exv10w2



 







Exhibit 10.2




Execution Copy




STOCK PURCHASE AGREEMENT




by and among




CROSSTEX ENERGY, INC.




and




THE PURCHASERS PARTY HERETO




 









 





                             Table of Contents




	 	 	 	 	 	 	 
	 
	 	ARTICLE I	 	 	 	 
	 
	 	DEFINITIONS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 1.01
	 	Definitions	 	 	1	 
	Section 1.02
	 	Accounting Procedures and Interpretation	 	 	5	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE II	 	 	 	 
	 
	 	AGREEMENT TO SELL AND PURCHASE	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.01
	 	Authorization of Sale of Common Stock	 	 	5	 
	Section 2.02
	 	Sale and Purchase	 	 	5	 
	Section 2.03
	 	Adjustment of Purchased Shares	 	 	5	 
	Section 2.04
	 	Closing	 	 	6	 
	Section 2.05
	 	Conditions to the Closing	 	 	6	 
	Section 2.06
	 	Crosstex Deliveries	 	 	7	 
	Section 2.07
	 	Purchasers’ Deliveries	 	 	8	 
	Section 2.08
	 	Use of Proceeds	 	 	9	 
	Section 2.09
	 	Independent Nature of Purchasers’ Obligations and Rights	 	 	9	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE III	 	 	 	 
	 
	 	REPRESENTATIONS AND WARRANTIES	 	 	 	 
	 
	 	RELATED TO CROSSTEX	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.01
	 	Corporate Existence	 	 	9	 
	Section 3.02
	 	Capitalization and Valid Issuance of Purchased Shares	 	 	10	 
	Section 3.03
	 	Crosstex SEC Documents	 	 	11	 
	Section 3.04
	 	No Material Adverse Change	 	 	11	 
	Section 3.05
	 	Litigation	 	 	11	 
	Section 3.06
	 	No Conflicts; Compliance with Laws	 	 	12	 
	Section 3.07
	 	Authority, Enforceability	 	 	12	 
	Section 3.08
	 	Approvals	 	 	13	 
	Section 3.09
	 	Investment Company Status	 	 	13	 
	Section 3.10
	 	Certain Fees	 	 	13	 
	Section 3.11
	 	No Side Agreements	 	 	13	 
	Section 3.12
	 	Preemptive Rights or Registration Rights	 	 	13	 
	Section 3.13
	 	No Registration	 	 	13	 
	Section 3.14
	 	No Integration	 	 	14	 
	Section 3.15
	 	Insurance	 	 	14	 
	Section 3.16
	 	Internal Accounting Controls	 	 	14	 
	Section 3.17
	 	Form S-3 Eligibility	 	 	14	 
	Section 3.18
	 	Material Agreements	 	 	 	 
	Section 3.19
	 	Listing and Maintenance Requirements	 	 	14	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE IV	 	 	 	 
	 
	 	REPRESENTATIONS AND WARRANTIES AND COVENANTS	 	 	 	 
	 
	 	OF THE PURCHASERS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.01
	 	Existence	 	 	15	 






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	Section 4.02
	 	Authorization, Enforceability	 	 	15	 
	Section 4.03
	 	No Breach	 	 	15	 
	Section 4.04
	 	Certain Fees	 	 	15	 
	Section 4.05
	 	No Side Agreements	 	 	16	 
	Section 4.06
	 	Unregistered Securities	 	 	16	 
	Section 4.07
	 	Lock-Up	 	 	17	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE V	 	 	 	 
	 
	 	INDEMNIFICATION, COSTS AND EXPENSES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5.01
	 	Indemnification by Crosstex	 	 	17	 
	Section 5.02
	 	Indemnification by the Purchasers	 	 	17	 
	Section 5.03
	 	Indemnification Procedure	 	 	17	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE VI	 	 	 	 
	 
	 	MISCELLANEOUS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 6.01
	 	Interpretation and Survival of Provisions	 	 	18	 
	Section 6.02
	 	Survival of Provisions	 	 	19	 
	Section 6.03
	 	No Waiver; Modifications in Writing	 	 	19	 
	Section 6.04
	 	Binding Effect; Assignment	 	 	19	 
	Section 6.05
	 	Non-Disclosure	 	 	20	 
	Section 6.06
	 	Communications	 	 	20	 
	Section 6.07
	 	Removal of Legend	 	 	22	 
	Section 6.08
	 	Entire Agreement	 	 	23	 
	Section 6.09
	 	Governing Law	 	 	23	 
	Section 6.10
	 	Execution in Counterparts	 	 	23	 
	Section 6.11
	 	Termination	 	 	23	 
	 
	 	 	 	 	 	 
	Exhibit A — Form of Registration Rights Agreement	 	 	 	 
	Exhibit B — Form of Opinion of Crosstex Counsel	 	 	 	 







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STOCK PURCHASE AGREEMENT




     This STOCK PURCHASE AGREEMENT, dated as of May 16, 2006 (this “Agreement”), is by
and among CROSSTEX ENERGY, INC., a Delaware corporation (“Crosstex”), and each of the
purchasers set forth in Schedule A hereto (the “Purchasers”).



     WHEREAS, on May 1, 2006, Crosstex Energy Services, L.P., a wholly-owned subsidiary of Crosstex
Energy, L.P., a Delaware limited partnership (“Crosstex Partners”), entered into a
definitive Purchase and Sale Agreement, (the “Chief Acquisition Agreement”) with Chief
Holdings LLC (“Chief”) a Texas limited liability company, and certain other purchasers to
acquire, directly or indirectly, the natural gas gathering pipeline systems and related facilities
of Chief (the “Chief Asset Acquisition”);



     WHEREAS, Crosstex Partners desires to finance a portion of the Chief Asset Acquisition through
the sale of Senior Subordinated Series C Units to Crosstex;



     WHEREAS, Crosstex desires to finance its purchase of Senior Subordinated Series C Units in
part through the sale of common stock, par value $0.01 of Crosstex (“Common Stock”) to the
Purchasers and each of the Purchasers, severally and not jointly, desires to purchase such Common
Stock in accordance with this Agreement; and



     WHEREAS, Crosstex has agreed to provide the Purchasers with certain registration rights with
respect to the Common Stock acquired pursuant hereto.



     NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree as follows:



ARTICLE I

DEFINITIONS




     Section 1.01 Definitions. As used in this Agreement, and unless the context requires a
different meaning, 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.



     “Allocated Purchase Price” means with respect to each Purchaser, the dollar amount set forth
opposite such Purchaser’s name under the heading “Allocated Purchase Price” on Schedule A
hereto.



     “Anniversary Date” means 90 days from the Closing Date.



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     “Basic Documents” means, collectively, this Agreement, the Registration Rights Agreement, the
Non-Disclosure Agreements and any and all other agreements or instruments executed and delivered to
the Purchasers by Crosstex or any Subsidiary of Crosstex hereunder or thereunder.



     “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.



     “Bylaws” means the complete and correct Bylaws of Crosstex as in full force and effect on the
date hereof and the Closing Date, as applicable.



     “Chief Asset Acquisition” shall have the meaning specified in the recitals.



     “Chief Acquisition Agreement” shall have the meaning specified in the recitals.



     “Closing” shall have the meaning specified in Section 2.04.



     “Closing Date” shall have the meaning specified in Section 2.04.



     “Commission” means the United States Securities and Exchange Commission.



     “Common Stock” shall have the meaning specified in the recitals.



     “Common Stock Price” means the lesser of (i) $70.17 and (ii) the price at which Crosstex sells
or commits to sell any Common Stock at any time prior to or contemporaneous with the Closing.
Notwithstanding the foregoing, the Common Stock Price with respect to Lubar Equity Fund, LLC shall
be $76.90.



     “Crosstex” has the meaning set forth in the introductory paragraph.



     “Crosstex Financial Statements” shall have the meaning specified in Section 3.03.



     “Crosstex Material Adverse Effect” means any material and adverse effect on (a) the assets,
liabilities, financial condition, business, operations, affairs or prospects of Crosstex and its
Subsidiaries taken as a whole; (b) the ability of Crosstex and its Subsidiaries taken as a whole to
carry out 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 to
consummate the transactions under any Basic Document; 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 relates to (x) a
general deterioration in the economy or changes in the general state of the industries in which the
Crosstex Parties operate, except to the extent that the Crosstex Parties, 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, including
acts of terrorism, or (z) any change in accounting requirements or principles imposed



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upon Crosstex and its Subsidiaries or their respective businesses or any change in applicable
Law, or the interpretation thereof.



     “Crosstex Parties” means Crosstex and all of Crosstex’s Subsidiaries.



     “Crosstex Related Parties” shall have the meaning specified in Section 5.02.



     “Crosstex SEC Documents” shall have the meaning specified in Section 3.03.



     “Crosstex Securities” means any class or series of equity interest in Crosstex (but excluding
any options, rights, warrants and appreciation rights relating to an equity interest in Crosstex).



     “Crosstex Wholly-Owned Subsidiaries” means Crosstex Holdings GP, LLC, a Delaware limited
liability company, Crosstex Holdings LP, LLC, a Delaware limited liability company, Crosstex
Holdings, L.P., a Delaware limited partnership, Crosstex Energy GP, LLC, a Delaware limited
liability company, Crosstex Energy GP, L.P., a Delaware limited partnership, Crosstex Asset
Management GP, LLC, a Delaware limited liability company, and Crosstex Asset Management, L.P., a
Delaware limited partnership.



     “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 in
effect from time to time.



     “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 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.



     “Indemnified Party” shall have the meaning specified in Section 5.03.



     “Indemnifying Party” shall have the meaning specified in Section 5.03.



     “Law” means any federal, state, local or foreign order, writ, injunction, judgment,
settlement, award, decree, statute, law, rule or regulation.



     “Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such interest is based on the common law, statute or
contract, and whether such obligation or claim is fixed or contingent, and including but not
limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purpose of this Agreement, a Person shall be deemed to be the owner of any



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Property which it has acquired or holds subject to a conditional sale agreement, or leases
under a financing lease or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person in a transaction intended to create a financing.



     “NASDAQ” means the NASDAQ National Market.



     “Non-Disclosure Agreements” means collectively (i) the Letter Agreement, dated April 27, 2006,
by and between Kayne Anderson MLP Investment Company and Crosstex Partners, (ii) the Letter
Agreement, dated May 3, 2006, by and between Tortoise Capital Advisors LLC and Crosstex Partners,
(iii) the Letter Agreement, dated April 27, 2006, by and between LB I Group Inc. and Crosstex
Partners, and (iv) the Letter Agreement, dated May 4, 2006, by and between Fiduciary Asset
Management, LLC and Crosstex Partners.



     “Permits” means, with respect to Crosstex or any of its Subsidiaries, any licenses, permits,
variances, consents, authorizations, waivers, grants, franchises, concessions, exemptions, orders,
registrations and approvals of Governmental Authorities or other Persons necessary for the
ownership, leasing, operation, occupancy or use of its Properties or the conduct of its businesses
as currently conducted.



     “Person” means any individual, corporation, company, voluntary association, partnership, joint
venture, trust, limited liability company, unincorporated organization or 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.



     “Purchase Price” means $180,002,095.30, which is the aggregate of each Purchaser’s Allocated
Purchase Price as set forth on Schedule A hereto.



     “Purchased Shares” means with respect to each Purchaser, the number of shares of Common Stock
as set forth opposite such Purchaser’s name on Schedule A hereto, subject to adjustment
pursuant to Section 2.03.



     “Purchaser” has the meaning set forth in the introductory paragraph.



     “Purchaser Related Parties” shall have the meaning specified in Section 5.01.



     “Registration Rights Agreement” means the Registration Rights Agreement, to be entered into at
the Closing, between Crosstex and the Purchasers in the form attached hereto as Exhibit A.



     “Representatives” of any Person means the officers, directors, managers, employees, agents,
counsel, accountants, investment bankers and other representatives of such Person.



     “Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules
and regulations of the Commission promulgated thereunder.



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     “Senior Subordinated Series C Units” means the senior subordinated Series C units representing
limited partner interests in Crosstex Partners.



     “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; or (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
or more of its Subsidiaries. Notwithstanding any other provision of this Agreement, Crosstex
Partners shall be deemed a Subsidiary of Crosstex.



     “XTEX Purchase Agreement” means the Senior Subordinated Series C Unit Purchase Agreement,
dated the date hereof, by and among Crosstex Partners and the purchasers party thereto.



     “XTEX Registration Rights Agreement” means the Registration Rights Agreement, to be entered
into at the Closing, by and among Crosstex Partners and the purchasers party thereto, attached to
the XTEX Purchase Agreement as Exhibit A.



     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 Purchasers 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 Common Stock. Crosstex has authorized the issuance
and sale to the Purchasers of the Purchased Shares.



     Section 2.02 Sale and Purchase. Subject to the terms and conditions hereof, Crosstex
hereby agrees to issue and sell to each Purchaser, free and clear of any and all Liens, and each
Purchaser, severally and not jointly, hereby agrees to purchase from Crosstex, the number of
Purchased Shares as set forth on Schedule A (such number of Purchased Shares set forth
thereon with respect to each Purchaser, subject to adjustment pursuant to Section 2.03
below), and each Purchaser agrees to pay Crosstex its Allocated Purchase Price.



     Section 2.03 Adjustment of Purchased Shares. If the Common Stock Price is less than
$70.17, then the number of Purchased Shares allocated to each Purchaser shall be adjusted to be
equal to the Allocated Purchase Price of such Purchaser divided by the Common Stock Price



5









 




with
respect to such Purchaser, rounded to the nearest whole number. Notwithstanding anything to the
contrary contained herein, the number of Purchased Shares allocated to Lubar Equity Fund, LLC shall
not be adjusted.




     Section 2.04 Closing. Subject to the terms and conditions hereof, the consummation of the
purchase and sale of the Purchased Shares hereunder (the “Closing”) shall take place at the
offices of Vinson & Elkins, L.L.P., First City Tower, 1001 Fannin, Houston, Texas 77002,
concurrently with the closing of the Chief Asset Acquisition (the date of such closings, the
“Closing Date”).



     Section 2.05 Conditions to the Closing.



          (a) Mutual Conditions. The respective obligations of each party to consummate the purchase
and issuance and sale of the Purchased Shares 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 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) Purchasers’ Conditions. The respective obligation of each Purchaser to consummate the
purchase of the Purchased Shares 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 by such Purchaser in
writing, in whole or in part with respect to its Purchased Shares, to the extent permitted by
applicable Law):




               (i) Crosstex shall have given each Purchaser at least two (2) Business Days prior written
notice of the Closing Date;



               (ii) since the date of this Agreement, no Crosstex Material Adverse Effect shall have occurred
and be continuing;



               (iii) each of the conditions set forth in Section 2.05(b) of the XTEX Purchase Agreement
(other than Section 2.05(b)(v)) shall have been satisfied;



               (iv) Crosstex shall not have incurred any material indebtedness since the date hereof other
than indebtedness to purchase equity in Crosstex Partners;



               (v) no notice of delisting shall have been received by Crosstex and a notification form and
supporting documentation, if any, shall have been filed with the NASDAQ;



6









 





               (vi) the representations and warranties of Crosstex contained in this Agreement that are
qualified by materiality or Crosstex Material Adverse Effect shall be true and correct as of the
Closing Date as if made on and as of the Closing Date and all other representations and warranties
shall be true and correct in all material respects as of the Closing Date as if made on and as of
the Closing Date (except that representations made as of a specific date shall be required to be
true and correct as of such date only); and



               (vii) Crosstex shall have delivered, or caused to be delivered, to the Purchasers at the
Closing, Crosstex’s closing deliveries described in Section 2.06.



          (c) Crosstex’s Conditions. The obligation of Crosstex to consummate the sale of the
Purchased Shares to each Purchaser shall be subject to the satisfaction on or prior to the Closing
Date of each of the following conditions (which may be waived by Crosstex in writing, in whole or
in part, to the extent permitted by applicable Law):




               (i) that the representations and warranties of such Purchaser contained in this Agreement
shall be true and correct in all material respects at and as of the Closing Date as if made on and
as of the Closing Date (except that representations made as of a specific date shall be required to
be true and correct as of such date only); and



               (ii) Crosstex Partners shall have consummated the Chief Asset Acquisition in accordance with
the Chief Acquisition Agreement.



     Section 2.06 Crosstex Deliveries. At the Closing, subject to the terms and conditions
hereof, Crosstex will deliver, or cause to be delivered, to the Purchasers:



          (a) A certificate or certificates representing the Purchased Shares (bearing the legend set
forth in Section 4.06(d)), free and clear of any Liens, other than transfer restrictions
under applicable federal and state securities laws;




          (b) Copies of (i) the Restated Certificate of Incorporation of Crosstex, certified by the
Secretary of State of Delaware as of a recent date and (ii) the Bylaws;




          (c) A certificate of the Secretary of State of the State of Delaware, dated a recent date,
that Crosstex is in good standing;




          (d) A cross-receipt executed by Crosstex and delivered to each Purchaser certifying that it
has received the Allocated Purchase Price with respect to such Purchaser as of the Closing Date;




          (e) An opinion addressed to the Purchasers from legal counsel to Crosstex, dated as of the
Closing, in the form and substance attached hereto as Exhibit B;




          (f) The Registration Rights Agreement in substantially the form attached hereto as Exhibit
A, which shall have been duly executed by Crosstex;




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          (g) A certificate, dated the Closing Date and signed by (x) the Chief Executive Officer and
(y) the Chief Financial Officer of Crosstex, in their capacities as such, stating that:





          (i) Crosstex has performed and complied with the covenants and agreements contained in
this Agreement that are required to be performed and complied with by Crosstex on or prior
to the Closing Date;




          (ii) The representations and warranties of Crosstex contained in this Agreement that
are qualified by materiality or Crosstex Material Adverse Effect were true and correct when
made and as of the Closing Date and all other representations and warranties were true and
correct in all material respects when made and are true and correct in all material respects
as of the Closing Date, in each case as though made at and as of the Closing Date (except
that representations made as of a specific date shall be required to be true and correct as
of such date only); and



          (h) A certificate of the Secretary or Assistant Secretary of Crosstex certifying as to (1) the
Bylaws, (2) board resolutions authorizing the execution and delivery of the Basic Documents and the
consummation of the transactions contemplated thereby and hereby and (3) its incumbent officers
authorized to execute the Basic Documents, setting forth the name and title and bearing the
signatures of such officers.




     Section 2.07 Purchasers’ Deliveries. At the Closing, subject to the terms and conditions
hereof, each Purchaser will deliver, or cause to be delivered, to Crosstex:



     (a) Payment to Crosstex of each Purchaser’s Allocated Purchase Price by wire transfer of
immediately available funds to an account designated by Crosstex in writing at least two Business
Days prior to the Closing Date;



     (b) The Registration Rights Agreement in substantially the form attached hereto as Exhibit
A, which shall have been duly executed by each Purchaser;



     (c) A cross-receipt executed by each Purchaser and delivered to Crosstex certifying that it
has received its respective Purchased Shares as of the Closing Date; and



     (d) A certificate from each Purchaser, dated the Closing Date and signed by an appropriate
officer of such Purchaser, in their capacities as such, stating that:




          (i) Such Purchaser has performed and complied with the covenants and agreements
contained in this Agreement that are required to be performed and complied with by such
Purchaser on or prior to the Closing Date; and




          (ii) The representations and warranties of such Purchaser contained in this Agreement
that are qualified by materiality were true and correct when made and as of the Closing Date
and all other representations and warranties were true and correct in all material respects
when made and are true and correct in all material respects as of the Closing Date, in each
case as though made at and as of the Closing Date (except that



8









 






representations made as of a
specific date shall be required to be true and correct as of such date only).



     Section 2.08 Use of Proceeds. Crosstex shall use the proceeds received from the sale of
the Purchased Shares solely for the purpose of purchasing Senior Subordinated Series C Units from
Crosstex Partners and reasonable expenses related thereto.



     Section 2.09 Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser under any Basic Document are several and not joint with the obligations of any other
Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under any Basic Document. The failure or waiver of performance under any
Basic Document by any Purchaser does not excuse performance by any other Purchaser. Nothing
contained herein or in any other Basic Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or the transactions contemplated
by the Basic Document. Each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of this agreement or out of the other
Basic Documents, and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.



ARTICLE III

REPRESENTATIONS AND WARRANTIES

RELATED TO CROSSTEX




     Crosstex represents and warrants to each Purchaser as follows:



     Section 3.01 Corporate Existence. Crosstex (a) is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware; and (b) 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. 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, and 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. None of Crosstex nor any of its Subsidiaries are in default in
the performance, observance or fulfillment of any provision of its respective certificate of
incorporation, certification of formation, bylaws, limited liability company agreement or other
similar organizational documents. Each of Crosstex and its Subsidiaries is duly qualified or
licensed and in good standing as a foreign limited partnership, limited liability company or
corporation, as applicable, and is authorized to do business in each jurisdiction in which the
ownership or leasing of its respective Properties or the character of its respective operations
makes such



9









 




qualification necessary, except where the failure to obtain such qualification, license,
authorization or good standing would not be reasonably likely to have a Crosstex Material Adverse
Effect.




     Section 3.02 Capitalization and Valid Issuance of Purchased Shares.



          (a) As of the date of this Agreement, the issued and outstanding capital stock of Crosstex
consist of 12,763,469 shares of Common Stock. All outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and nonassessable.




          (b) Other than the Crosstex Energy, Inc. Long-Term Incentive Plan, Crosstex has no equity
compensation plans that contemplate the issuance of Common Stock or other equity interest in
Crosstex (or securities convertible into or exchangeable for Common Stock or other equity interest
in 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 stockholders may vote are
issued or outstanding. Except as set forth in the first sentence of this Section 3.02(b), there
are no outstanding or authorized (i) options, warrants, preemptive rights, subscriptions, calls, or
other rights, convertible or exchangeable securities, agreements, claims or commitments of any
character obligating Crosstex or any of its Subsidiaries to issue, transfer or sell any Common
Stock or other equity interest in, Crosstex or any of its Subsidiaries or securities convertible
into or exchangeable for such Common Stock or other equity interest in Crosstex, (ii) obligations
of Crosstex or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Common Stock
or other equity interests of Crosstex or any of its Subsidiaries or any such securities or
agreements listed in clause (i) of this sentence or (iii) 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. None of the offering or sale of the Purchased
Shares or the registration of the Purchased Shares pursuant to the Registration Rights Agreement,
all as contemplated by this Agreement, gives rise to any rights for or relating to the registration
of any Common Stock or other securities of the Crosstex.




          (c) (i) All of the issued and outstanding equity interests of each of the Crosstex
Wholly-Owned Subsidiaries are owned, directly or indirectly, by Crosstex free and clear of any
Liens (except for such restrictions as may exist under applicable Law, and all such ownership
interests have been duly authorized, validly issued and are fully paid and non-assessable and free
of preemptive rights, with no personal liability attaching to the ownership thereof, and (ii)
except as disclosed in the Crosstex SEC Documents, 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.




          (d) The Common Stock being purchased by each of the Purchasers hereunder will be duly
authorized by Crosstex prior to the Closing and, when issued and delivered to such Purchaser
against payment therefor in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable and will be free of any and all Liens and restrictions on transfer,
other than restrictions on transfer under this Agreement and under applicable state and federal
securities laws.

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          (e) The Common Stock is listed on the NASDAQ and Crosstex has not received any notice of
delisting. At the Closing the notification form and supporting documentation, if any, related to
the Purchased Shares will have been filed with the NASDAQ.




     Section 3.03 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 together with the Registration
Statement, collectively “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
consolidated financial position of Crosstex and its Subsidiaries as of the dates thereof and the
consolidated results of its operations and cash flows for the periods then ended. KPMG LLP is an
independent public accounting firm with respect to Crosstex and has not resigned or been dismissed
as independent public accountants of Crosstex 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.



     Section 3.04 No Material Adverse Change. Except as set forth in or contemplated by the
Crosstex SEC Documents filed with the Commission on or prior to the date hereof, since December 31,
2005, Crosstex and its Subsidiaries have conducted their respective businesses in the ordinary
course, consistent with past practice, and there has been no (a) change, event, occurrence,
effect, fact, circumstance or condition that has had or would be reasonably likely to have a
Crosstex Material Adverse Effect, (b) acquisition or disposition of any material asset by Crosstex
or any of its Subsidiaries or any contract or arrangement therefor, otherwise than for fair value
in the ordinary course of business or as disclosed in the Crosstex SEC Documents, or (c) material
change in Crosstex’s accounting principles, practices or methods.



     Section 3.05 Litigation. Except as set forth in the Crosstex SEC Documents, there is no
action, suit, or proceeding pending (including any investigation, litigation or inquiry) or, to
Crosstex’s knowledge, contemplated or threatened against or affecting any of the Crosstex Parties
or any of their respective officers, directors, properties or assets, which (a) questions the
validity of this Agreement or the Registration Rights Agreement or the right of Crosstex to enter
into this Agreement or the Registration Rights Agreement or to consummate the transactions



11









 




contemplated hereby and thereby or (b) (individually or in the aggregate) would be reasonably
likely to result in a Crosstex Material Adverse Effect.




     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 Shares, do not and will not (a)
assuming the accuracy of the representations and warranties of the Purchasers contained herein and
their compliance with the covenants contained herein, violate any provision of any Law or Permit
having applicability to Crosstex or any of its Subsidiaries or any of their respective Properties,
(b) conflict with or result in a violation or breach of any provision of the certificate of
incorporation or bylaws, each as amended to date, of Crosstex or any organizational documents of
any of Crosstex’s Subsidiaries, (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, agreement, instrument, obligation, note, bond, mortgage, license, loan or credit
agreement to which Crosstex or any of its Subsidiaries is a party or by which Crosstex or any of
its Subsidiaries or any of their respective Properties 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 Crosstex or any of its Subsidiaries, except where any such conflict,
violation, default, breach, termination, cancellation, failure to receive consent or approval, 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. Neither Crosstex nor any of its Subsidiaries is in
violation of any judgment, decree or order or any law, statute, ordinance, rule or regulation
applicable to Crosstex or its Subsidiaries, except as would not, individually or in the aggregate,
have a Material Adverse Effect. Crosstex and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities necessary to conduct
their respective businesses, except where the failure to possess such certificates, authorizations
or permits would not have, individually or in the aggregate, a Crosstex Material Adverse Effect,
and neither Crosstex nor any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit except where such
potential revocation or modification would not have, individually or in the aggregate, a Crosstex
Material Adverse Effect. Neither Crosstex, nor any of its Subsidiaries, nor any director, officer,
agent, employee or other person acting on behalf of Crosstex or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, Crosstex or any of its Subsidiaries (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii) violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.



     Section 3.07 Authority, Enforceability. Crosstex has all necessary corporate power and
authority to execute, deliver and perform its obligations under the Basic Documents and the
execution, delivery and performance by Crosstex of the Basic Documents has been duly authorized by
all necessary action; and the Basic Documents constitute the legal, valid and binding obligations
of Crosstex, enforceable in accordance with their terms, except as such



12









 




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 Common Stock is required in connection
with Crosstex’s issuance and sale of the Purchased Shares to the Purchasers.




     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 Investment Company Status. Crosstex is not an “investment company” or a
company controlled by an “investment company” within the meaning of the Investment Company Act of
1940, as amended.



     Section 3.10 Certain Fees. 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 Shares or
the consummation of the transaction contemplated by this Agreement. Crosstex agrees that it will
indemnify and hold harmless each 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
Shares or the consummation of the transactions contemplated by this Agreement.



     Section 3.11 No Side Agreements. There are no agreements by, among or between Crosstex or
any of its Affiliates, on the one hand, and any Purchasers or any of its Affiliates, on the other
hand, with respect to the transactions contemplated hereby other than the Basic Documents, the XTEX
Purchase Agreement and the XTEX Registration Rights Agreement nor promises or inducements for
future transactions between or among any of such parties.



     Section 3.12 Preemptive Rights or Registration Rights. Except as set forth in the
agreement of limited partnership, limited liability company agreement or other organizational
documents of the Crosstex Parties, there are no preemptive rights or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of, any capital stock or
partnership or membership interests of any of the Crosstex Parties, in each case pursuant to or any
other agreement or instrument to which any of such entities is a party or by which any one of them
may be bound. Neither the execution of this Agreement nor the issuance of the Purchase Shares as
contemplated by this Agreement gives rise to any rights for or relating to the registration of any
Common Stock or other securities of Crosstex, other than as have been waived.



     Section 3.13 No Registration Assuming the accuracy of the representations and warranties
of each Purchaser contained in the Purchase Agreement, the issuance and sale of the



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Purchased
Shares pursuant to this Agreement is exempt from registration requirements of the Securities Act of
1933, as amended.




     Section 3.14 No Integration. Neither Crosstex nor any of its Subsidiaries have, directly
or indirectly through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any “security” (as defined in the Securities Act of 1933, as amended)
that is or will be integrated with the sale of the Purchased Shares in a manner that would require
registration under the Securities Act of 1933, as amended.



     Section 3.15 Insurance. Crosstex and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses
in which they are engaged. Crosstex does not have any reason to believe that it nor 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.



     Section 3.16 Internal Accounting Controls. Crosstex and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and
to maintain asset accountability, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded accountability for assets is
compared with the 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.



     Section 3.17 Form S-3 Eligibility. Crosstex is eligible to register the resale of its
Common Stock for resale by the Purchasers under Form S-3 promulgated under the Securities Act.



     Section 3.18 Material Agreements. Crosstex has provided the Purchasers with, or made
available to the Purchasers 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.



     Section 3.19 Listing and Maintenance Requirements. Crosstex has not received
notice (written or oral) from NASDAQ to the effect that it is not in compliance with the listing or
maintenance requirements thereof. Crosstex is in compliance with all such listing and maintenance
requirements. The issuance and sale of the Purchased Shares and the offer of the Common Shares and
issuance of such Common Shares upon conversion of the Purchased Shares does not contravene NASDAQ
rules and regulations.



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ARTICLE IV

REPRESENTATIONS AND WARRANTIES AND COVENANTS

OF THE PURCHASERS




     Each Purchaser, severally and not jointly, hereby represents and warrants and covenants to
Crosstex that:



     Section 4.01 Existence. Such 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. Such Purchaser has all necessary legal power
and authority to enter into, deliver and perform its obligations under this Agreement and the
Registration Rights Agreement. The execution, delivery and performance of this Agreement and the
Registration Rights Agreement by such 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 such Purchaser is required. This Agreement and
the Registration Rights Agreement have been duly executed and delivered by such Purchaser and
constitute legal, valid and binding obligations of such 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
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
Registration Rights Agreement by such Purchaser and the consummation by such Purchaser of the
transactions contemplated hereby and 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 such Purchaser is a party or by which the Purchaser is bound or to which any of
the property or assets of such Purchaser is subject, (b) conflict with or result in any violation
of the provisions of the organizational documents of such Purchaser, or (c) violate any statute or
order, rule or regulation of any court or governmental agency or body having jurisdiction over such
Purchaser or the property or assets of such 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 Registration Rights Agreement and could not,
individually or in the aggregate, reasonably be expected to have a material adverse effect on the
financial condition or prospects of such Purchaser.



     Section 4.04 Certain Fees. No fees or commissions are or will be payable by such Purchaser
to brokers, finders, or investment bankers with respect to the purchase of any of the Purchased
Shares or the consummation of the transaction contemplated by this Agreement. Such Purchaser
agrees severally and not jointly with any other Purchaser, that it will indemnify and hold harmless
Crosstex from and against any and all claims, demands, or liabilities for broker’s, finder’s,
placement, or other similar fees or commissions incurred by such Purchaser or alleged to have been
incurred by such Purchaser in connection with the purchase of the Purchased Shares or the
consummation of the transactions contemplated by this Agreement.



15









 





     Section 4.05 No Side Agreements. There are no other agreements by, among or between such Purchaser and any of its Affiliates, on
the one hand, and Crosstex or any of its Affiliates, on the other hand, with respect to the
transactions contemplated hereby other than the Basic Documents, the XTEX Purchase Agreement and
XTEX Registration Rights Agreements nor promises or inducements for future transactions between or
among any of such parties.



     Section 4.06 Unregistered Securities. Such Purchaser represents that:



          (a) Investment. The Purchased Shares are being acquired for its own account or the account
of clients for whom it exercises investment discretion, not as a nominee or agent, and with no
intention of distributing the Purchased Shares or any part thereof, and that Purchaser has no
present intention of selling or granting any participation in or otherwise distributing the same in
any transaction in violation of the securities laws of the United States or any state, without
prejudice, however, to such Purchaser’s right at all times to (subject to such Purchaser’s
agreement contained in Section 4.07 hereof) sell or otherwise dispose of all or any part of
the Purchased Shares under a registration statement under the Securities Act and applicable state
securities laws or under an exemption from such registration available thereunder (including,
without limitation, if available, Rule 144 promulgated thereunder). If such Purchaser should in the
future decide to dispose of any of the Purchased Shares, such Purchaser understands and agrees (a)
that it may do so only in compliance with the Securities Act and applicable state securities law,
as then in effect, which may include a sale contemplated by any registration statement pursuant to
which such securities are being offered, and (b) that stop-transfer instructions to that effect
will be in effect with respect to such securities, subject to withdrawal thereof as described in
Section 6.07(b).




          (b) Nature of Purchasers. Such Purchaser represents and warrants to, and covenants and
agrees with, Crosstex that, (a) it is an “accredited investor” within the meaning of Rule 501 of
Regulation D promulgated by the Securities and Exchange Commission pursuant to the Securities Act
and (b) by reason of its business and financial experience it has such knowledge, sophistication
and experience in making similar investments and in business and financial matters generally so as
to be capable of evaluating the merits and risks of the prospective investment in the Purchased
Shares, is able to bear the economic risk of such investment and, at the present time, would be
able to afford a complete loss of such investment.




          (c) Receipt of Information; Authorization. Such Purchaser acknowledges that it has (a) had
access to Crosstex’s periodic filings with the Commission, including Crosstex’s Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports filed on Form 8-K and (b) been
provided a reasonable opportunity to ask questions of and receive answers from Representatives of
Crosstex regarding such matters sufficient to enable such Purchaser to evaluate the risks and
merits of purchasing the Purchased Shares and consummating the transactions contemplated by the
Basic Documents.




          (d) Legend. It is understood that the certificates evidencing the Purchased Shares will
bear the following legend: “These securities have not been registered under the Securities Act of
1933, as amended. They may not be sold or offered for sale in the absence of a registration
statement in effect with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless sold pursuant




16









 







to Rule
144 of such Act. These securities may be pledged in connection with a bona fide margin account or
other loan secured by such securities.”




     Section 4.07 Lock-Up. Such Purchaser agrees that from and after Closing it will not sell
any of the Purchased Shares prior to the Anniversary Date.



ARTICLE V

INDEMNIFICATION, COSTS AND EXPENSES




     Section 5.01 Indemnification by Crosstex. Crosstex agrees to indemnify each 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, without limitation, 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 as a result of, arising out of, or in any way related to
the breach of any of the representations, warranties or covenants of Crosstex contained herein,
provided such claim for indemnification relating to a breach of a representation or warranty is
made prior to the expiration of such representation or warranty.



     Section 5.02 Indemnification by the Purchasers. Each Purchaser agrees, severally and not
jointly, to indemnify Crosstex, its officers and directors and their respective Representatives
(collectively, “Crosstex 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, without limitation, 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 as a result of, arising out of, or in any way related to
the breach of any of the representations, warranties or covenants of such Purchaser contained
herein, provided such claim for indemnification relating to a breach of the representations and
warranties is made prior to the expiration of such representations and
warranties; provided, however, that the liability of each Purchaser shall not be
greater in amount than such Purchaser’s Allocated Purchase Price.



     Section 5.03 Indemnification Procedure. 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, the Indemnified Party shall give the indemnitor hereunder (the “Indemnifying
Party”) written notice of such claim or the commencement of such action, suit or proceeding,
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 claim to the extent then known. The Indemnifying Party shall have the



17









 




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, it shall promptly 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 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 diligently pursues such defense, the 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 failed to assume the defense and employ counsel 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 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.




ARTICLE VI

MISCELLANEOUS




     Section 6.01 Interpretation and Survival of Provisions. Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise
specified. 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.” 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. Whenever any determination, consent, or approval is to be made or given by the
Purchasers, such action shall be in such 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, 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.



18









 





     Section 6.02 Survival of Provisions. The representations and warranties set forth in
Sections 3.02, 3.07, 3.10, 3.11, 4.04, and 4.06
hereunder shall survive the execution and delivery of this Agreement indefinitely, and the other
representations and warranties set forth herein shall survive for a period of twelve (12) months
following the Closing Date regardless of any investigation made by or on behalf of Crosstex or the
Purchasers. The covenants made in this Agreement or any other Basic Document shall survive the
Closing of the transactions described herein and remain operative and in full force and effect
regardless of acceptance of any of the Purchased Shares and payment therefor and repayment,
conversion, exercise or repurchase thereof. All indemnification obligations of Crosstex and the
Purchasers and the provisions of Article V shall remain operative and in full force and effect
unless such obligations are expressly terminated in a writing referencing that individual Section,
regardless of any purported general termination of this Agreement.



     Section 6.03 No Waiver; Modifications in Writing.



          (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 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.




     Section 6.04 Binding Effect; Assignment.



          (a) Binding Effect. This Agreement shall be binding upon Crosstex, each 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 Shares. All or any portion of Purchased Shares purchased
pursuant to this Agreement may be sold, assigned or pledged by such Purchaser, subject to
compliance with applicable securities laws, Sections 4.06 and 4.07 herein and the
Registration Rights Agreement.




19









 








          (c) Assignment of Rights. All or any portion of the rights and obligations of each
Purchaser under this Agreement may be transferred by such Purchaser to any Affiliate of such
Purchaser without the consent of Crosstex. All or any portion of the rights and obligations of
each Purchaser under this Agreement may not be transferred by such Purchaser to a non-Affiliate
without the written consent of Crosstex.




     Section 6.05 Non-Disclosure. Notwithstanding anything herein to the contrary, the
Non-Disclosure Agreement shall remain in full force and effect regardless of any termination of
this Agreement. Other than the Form 8-Ks and Registration Statement to be filed in connection with
this Agreement, Crosstex, the General Partners, their respective Subsidiaries and any of their
respective Representatives shall disclose the identity of, or any other information concerning, any
Purchaser or any of its Affiliates only after providing such Purchaser a reasonable opportunity to
review and comment on such disclosure; provided, however, that nothing in this Section 6.05 shall
delay any required filing or other disclosure with the Commission, Nasdaq or any Governmental
Authority or otherwise hinder Crosstex, the General Partners, their respective subsidiaries or
their Representations’ ability to timely comply with all laws or rules and regulations of the
Commission, Nasdaq or other Governmental Authority.



     Section 6.06 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 Chieftain Capital Management, Inc., as agent and
attorney-in-fact for the Purchasers who are its clients under separate
investment advisor agreements:
	 
	 	 	 	 
	 

	 	 	 	Chieftain Capital Management, Inc.
	 

	 	 	 	12 East 49th Street
	 

	 	 	 	New York, New York 10017
	 

	 	 	 	Attn: Thomas D. Stern
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Seward & Kissel LLP
	 

	 	 	 	One Battery Park Plaza
	 

	 	 	 	New York, New York 10004
	 

	 	 	 	Attention: Patricia A. Poglinco, Esq.
	 

	 	 	 	Fax: (212) 480-8421
	 
	 	 	 	 
	 

	 	(b)
	 	If to Kayne Anderson MLP Investment Company or Kayne Anderson
Energy Total Return Fund, Inc.:
	 
	 	 	 	 
	 

	 	 	 	1800 Avenue of the Stars, 2nd Floor
	 

	 	 	 	Los Angeles, CA 90067
	 

	 	 	 	Attention: David Shladovsky, Esq.
	 

	 	 	 	Facsimile: (310) 284-6490






20









 






	 	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	1100 Louisiana, Suite 4550
	 

	 	 	 	Houston, Texas 77002
	 

	 	 	 	Attention: Kevin McCarthy
	 

	 	 	 	Facsimile: (713) 655-7359
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Vinson & Elkins L.L.P.
	 

	 	 	 	1001 Fannin, Suite 2300
	 

	 	 	 	Houston, TX 77002
	 

	 	 	 	Attention: Dan Fleckman
	 

	 	 	 	Facsimile: (713) 615-5859
	 
	 	 	 	 
	 

	 	(c)
	 	If to LB I Group Inc.:
	 
	 	 	 	 
	 

	 	 	 	LB I Group Inc.
	 

	 	 	 	c/o Lehman Brothers Inc.
	 

	 	 	 	399 Park Avenue, 9th Floor
	 

	 	 	 	New York, NY 10022
	 

	 	 	 	Attention: Michael J. Cannon
	 

	 	 	 	Facsimile: 646-758-4208
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Vinson & Elkins L.L.P.
	 

	 	 	 	1001 Fannin, Suite 2300
	 

	 	 	 	Houston, TX 77002
	 

	 	 	 	Attention: Dan Fleckman
	 

	 	 	 	Facsimile: (713) 615-5859
	 
	 	 	 	 
	 

	 	(d)
	 	If to Lubar Equity Fund, LLC:
	 
	 	 	 	 
	 

	 	 	 	Lubar Equity Fund, LLC
	 

	 	 	 	700 N. Water Street
	 

	 	 	 	Suite 1200
	 

	 	 	 	Milwaukee, WI 53202
	 

	 	 	 	Attn: David J. Lubar
	 

	 	 	 	Facsimile: (414) 291–9061
	 
	 	 	 	 
	 

	 	(e)
	 	If to Tortoise North American Energy Corp.:
	 
	 	 	 	 
	 

	 	 	 	10801 Mastin, Suite 222
	 

	 	 	 	Overland Park, KS 66210
	 

	 	 	 	Attention: David Schulte
	 

	 	 	 	Facsimile: (913) 981-1021






21









 






	 	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Blackwell Sanders Peper Martin LLP
	 

	 	 	 	2300 Main Street, Suite 1000
	 

	 	 	 	Kansas City, MO 64108
	 

	 	 	 	Attention: Steven F. Carman
	 

	 	 	 	Facsimile: (816) 983-8080
	 
	 	 	 	 
	 

	 	(f)
	 	If to Crosstex:
	 
	 	 	 	 
	 

	 	 	 	Crosstex Energy, L.P.
	 

	 	 	 	2501 Cedar Springs
	 

	 	 	 	Dallas, Texas 75201
	 

	 	 	 	Attention: Barry E. Davis
	 

	 	 	 	Facsimile: (214) 953-9500
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Baker Botts L.L.P.
	 

	 	 	 	2001 Ross Avenue
	 

	 	 	 	Dallas, Texas 75201-2980
	 

	 	 	 	Attention: Doug Rayburn
	 

	 	 	 	Facsimile: (214) 661-4634





or to such other address as Crosstex or such 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 mail, return receipt requested, or
regular mail, if mailed; when receipt acknowledged, if sent via facsimile; and upon actual receipt
when delivered to an air courier guaranteeing overnight delivery.




     Section 6.07 Removal of Legend.



          (a) Each Purchaser may request Crosstex to remove the legend described in Section 4.06(d) from
the certificates evidencing the Purchased Shares 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 such
Purchaser to effect the removal of such legend.




          (b) Crosstex agrees that following the date that such registration statement is declared
effective by the Commission, or at such time as such legend is no longer required under this
Section 6.07(b), it will, as promptly as practicable following the delivery by a Purchaser to
Crosstex or Crosstex’s transfer agent of a certificate representing Common Stock issued with a
restrictive legend, instruct Crosstex’s transfer agent to, or deliver or cause to be delivered to
such Purchaser a certificate representing such Common Stock that is free from all restrictive and
other legends. While a registration statement covering the resale of such security is effective or
at any




22









 







time after removal of any such restrictive legend, Crosstex shall withdraw any and all
stop-transfer instructions with respect to such security. Notwithstanding anything in this
agreement or any other Basic Document to the contrary, Crosstex may not make any notation on its
records or give instructions to any transfer agent of Crosstex that enlarge the restrictions on
transfer set forth in this Section.




     Section 6.08 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 Purchasers or any of their 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.



     Section 6.09 Governing Law. This Agreement will be construed in accordance with and
governed by the laws of the State of Texas without regard to principles of conflicts of laws.



     Section 6.10 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.



     Section 6.11 Termination.



          (a) In the event that any of the conditions to a party’s obligation to close specified in
Section 2.05 is not satisfied at or prior to the Closing Date, such party may terminate
this Agreement.




          (b) In the event that the Closing Date does not take place on or before August 31, 2006,
either party may terminate this Agreement.




          (c) In the event of any termination of this Agreement pursuant to this Section 6.11,
this Agreement shall forthwith become null and void. In the event of such termination, there shall
be no liability on the part of any party hereto; provided that nothing herein shall relieve any
party from any liability or obligation with respect to any willful breach of this Agreement.




23









 








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



	 	 	 	 	 	 	 
	 	 	CROSSTEX ENERGY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ William W. Davis
 

William W. Davis
	 	 
	 

	 	 	 	Executive Vice President and	 	 
	 

	 	 	 	Chief Financial Officer	 	 






[Signature Page to XTXI Purchase Agreement] 






 








 








	 	 	 	 	 	 	 
	 	 	CHIEFTAIN CAPITAL MANAGEMENT, INC.	 	 
	 	 	as agent and attorney-in-fact for the Purchasers who
are its clients under separate investment advisor
agreements	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas D. Stern
 

     Thomas D. Stern
	 	 
	 

	 	 	 	     Managing Director	 	 






[Signature Page to XTXI Purchase Agreement] 









 






	 	 	 	 	 	 	 
	 	 	KAYNE ANDERSON MLP INVESTMENT COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James C. Baker
 

     James C. Baker
	 	 
	 

	 	 	 	     Vice President	 	 






[Signature Page to XTXI Purchase Agreement] 









 






	 	 	 	 	 	 	 
	 	 	KAYNE ANDERSON ENERGY TOTAL	 	 
	 	 	   RETURN FUND, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James C. Baker
 

     James C. Baker
	 	 
	 

	 	 	 	     Vice President	 	 






[Signature Page to
XTXI Purchase Agreement] 









 






	 	 	 	 	 	 	 
	 	 	LB I GROUP INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ashvin Rao
 

     Ashvin Rao
	 	 
	 

	 	 	 	     Vice President	 	 






[Signature Page to XTXI Purchase Agreement] 









 






	 	 	 	 	 	 	 
	 	 	LUBAR EQUITY FUND, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Lubar & Co., Incorporated	 	 
	 

	 	Its:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David J. Lubar
 

     David J. Lubar
	 	 
	 

	 	 	 	     President	 	 






[Signature Page to
XTXI Purchase Agreement] 









 






	 	 	 	 	 	 	 
	 	 	TORTOISE NORTH AMERICAN ENERGY CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David J. Schulte
 

     David J. Schulte
	 	 
	 

	 	 	 	     President	 	 







[Signature Page to XTXI Purchase Agreement] 









 








Schedule A




	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Allocated	 
	Purchaser	 	Shares*	 	 	Purchase Price	 
	Chieftain Capital Management, Inc. as agent
and attorney-in-fact for the Purchasers who
are its clients under separate investment
advisor agreements
	 	 	1,710,130	 	 	$	119,999,822.10	 
	Kayne Anderson MLP Investment Company
	 	 	57,005	 	 	 	4,000,040.85	 
	Kayne Anderson Energy Total Return Fund, Inc.
	 	 	285,025	 	 	 	20,000,204.25	 
	LB I Group Inc.
	 	 	313,520	 	 	 	21,999,698.40	 
	Lubar Equity Fund, LLC
	 	 	156,070	 	 	 	12,001,783.00	 
	Tortoise North American Energy Corp.
	 	 	28,510	 	 	 	2,000,546.70	 
	 
	 	 	 	 	 	 
	Total
	 	 	2,550,260	 	 	$	180,002,095.30	 
	 
	 	 	 	 	 	 








 




			
	*	 	Subject to adjustment pursuant to Section 2.03.





Schedule A





 









 





Exhibit
A


REGISTRATION RIGHTS AGREEMENT




by and among




CROSSTEX ENERGY, INC.




and




THE PURCHASERS PARTY HERETO




 









 





Table of Contents




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE I	 	 	 	 
	 
	 	DEFINITIONS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 1.1
	 	Definitions	 	 	1	 
	Section 1.2
	 	Registrable Securities	 	 	3	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE II	 	 	 	 
	 
	 	REGISTRATION RIGHTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.1
	 	Shelf Registration	 	 	3	 
	Section 2.2
	 	Piggyback Registration	 	 	5	 
	Section 2.3
	 	Underwritten Offering	 	 	6	 
	Section 2.4
	 	Sale Procedures	 	 	7	 
	Section 2.5
	 	Cooperation by Holders	 	 	9	 
	Section 2.6
	 	Restrictions on Public Sale by Holders of Registrable Securities	 	 	10	 
	Section 2.7
	 	Expenses	 	 	10	 
	Section 2.8
	 	Indemnification	 	 	10	 
	Section 2.9
	 	Rule 144 Reporting	 	 	13	 
	Section 2.10
	 	Transfer or Assignment of Registration Rights	 	 	13	 
	Section 2.11
	 	Limitation on Subsequent Registration Rights	 	 	13	 
	Section 2.12
	 	Aggregation of Registrable Securities	 	 	13	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE III	 	 	 	 
	 
	 	MISCELLANEOUS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.1
	 	Communications	 	 	14	 
	Section 3.2
	 	Successor and Assigns	 	 	16	 
	Section 3.3
	 	Assignment of Rights	 	 	16	 
	Section 3.4
	 	Recapitalization, Exchanges, etc. Affecting the Common Stock	 	 	16	 
	Section 3.5
	 	Specific Performance	 	 	17	 
	Section 3.6
	 	Counterparts	 	 	17	 
	Section 3.7
	 	Headings	 	 	17	 
	Section 3.8
	 	Governing Law	 	 	17	 
	Section 3.9
	 	Severability of Provisions	 	 	17	 
	Section 3.10
	 	Entire Agreement	 	 	17	 
	Section 3.11
	 	Amendment	 	 	17	 
	Section 3.12
	 	No Presumption	 	 	17	 






 









 






REGISTRATION RIGHTS AGREEMENT




     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of
[                    ], 2006 by and among CROSSTEX ENERGY, INC., a Delaware corporation
(“Crosstex”), and each of the parties set forth on Schedule A hereto (the
“Purchasers”).



     WHEREAS, this Agreement is made in connection with the Closing of the issuance and sale of the
Purchased Shares pursuant to the Stock Purchase Agreement, dated as of May 16, 2006, by and between
Crosstex and the Purchasers (the “Purchase Agreement”);



     WHEREAS, Crosstex has agreed to provide the registration and other rights set forth in this
Agreement for the benefit of the Purchasers pursuant to the Purchase Agreement; and



     WHEREAS, it is a condition to the obligations of the Purchasers and Crosstex under the
Purchase Agreement that this Agreement be executed and delivered.



     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 by
each party hereto, the parties hereby agree as follows:



ARTICLE I

DEFINITIONS




     Section 1.1 Definitions. The terms set forth below are used herein as so defined:



          “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 and, for the purposes of this definition, any registered investment advisor,
together with its clients for whom it exercises investment discretion and acts as agent and
attorney-in-fact shall be considered Affiliates. 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.




          “Anniversary Date” shall have the meaning set forth in the Purchase Agreement.




          “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 set forth in the Purchase Agreement.




          “Closing Date” shall have the meaning set forth in the Purchase Agreement.



          “Commission” means the United States Securities and Exchange Commission.


1









 











          “Common Stock” shall have the meaning set forth in the Purchase Agreement.




          “Crosstex” has the meaning specified therefor in the introductory paragraph of this
Agreement.




          “Effectiveness Period” has the meaning specified therefor in Section 2.1(a) of
this Agreement.




          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.




          “Holder” means the record holder of any Registrable Securities.




          “Included Registrable Securities” has the meaning specified therefor in Section
2.2(a) of this Agreement.




          “Losses” has the meaning specified therefor in Section 2.8(a) of this
Agreement.




          “Managing Underwriter” means, with respect to any Underwritten Offering, the book
running lead manager of such Underwritten Offering.




          “Non-Disclosure Agreements” means collectively (i) the Letter Agreement, dated April
27, 2006, by and between Kayne Anderson MLP Investment Company and Crosstex Partners, (ii) the
Letter Agreement, dated May 3, 2006, by and between Tortoise Capital Advisors LLC, and Crosstex
Partners, (iii) the Letter Agreement, dated April 27, 2006, by and between LB I Group Inc. and
Crosstex Partners, and (iv) the Letter Agreement, dated May 4, 2006, by and between Fiduciary Asset
Management, LLC and Crosstex Partners.




          “Other Holder” has the meaning specified in Section 2.2(b).




          “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.




          “Piggyback Registration” has the meaning specified therefor in Section 2.2(a)
of this Agreement.




          “Purchase Agreement” has the meaning specified therefor in the Recitals of this
Agreement.




          “Purchased Shares” shall have the meaning set forth in the Purchase Agreement.




          “Purchasers” has the meaning specified therefor in the introductory paragraph of this
Agreement.




2









 








          “Registrable Securities” means the Purchased Shares, all of which are subject to the
rights provided herein until such rights terminate pursuant to the provisions of this Agreement.




          “Registration Expenses” has the meaning specified therefor in Section 2.7(a)
of this Agreement.




          “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.




          “Selling Expenses” has the meaning specified therefor in Section 2.7(a) of
this Agreement.




          “Selling Holder” means a Holder who is selling Registrable Securities pursuant to a
registration statement.




          “Shelf Registration Statement” means a registration statement under the Securities Act
to permit the resale of the Registrable Securities from time to time as permitted by Rule 415 of
the Securities Act (or any similar provision then in force under the Securities Act).




          “Underwritten Offering” means an offering (including an offering pursuant to a Shelf
Registration Statement) in which Common Stock is sold to an underwriter on a firm commitment basis
for reoffering to the public or an offering that is a “bought deal” with one or more investment
banks.




     Section 1.2 Registrable Securities. Any Registrable Security will cease to be a
Registrable Security when (a) a registration statement covering such Registrable Security has been
declared effective by the Commission and such Registrable Security has been sold or disposed of
pursuant to such effective registration statement; (b) such Registrable Security has been disposed
of pursuant to any Section of Rule 144 (or any similar provision then in force under the Securities
Act); (c) such Registrable Security is held by Crosstex or one of its subsidiaries; (d) such
Registrable Security has been sold in a private transaction in which the transferor’s rights under
this Agreement are not assigned to the transferee of such securities or (e) two years from the date
hereof; provided, however, no Registrable Security shall cease to be a Registrable
Security pursuant to this Section 1.2(e) for the purposes of a Piggyback Registration or a
registration pursuant to Section 2.3 hereof prior to five years from the date hereof with
respect to any Purchaser who holds 8% or more of the shares of Common Stock outstanding at such
time.



ARTICLE II

REGISTRATION RIGHTS




     Section 2.1 Shelf Registration.



          (a) Shelf Registration. As soon as practicable following the Closing of the
acquisition of the Purchased Shares pursuant to the terms of the Purchase Agreement, but in any
event within 30 days of the Closing, Crosstex shall prepare and file a Shelf Registration Statement
covering the Registrable Securities. Crosstex shall use its commercially reasonable





3









 







efforts to
cause the Shelf Registration Statement to become effective no later than 90 days after the date of
the Closing. A Shelf Registration Statement filed pursuant to this Section 2.1(a) shall be
on such appropriate registration form of the Commission as shall be selected by Crosstex; provided,
however, that if a prospectus supplement will be used in connection with the marketing of an
Underwritten Offering from the Shelf Registration Statement and the Managing Underwriter at any
time shall notify Crosstex in writing that, in the sole judgment of such Managing Underwriter,
inclusion of detailed information to be used in such prospectus supplement is of material
importance to the success of the Underwritten Offering of such Registrable Securities, Crosstex
shall include such information in the prospectus unless it has determined, upon advice of counsel,
that such information would violate the rules and regulations of the Commission or would cause such
prospectus supplement to contain an untrue statement of a material fact or to omit to state a
material fact required to be stated therein or necessary in order to make the statements therein
not misleading. Crosstex will use its commercially reasonable efforts to cause the Shelf
Registration Statement filed pursuant to this Section 2.1(a) to be continuously effective
under the Securities Act until the earlier of (i) all Registrable Securities covered by the Shelf
Registration Statement have been distributed in the manner set forth and as contemplated in the
Shelf Registration Statement, (ii) there are no longer any Registrable Securities outstanding or
(iii) two years from the Closing (the “Effectiveness Period”). The Shelf Registration
Statement when declared effective (including the documents incorporated therein by reference) will
comply as to form in all material respects with all applicable requirements of the Securities Act
and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading. If the Shelf Registration Statement is not declared effective within 120 days after
Closing, then the Purchasers shall be entitled to a payment (with respect to each of such
Purchaser’s Purchased Shares), as liquidated damages and not as a penalty, of 0.25% of the Purchase
Price per 30-day period for the first sixty (60) days following the 120th day after Closing, with
such payment amount increasing by an additional 0.25% of the Purchase Price per 30-day period for
each subsequent 60 days, up to a maximum of 1.00% of the Purchase Price per 30-day period (the
“Liquidated Damages”), until such time as the Shelf Registration Statement is declared
effective or there are no longer any Registrable Securities outstanding. The Liquidated Damages
shall accrue on a daily basis and be paid to each Purchaser in cash within ten (10) Business Days
of the end of such 30-day period. The Purchasers’ rights (and any transferee’s rights pursuant to
Section 2.10) under this Section 2.1 shall terminate when such Registrable Securities become
eligible for resale under Rule 144(k) (or any similar provision then in force under the Securities
Act).




          (b) Delay Rights. Notwithstanding anything to the contrary contained herein, Crosstex
may, upon written notice to any Selling Holder whose Registrable Securities are included in the
Shelf Registration Statement, suspend such Selling Holder’s use of any prospectus which is a part
of the Shelf Registration Statement (in which event the Selling Holder shall discontinue sales of
the Registrable Securities pursuant to the Shelf Registration Statement) if (i) Crosstex is
pursuing an acquisition, merger, reorganization, disposition or other similar transaction and
Crosstex determines in good faith that Crosstex’s ability to pursue or
consummate such a transaction would be materially and adversely affected by any required
disclosure of such transaction in the Shelf Registration Statement or (ii) Crosstex has experienced
some other material non-public event the disclosure of which at such time, in the good faith
judgment of Crosstex, would materially and adversely affect Crosstex; however, in no





4









 







event shall
any delay pursuant hereto exceed sixty (60) days in any one hundred-eighty (180) day period or
ninety (90) days in any twelve-month period. Upon disclosure of such information or the
termination of the condition described above, Crosstex shall provide prompt notice to the Selling
Holders whose Registrable Securities are included in the Shelf Registration Statement, and shall
promptly terminate any suspension of sales it has put into effect and shall take such other actions
to permit registered sales of Registrable Securities as contemplated in this Agreement.




     Section 2.2 Piggyback Registration.



          (a) Participation. Commencing on the later of the Anniversary Date or the Effective
Date of the Registration Statement, if Crosstex at any time proposes to file a prospectus
supplement to an effective Shelf Registration Statement with respect to an Underwritten Offering of
Common Stock for its own account or to register any Common Stock for its own account for sale to
the public in an Underwritten Offering or otherwise file any registration statement with the
Commission relating to any Underwritten Offering of Common Stock other than (x) a registration
statement on Form S-8 (or any successor form) relating solely to employee benefit plans or (y) a
registration statement on Form S-4 (or any successor form) relating solely to a Rule 145
transaction, then, as soon as practicable following the engagement of counsel to Crosstex to
prepare the documents to be used in connection with an Underwritten Offering, Crosstex shall give
notice of such proposed Underwritten Offering to the Holders, and such notice shall offer the
Holders the opportunity to include in such Underwritten Offering such number of Registrable
Securities (the “Included Registrable Securities”) as each such Holder may request in
writing (a “Piggyback Registration”); provided, however, that Crosstex
shall not be required to offer such opportunity to Holders if the Holders do not offer a minimum of
$5,000,000 of Registrable Securities (determined by multiplying the number of Registrable
Securities owned by the average of the closing price on NASDAQ for Common Stock for the ten (10)
trading days preceding the date of such notice). The notice required to be provided in this
Section 2.2(a) to Holders shall be provided on a Business Day pursuant to Section
3.1 hereof and receipt of such notice shall be confirmed by Holder. Holder shall then have two
(2) Business Days to request inclusion of Registrable Securities in the Underwritten Offering. If
no request for inclusion from a Holder is received within the specified time, such Holder shall
have no further right to participate in such Piggyback Registration. If, at any time after giving
written notice of its intention to undertake an Underwritten Offering and prior to the closing of
such Underwritten Offering, Crosstex shall determine for any reason not to undertake or to delay
such Underwritten Offering, Crosstex may, at its election, give written notice of such
determination to the Selling Holders and, (x) in the case of a determination not to undertake such
Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable
Securities in connection with such terminated Underwritten Offering, and (y) in the case of a
determination to delay such Underwritten Offering, shall be permitted to delay offering any
Included Registrable Securities for the same period as the delay in the Underwritten Offering. Any
Selling Holder
shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling
Holder’s Registrable Securities in such offering by giving written notice to Crosstex of such
withdrawal up to and including the time of pricing of such offering. No Holders shall be entitled
to participate in any such Underwritten Offering under this Section 2.2(a) unless such Holder
(together with any Affiliates that are Selling Holders) participating therein holds at least
fifteen million ($15,000,000) of Registrable Securities (determined by multiplying the number of




5









 







Registrable Securities owned by the average of the closing price for Common Stock for the ten (10)
trading days preceding the date of such notice).




          (b) Priority of Piggyback Registration. If the Managing Underwriter or Underwriters
of any proposed Underwritten Offering of Common Stock included in a Piggyback Registration advises
Crosstex that the total amount of Common Stock which the Selling Holders and any other Persons
intend to include in such offering exceeds the number which can be sold in such offering without
being likely to have an adverse effect on the price, timing or distribution of the Common Stock
offered or the market for the Common Stock, then the Common Stock to be included in such
Underwritten Offering shall include the number of Registrable Securities that such Managing
Underwriter or Underwriters advises Crosstex can be sold without having such adverse effect, with
such number to be allocated pro rata among the Selling Holders and any other
Persons who have been or are granted registration rights on or after the date of this Agreement
(“Other Holders”) who have requested participation in the Piggyback Registration (based,
for each such Selling Holder or Other Holder, on the percentage derived by dividing (A) the number
of Registrable Securities proposed to be sold by such Selling Holder or such Other Holder in such
offering; by (B) the aggregate number of Common Stock proposed to be sold by all Selling Holders
and all Other Holders in the Piggyback Registration).




     Section 2.3 Underwritten Offering.



          (a) S-3 Registration. In the event that a Selling Holder (together with any
Affiliates that are Selling Holders) elects to dispose of Registrable Securities under the Shelf
Registration Statement pursuant to an Underwritten Offering of at least fifteen million
($15,000,000) of Registrable Securities, Crosstex shall, at the request of such Selling Holder,
enter into an underwriting agreement in customary form with the Managing Underwriter or
Underwriters, which shall include, among other provisions, indemnities to the effect and to the
extent provided in Section 2.8, and shall take all such other reasonable actions as are
requested by the Managing Underwriter in order to expedite or facilitate the disposition of the
Registrable Securities; provided, however, that Crosstex management will not be required to
participate in a roadshow or similar marketing effort.




          (b) General Procedures. In connection with any Underwritten Offering (i) under
Section 2.2 of this Agreement, Crosstex shall be entitled to select the Managing
Underwriter or Underwriters, and (ii) under Section 2.3 of this Agreement, the Selling
Holders shall be entitled to select the Managing Underwriter or Underwriters. In connection with
an Underwritten Offering under Section 2.2 or Section 2.3 hereof, each Selling
Holder and Crosstex shall enter into an underwriting agreement with the Managing Underwriter or
Underwriters which contains such representations, covenants, indemnities and other rights and
obligations as
are customary in underwriting agreements for firm commitment offerings of equity securities.
No Selling Holder may participate in such Underwritten Offering unless such Selling Holder agrees
to sell its Registrable Securities on the basis provided in such underwriting agreement and
completes and executes all questionnaires, powers of attorney, indemnities and other documents
reasonably required under the terms of such underwriting agreement. Each Selling Holder may, at
its option, require that any or all of the representations and warranties by, and the other
agreements on the part of, Crosstex to and for the benefit of such underwriters also be made to and
for such Selling Holder’s benefit and that any or all of the conditions precedent to the





6









 







obligations of such underwriters under such underwriting agreement also be conditions precedent to
its obligations. No Selling Holder shall be required to make any representations or warranties to
or agreements with Crosstex or the underwriters other than representations, warranties or
agreements regarding such Selling Holder and its ownership of the securities being registered on
its behalf and its intended method of distribution and any other representation required by law.
If any Selling Holder disapproves of the terms of an underwriting, such Selling Holder may elect to
withdraw therefrom by notice to Crosstex and the Managing Underwriter; provided,
however, that such withdrawal must be made prior to the pricing of such Underwritten
Offering hereof to be effective. No such withdrawal or abandonment shall affect Crosstex’s
obligation to pay Registration Expenses.




     Section 2.4 Sale Procedures. In connection with its obligations contained in Sections
2.1, 2.2 and 2.3, Crosstex will, as expeditiously as possible:



          (a) prepare and file with the Commission such amendments and supplements to the Shelf
Registration Statement and the prospectus used in connection therewith as may be necessary to keep
the Shelf Registration Statement effective for the Effectiveness Period and as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition of all securities
covered by the Shelf Registration Statement;




          (b) furnish to each Selling Holder (i) as far in advance as reasonably practicable before
filing the Shelf Registration Statement or any other registration statement contemplated by this
Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete
drafts of all such documents proposed to be filed (including exhibits and each document
incorporated by reference therein to the extent then required by the rules and regulations of the
Commission), and provide each such Selling Holder the opportunity to object to any information
pertaining to such Selling Holder and its plan of distribution that is contained therein and make
the corrections reasonably requested by such Selling Holder with respect to such information prior
to filing the Shelf Registration Statement or such other registration statement and the prospectus
included therein or any supplement or amendment thereto, and (ii) such number of copies of the
Shelf Registration Statement or such other registration statement and the prospectus included
therein and any supplements and amendments thereto as such Persons may reasonably request in order
to facilitate the public sale or other disposition of the Registrable Securities covered by such
Shelf Registration Statement or other registration statement;




          (c) if applicable, use its commercially reasonable efforts to register or qualify the
Registrable Securities covered by the Shelf Registration Statement or any other registration
statement contemplated by this Agreement under the securities or blue sky laws of such
jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing
Underwriter, shall reasonably request, provided that Crosstex will not be required to qualify
generally to transact business in any jurisdiction where it is not then required to so qualify or
to take any action which would subject it to general service of process in any such jurisdiction
where it is not then so subject;




          (d) promptly notify each Selling Holder and each underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of (i) the




7









 







filing of the
Shelf Registration Statement or any other registration statement contemplated by this Agreement or
any prospectus included therein or any amendment or supplement thereto, and, with respect to such
Shelf Registration Statement or any other registration statement or any post-effective amendment
thereto, when the same has become effective; and (ii) any written comments from the Commission with
respect to any filing referred to in clause (i) and any written request by the Commission for
amendments or supplements to the Shelf Registration Statement or any other registration statement
or any prospectus or prospectus supplement thereto;




          (e) immediately notify each Selling Holder and each underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of (i) the happening of any
event as a result of which the prospectus contained in the Shelf Registration Statement or any
other registration statement contemplated by this Agreement or any supplemental amendment thereto,
includes an untrue statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the light of the
circumstances then existing; (ii) the issuance or threat of issuance by the Commission of any stop
order suspending the effectiveness of the Shelf Registration Statement or any other registration
statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or
(iii) the receipt by Crosstex of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the applicable securities or blue sky
laws of any jurisdiction. Following the provision of such notice, Crosstex agrees to as promptly
as practicable amend or supplement the prospectus or prospectus supplement or take other
appropriate action so that the prospectus or prospectus supplement does not include an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the circumstances then
existing and to take such other action as is necessary to remove a stop order, suspension, threat
thereof or proceedings related thereto;




          (f) upon request and subject to appropriate confidentiality obligations, furnish to each
Selling Holder copies of any and all transmittal letters or other correspondence with the
Commission or any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to such offering of
Registrable Securities;




          (g) in the case of an Underwritten Offering, furnish upon request, (i) an opinion of counsel
for Crosstex, dated the effective date of the applicable registration statement
or the date of any amendment or supplement thereto, preliminary or prospectus supplement, and
a letter of like kind dated the date of the closing under the underwriting agreement, and (ii) a
“cold comfort” letter, dated the effective date of the applicable registration statement or the
date of any amendment or supplement thereto, preliminary or prospectus supplement and a letter of
like kind dated the date of the closing under the underwriting agreement, in each case, signed by
the independent public accountants who have certified Crosstex’s financial statements included or
incorporated by reference into the applicable registration statement, and each of the opinion and
the “cold comfort” letter shall be in customary form and covering substantially the same matters
with respect to such registration statement (and the prospectus included therein any supplement
thereto) and as are customarily covered in opinions of issuer’s counsel and in




8









 







accountants’ letters
delivered to the underwriters in Underwritten Offerings of securities, such other matters as such
underwriters may reasonably request;




          (h) otherwise use its commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least 12 months, but not more than 18
months, beginning with the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 promulgated thereunder;




          (i) make available to the appropriate representatives of the Managing Underwriter and Selling
Holders access to such information and Crosstex personnel as is reasonable and customary to enable
such parties to establish a due diligence defense under the Securities Act; provided that Crosstex
need not disclose any information to any such representative unless and until such representative
has entered into a confidentiality agreement with Crosstex;




          (j) cause all such Registrable Securities registered pursuant to this Agreement to be listed
on each securities exchange or nationally recognized quotation system on which similar securities
issued by Crosstex are then listed;




          (k) use its commercially reasonable efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of Crosstex to enable the Selling Holders to consummate
the disposition of such Registrable Securities;




          (l) provide a transfer agent and registrar for all Registrable Securities covered by such
registration statement not later than the effective date of such registration statement; and




          (m) enter into customary agreements and take such other actions as are reasonably requested by
the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition
of such Registrable Securities.




     Each Selling Holder, upon receipt of notice from Crosstex of the happening of any event of the
kind described in subsection (e) of this Section 2.4, shall forthwith discontinue
disposition of the Registrable Securities until such Selling Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by subsection (e) of this Section 2.4 or
until it is advised in
writing by Crosstex that the use of the prospectus may be resumed, and has received copies of
any additional or supplemental filings incorporated by reference in the prospectus, and, if so
directed by Crosstex, such Selling Holder will, or will request the Managing Underwriter or
underwriters, if any, to deliver to Crosstex (at Crosstex’s expense) all copies in their possession
or control, other than permanent file copies then in such Selling Holder’s possession, of the
prospectus and any prospectus supplement covering such Registrable Securities current at the time
of receipt of such notice.



     Section 2.5 Cooperation by Holders. Crosstex shall have no obligation to include in the
Shelf Registration Statement Common Stock of a Holder or in a Piggyback Registration Common Stock
of a Selling Holder who has failed to timely furnish such information which, in



9









 




the opinion of
counsel to Crosstex, is reasonably required in order for the registration statement or prospectus
supplement, as applicable, to comply with the Securities Act.




     Section 2.6 Restrictions on Public Sale by Holders of Registrable Securities. Each Holder
of Registrable Securities who is included in the Shelf Registration Statement agrees not to effect
any public sale or distribution of the Registrable Securities during the 30 calendar day period
beginning on the date of a prospectus supplement filed with the Commission with respect to the
pricing of an Underwritten Offering, or other prospectus (including any free writing prospectus)
containing the terms of the pricing of such Underwritten Offering; provided that the duration of
the foregoing restrictions shall be no longer than the duration of the shortest restriction
generally imposed by the underwriters on the officers or directors or any other stockholder of
Crosstex on whom a restriction is imposed and provided further that such Selling Holder (together
with any Affiliates that are Selling Holders) owns at least fifteen million ($15,000,000) of
Registrable Securities (determined by multiplying the number of Registrable Securities owned by the
average of the closing price for Common Stock for the ten (10) trading days preceding the date of
such filing).



     Section 2.7 Expenses.



          (a) Certain Definitions. “Registration Expenses” means all expenses incident
to Crosstex’s performance under or compliance with this Agreement to effect the registration of
Registrable Securities in a Shelf Registration pursuant to Section 2.1, a Piggyback
Registration pursuant to Section 2.2, or an Underwritten Offering pursuant to Section
2.3, and the disposition of such securities, including, without limitation, all registration,
filing, securities exchange listing and NASDAQ fees, all registration, filing, qualification and
other fees and expenses of complying with securities or blue sky laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes and fees of transfer agents and registrars,
all word processing, duplicating and printing expenses, the fees and disbursements of counsel and
independent public accountants for Crosstex, including the expenses of any special audits or “cold
comfort” letters required by or incident to such performance and compliance. Except as otherwise
provided in Section 2.8 hereof, Crosstex shall not be responsible for legal fees incurred
by Holders in
connection with the exercise of such Holders’ rights hereunder. In addition, Crosstex shall
not be responsible for any “Selling Expenses,” which means all underwriting fees, discounts
and selling commissions and transfer taxes allocable to the sale of the Registrable Securities.




          (b) Expenses. Crosstex will pay all reasonable Registration Expenses in connection
with a Piggyback Registration or Underwritten Offering, whether or not any sale is made pursuant to
the Piggyback Registration or Underwritten Offering. Each Selling Holder shall pay all Selling
Expenses in connection with any sale of its Registrable Securities hereunder.




     Section 2.8 Indemnification.



          (a) By Crosstex. In the event of a registration of any Registrable Securities under
the Securities Act pursuant to this Agreement, Crosstex will indemnify and hold harmless each
Selling Holder thereunder, its directors, officers and managers, and each underwriter, pursuant to
the applicable underwriting agreement with such underwriter, of Registrable Securities thereunder
and each Person, if any, who controls such Selling Holder or underwriter





10









 







within the meaning of the
Securities Act and the Exchange Act, against any losses, claims, damages, expenses or liabilities
(including reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or
several, to which such Selling Holder or underwriter or controlling Person may become subject under
the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained in the Shelf
Registration Statement or any other registration statement contemplated by this Agreement, any
preliminary prospectus or final prospectus contained therein, or any free writing prospectus
related thereto, or any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading, and will reimburse each such Selling
Holder, its directors and officers, each such underwriter and each such controlling Person for any
legal or other expenses reasonably incurred by them in connection with investigating or defending
any such Loss or actions or proceedings; provided, however, that Crosstex will not
be liable in any such case if and to the extent that any such Loss arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission so made in strict
conformity with information furnished by such Selling Holder, such underwriter or such controlling
Person in writing specifically for use in the Shelf Registration Statement or such other
registration statement, or prospectus supplement, as applicable. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of such Selling Holder
or any such director, officer or controlling Person, and shall survive the transfer of such
securities by such Selling Holder.




          (b) By Each Selling Holder. Each Selling Holder agrees severally and not jointly to
indemnify and hold harmless Crosstex, its directors and officers, and each Person, if any, who
controls Crosstex within the meaning of the Securities Act or of the Exchange Act to the same
extent as the foregoing indemnity from Crosstex to the Selling Holders, but only with respect to
information regarding such Selling Holder furnished in writing by or on behalf of such
Selling Holder expressly for inclusion in the Shelf Registration Statement or prospectus
supplement relating to the Registrable Securities, or any amendment or supplement thereto;
provided, however, that the liability of each Selling Holder shall not be greater
in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such
Selling Holder from the sale of the Registrable Securities giving rise to such indemnification.




          (c) Notice. Promptly after receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party other than under this Section 2.8. In any action
brought against any indemnified party, it shall notify the indemnifying party of the commencement
thereof. The indemnifying party shall be entitled to participate in and, to the extent it shall
wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party shall not be liable
to such indemnified party under this Section 2.8 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense






11









 







thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided, however,
that, (i) if the indemnifying party has failed to assume the defense and employ counsel or (ii) 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 additional 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 legal defense and otherwise to participate in
the defense of such action, with the reasonable expenses and fees of such separate counsel and
other reasonable 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, includes a complete release from
liability of, and does not contain any admission of wrong doing by, the indemnified party.




          (d) Contribution. If the indemnification provided for in this Section 2.8 is
held by a court or government agency of competent jurisdiction to be unavailable to Crosstex or any
Selling Holder or is insufficient to hold them harmless in respect of any Losses, then each such
indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of Crosstex on the one hand and of such Selling Holder on
the other in connection with the statements or omissions which resulted in such Losses, as well as
any other relevant equitable considerations; provided, however, that in no event
shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar
amount of proceeds (net of Selling Expenses) received by such Selling Holder from the sale of
Registrable Securities giving rise to such indemnification. The relative fault of Crosstex on the
one hand and each Selling Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact has been made by, or relates to, information
supplied by such party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this paragraph were to be determined
by pro rata allocation or by any other method of allocation which does not take account of the
equitable considerations referred to in the first sentence of this paragraph. The amount paid by
an indemnified party as a result of the Losses referred to in the first sentence of this paragraph
shall be deemed to include any legal and other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any Loss which is the subject of this
paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who is not guilty of such
fraudulent misrepresentation.




          (e) Other Indemnification. The provisions of this Section 2.8 shall be in
addition to any other rights to indemnification or contribution which an indemnified party may have
pursuant to law, equity, contract or otherwise.





12









 








     Section 2.9 Rule 144 Reporting. With a view to making available the benefits of certain
rules and regulations of the Commission that may permit the sale of the Registrable Securities to
the public without registration, Crosstex agrees to use its commercially reasonable efforts to:



          (a) Make and keep public information regarding Crosstex available, as those terms are
understood and defined in Rule 144 of the Securities Act, at all times from and after the date
hereof;




          (b) File with the Commission in a timely manner all reports and other documents required of
Crosstex under the Securities Act and the Exchange Act at all times from and after the date hereof;
and




          (c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon
request a copy of the most recent annual or quarterly report of Crosstex, and such other reports
and documents so filed as such Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing such Holder to sell any such securities without registration.




     Section 2.10 Transfer or Assignment of Registration Rights. The rights to cause Crosstex
to register Registrable Securities granted to the Purchasers by Crosstex under this Article II may
be transferred or assigned by the Purchasers to one or more transferee(s) or assignee(s) of such
Registrable Securities, who (a) are Affiliates of such Purchaser, or (b) hold, collectively with
its or their Affiliates, after giving effect to such transfer or assignment, at least fifteen
million ($15,000,000) of Registrable Securities. Crosstex shall be given written notice prior to
any said transfer or assignment, stating the name and address of each such transferee and
identifying the securities with respect to which such registration rights are being transferred or
assigned, and each such transferee shall assume in writing responsibility for its obligations of
the Purchasers under this Agreement.



     Section 2.11 Limitation on Subsequent Registration Rights. From and after the date hereof,
Crosstex shall not, without the prior written consent of the Holders of a majority of the
outstanding Registrable Securities, enter into any agreement with any current or future holder of
any securities of Crosstex that would allow such current or future holder to require Crosstex to
include securities in any registration statement filed by Crosstex on a basis that is superior in
any way to the piggyback rights granted to the Purchasers hereunder.



     Section 2.12 Aggregation of Registrable Securities. All Registrable Securities held or
acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement. In addition, all Registrable
Securities held or acquired by Fiduciary / Claymore MLP Opportunity Fund and its Affiliates, on the
one hand, and Energy Income and Growth Fund and its Affiliates, on the other hand, shall be
aggregated together for the purpose of determining the availability of any rights under this
Agreement.



13









 





ARTICLE III

MISCELLANEOUS




     Section 3.1 Communications. All notices and other communications provided for or permitted
hereunder shall be made in writing by facsimile, courier service or personal delivery:



	 	 	 	 	 
	 

	 	(a)
	 	If to Chieftain Capital Management, Inc., as agent and
attorney-in-fact for the Purchasers who are its clients under separate
investment advisor agreements:
	 
	 	 	 	 
	 

	 	 	 	Chieftain Capital Management, Inc.
	 

	 	 	 	12 East 49th Street
	 

	 	 	 	New York, New York 10017
	 

	 	 	 	Attn: Thomas D. Stern
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Seward & Kissel LLP
	 

	 	 	 	One Battery Park Plaza
	 

	 	 	 	New York, New York 10004
	 

	 	 	 	Attention: Patricia A. Poglinco, Esq.
	 

	 	 	 	Fax: (212) 480-8421
	 
	 	 	 	 
	 

	 	(b)
	 	If to Energy Income and Growth Fund:
	 
	 	 	 	 
	 

	 	 	 	c/o Fiduciary Asset Management
	 

	 	 	 	8112 Maryland Avenue, Suite 400
	 

	 	 	 	St. Louis MO 63105
	 

	 	 	 	Attention: Jim Cunnane
	 

	 	 	 	Facsimile: (314) 863-4360
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Andrews Kurth LLP
	 

	 	 	 	1350 I Street, NW, Suite 1100
	 

	 	 	 	Washington, DC 20005
	 

	 	 	 	Attention: Bill Cooper
	 

	 	 	 	Facsimile: (202) 974-9537
	 
	 	 	 	 
	 

	 	(c)
	 	If to Kayne Anderson MLP Investment Company or Kayne Anderson
Energy Total Return Fund, Inc.:
	 
	 	 	 	 
	 

	 	 	 	1800 Avenue of the Stars, 2nd Floor
	 

	 	 	 	Los Angeles, CA 90067
	 

	 	 	 	Attention: David Shladovsky, Esq.
	 

	 	 	 	Facsimile: (310) 284-6490






14









 






	 	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	1100 Louisiana, Suite 4550
	 

	 	 	 	Houston, Texas 77002
	 

	 	 	 	Attention: Kevin McCarthy
	 

	 	 	 	Facsimile: (713) 655-7359
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Vinson & Elkins L.L.P.
	 

	 	 	 	1001 Fannin, Suite 2300
	 

	 	 	 	Houston, TX 77002
	 

	 	 	 	Attention: Dan Fleckman
	 

	 	 	 	Facsimile: (713) 615-5859
	 
	 	 	 	 
	 

	 	(d)
	 	If to LB I Group Inc.:
	 
	 	 	 	 
	 

	 	 	 	LB I Group Inc.
	 

	 	 	 	c/o Lehman Brothers Inc.
	 

	 	 	 	399 Park Avenue, 9th Floor
	 

	 	 	 	New York, NY 10022
	 

	 	 	 	Attention: Michael J. Cannon
	 

	 	 	 	Facsimile: 646-758-4208
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Vinson & Elkins L.L.P.
	 

	 	 	 	1001 Fannin, Suite 2300
	 

	 	 	 	Houston, TX 77002
	 

	 	 	 	Attention: Dan Fleckman
	 

	 	 	 	Facsimile: (713) 615-5859
	 
	 	 	 	 
	 

	 	(e)
	 	If to Lubar Equity Fund, LLC:
	 
	 	 	 	 
	 

	 	 	 	Lubar Equity Fund, LLC
	 

	 	 	 	700 N. Water Street
	 

	 	 	 	Suite 1200
	 

	 	 	 	Milwaukee, WI 53202
	 

	 	 	 	Attn: David J. Lubar
	 

	 	 	 	Facsimile: (414) 291–9061
	 
	 	 	 	 
	 

	 	(f)
	 	If to Tortoise North American Energy Corp.:
	 
	 	 	 	 
	 

	 	 	 	10801 Mastin, Suite 222
	 

	 	 	 	Overland Park, KS 66210
	 

	 	 	 	Attention: David Schulte






15









 






	 	 	 	 	 
	 

	 	 	 	Facsimile: (913) 981-1021
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Blackwell Sanders Peper Martin LLP
	 

	 	 	 	2300 Main Street, Suite 1000
	 

	 	 	 	Kansas City, MO 64108
	 

	 	 	 	Attention: Steven F. Carman
	 

	 	 	 	Facsimile: (816) 983-8080
	 
	 	 	 	 
	 

	 	(g)
	 	If to Crosstex:
	 
	 	 	 	 
	 

	 	 	 	Crosstex Energy, Inc.
	 

	 	 	 	2501 Cedar Springs
	 

	 	 	 	Dallas, Texas 75201
	 

	 	 	 	Attention: Barry E. Davis
	 

	 	 	 	Facsimile: (214) 953-9500
	 
	 	 	 	 
	 

	 	 	 	with a copy to:
	 
	 	 	 	 
	 

	 	 	 	Baker Botts L.L.P.
	 

	 	 	 	2001 Ross Avenue
	 

	 	 	 	Dallas, Texas 75201-2980
	 

	 	 	 	Attention: Doug Rayburn
	 

	 	 	 	Facsimile: (214) 661-4634





or, if to a transferee of such Purchaser, to such Holder at the address provided pursuant to
Section 2.10 above. All such notices and communications shall be deemed to have been
received at the time delivered by hand, if personally delivered; when receipt acknowledged, if sent
via facsimile or sent via Internet electronic mail; and when actually received, if sent by any
other means.




     Section 3.2 Successor and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, including subsequent Holders of
Registrable Securities to the extent permitted herein.



     Section 3.3 Assignment of Rights. All or any portion of the rights and obligations of the
Purchasers under this Agreement may be transferred or assigned by such Purchaser in accordance with
Section 2.10 hereof.



     Section 3.4 Recapitalization, Exchanges, etc. Affecting the Common Stock. The provisions
of this Agreement shall apply to the full extent set forth herein with respect to any and all
capital stock of Crosstex or any successor or assign of Crosstex (whether by merger, consolidation,
sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution
of, the Registrable Securities, and shall be appropriately adjusted for combinations,
recapitalizations and the like occurring after the date of this Agreement.



16









 





     Section 3.5 Specific Performance. Damages in the event of breach of this Agreement by a
party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that
each such Person, in addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of
the parties hereto hereby waives any and all defenses it may have on the ground of lack of
jurisdiction or competence of the court to grant such an injunction or other equitable relief. The
existence of this right will not preclude any such Person from pursuing any other rights and
remedies at law or in equity which such Person may have.



     Section 3.6 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.



     Section 3.7 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.



     Section 3.8 Governing Law. The laws of the State of Texas shall govern this Agreement
without regard to principles of conflict of laws.



     Section 3.9 Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof or affecting or impairing the validity or enforceability of such provision in any other
jurisdiction.



     Section 3.10 Entire Agreement. This Agreement, the Purchase Agreement and the
Non-Disclosure Agreement 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 or therein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to herein or therein
with respect to the rights granted by Crosstex set forth herein or therein. This Agreement, the
Purchase Agreement and the Non-Disclosure Agreement supersede all prior agreements and
understandings between the parties with respect to such subject matter.



     Section 3.11 Amendment. This Agreement may be amended only by means of a written amendment
signed by Crosstex and the Holders of a majority of the then outstanding Registrable Securities;
provided, however, that no such amendment shall materially and adversely affect the rights of any
Holder hereunder without the consent of such Holder.



     Section 3.12 No Presumption. In the event any claim is made by a party relating to any
conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or persuasion
shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a
particular party or its counsel.



17









 





[The remainder of this page is intentionally left blank.]




18









 








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



	 	 	 	 	 	 	 
	 	 	CROSSTEX ENERGY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

William W. Davis
	 	 
	 

	 	 	 	Executive Vice President and Chief Financial
Officer	 	 






[Signature Page to XTXI Registration Rights Agreement]






 









 








	 	 	 	 	 	 	 
	 	 	CHIEFTAIN CAPITAL MANAGEMENT, INC.,
as agent and attorney-in-fact for the Purchasers who
are its clients under separate investor advisor
agreements	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Thomas D. Stern
	 	 
	 

	 	 	 	Managing Director	 	 






[Signature Page to XTXI Registration Rights Agreement]






 









 








	 	 	 	 	 	 	 
	 	 	KAYNE ANDERSON MLP INVESTMENT COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

James C. Baker
	 	 
	 

	 	 	 	Vice President	 	 






[Signature Page to XTXI Registration Rights Agreement]






 









 








	 	 	 	 	 	 	 
	 	 	KAYNE ANDERSON ENERGY TOTAL
RETURN FUND, INC.	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

James C. Baker
	 	 
	 

	 	 	 	Vice President	 	 






[Signature Page to XTXI Registration Rights Agreement]






 









 








	 	 	 	 	 	 	 
	 	 	LB I GROUP INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Ashvin Rao
	 	 
	 

	 	 	 	Vice President	 	 






[Signature Page to XTXI Registration Rights Agreement]







 









 








	 	 	 	 	 	 	 
	 	 	LUBAR EQUITY FUND, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Lubar & Co., Incorporated	 	 
	 

	 	Its:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

David J. Lubar
	 	 
	 

	 	 	 	President	 	 






[Signature Page to XTXI Registration Rights Agreement]






 









 








	 	 	 	 	 	 	 
	 	 	TORTOISE NORTH AMERICAN ENERGY CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

David J. Schulte
	 	 
	 

	 	 	 	President	 	 






[Signature Page to XTXI Registration Rights Agreement]






 









 








Schedule A




	 	 	 	 	 	 	 	 	 
	 	 	Purchased	 	 	Allocated	 
	Purchaser	 	Shares*	 	 	Purchase Price	 
	Chieftain Capital Management, Inc. as agent
and attorney-in-fact for the Purchasers who
are its clients under separate investment
advisor agreements
	 	 	1,710,130	 	 	$	119,999,822.10	 
	Kayne Anderson MLP Investment Company
	 	 	57,005	 	 	 	4,000,040.85	 
	Kayne Anderson Energy Total Return Fund, Inc.
	 	 	285,025	 	 	 	20,000,204.25	 
	LB I Group Inc.
	 	 	313,520	 	 	 	21,999,698.40	 
	Lubar Equity Fund, LLC
	 	 	156,070	 	 	 	12,001,783.00	 
	Tortoise North American Energy Corp.
	 	 	28,510	 	 	 	2,000,546.70	 
	 
	 	 	 	 	 	 
	Total
	 	 	2,550,260	 	 	$	180,002,095.30	 
	 
	 	 	 	 	 	 








 




			
	*	 	Subject to adjustment pursuant to Section 2.03 of the Purchase Agreement.





Schedule A





 










 







Exhibit B – Form of Opinion of Crosstex Counsel




     Capitalized terms used but not defined herein have the meanings assigned to such terms in the
Stock Purchase Agreement (the “Purchase Agreement”). Crosstex shall furnish to the
Purchasers at the Closing an opinion of Baker Botts L.L.P., counsel for Crosstex, addressed to the
Purchasers and dated the Closing Date in form reasonably satisfactory to Vinson & Elkins L.L.P.,
counsel for the Purchasers, stating that:



     (i) Crosstex has been duly incorporated and is validly existing in good standing as a
corporation under the Delaware General Corporation Law (the “DGCL”) with all necessary corporate
power and authority to own or lease its properties and to carry on its business as its business is
now conducted as described in Crosstex’s Annual Report on Form 10-K for the period ended December
31, 2005 (the “Annual Report”) and Crosstex’s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2006 (the “10-Q”). Crosstex is duly registered or qualified as a foreign
corporation for the transaction of business under the laws of the jurisdictions set forth in
Exhibit A to such opinion.



     (ii) Each of the subsidiaries of Crosstex listed on Annex 1 (the “Crosstex
Subsidiaries,” and, collectively with Crosstex, the “Crosstex Entities”) has been duly
formed and is validly existing and in good standing under the laws of the jurisdiction of its
formation with all necessary, partnership or limited liability company power and authority to own,
lease, use or operate its respective properties. Each of the Crosstex Subsidiaries is duly
qualified or registered for the transaction of business and in good standing as a foreign limited
partnership or limited liability company, as applicable, in each of the jurisdictions set forth in
Exhibit B to such opinion.



     (iii) To our knowledge, except as described in the Annual Report and the 10-Q, and except for
options granted pursuant to the Crosstex Energy, Inc. Long-Term Incentive Plan, there are no
outstanding or authorized (i) options, warrants, preemptive rights, subscriptions, calls, or other
rights, convertible or exchangeable securities, agreements, claims or commitments of any character
obligating Crosstex to issue, transfer or sell any shares of Common Stock or other equity
securities in Crosstex or securities convertible into or exchangeable for such securities, (ii)
obligations of Crosstex to repurchase, redeem or otherwise acquire any equity interests of Crosstex
or any such securities or agreements listed in clause (i) of this sentence or (iii) voting trusts
or similar agreements to which any Crosstex Entity is a party with respect to the voting of the
equity interests of any Crosstex Entity. To our knowledge, none of the offering or sale of the
Purchased Shares or the registration of the Purchased Shares pursuant to the Registration Rights
Agreement, all as contemplated by the Purchase Agreement, gives rise to any rights for or relating
to the registration of any Common Shares or other securities of Crosstex.



     (iv) Crosstex owns of record, directly or indirectly, all of the issued and outstanding equity
interests of each of the Crosstex Subsidiaries, free and clear of any Liens in respect of which a
financing statement under the Uniform Commercial Code naming any of the Crosstex Entities as debtor
is on file in the office of the Secretary of State of Delaware or the office of the Secretary of
State of Texas, and all such ownership interests have been duly authorized, validly issued and are
fully paid (to the extent required in the organizational documents of the Crosstex Subsidiaries, as
applicable) and non-assessable (except as such



 









 




nonassessability may be affected by matters described in Sections 17-303 and 17-607 of the
Delaware LP Act, as applicable).




     (v) The Purchased Shares to be issued and sold to the Purchasers by Crosstex pursuant to the
Purchase Agreement, have been duly authorized and when issued and delivered to the Purchasers
against payment therefor in accordance with the terms of the Purchase Agreement, will be validly
issued, fully paid and nonassessable.



     (vi) None of the offering, issuance and sale by Crosstex of the Purchased Shares or the
execution, delivery and performance of the Purchase Agreement and Registration Rights Agreement (A)
constitutes a violation of the certificate of incorporation or bylaws, each as amended to date, of
any of the Crosstex, (B) constitutes a breach or violation of, or a default under (or an event
which, with notice or lapse of time or both, would constitute such an event), any agreement filed
or incorporated by reference as an exhibit to the Annual Report or (C) results or will result in
any violation of the DGCL or U.S. federal law, which in the case of clauses (B) or (C) would be
reasonably likely to have a Crosstex Material Adverse Effect; provided, however,
that no opinion is expressed pursuant to this paragraph (vi) with respect to federal or state
securities or anti-fraud statutes, rules or regulations.



     (vii) Each of the Purchase Agreement and Registration Rights Agreement has been duly
authorized and validly executed and delivered on behalf of Crosstex and is enforceable against
Crosstex except as the enforceability thereof may be limited by (A) applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or similar laws from time to time in
effect affecting creditors’ rights and remedies generally and by general principles of equity
(regardless of whether such principles are considered in a proceeding in equity or at law) and (B)
public policy, applicable law relating to fiduciary duties and indemnification and an implied
covenant of good faith and fair dealing.



     (viii) Except for the approvals required by the Commission in connection with Crosstex’s
obligations under the Registration Rights Agreement, no authorization, consent, approval, waiver,
license, qualification or filing with any U.S. federal or Delaware court, governmental agency or
body having jurisdiction over the Crosstex Entities or any of their respective properties is
required for the issuance and sale by Crosstex of the Purchased Shares, the execution, delivery and
performance of each of the Purchase Agreement and Registration Rights or the consummation of the
transactions contemplated by the Purchase Agreement and Registration Rights Agreement, except those
that have been obtained or as may be required under state securities or “Blue Sky” laws, as to
which we do not express any opinion.



     (ix) To our knowledge, there is no action, suit, proceeding or investigation pending against
the Crosstex Entities before any court or governmental agency that questions the validity of the
Purchase Agreement or the Registration Rights Agreement, or the right of Crosstex to enter into
such agreements.



     (x) Crosstex is not an “investment company” within the meaning of the Investment Company Act
of 1940, as amended.



 









 





     (xii) Assuming the accuracy of the representations and warranties of each Purchaser contained
in the Purchase Agreement, the issuance and sale of the Purchased Shares pursuant to the Purchase
Agreement is exempt from registration requirements of the Securities Act of 1933, as amended.



 









 





Annex 1



Crosstex Holdings GP, LLC, a Delaware limited liability company



Crosstex Holdings LP, LLC, a Delaware limited liability company



Crosstex Holdings, L.P., a Delaware limited partnership



Crosstex Energy GP, LLC, a Delaware limited liability company



Crosstex Energy GP, L.P., a Delaware limited partnership



Crosstex Asset Management GP, LLC, a Delaware limited liability company



Crosstex Asset Management, L.P., a Delaware limited partnership