLC Long-Term Incentive Plan (the “LTIP”),
Crosstex has no equity compensation plans that contemplate the issuance of
partnership interests of Crosstex (or securities convertible into or
exchangeable for partnership interests of Crosstex). No indebtedness having the
right to vote (or convertible into or exchangeable for securities having the
right to vote) on any matters on which Crosstex unitholders may vote are issued
or

 

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outstanding. Except as set forth on Schedule 3.02(b), there are no outstanding
or authorized (i) options, warrants, preemptive rights, subscriptions, calls,
rights of first refusal, or other rights, convertible or exchangeable
securities, agreements, claims or commitments of any character obligating any of
the Crosstex Entities to issue, transfer or sell any partnership interests
(including the Series A Preferred Units and the Conversion Units) or other
equity interest in, Crosstex or any of its Subsidiaries or securities
convertible into or exchangeable for such partnership interests, or rights under
any Contract requiring payment based upon the value of the equity of Crosstex,
(ii) obligations of Crosstex or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any partnership interests or equity interests of Crosstex or
any of its Subsidiaries or any such securities or agreements listed in clause
(i) of this sentence or (iii) proxy agreement or voting trusts or similar
agreements to which Crosstex or any of its Subsidiaries is a party with respect
to the voting of the equity interests of Crosstex or any of its Subsidiaries.
(c) The General Partner is the sole general partner of Crosstex with a 2%
general partner interest in Crosstex; such general partner interest has been
duly authorized and validly issued in accordance with the Partnership Agreement
and the General Partner owns such interest free and clear of all Liens (except
restrictions on transferability contained in Section 4.6 of the Partnership
Agreement and other than Liens arising under the Partnership Agreement or the
Delaware LP Act).
(d) Schedule B hereto correctly sets forth the name of each of the Subsidiaries
of Crosstex, the jurisdiction of incorporation or formation, as applicable, and
the Persons owning the outstanding equity interests of such Subsidiary. All of
the issued and outstanding equity interests of each of Crosstex’s Subsidiaries
(except Crosstex DC Gathering Company, J.V.) are owned, directly or indirectly,
by Crosstex free and clear of any Liens (except for such restrictions as may
exist under applicable Law and except for such Liens as may be imposed under the
Crosstex Credit Facility and the Master Shelf Agreement), and all such ownership
interests have been duly authorized, validly issued and are fully paid (to the
extent required in the organizational documents of Crosstex’s Subsidiaries, as
applicable) and non-assessable (except as such nonassessability may be affected
by matters described in Sections 17-303, 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”), Sections 101.206, 153.102, 153.202 and 153.210 of the
Texas Business Organizations Code and Sections 12:1327 and 12:1328 of the
Louisiana Limited Liability Company Act). Except as disclosed in the Crosstex
SEC Documents and except as may be required pursuant to the Crosstex DC
Gathering Company, J.V. joint venture agreement, neither Crosstex nor any of its
Subsidiaries owns any shares of capital stock or other securities of, or
interest in, any other Person, or is obligated to make any capital contribution
to or other investment in any other Person.
(e) The Purchased Units being purchased by the Purchaser hereunder and the
limited partner interests represented thereby will be duly authorized by
Crosstex pursuant to the Partnership Agreement prior to the Closing and, when
issued and delivered to the Purchaser against payment therefor in accordance
with the terms of this Agreement, will be validly issued, fully paid (to the
extent required by the Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in Sections 17-303, 17-607
and 17-804 of the Delaware LP Act) and will be free of any and all Liens and
restrictions on transfer, other than (i) restrictions on transfer under the
Partnership Agreement or this Agreement and

 

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under applicable state and federal securities laws, (ii) such Liens as are
created by the Purchaser and (iii) such Liens as arise under the Partnership
Agreement (as amended by Amendment No. 3 to the Partnership Agreement) or the
Delaware LP Act.
(f) Upon issuance in accordance with this Agreement and the terms of the
Series A Preferred Units, the Conversion Units will be duly authorized, validly
issued, fully paid (to the extent required by the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by matters
described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) and will
be free of any and all Liens and restrictions on transfer, other than
(i) restrictions on transfer under the Partnership Agreement or this Agreement
and under applicable state and federal securities laws, (ii) such Liens as are
created by the Purchaser and (iii) such Liens as arise under the Partnership
Agreement (as amended by Amendment No. 3 to the Partnership Agreement) or the
Delaware LP Act.
Section 3.03 Crosstex SEC Documents; Crosstex Financial Statements.
(a) Except as disclosed in the Crosstex SEC Documents, Crosstex has timely filed
with the Commission all forms, registration statements, reports, schedules and
statements required to be filed by it under the Exchange Act or the Securities
Act (all such documents, collectively the “Crosstex SEC Documents”). The
Crosstex SEC Documents, including, without limitation, any audited or unaudited
financial statements and any notes thereto or schedules included therein (the
“Crosstex Financial Statements”), at the time filed (in the case of registration
statements, solely on the dates of effectiveness) (except to the extent
corrected by a subsequently filed Crosstex SEC Document filed prior to the date
hereof) (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein (in light of the circumstances under which they were
made in the case of any prospectus) not misleading, (b) complied in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as applicable, (c) complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto, (d) in the case of the Crosstex
Financial Statements, were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the Commission), and (e) in the case of the Crosstex Financial Statements,
fairly present (subject in the case of unaudited statements to normal, recurring
and year-end audit adjustments) in all material respects the financial
condition, results of operations and cash flows of Crosstex and its Subsidiaries
as of the dates and for the periods indicated.
(b) KPMG LLP, who has certified certain financial statements of Crosstex and the
General Partner and have audited the effectiveness of Crosstex’s internal
control over financial reporting and expressed an unqualified opinion on
management’s assessment thereof, are independent, registered public accountants
with respect to Crosstex and the General Partner as required by the Securities
Act, and have not resigned or been dismissed as independent public accountants
of Crosstex or the General Partner as a result of or in connection with any
disagreement with Crosstex on a matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure. Since the date of
the most recent balance sheet of Crosstex reviewed or audited by KPMG LLP and
the audit committee of the board of directors of

 

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the General Partner, (i) Crosstex has not been advised of (A) any significant
deficiencies or material weakness in the design or operation of internal
controls which could adversely affect Crosstex’s internal controls and (B) any
fraud, whether or not material, that involves management or other employees who
have a significant role in Crosstex’s internal controls, and (ii) there have
been no changes in internal controls or in other factors that could materially
affect internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.
(c) Crosstex has provided to the Purchaser copies of all issued auditors’
reports received since January 1, 2008, in each case to the extent relating to
the business of Crosstex and its Subsidiaries and the operation thereof, whether
the same are issued to any of the Crosstex Entities. Since January 1, 2008,
Crosstex has not received any letters to management regarding accounting
practices and systems of internal controls. Since the date of the last issued
auditors’ report provided by Crosstex to the Purchaser, none of the Crosstex
Entities nor, to Crosstex’s knowledge, any director, officer, employee, auditor,
accountant or representative of any of the Crosstex Entities has received any
complaint, allegation, assertion or claim, in each case of a material nature,
whether written or oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of the Crosstex Entities or their
respective internal accounting controls, including any such complaint,
allegation, assertion or claim that Crosstex or any of its Subsidiaries has
engaged in questionable accounting or auditing practices, that was not brought
to the attention of the Audit Committee of the Board of Directors of Crosstex GP
LLC and reflected in the minutes of such committee.
Section 3.04 No Material Adverse Change. Except as expressly set forth in or
contemplated by the Crosstex SEC Documents filed with the Commission on or prior
to the date hereof, since the date of Crosstex’s most recent Form 10-K filing
with the Commission: (a) none of the Crosstex Entities has sustained any
material 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, investigation, order or decree; (b) none of the
Crosstex Entities has incurred any liability, obligation, indirect, direct or
contingent, or entered into any transactions, not in the ordinary course of
business, that, singly or in the aggregate, is material to the Crosstex Entity;
(c) there has not been any material change in the capitalization or material
increase in the short-term debt or long-term debt of the Crosstex Entities;
(d) there has been no change, event, occurrence, effect, fact, circumstance or
condition that has had or would be reasonably likely to have a Crosstex Material
Adverse Effect; (e) there has not been any acquisition or disposition of any
material asset by any Crosstex Entity or any Contract therefor, otherwise than
for fair value in the ordinary course of business or as disclosed in the
Crosstex SEC Documents or on Schedule 3.04 hereto; and (f) there has not been
any material change in Crosstex’s accounting principles, practices or methods.
Section 3.05 Litigation.
(a) Except as set forth in the Crosstex SEC Documents or on Schedule 3.05(a)
hereto, there is (i) no action, suit or proceeding pending (including any
investigation, litigation or inquiry) before any court, arbitrator or
governmental agency, body or official, domestic or foreign, or, to Crosstex’s
knowledge, contemplated or threatened against or affecting any of the Crosstex
Entities or any of their respective officers, directors, Properties or assets or
which

 

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questions the validity of this Agreement or the Basic Documents or the right of
Crosstex to enter into this Agreement or the Basic Documents or to consummate
the transactions contemplated hereby or thereby, (ii) no statute, rule,
regulation or order that has been enacted, adopted or issued by any Governmental
Authority or that has been formally proposed by any Governmental Authority 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 Crosstex Material Adverse Effect, (B) prevent or result in the
suspension of the offering and issuance of the Purchased Units, or (C) in any
manner draw into question the validity of the Basic Documents or Operative
Agreements.
(b) 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
Crosstex SEC Documents 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 Crosstex SEC Documents that are not described as required
by the Exchange Act or the Securities Act, as applicable.
Section 3.06 No Conflicts; Compliance with Laws. The execution, delivery and
performance by Crosstex of the Basic Documents and compliance by Crosstex with
the terms and provisions hereof and thereof, and the issuance and sale by
Crosstex of the Purchased Units and Conversion Units, does not and will not,
assuming the accuracy of the representations and warranties of the Purchaser
contained herein and its compliance with the covenants contained herein,
(a) violate any provision of any Law or Permit having applicability to any of
the Crosstex Entities or the Properties of the Crosstex Entities, (b) conflict
with or result in a violation or breach of any provision of the certificate of
limited partnership or other organizational documents of the Crosstex Entities
or any of the Operative Agreements, (c) require any consent, approval or notice
under or result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under any Contract or credit
agreement to which any of the Crosstex Entities is a party or by which any of
the Crosstex Entities or any of the Properties of the Crosstex Entities may be
bound, or (d) result in or require the creation or imposition of any Lien upon
or with respect to any of the Properties now owned or hereafter acquired by any
of the Crosstex Entities, except in the case of clauses (a), (c) and (d) where
any such conflict, violation, default, breach, termination, cancellation,
failure to receive consent, approval or notice, or acceleration with respect to
the foregoing provisions of this Section 3.06 would not be, individually or in
the aggregate, reasonably likely to result in a Crosstex Material Adverse
Effect. To the knowledge of the Crosstex Entities, no third party to any
Contract 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 Crosstex Material Adverse Effect.
Section 3.07 Authority; Enforceability. Crosstex has all requisite partnership
power and authority to execute, deliver and perform its obligations under the
Basic Documents, including, without limitation, to issue, sell and deliver the
Purchased Units to be sold by it, in accordance with and upon the terms and
conditions set forth in the Basic Documents and the

 

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execution, delivery and performance by Crosstex of the Basic Documents has been
duly authorized by all necessary action on the part of the General Partner. As
of the Closing Date, all partnership and limited liability company action, as
the case may be, required to be taken by the Crosstex Entities or any of their
members or partners for the authorization, issuance, sale and delivery of the
Purchased Units, the execution, delivery and performance of the Basic Documents
by the Crosstex Entities party hereto or thereto, and the consummation of the
transactions contemplated by this Agreement shall have been taken. This
Agreement has been duly and validly authorized, executed and delivered by each
of the Crosstex Entities party hereto. The Basic Documents constitute or, with
respect to the Basic Documents to be executed following the date hereof, will
constitute the legal, valid and binding obligations of Crosstex, enforceable in
accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer and similar laws affecting
creditors’ rights generally or by general principles of equity and except as the
rights to indemnification may be limited by applicable law. No approval from the
holders of the Common Units is required in connection with Crosstex’s issuance
and sale of the Purchased Units or Conversion Units to the Purchaser.
Section 3.08 Approvals. Except for the approvals required by the Commission in
connection with any registration statement filed under the Registration Rights
Agreement and for approvals which have already been obtained, no authorization,
consent, approval, waiver, license, qualification or written exemption from, nor
any filing, declaration, qualification or registration with, any Governmental
Authority or any other Person is required in connection with the execution,
delivery or performance by Crosstex of any of the Basic Documents, except where
the failure to receive such authorization, consent, approval, waiver, license,
qualification or written exemption from, or to make such filing, declaration,
qualification or registration would not, individually or in the aggregate, be
reasonably likely to have a Crosstex Material Adverse Effect.
Section 3.09 MLP Status. Crosstex has, for each taxable year beginning after
December 31, 2001, during which Crosstex was in existence, met the gross income
requirements of Section 7704(c)(2) of the Internal Revenue Code of 1986, as
amended (the “Code”). Crosstex expects to meet the gross income requirements of
Section 7704(c)(2) of the Code for its taxable year ending December 31, 2009.
Section 3.10 Investment Company Status. None of the Crosstex Entities is now,
and immediately after the sale of the Purchased Units hereunder and the
application of the net proceeds from such sale none of the Crosstex Entities
will be, an “investment company” or a company controlled by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
Section 3.11 Certain Fees. Except for fees to be paid by Crosstex to the
Purchaser or its designee, no fees or commissions are or will be payable by
Crosstex to brokers, finders or investment bankers with respect to the sale of
any of the Purchased Units or the consummation of the transactions contemplated
by this Agreement. Crosstex agrees that it will indemnify and hold harmless the
Purchaser from and against any and all claims, demands or liabilities for
broker’s, finder’s, placement or other similar fees or commissions incurred by
Crosstex or alleged to have been incurred by Crosstex in connection with the
sale of the Purchased Units or the consummation of the transactions contemplated
by this Agreement.

 

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Section 3.12 Insurance. The Crosstex Entities maintain insurance covering the
properties, operations, personnel and businesses of the Crosstex Entities and
are insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts, with such deductibles, as are prudent and
customary in the businesses in which they are engaged and for the assets and
Properties that they own. None of the Crosstex Entities has received notice from
any insurer or agent of such insurer that substantial capital improvements or
other expenditures will have to be made in order to continue such insurance.
Crosstex does not have any reason to believe that it or any Subsidiary will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business. All such insurance is outstanding and duly in force on
the date hereof and will be outstanding and duly in force on the Closing Date
and will remain in full force and effect immediately following the consummation
of the transactions contemplated hereby.
Section 3.13 Books and Records; Sarbanes-Oxley Compliance.
(a) 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
GAAP and to maintain accountability for its assets, (C) access to the Crosstex
Entities’ assets is permitted only in accordance with management’s general or
specific authorization and (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. Crosstex is not
aware of any failures of such internal accounting controls that are material or
that would be required to be disclosed pursuant to any applicable Law.
(b) (i) Crosstex has established and maintain 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 Crosstex in the reports it files or submits under
the Exchange Act is accumulated and communicated to management of Crosstex,
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 in alerting Crosstex in a timely manner to material information
required to be disclosed in Crosstex’s reports filed with the Commission.
(c) There is and has been no failure on the part of Crosstex or any of
Crosstex’s directors or officers, in their capacities as such, to comply in all
material respects with the provisions of the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated in connection therewith.
Section 3.14 Listing and Maintenance Requirements. The Common Units are listed
on the NASDAQ, and Crosstex has not received any notice of delisting. The
issuance and sale of the

 

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Purchased Units and the offer of the Common Units and issuance of such Common
Units upon conversion of the Purchased Units does not contravene NASDAQ rules
and regulations.
Section 3.15 Confidential Information. To the knowledge of Crosstex, none of its
employees or executive officers has disclosed material non-public information to
any prospective investor who has not entered into a confidentiality or
non-disclosure agreement between such prospective investor and Crosstex relating
to such information.
Section 3.16 Taxes.
(a) Except as would not, individually or in the aggregate, reasonably be
expected to have a Crosstex Material Adverse Effect, (i) each of the Crosstex
Entities has prepared and timely filed (taking into account any extension of
time within which to file) all Tax Returns required to be filed by any of them
and all such filed Tax Returns are complete and accurate, (ii) each of the
Crosstex Entities has timely paid all Taxes that are required to be paid by any
of them, (iii) there are no audits, examinations, investigations, actions,
suits, claims or other proceedings in respect of Taxes pending or threatened in
writing nor has any deficiency for any Tax been assessed by any Governmental
Authority in writing against any Crosstex Entity, and (iv) all Taxes required to
be withheld by any Crosstex Entity have been withheld and paid over to the
appropriate Tax authority (except, in the case of this clause (iv) or clause
(i) or (ii) above, with respect to matters contested in good faith and for which
adequate reserves have been established on Crosstex’s financial statements in
accordance with GAAP). None of the Crosstex Entities has entered into any
transaction that, as of the date of this Agreement, has been identified by the
Internal Revenue Service in published guidance as a “listed transaction” as
defined under Section 1.6011-4(b)(2) of the Treasury Regulations promulgated
under the Code.
(b) As used in this Agreement, (i) “Taxes” means any and all domestic or
foreign, federal, state, local or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority, including taxes on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, unemployment, social
security, workers’ compensation or net worth, and taxes in the nature of excise,
withholding, ad valorem or value added, and including any liability in respect
of any items described above as a transferee or successor, pursuant to
Section 1.1502-6 of the Treasury Regulations (or any similar provision of state,
local or foreign Law), or as an indemnitor, guarantor, surety or in a similar
capacity under any Contract and (ii) “Tax Return” means any return, report or
similar filing (including the attached schedules) filed or required to be filed
with respect to Taxes (and any amendments thereto), including any information
return, claim for refund or declaration of estimated Taxes.
Section 3.17 Compliance with Laws; Permits.
(a) Each of the Crosstex Entities is in compliance with all Laws applicable to
its business, operations or assets, except where the failure to be in compliance
would not be reasonably likely to have a Crosstex Material Adverse Effect. None
of the Crosstex Entities has received any notice of or been charged with any
violation of any Laws, except where any such

 

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violations (i) would not reasonably be expected to have, individually or in the
aggregate, a Crosstex Material Adverse Effect or (ii) have been disclosed in
Crosstex SEC Documents.
(b) None of the Crosstex Entities is, or at the Closing Date will be, in default
or violation, and no event has occurred which, with notice or the lapse of time
or both, would constitute a default or violation, in any material respect of any
term, condition or provision of any material Permit required for the operation
of the business of the Crosstex Entities as presently conducted and as presently
intended to be conducted (“Crosstex Permit”), and to the knowledge of Crosstex,
there are no facts or circumstances which could form the basis for any such
default or violation, except where such default or violation (i) would not
reasonably be expected to have, individually or in the aggregate, a Crosstex
Material Adverse Effect or (ii) has been disclosed in Crosstex SEC Documents.
There are no material judicial, administrative or arbitral actions, suits,
mediations, investigations, inquiries, proceedings or claims (including
counterclaims) by or before a Governmental Authority pending or, to the
knowledge of Crosstex, threatened, relating to the suspension, revocation,
termination, impairment or modification of any of the Crosstex Permits, except
as such actions, suits, mediations, investigations, inquiries, proceedings or
claims (i) would not reasonably be expected to have, individually or in the
aggregate, a Crosstex Material Adverse Effect or (ii) have been disclosed in
Crosstex SEC Documents. None of the Crosstex Permits will be impaired or in any
way affected by the consummation of the transactions contemplated by this
Agreement.
(c) The operations of the Crosstex Entities are in material compliance with all
Environmental Laws. The Crosstex Entities have obtained and are in material
compliance with all material Environmental Permits required for their
operations. Crosstex has not received written notice of any pending action or
proceeding and, to the knowledge of Crosstex, no action or proceeding is
threatened, to suspend, revoke, terminate or materially and adversely modify any
Environmental Permits held by the Crosstex Entities. Except as disclosed on
Schedule 3.17(c), to the knowledge of Crosstex, no facts, circumstances or
conditions currently exist that would reasonably be expected to adversely affect
the Crosstex Entities’ continued material compliance with Environmental Laws and
Environmental Permits, except as (i) would not reasonably be expected to have,
individually or in the aggregate, a Crosstex Material Adverse Effect or
(ii) have been disclosed in Crosstex SEC Documents. There are no present
material environmental enforcement or administrative actions or claims under
Environmental Law asserted against any of the Crosstex Entities, including
claims relating to the use, storage, release, spill or disposal of any Hazardous
Substances, except as such enforcement, administrative actions or claims
(i) would not reasonably be expected to have, individually or in the aggregate,
a Crosstex Material Adverse Effect or (ii) have been disclosed in Crosstex SEC
Documents. Notwithstanding any other provision of this Agreement, the
representations and warranties set forth in this Section 3.17(c) are the only
representations and warranties relating to Environmental Laws or Environmental
Permits.
Section 3.18 Title to Property. The Subsidiaries of Crosstex have good and
indefeasible title to all fee owned real property, valid and enforceable leases
with respect to all leased real property and good title to all personal
property, owned or leased by such Subsidiaries, free and clear of all Liens,
except (a) as described in the Crosstex SEC Documents and (b) such as do not
materially interfere with the use of such properties as they have been used in
the past

 

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and are proposed to be used in the future as described in the Crosstex SEC
Documents, except, in each case, for Liens arising under the Crosstex Credit
Facility and the Master Shelf Agreement.
Section 3.19 Rights-of-Way. Each of the Partnership Entities has such easements,
railroad crossings and rights-of-way and similar real estate interests
(collectively, “Rights-of-Way”) as are used or necessary (a) to use, own and
operate its assets and business in the manner as such assets and business are
being used, owned and operated by the Partnership Entities in connection with
its business immediately prior to the date hereof and immediately prior to the
Closing, (b) for the Partnership Entities (i) to perform their respective
obligations under the gathering agreements, processing agreements, and
transportation agreements to which such Partnership Entities is a party (other
than any obligations of the Partnership Entities to connect new wells under any
of such gathering agreements or processing agreements) and (ii) to otherwise
receive, transport or gather, treat, and redeliver gas on any of the Partnership
Entities’ gathering systems or transportation systems, for the avoidance of
doubt, in each case of the foregoing clauses (i) and (ii), without materially
violating any Law or contractual, legal, title, property, or other right of any
Person on such day (whether or not asserted on such day) and (iii) for pipelines
that comprise a part of the assets of the Partnership Entities that have been
constructed, but that are not connected to any of the Partnership Entities
gathering systems as of the Closing Date, except in each case of the foregoing
clauses (a) and (b), where the failure to have such Rights-of-Way would not be
reasonably likely to have, individually or in the aggregate, a Crosstex Material
Adverse Effect. The Partnership Entities have fulfilled and performed all of
their obligations with respect to such Rights-of-Way, except as would not be
reasonably likely to have a Crosstex Material Adverse Effect. No event has
occurred or fact exists that allows, or after notice or lapse of time would
allow, revocation, modification or termination thereof or would result in any
impairment of the rights of the Partnership Entities, except as would not be
reasonably likely to have a Crosstex Material Adverse Effect and except for
limitations as to time or date or payments or collateral obligations, none of
which, individually or in the aggregate would be reasonably likely to have a
Crosstex Material Adverse Effect.
Section 3.20 No Labor Dispute. No labor disturbance by the employees of the
Crosstex Entities exists or, to the knowledge of the Crosstex Entities, is
imminent.
Section 3.21 Material Agreements. Crosstex has provided the Purchaser with or
made available to the Purchaser through the Crosstex SEC Documents, correct and
complete copies of all material agreements (as defined in Section 601(b)(10) of
Regulation S-K promulgated by the Commission) and of all exhibits to the
Crosstex SEC Documents, including amendments to or other modifications of
pre-existing material agreements, entered into by Crosstex (the “Material
Agreements”). Each Material Agreement is in full force and effect and is valid
and enforceable against the Crosstex Entity party thereto. None of the Crosstex
Entities is in default (with or without due notice or lapse of time or both) in
any material respect under any Material Agreement.
Section 3.22 Form S-3 Eligibility. Crosstex is eligible to register the resale
of its Common Units for resale by the Purchaser under Form S-3 promulgated under
the Securities Act.

 

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Section 3.23 Pre-Closing Covenants of the Crosstex Entities. From and after the
date of this Agreement and until the Closing Date, the Crosstex Entities will
use commercially reasonable efforts to conduct its business in the ordinary
course of business, preserve intact its existence and business organization and
goodwill and present business relationships with all material customers,
suppliers, licensors, distributors and others having significant business
relationships with the Crosstex Entities, to the extent such relationships are
beneficial to the Crosstex Entities and their business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES AND
COVENANTS OF THE PURCHASER
The Purchaser hereby represents and warrants and covenants to Crosstex as
follows:
Section 4.01 Existence. The Purchaser is duly organized and validly existing and
in good standing under the laws of its state of formation, with all necessary
power and authority to own properties and to conduct its business as currently
conducted.
Section 4.02 Authorization, Enforceability. The Purchaser has all necessary
legal power and authority to enter into, deliver and perform its obligations
under this Agreement and the Basic Documents. The execution, delivery and
performance of this Agreement and the Basic Documents by the Purchaser and the
consummation by it of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary legal action, and no further
consent or authorization of the Purchaser is required. This Agreement and the
Basic Documents have been duly executed and delivered by the Purchaser and
constitute legal, valid and binding obligations of the Purchaser; provided that,
the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws relating to or affecting
creditors’ rights generally and by general principles of equity and except as
the rights to indemnification may be limited by applicable law (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 4.03 No Breach. The execution, delivery and performance of this
Agreement and the Basic Documents by the Purchaser and the consummation by the
Purchaser of the transactions contemplated hereby or thereby will not
(a) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material agreement to which
the Purchaser is a party or by which the Purchaser is bound or to which any of
the property or assets of the Purchaser is subject, (b) conflict with or result
in any violation of the provisions of the organizational documents of the
Purchaser, or (c) violate any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Purchaser or the
property or assets of the Purchaser, except in the case of clauses (a) and (c),
for such conflicts, breaches, violations or defaults as would not prevent the
consummation of the transactions contemplated by this Agreement and the Basic
Documents.
Section 4.04 Certain Fees. No fees or commissions are or will be payable by the
Purchaser to brokers, finders or investment bankers with respect to the purchase
of any of the Purchased Units or the consummation of the transactions
contemplated by this Agreement. The Purchaser agrees that it will indemnify and
hold harmless Crosstex from and against any and all

 

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claims, demands or liabilities for broker’s, finder’s, placement, or other
similar fees or commissions incurred by the Purchaser or alleged to have been
incurred by the Purchaser in connection with the purchase of the Purchased Units
or the consummation of the transactions contemplated by this Agreement.
Section 4.05 Unregistered Securities.
(a) Accredited Investor Status; Sophisticated Purchaser. The Purchaser is an
“accredited investor” within the meaning of Rule 501 under the Securities Act
and is able to bear the risk of its investment in Purchased Units and the
Conversion Units. The Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the purchase of the Purchased Units and the Conversion Units.
(b) Information. The Purchaser and its Representatives have been furnished with
all materials relating to the business, finances and operations of Crosstex that
have been requested and materials relating to the offer and sale of the
Purchased Units and Conversion Units that have been requested by the Purchaser.
The Purchaser and its Representatives have been afforded the opportunity to ask
questions of Crosstex. Neither such inquiries nor any other due diligence
investigations conducted at any time by the Purchaser and Representatives shall
modify, amend or affect the Purchaser’s right (i) to rely on Crosstex’s
representations and warranties contained in Article III above or (ii) to
indemnification or any other remedy based on, or with respect to the accuracy or
inaccuracy of, or compliance with, the representations, warranties, covenants
and agreements in this Agreement, or any Basic Document. The Purchaser
understands that its purchase of the Purchased Units involves a high degree of
risk. The Purchaser has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Purchased Units.
(c) Residency. The Purchaser shall cooperate reasonably with Crosstex to provide
any information necessary for any applicable securities filings.
(d) Legends. The Purchaser understands that, until such time as the Purchased
Units have been registered pursuant to the provisions of the Securities Act, or
the Purchased Units are eligible for resale pursuant to Rule 144 promulgated
under the Securities Act without any restriction as to the number of securities
as of a particular date that can then be immediately sold, the Purchased Units
will bear a restrictive legend as provided in the Partnership Agreement. The
Purchaser understands that, until such time as the Conversion Units have been
registered pursuant to the provisions of the Securities Act, or the Conversion
Units are eligible for resale pursuant to Rule 144 promulgated under the
Securities Act without any restriction as to the number of securities as of a
particular date that can then be immediately sold, the Conversion Units will
bear a restrictive legend as provided in the Partnership Agreement.
(e) Purchase Representation. The Purchaser is purchasing the Purchased Units for
its own account and not with a view to distribution in violation of any
securities laws. The Purchaser has been advised and understands that neither the
Purchased Units nor the Conversion Units have been registered under the
Securities Act or under the “blue sky” laws of any jurisdiction and may be
resold only if registered pursuant to the provisions of the Securities Act (or
if eligible, pursuant to the provisions of Rule 144 promulgated under the
Securities Act or

 

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pursuant to another available exemption from the registration requirements of
the Securities Act). The Purchaser has been advised and understands that
Crosstex, in issuing the Purchased Units, is relying upon, among other things,
the representations and warranties of the Purchaser contained in this Article IV
in concluding that such issuance is a “private offering” and is exempt from the
registration provisions of the Securities Act.
(f) Rule 144. The Purchaser understands that there is no public trading market
for the Purchased Units, that none is expected to develop and that the Purchased
Units must be held indefinitely unless and until Purchased Units or Conversion
Units received upon conversion thereof are registered under the Securities Act
or an exemption from registration is available. The Purchaser has been advised
of and is aware of the provisions of Rule 144 promulgated under the Securities
Act.
(g) Reliance by Crosstex. The Purchaser understands that the Purchased Units are
being offered and sold in reliance on a transactional exemption from the
registration requirements of federal and state securities laws and that Crosstex
is relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the applicability of such exemptions and the suitability
of the Purchaser to acquire the Purchased Units and the Conversion Units
issuable upon conversion thereof.
ARTICLE V
INDEMNIFICATION, COSTS AND EXPENSES
Section 5.01 Indemnification by Crosstex. Crosstex agrees to indemnify the
Purchaser and its Representatives (collectively, “Purchaser Related Parties”)
from, and hold each of them harmless against, any and all losses, actions,
suits, proceedings (including any investigations, litigation or inquiries),
demands and causes of action, and, in connection therewith, and promptly upon
demand, pay or reimburse each of them for all reasonable costs, losses,
liabilities, damages or expenses of any kind or nature whatsoever (including the
reasonable fees and disbursements of counsel and all other reasonable expenses
incurred in connection with investigating, defending or preparing to defend any
such matter that may be incurred by them or asserted against or involve any of
them), whether or not involving a third party claim, as a result of, arising out
of, or in any way related to (i) the failure of any of the representations or
warranties made by Crosstex contained herein to be true and correct in all
material respects as of the date hereof (except with respect to any provisions
including the word “material” or words of similar import, with respect to which
such representations and warranties must have been true and correct) or (ii) the
breach of any covenants of Crosstex contained herein, provided that, in the case
of the immediately preceding clause (i), such claim for indemnification is made
prior to the expiration of such representation or warranty; provided, however,
that for purposes of determining when an indemnification claim has been made,
the date upon which a Purchaser Related Party shall have given notice (stating
in reasonable detail the basis of the claim for indemnification) to Crosstex
shall constitute the date upon which such claim has been made.
Section 5.02 Indemnification by the Purchaser. The Purchaser agrees to indemnify
Crosstex, the General Partners and their respective Representatives
(collectively, “Crosstex Related Parties”) from, and hold each of them harmless
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proceedings (including any investigations, litigation or inquiries), demands and
causes of action, and, in connection therewith, and promptly upon demand, pay or
reimburse each of them for all reasonable costs, losses, liabilities, damages or
expenses of any kind or nature whatsoever (including the reasonable fees and
disbursements of counsel and all other reasonable expenses incurred in
connection with investigating, defending or preparing to defend any such matter
that may be incurred by them or asserted against or involve any of them),
whether or not involving a third party claim, as a result of, arising out of, or
in any way related to (i) the failure of any of the representations or
warranties made by the Purchaser contained herein to be true and correct in all
material respects as of the date hereof or (ii) the breach of any of the
covenants of the Purchaser contained herein, provided that, in the case of the
immediately preceding clause (i), such claim for indemnification relating to a
breach of any representation or warranty is made prior to the expiration of such
representation or warranty; provided, however, that for purposes of determining
when an indemnification claim has been made, the date upon which a Crosstex
Related Party shall have given notice (stating in reasonable detail the basis of
the claim for indemnification) to the Purchaser shall constitute the date upon
which such claim has been made; provided, further, that the liability of the
Purchaser shall not be greater in amount than the Purchase Price.
Section 5.03 Indemnification Procedure.
(a) A claim for indemnification for any matter not involving a third party claim
may be asserted by notice to the party from whom indemnification is sought;
provided, however, that failure to so notify the indemnifying party shall not
preclude the indemnified party from any indemnification which it may claim in
accordance with this Article V, except as otherwise provided in Sections 5.01
and 5.02.
(b) Promptly after any Crosstex Related Party or Purchaser Related Party
(hereinafter, the “Indemnified Party”) has received notice of any indemnifiable
claim hereunder, or the commencement of any action, suit or proceeding by a
third person, which the Indemnified Party believes in good faith is an
indemnifiable claim under this Agreement (each, a “Third Party Claim”), the
Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”)
written notice of such Third Party Claim but failure to so notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability it
may have to such Indemnified Party hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure. Such notice shall
state the nature and the basis of such Third Party Claim to the extent then
known. The Indemnifying Party shall have the right to defend and settle, at its
own expense and by its own counsel, any such matter as long as the Indemnifying
Party pursues the same diligently and in good faith. If the Indemnifying Party
undertakes to defend or settle such Third Party Claim, it shall promptly, and in
no event later than five (5) days, notify the Indemnified Party of its intention
to do so, and the Indemnified Party shall cooperate with the Indemnifying Party
and its counsel in all commercially reasonable respects in the defense thereof
and/or the settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records and other
information reasonably requested by the Indemnifying Party and in the
Indemnified Party’s possession or control. Such cooperation of the Indemnified
Party shall be at the cost of the Indemnifying Party. After the Indemnifying
Party has notified the Indemnified Party of its intention to undertake to defend
or settle any such asserted liability, and for so long as the Indemnifying Party
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Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability; provided, however, that the Indemnified Party shall
be entitled (i) at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof and (ii) if (A) the
Indemnifying Party has, within ten (10) Business Days of when the Indemnified
Party provides written notice of a Third Party Claim, failed (y) to assume the
defense or settlement of such Third Party Claim and employ counsel and
(z) notify the Indemnified Party of such assumption, or (B) if the defendants in
any such action include both the Indemnified Party and the Indemnifying Party
and counsel to the Indemnified Party shall have concluded that there may be
reasonable defenses available to the Indemnified Party that are different from
or in addition to those available to the Indemnifying Party or if the interests
of the Indemnified Party reasonably may be deemed to conflict with the interests
of the Indemnifying Party, then the Indemnified Party shall have the right to
select a separate counsel and to assume such settlement or legal defense and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the Indemnifying Party as incurred. Notwithstanding any
other provision of this Agreement, the Indemnifying Party shall not settle any
indemnified claim without the consent of the Indemnified Party, unless the
settlement thereof imposes no liability or obligation on, and includes a
complete release from liability of, and does not contain any admission of wrong
doing by, the Indemnified Party.
Section 5.04 Tax Matters. All indemnification payments under this Article V
shall be adjustments to the Purchase Price except as otherwise required by
applicable Law.
ARTICLE VI
TERMINATION
Section 6.01 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) By mutual written consent of Crosstex and the Purchaser;
(b) By either Crosstex or the Purchaser if (i) any court of competent
jurisdiction in the United States or other United States Governmental Authority
shall have issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and such order, decree, ruling or other action is or shall
have become final and nonappealable or (ii) the Closing has not been consummated
by February 28, 2010 (the “Outside Date”); provided, that no party may terminate
this Agreement pursuant to this clause (ii) if such party’s failure to fulfill
any of its obligations under this Agreement shall have been the reason that the
Closing shall not have occurred on or before said date;
(c) By Crosstex if (i) there shall have been a breach of any representation or
warranty on the part of the Purchaser set forth in this Agreement or in any
other Basic Document, or if any such representation or warranty of the Purchaser
shall have become untrue, in either case such that the conditions set forth in
Section 2.04(c) would be incapable of being satisfied by the Outside Date; or
(ii) there shall have been a breach in any material respect by the Purchaser of
any of their respective covenants or agreements hereunder, and with respect to
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(ii) the Purchaser have not cured such breach or inaccuracy within twenty
(20) Business Days after receipt of written notice thereof from Crosstex;
provided that Crosstex is not then in breach of any of its obligations
hereunder; and
(d) By the Purchaser if (i) there shall have been a breach of any representation
or warranty on the part of Crosstex set forth in this Agreement or in any other
Basic Document, or if any such representation or warranty of Crosstex shall have
become untrue, in either case such that the conditions set forth in
Section 2.04(b) would be incapable of being satisfied by the Outside Date; or
(ii) there shall have been a breach in any material respect by Crosstex of its
covenants or agreements hereunder, and Crosstex has not cured such breach or
inaccuracy within twenty (20) Business Days after receipt of written notice
thereof from the Purchaser; provided that the Purchaser are not then in breach
of any of its obligations hereunder.
Section 6.02 Certain Effects of Termination. In the event of the termination of
this Agreement by either Crosstex or the Purchaser as provided in Section 6.01:
(a) Except as set forth in Section 7.03, this Agreement shall become null and
void and have no further force or effect, but the parties shall not be released
from any liability arising from or in connection with any breach hereof
occurring prior to such termination; and
(b) The Non-Disclosure Agreement shall remain in effect.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses.
(a) Crosstex shall pay out of the proceeds received from the consummation of the
transactions contemplated by this Agreement the reasonable fees and expenses
incurred by the Purchaser and its Affiliates in connection with the due
diligence, preparation, negotiation and execution of this Agreement and the
other Basic Documents, including, without limitation, legal, accounting,
advisory and other reasonable fees and expenses; provided, that, the expenses of
the Purchaser and its Affiliates paid out of such proceeds shall not exceed
$400,000 in the aggregate.
(b) Notwithstanding the foregoing, if Crosstex raises equity capital from
another source (other than pursuant to its LTIP) prior to February 28, 2010 and
the Closing has not occurred at such time, Crosstex shall pay the reasonable
fees and expenses incurred by the Purchaser and its Affiliates in connection
with the due diligence, preparation, negotiation and execution of this Agreement
as well as the other Basic Documents, including, without limitation, legal,
accounting, advisory and other reasonable fees and expenses regardless of
whether the transactions contemplated by this Agreement are consummated;
provided, that, the expenses of the Purchaser and its Affiliates paid out of
such proceeds shall not exceed $400,000 in the aggregate.
Section 7.02 Interpretation. Article, Section, Schedule and Exhibit references
in this Agreement are references to the corresponding Article, Section, Schedule
or Exhibit to this Agreement, unless otherwise specified. All Exhibits and
Schedules to this Agreement are hereby incorporated and made a part hereof as if
set forth in full herein and are an integral part of this

 

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Agreement. All references to instruments, documents, Contracts and agreements
are references to such instruments, documents, Contracts and agreements as the
same may be amended, supplemented and otherwise modified from time to time,
unless otherwise specified. The word “including” shall mean “including but not
limited to” and shall not be construed to limit any general statement that it
follows to the specific or similar items or matters immediately following it.
Whenever Crosstex has an obligation under the Basic Documents, the expense of
complying with that obligation shall be an expense of Crosstex unless otherwise
specified. Any reference in this Agreement to $ shall mean U.S. dollars.
Whenever any determination, consent or approval is to be made or given by the
Purchaser, such action shall be in the Purchaser’s sole discretion, unless
otherwise specified in this Agreement. If any provision in the Basic Documents
is held to be illegal, invalid, not binding or unenforceable, (i) such provision
shall be fully severable and the Basic Documents shall be construed and enforced
as if such illegal, invalid, not binding or unenforceable provision had never
comprised a part of the Basic Documents, and the remaining provisions shall
remain in full force and effect and (ii) the parties hereto shall negotiate in
good faith to modify the Basic Documents so as to effect the original intent of
the parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
the Basic Documents, the date that is the reference date in calculating such
period shall be excluded. If the last day of such period is a non-Business Day,
the period in question shall end on the next succeeding Business Day. Any words
imparting the singular number only shall include the plural and vice versa. The
words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to this
Agreement as a whole and not merely to a subdivision in which such words appear
unless the context otherwise requires. The provision of a Table of Contents, the
division of this Agreement into Articles, Sections and other subdivisions and
the insertion of headings are for convenience of reference only and shall not
affect or be utilized in construing or interpreting this Agreement.
Section 7.03 Survival of Provisions. The representations and warranties set
forth in Sections 3.01(a), 3.02, 3.07, 3.08, 3.10, 3.11, 4.01, 4.02, 4.04 and
4.05 hereunder shall survive the execution and delivery of this Agreement
indefinitely, the representations and warranties set forth in Section 3.16 shall
survive for a period of three (3) years following the Closing Date regardless of
any investigation made by or on behalf of Crosstex or the Purchaser, and the
other representations and warranties set forth herein shall survive for a period
of eighteen (18) months following the Closing Date regardless of any
investigation made by or on behalf of Crosstex or the Purchaser. The covenants
made in this Agreement or any other Basic Document shall survive the Closing and
remain operative and in full force and effect regardless of acceptance of any of
the Purchased Units and payment therefor and repayment, conversion or repurchase
thereof. Regardless of any purported general termination of this Agreement, the
provisions of Article V and all indemnification rights and obligations of
Crosstex and the Purchaser thereunder, Section 6.02 and this Article VII shall
remain operative and in full force and effect as between Crosstex and the
Purchaser, unless Crosstex and the Purchaser execute a writing that expressly
(with specific references to the applicable Section or subsection of this
Agreement) terminates such rights and obligations as between Crosstex and the
Purchaser.
Section 7.04 No Waiver; Modifications in Writing.

 

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(a) Delay. No failure or delay on the part of any party in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to a party at law or in equity or otherwise.
(b) Specific Waiver. Except as otherwise provided herein, no amendment, waiver,
consent, modification or termination of any provision of this Agreement or any
other Basic Document (except in the case of the Partnership Agreement for
amendments adopted pursuant to Section 13.1 thereof) shall be effective unless
signed by each of the parties hereto or thereto affected by such amendment,
waiver, consent, modification or termination. Any amendment, supplement or
modification of or to any provision of this Agreement or any other Basic
Document, any waiver of any provision of this Agreement or any other Basic
Document and any consent to any departure by Crosstex from the terms of any
provision of this Agreement or any other Basic Document shall be effective only
in the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or
demand on Crosstex in any case shall entitle Crosstex to any other or further
notice or demand in similar or other circumstances. Any investigation by or on
behalf of any party shall not be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant or
agreement contained herein.
Section 7.05 Binding Effect; Assignment.
(a) Binding Effect. This Agreement shall be binding upon Crosstex, the Purchaser
and their respective successors and permitted assigns. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and permitted assigns.
(b) Assignment of Purchased Units. All or any portion of Purchased Units
purchased pursuant to this Agreement may be sold, assigned or pledged by the
Purchaser, subject to compliance with applicable securities laws, Section 4.05
hereof and the Registration Rights Agreement, and, except as provided in the
Basic Documents, any such assignment shall not affect the rights of the
Purchaser hereunder.
(c) Assignment of Rights. The Purchaser’s rights and obligations hereunder
(including the right to seek indemnification) may be transferred or assigned in
whole or in part by the Purchaser to any Affiliate of the Purchaser without the
consent of Crosstex or the other parties hereto. Upon any such permitted
transfer or assignment, references in this Agreement to the Purchaser (as they
apply to the transferor or assignor, as the case may be) shall thereafter apply
to such transferee or assignee of the Purchaser unless the context otherwise
requires. Without the written consent of Crosstex, which consent shall not be
unreasonably withheld, no portion of the rights and obligations of the Purchaser
under this Agreement may be assigned or transferred by the Purchaser or such a
transferee of Purchased Units to a Person that is not an Affiliate of the
Purchaser. No portion of the rights and obligations of Crosstex under this
Agreement may be transferred or assigned without the prior written consent of
the Purchaser, which consent shall not be unreasonably withheld.

 

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Section 7.06 Non-Disclosure.
(a) The Purchaser agrees to abide by the obligations of the Non-Disclosure
Agreement as if it were a party thereto and the parties agree that such
agreement shall survive until the second anniversary of the Closing Date, at
which time the Non-Disclosure Agreement shall terminate and be of no further
force or effect.
(b) Other than the Form 8-Ks to be filed in connection with this Agreement, the
Crosstex Entities and any of their respective Representatives shall disclose the
identity of, or any other information concerning, the Purchaser or any of its
Affiliates only after providing the Purchaser a reasonable opportunity to review
and comment on such disclosure (with such comments being incorporated or
reflected, to the extent reasonable, in any such disclosure); provided, however,
that nothing in this Section 7.06 shall delay any required filing or other
disclosure with the Commission, NASDAQ or any Governmental Authority or
otherwise hinder the Crosstex Entities’ or their Representatives’ ability to
timely comply with all laws or rules and regulations of the Commission, NASDAQ
or other Governmental Authority.
Section 7.07 Communications. All notices and demands provided for hereunder
shall be in writing and shall be given by registered or certified mail, return
receipt requested, telecopy, air courier guaranteeing overnight delivery or
personal delivery to the following addresses

  (a)   If to the Purchaser:         GSO Crosstex Holdings LLC
280 Park Avenue
New York, New York 10017
Attention: James Bennett, Marisa Beeney and Chris Sullivan
Facsimile: (212) 503-2157
Internet electronic mail: james.bennett@gsocap.com, maris.beeney@gsocap.com
or chris.sullivan@gsocap.com         with a copy to:         Andrews Kurth LLP
600 Travis, Suite 4200
Houston, Texas 77002
Attention: G. Michael O’Leary or David Denechaud
Facsimile: (713) 238-7130 or (713) 238-7245
Internet electronic mail: moleary@akllp.com or ddenechaud@akllp.com

  (b)   If to Crosstex:         Crosstex Energy, L.P.
2501 Cedar Springs
Dallas, Texas 75201
Attention: General Counsel

 

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      Facsimile: (214) 721-9383
Internet electronic mail: joe.davis@crosstexenergy.com         with a copy to:  
      Baker Botts L.L.P.
2001 Ross Avenue
Dallas, Texas 75201-2980
Attention: Doug Rayburn
Facsimile: (214) 661-4634
Internet electronic mail: doug.rayburn@bakerbotts.com

or to such other address as Crosstex or the Purchaser may designate in writing.
All notices and communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; upon actual receipt if sent by
certified or registered mail, return receipt requested, or regular mail, if
mailed; upon actual receipt of the overnight courier copy, if sent via
facsimile; and upon actual receipt when delivered to an air courier guaranteeing
overnight delivery.
Section 7.08 Removal of Legend.
(a) The Purchaser may request Crosstex to remove the legend described in Section
4.05(d) from the certificates evidencing the Purchased Units by submitting to
Crosstex such certificates, together with an opinion of counsel to the effect
that such legend is no longer required under the Securities Act or applicable
state laws, as the case may be. Crosstex shall cooperate with the Purchaser to
effect the removal of such legend.
(b) Certificates evidencing Common Units acquired by the Purchaser upon
conversion of the Purchased Units shall not contain any legend (including the
legend set forth in Section 4.05(d)), (i) while a registration statement
covering the resale of such security is effective under the Securities Act, or
(ii) following any sale of such Common Units pursuant to Rule 144, or (iii) if
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission).
Section 7.09 Entire Agreement. This Agreement, the other Basic Documents and the
other agreements and documents referred to herein are intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or the other Basic Documents with respect to the rights
granted by Crosstex or any of its Affiliates or the Purchaser or any of its
Affiliates set forth herein or therein. This Agreement, the other Basic
Documents and the other agreements and documents referred to herein or therein
supersede all prior agreements and understandings between the parties with
respect to such subject matter.

 

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Section 7.10 Governing Law; Submission to Jurisdiction. This Agreement, and all
claims or causes of action (whether in contract or tort) that may be based upon,
arise out of or relate to this Agreement or the negotiation, execution or
performance of this Agreement (including any claim or cause of action based
upon, arising out of or related to any representation or warranty made in or in
connection with this Agreement), will be construed in accordance with and
governed by the laws of the State of Delaware without regard to principles of
conflicts of laws. Any action against any party relating to the foregoing shall
be brought in any federal or state court of competent jurisdiction located
within the State of Delaware, and the parties hereto hereby irrevocably submit
to the non-exclusive jurisdiction of any federal or state court located within
the State of Delaware over any such action. The parties hereby irrevocably
waive, to the fullest extent permitted by applicable Law, any objection which
they may now or hereafter have to the laying of venue of any such dispute
brought in such court or any defense of inconvenient forum for the maintenance
of such dispute. Each of the parties hereto agrees that a judgment in any such
dispute may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by Law.
Section 7.11 Waiver of Jury Trial. THE PARTIES TO THIS AGREEMENT EACH HEREBY
WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY
OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 7.12 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same agreement.
[Remainder of Page Left Intentionally Blank]

 

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of
the date first above written.

                CROSSTEX ENERGY, L.P.
        By:   Crosstex Energy GP, L.P.,           its general partner           
      By:   Crosstex Energy GP, LLC,           its general partner             
      By:   /s/ Joe A. Davis           Name:   Joe A. Davis          Title:  
Executive Vice President,
General Counsel & Secretary        GSO CROSSTEX HOLDINGS LLC, by its Members
        BLACKSTONE / GSO CAPITAL SOLUTIONS FUND LP
          By:   Blackstone / GSO Capital Solutions Associates LLC,            
its General Partner                    By:   /s/ George Fan             George
Fan — Authorized Signatory                    GSO CROSSTEX HOLDINGS (US) INC.
          By:   /s/ Marisa Beeney             Marisa Beeney — Authorized
Signatory                 

Signature Page to Purchase Agreement

 

 

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Schedule A

                      Purchased         Purchaser   Units     Purchase Price  
GSO Crosstex Holdings LLC
    14,705,882     $ 124,999,997  

 

Schedule A-1