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  Table of Contents

 

Exhibit 10.2    
    

         

  

ALLIANCE DATA SYSTEMS CORPORATION  

2004 Incentive Compensation Plan  

(As Amended and Restated Effective January 1, 2004)  

 
  

    Table of Contents    
    

        
 

	

Plan Philosophy
	

Effective Date
	

Eligibility
	

Base Compensation Used in Calculating IC Payout
	

Determining IC Targets
	

IC Components
	

Standard Weightings Chart for IC Components
	

Determining Payment Calculations
	

Timing of Payment
	

Status Changes That May Affect IC Targets and Payouts
	

Other Terms and Conditions
	

Attachment A—Example Individual Expectations Worksheet
	

Attachment B—Performance/Payout Table

2

 

 

Plan Philosophy    
    

The
intent of the Alliance Data Systems Incentive Compensation ("IC") Plan ("Plan") is to: 

	•
	Provide
IC to round out an eligible associate's total compensation package in order to attract and retain high performing associates; 
	•
	Improve
organizational performance by driving financial and individual performance and increasing associate satisfaction; 
	•
	Improve
the alignment between strategic imperatives and initiatives with the Alliance Scorecard; and 
	•
	Provide
an opportunity for associates to share in the success they help create. 

Participation
in this Plan reflects the importance of an associate's position and the impact that the associate's performance can have on the success of the Company. 

 

Effective Date    
    

The
Plan Year is January 1, 2004 through December 31, 2004. 

 

Eligibility    
    

Subject
to the provisions of this Plan, Associates are eligible to receive IC under this Plan if they are: 

	•
	Employed
by Alliance Data Systems Corporation or any of its subsidiaries (collectively, the "Company") and are either (a) a member of the Alliance Senior Leadership
Team, as defined by the title Director through Chairman & CEO, or (b) in an Exempt position that is designated by the Senior Director of Compensation as IC eligible (currently jobs in
pay grades 8-11, 21-23, 32-35, 94 and 95); 
	•
	Employed
or promoted into an IC eligible position by the Company before October 1, 2004; 
	•
	On
active status on the date of the award distribution or are eligible under the guidelines for retirement, disability or leave of absence; and 
	•
	In
the case of part-time associates in one of the specified pay grades listed above, working a schedule equal to a minimum of 25 hours per week. 

Associates
are not eligible if they: 

	•
	Do
not meet one of the eligibility requirements listed above; 
	•
	Are
participating in a sales commission or other incentive plan, unless approved by the appropriate Executive Vice President of a Line of Business ("LOB") or of a Business
Support Group ("BSG") and confirmed by the Senior Vice President of Human Resources and the Senior Director of Compensation; 
	•
	Are
temporary or on-call associates or contractors; 
	•
	Are
hired on or after October 1, 2004 or are promoted into an IC eligible pay grade on or after October 1, 2004; or 
	•
	Are
on a documented performance improvement plan as of the date of award distribution. 

 

Base Compensation Used in Calculating IC Payout    
    

Annualized
base pay as of October 1, 2004 will be used as part of the IC calculation. The IC target percentage(s) will be applied to October 1, 2004 base salary for purposes of
calculating the dollar target amount. 

3

 
 

Determining IC Targets  

Each
participant has an IC target. The Compensation Committee of the Board of Directors assigns IC targets for the Executive Committee members. IC targets for other positions are determined by the
participant's manager using the guidelines established by the Senior Director of Compensation in the following table: 

	Grade Level
 
	 	IC Target

	Executive Committee Member	 	Determined by the Board's Compensation Committee
	(Senior Vice President) 3	 	35% or 40% or 45%
	(Vice President) 4	 	25% or 30% or 35%
	(Director/Senior Director) 5	 	15% or 20% or 25%
	8-10, 21-23, 33-35 and 95	 	10% or 15%
	11, 32 and 94	 	5% or 10%

IC
targets are set in 5% increments. When determining the appropriate target, the following are considered: 

	•
	The
associate's position relative to those of other participants in the department; 
	•
	The
associate's anticipated contribution to the organization's success; and 
	•
	Targeted
total compensation package that is competitive with similar positions in the appropriate labor market or industry. 

IC
targets will be set at the beginning of the Plan year or at time of hire. If the IC target percentage changes, the manager will explain how the target will be prorated for payout purposes (if
appropriate) and whether or not the performance expectations and weightings will change for the current Plan year. 

 

IC Components    
    

All
performance goals should be established and communicated to the participant at the beginning of the Plan year or within 30 days of becoming a participant in the Plan. The degrees to which
these performance goals are accomplished have an impact on the actual incentive earned from the Plan. 

        Alliance Revenue and EBITDA Targets:    The Revenue and Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") targets make up 25%-75% of a participant's IC payment (see Standard Weightings Chart below). 

        LOB Revenue and EBITDA Targets:    There are a number of financial measures that can be used to determine success for a
particular area or individual. The appropriate Executive Vice President, along with the Senior Vice President of Human Resources and the Senior Director of Compensation will determine if
sub-measures will be used for a particular LOB or a particular individual. However, it is intended that the Board of Directors approve the achievement of LOB Revenue and EBITDA for payout
purposes. 

4

 

        Associate Satisfaction Index:    The annual administration of the Associate Survey and the tracking of data (i.e., improvement
expectations) are designed to motivate ongoing attention to issues that affect quality of client service, as well as the development and retention of associates. The Associate Satisfaction Index
("ASI") is a component of the Associate Survey process. The ASI component is designed to recognize and incent critical non-financial organizational factors that contribute to sustainable
business performance and provide a competitive advantage in recruiting, developing and retaining high performing associates. Targets are set at the beginning of each year along with a payout schedule. 

        Individual Expectations:    The Weightings Chart identifies those participants that have 25%—50% of their IC
payments based upon the achievement of individual expectations or team strategic imperatives (or action steps to accomplish the strategic imperatives) as determined between the participant and his or
her manager. A sample worksheet has been provided in Attachment A. 

 

Standard Weightings Chart for IC Components    
    

IC
objectives are weighted to drive financial and individual performance and increase associate satisfaction. LOBs have the ability to use specific components that closely reflect Alliance Scorecard
measurements. In addition, LOBs may adjust the standard components to include measurable financial drivers, such as bad debt or specific client revenue goals, with review and approval by the
appropriate Executive Vice President, along with the Senior Vice President of Human Resources and the Senior Director of Compensation. The participant's grade/job level as of October 1, 2004
will be used to determine the overall weightings. 

2004 IC Plan

Standard Components and Weightings  

	 
	 	 
	 	Senior

Leadership

Team1
	 	Exempts with Direct Supervisory Responsibility
	 	All Other Exempts2

	LOB	 	LOB EBITDA	 	50%	 	25%	 	25%
	 	 	LOB Revenue	 	25%	 	25%	 	25%
	 	 	Associate Satisfaction3	 	25%	 	25%	 	0%
	 	 	Individual Expectations4	 	0%	 	25%	 	50%
	
BSG	
 	
Alliance EBITDA	
 	

50%	
 	

25%	
 	

25%
	 	 	Alliance Revenue	 	25%	 	25%	 	25%
	 	 	Associate Satisfaction3	 	25%	 	25%	 	0%
	 	 	Individual Expectations4	 	0%	 	25%	 	50%

	1
	The
LOB/BSG executive has some flexibility to establish targets that are important for the success of his or her respective area. The Individual Expectations weighting
should not be used for SLT members unless it is used to drive financial performance. Any changes to the standard components, weightings or payout tables should be sent to the Senior Director of
Compensation for approval by the appropriate Executive Vice President, along with the Senior Vice President of Human Resources. 
	2
	The
LOB/BSG has some flexibility in reassigning Revenue targets for those associates who fall into an all other eligible exempt category or in unique cases. 
	3
	Some
participants, such as National Account Managers ("NAMs"), may have more emphasis on client relationships than Associate Satisfaction. LOB/BSG executives can determine
how they want to distribute the weightings for these positions. 
	4
	Eligible
exempt associates below the Director level should have Individual Expectations that support strategic imperatives ensuring the success of their LOB/BSG and the
Company. 

5

 

 

Determining Payment Calculations    
    

        Attachment A:    Example Individual Expectations Worksheet 

        The
sample form is provided to facilitate the setting of the Individual Expectations. If a participant is being held accountable for a Company-level strategic imperative (or an action
item to accomplish the strategic imperative for the LOB/BSG), that form may also be used. Regardless of the form used, an overall percentage of achievement of the Individual Expectations will be
required at the end of 2004 in order to determine the dollar payment for this IC component. 

        Attachment B:    Performance/Payout Table for Revenue, EBITDA, Associate Satisfaction and Individual Expectations 

        Identifies
the relationship between level of performance and the percentage to be paid for the achievement of the Alliance Revenue & Alliance EBITDA, LOB Revenue & LOB
EBITDA, ASI and Individual Expectations targets. A minimum of 80% must be achieved for any payment to be received; performance of 120% or greater receives the maximum payment of 150%. Percentages are
rounded to the nearer whole number. 

        For
BSGs, both the Alliance EBITDA and Alliance Revenue targets must be achieved at 100% or greater in order for ASI or Individual
Expectations to be paid above 100% of target. For LOBs, both the LOB EBITDA and LOB Revenue targets must be achieved at 100% or greater in order for ASI
or Individual Expectations to be paid above 100% of target. 

 

Timing of Payment    
    

IC
earned for the 2004 Plan year is paid in the first quarter of the following year. A participant must be actively employed on the date payment is made to receive his or her award. Any participant
who is on an approved leave of absence or disability leave but is still on active status will receive his or her payment even if he or she is not actively at work on the date payment is made. 

 

Status Changes That May Affect IC Targets and Payout  

Status
changes can affect the amount of incentive a participant receives. Status changes include: 

	•
	Transfers; 
	•
	New
Hires; 
	•
	IC
Target Changes; 
	•
	Leaves
of Absence; and 
	•
	Terminations.

        Transfers:    The LOB or BSG a participant is assigned to as of October 1, 2004 will be used to determine any payments
dependent upon LOB/BSG level of performance (see Standard Weightings Chart). Year-end performance for the LOB/BSG will be used to calculate the incentive amount to be paid for this
component. No prorating will be done for the amount of time spent in another LOB/BSG or in a different IC eligible grade over the Plan year without prior approval of the appropriate Executive Vice
President, along with the Senior Vice President of Human Resources and the Senior Director of Compensation. 

For
the ASI component, leaders who have moved or transferred during the course of the year, and who could therefore have their compensation tied to different reporting groups, will be reviewed as
follows: 

	•
	Determine
where the associate spent the most time during the action planning cycle; 
	•
	Assess
where the associate had the greatest opportunity to influence Associate Satisfaction; and 
	•
	Before
the end of December, the appropriate HR Executive will make a report recommendation to the Senior Director of Compensation, to be approved by the appropriate
Executive Vice President, along with the Senior Vice President of Human Resources. 

6

 

        New Hires:    For associates hired between January 1 and September 30, 2004 into an IC eligible position, the base
salary as of October 1, 2004 will be used to calculate the IC dollar target. The dollar target will be prorated as follows: 

	Hired Between These Dates
 
	 	Prorated Amount

	January 1-March 31	 	100%
	April 1-June 30	 	75%
	July 1-September 30	 	50%
	October 1-December 31	 	No IC

For
example, if an associate is hired on March 12, the IC dollar target will not be prorated. If an associate is hired on July 4, then the IC dollar target will be prorated by 50%. 

        IC Target Changes:    For current Company associates, if there is a promotion or a grade level change during the Plan year but
before October 1 which results in either (a) an associate becoming newly IC eligible or (b) a change in IC target, the IC target will be prorated according to the chart below
depending on the associate's IC eligible effective date. Note: changes in IC targets after October 1,
2004 will not be used to calculate IC payout for the 2004 Plan year. 

	IC Eligible Effective Date Between These Dates
 
	 	Prorated Amount For

Old/New IC % Target

	January 1-March 31	 	0%/100%
	April 1-June 30	 	25%/75%
	July 1-September 30	 	50%/50%
	October 1-December 31	 	100%/0%

The
base salary as of October 1 will be used to calculate the dollar target, even if there is a corresponding change in base salary at the time of the promotion or IC target change. For
example, a grade level change in April results in an IC target change from 5% to 10% and a base salary change from $35,000 to $40,000. The base salary on October 1 is $40,000, so that is the
salary used in the calculation. The IC dollar target is then calculated using the following formula: 

	 
	 	10/01 Base
	 	IC
	 	Target
	 	Prorate
	 	Subtotal

	Old	 	$	40,000	 	5%	 	$	2,000	 	25%	 	$	500
	New	 	$	40,000	 	10%	 	$	4,000	 	75%	 	$	3,000
	TOTAL	 	 	 	 	 	 	 	 	 	 	 	$	3,500

The
participant's manager should communicate to the participant the new weightings of financial and Individual Expectations (if applicable). 

        Leaves of Absence:    If a participant takes a leave of absence in excess of 30 consecutive days, either paid or unpaid, during
the Plan year, he or she may be eligible for a prorated award at the discretion of the appropriate Executive Vice President, along with the Senior Vice President of Human Resources and the Senior
Director of Compensation. 

        Terminations:    If a participant terminates his or her position voluntarily or involuntarily during the Plan year, he or she
will not be eligible for an IC payment because he or she would not be on active status on the date of the award distribution. If a participant retires,
becomes disabled or dies during the Plan year, he or she may be eligible for a prorated award at the discretion of the appropriate Executive Vice President, along with the Senior Vice President of
Human Resources and the Senior Director of Compensation. In the event of death, any incentive award is made to the beneficiary named in the Company-paid life insurance program. 

7

 

 

Other Terms and Conditions    
    

	•
	All
decisions by the Company will be final in the interpretation and administration of the Plan and shall lie within the Company's sole and absolute discretion. Decisions
shall be final, conclusive and binding on all parties concerned. 
	•
	This
Plan does not constitute a contract for the participant's continued employment with the Company. All Company associates are employed "at-will" which means
either the Company or the associate may terminate the employment relationship at any time with or without cause. 
	•
	Participant's
rights under the Plan may not be assigned or transferred in any way, except as otherwise set forth herein. 
	•
	The
Alliance Data Systems 2004 IC Plan may be amended, modified, suspended or terminated by the Company at any time, without prior consent by or prior notice to associates.
The Company at its sole discretion may change objectives at any time without prior consent by or prior notice to associates. 
	•
	The
Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make other segregation of assets to assure the payment of the
amounts under the Plan. Rights to the payment of amounts under the Plan shall be no greater than the rights of the Company's general creditors. 
	•
	Texas
state law governs the validity, construction, interpretation, administration and effect of the Plan and the substantive laws, but not the choice of law rules of the
State of Texas, shall govern rights relating to the Plan. 
	•
	Generally,
all applicable employment and tax deductions plus 401(k) contribution deferrals will be withheld from the IC payout. 
	•
	No
associate has the right nor is guaranteed the right to participate in the Plan by virtue of being an associate or fulfilling any specific position with the Company.
Selection for participation in the Plan is solely within the discretion of the Company. The Company may offer participation in the Plan to additional associates or terminate the participation of any
participant in the Plan at any time during the Plan Year. 
	•
	Revenues
and earnings classified as "windfalls" or business losses may or may not be excluded in whole or in part from the calculation of Revenue and EBITDA at the
discretion of the Company. 
	•
	Notice
to participate in the Plan shall not impair or limit the Company's rights to transfer, promote or demote Plan participants to other jobs or to terminate their
employment, nor shall it create any claim or right to receive any payment under the Plan or any right to be retained in the employ of the Company. 
	•
	The
Plan is established for the current fiscal year. There shall be no obligation on the part of the Company to continue the Plan in the same or modified form for any future
years. 
	•
	In
the event that a participant has a dispute concerning the administration of this Plan, it shall first be submitted in writing to the Senior Director of Compensation. In
the event that the Senior Director of Compensation does not provide a response satisfactory to the participant within 30 business days, the participant may submit the dispute in writing within five
business days thereafter to the Senior Vice President of Human Resources, whose decision regarding the dispute shall be final and binding on each participant or person claiming under the Plan. 
	•
	The
Plan is effective January 1, 2004, and supersedes and replaces all previous IC Plans. All such previous plans, unless earlier terminated, are terminated at
midnight, December 31, 2003. If not renewed by the Company, this Plan will automatically terminate on December 31, 2004. 
	•
	In
the event an eligible associate's performance falls below satisfactory standards during the Plan year, the associate may receive a reduced IC payment, at the discretion
of the Company, regardless of the performance results of the Company, LOB, BSG or the ASI results (if applicable). 
	•
	The
Company, at its sole discretion, may adjust or modify the methodology for calculating IC payments, the eligibility for receiving IC payments, and the actual amount of IC
payments. All adjustments or modifications must be approved by the CEO, the appropriate Executive Vice President, the Senior Vice President of Human Resources and the Senior Director of Compensation. 

8

  

 
 

Attachment A    
    

EXAMPLE INDIVIDUAL EXPECTATIONS WORKSHEET  

	Name:	Target IC (%):
	

	Position Title:	Grade Level:
	

	(a)	(b)	Ratings	(e)
	Specific Expectations/Standards of

Measure (Deliverables to be Achieved)	Accomplishments/Results (Actual

Results Achieved in Performance Period)	(c)

Weighting %	(d)

Actual Perf. %	Overall Perf.

Score % (c×d)
	1.	 	 	 	 
	

	2.	 	 	 	 
	

	3.	 	 	 	 
	

	4.	 	 	 	 
	

	5.	 	 	 	 
	

	

	 	 	100%	 	 
	 	Total Score on Specific Expectations (add column "e")>	 
	

	

	

Signed by: Associate Manager 

A-1

  

 
 

Attachment B    
    

PERFORMANCE/PAYOUT TABLE

FOR REVENUE, EBITDA, ASSOCIATE SATISFACTION AND INDIVIDUAL EXPECTATIONS  

	 	 	% of Objective(s)

Achieved*	 	%

Payout*	 	 
	 	 	79% or less	 	0%	 	 
	80% is the threshold for performance achievements to result in a payout.	 	80%	 	65%	 	 
	 	 	81%	 	67%	 	 
	 	 	82%	 	69%	 	 
	 	 	83%	 	70%	 	 
	 	 	84%	 	72%	 	 
	 	 	85%	 	74%	 	 
	 	 	86%	 	76%	 	 
	 	 	87%	 	77%	 	 
	 	 	88%	 	79%	 	 
	 	 	89%	 	81%	 	 
	 	 	90%	 	83%	 	 
	 	 	91%	 	84%	 	 
	 	 	92%	 	86%	 	 
	 	 	93%	 	88%	 	 
	 	 	94%	 	89%	 	 
	 	 	95%	 	91%	 	 
	 	 	96%	 	93%	 	 
	 	 	97%	 	95%	 	 
	 	 	98%	 	96%	 	 
	 	 	99%	 	98%	 	 
	 	 	100%	 	100%	 	100% is the target for performance achievements to receive 100% payout.
	 	 	101%	 	102.5%	 	 
	 	 	102%	 	105.0%	 	 
	 	 	103%	 	107.5%	 	 
	 	 	104%	 	110.0%	 	 
	 	 	105%	 	112.5%	 	 
	 	 	106%	 	115.0%	 	 
	 	 	107%	 	117.5%	 	 
	 	 	108%	 	120.0%	 	 
	 	 	109%	 	122.5%	 	 
	 	 	110%	 	125.0%	 	 
	 	 	111%	 	127.5%	 	 
	 	 	112%	 	130.0%	 	 
	 	 	113%	 	132.5%	 	 
	 	 	114%	 	135.0%	 	 
	 	 	115%	 	137.5%	 	 
	 	 	116%	 	140.0%	 	 
	 	 	117%	 	142.5%	 	 
	 	 	118%	 	145.0%	 	 
	 	 	119%	 	147.5%	 	 
	 	 	120% or greater	 	150.0%	 	150% is the maximum payout level.

For business support groups, both Alliance EBITDA and Alliance Revenue targets must be achieved at 100% or
greater in order for ASI or Individual Expectations to be paid above 100% of target. For lines of business, both LOB EBITDA and LOB Revenue targets must
be achieved at 100% or greater in order for ASI or Individual Expectations to be paid above 100% of target. 

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Exhibit 10.1    
    

 
 

THIRD AMENDMENT    
    

        THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment") is entered into as of the
1st day of April, 2004 by and among each of the persons listed on the signature pages hereof as banks (the "Banks"), Crosstex Energy
Services, L.P., a Delaware limited partnership (the "Borrower"), and Union Bank of California, N.A., as administrative agent (the
"Administrative Agent"). 

 
 

BACKGROUND    
    

        A.    The
Banks, the Administrative Agent and the Borrower are parties to that certain Second Amended and Restated Credit Agreement dated as of November 26, 2002, as
amended by the First Amendment dated as of June 3, 2003 and the Second Amendment dated as of October 30, 2003 (said Agreement, as so amended, herein called the
"Credit Agreement"). Terms defined in the Credit Agreement and not otherwise defined herein have the same respective meanings when used herein. 

        B.    Crosstex
Louisiana Energy, L.P., a Delaware limited partnership and Subsidiary of the Limited Partner ("Crosstex
Louisiana"), intends to acquire all of the capital stock of LIG Pipeline Company, a Nevada corporation ("LIG"), (the
"LIG Acquisition") pursuant to the Purchase and Sale Agreement dated as of February 13, 2004 between the Limited Partner and AEP Energy Services
Investments, Inc., a Delaware corporation (the "Seller"), as amended by the First Amendment dated as of February 13, 2004 between the
Limited Partner and the Seller (as amended the "LIG Purchase and Sale Agreement"), and all other agreements, instruments or documents executed in
connection therewith or otherwise related to the LIG Acquisition (collectively, the "LIG Acquisition Documents"). 

        C.    In
order to effect the LIG Acquisition, the Borrower will borrow Advances under the Credit Agreement and make a cash distribution to the Limited Partner in the amount of
such Advances (the "Cash Distribution"). The Limited Partner will loan the Cash Distribution to Crosstex Louisiana in order to fund all or part of the
purchase price in connection with the LIG Acquisition. In connection with the LIG Acquisition, the Borrower and its Partners will effect a reorganization as described more fully in the Omnibus
Agreement dated as of March 31, 2004 among the Limited Partner, the Borrower, Crosstex Louisiana, Crosstex Operating GP, LLC, a Delaware limited liability company, the General Partner, LIG
Liquids Holdings, L.P., a Delaware limited partnership, Crosstex Tuscaloosa, LLC, a Louisiana limited liability company, Crosstex Treating Services GP, LLC, a Delaware limited liability company,
Crosstex Acquisition Management GP, LLC, a Delaware limited liability company, and Crosstex Gulf Coast Marketing Ltd., a Texas limited partnership (the "Omnibus
Agreement"), which specifically provides that (1) Crosstex Louisiana will subsequently transfer substantially all of the assets acquired pursuant to the LIG Acquisition
Documents to the Borrower and its Subsidiaries, (2) Crosstex Operating GP, LLC will be substituted as the general partner of Borrower, and (3) Crosstex Acquisition Management GP, LLC and
Crosstex Treating Services GP, LLC will merge with and into Crosstex Energy Services GP, LLC (the "Reorganization"). 

        D.    The
Borrower has requested, and the Banks have agreed, to (1) consent to the LIG Acquisition, the Cash Distribution and the subsequent Reorganization,
(2) increase the aggregate amount of the Revolver A Commitments to $100,000,000 and the Revolver B Commitments to $100,000,000 and (3) make certain other amendments to the Credit
Agreement. 

        E.    In
addition, the parties hereto wish to add each of BNP Paribas, General Electric Capital Corporation and Guaranty Bank as a "Bank" under the Credit Agreement (the
"New Banks"). 

 

 
 

AGREEMENT    
    

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

Section 1.
Amendments. 

        (a)   Schedules
1 and 2 to the Credit Agreement are hereby deleted in their entirety and Schedules 1 and 2 attached hereto are hereby substituted therefor. 

        (b)   The
definition of "Applicable Margin" is hereby amended in its entirety as follows: 

        "Applicable Margin" means, as of any date of determination, the following percentages determined as a function of the Borrower's Leverage
Ratio: 

	Leverage Ratio
 
	 	Eurodollar

Rate Advances
	 	Reference

Rate Advances
	 	Commitment Fees
	 	Letter of

Credit Fees

	> 3.00	 	2.50%	 	1.00%	 	0.50%	 	1.75%
	> 2.50 and £3.00	 	2.25%	 	0.75%	 	0.50%	 	1.75%
	> 2.00 and £2.50	 	2.00%	 	0.50%	 	0.375%	 	1.50%
	£2.00	 	1.75%	 	0.25%	 	0.375%	 	1.50%

The
foregoing ratio (a) shall be determined as if the Leverage Ratio is less than or equal to 2.50 but greater than 2.00 for the period from the Third Amendment Effective Date through the date
financial statements are delivered pursuant to Section 5.01(c) for the fiscal quarter ending March 31, 2004, and (b) shall thereafter be determined from the financial statements
of the Borrower and its Subsidiaries most recently delivered pursuant to Section 5.01(c) or Section 5.01(d) and certified to by a Responsible Officer in accordance with such Sections.
Any change in the Applicable Margin shall be effective upon the date of delivery of the financial statements pursuant to Section 5.01(c) or Section 5.01(d), as the case may be, and
receipt by the Administrative Agent of the compliance certificate required by such Sections. If the Borrower fails to deliver any financial statements within the times specified in
Section 5.01(c) or 5.01(d), as the case may be, such ratio shall be determined as if the Leverage Ratio is greater than 3.00 from the date the Administrative Agent notifies the Borrower and the
Banks that such financial statements should have been delivered until the Borrower delivers such financial statements to the Administrative Agent and the Banks. Notwithstanding the foregoing, if at
any time the ratings applicable to the senior, unsecured, long-term indebtedness for borrowed money of the Borrower, the MLP, and/or any Subsidiary thereof that is not guaranteed by any
other Person (other than the Borrower, the MLP, the General Partner or any Subsidiary thereof) or subject to any other credit enhancement are either (i) BB or higher by S&P and Ba2 or higher by
Moody's or (ii) 2 or higher by the National Association of Insurance Commissioners, then the Applicable Margin with respect to Eurodollar Rate Advances shall be reduced by 0.25%. 

        (c)   The
following new definitions are hereby added to Section 1.01 of the Credit Agreement in appropriate alphabetical order: 

        "Finance Entity" means any Subsidiary of the MLP that is not also a Subsidiary of the Borrower and that is formed for the purpose of
issuing Debt specifically permitted by Section 6.02(k). 

        "LIG Acquisition" means the acquisition of LIG Pipeline Company, a Nevada corporation, pursuant to the LIG Purchase and Sale Agreement. 

2

 

        "LIG Acquisition Documents" means the LIG Purchase and Sale Agreement and all other agreements, instruments or documents executed in
connection therewith or otherwise related to the LIG Acquisition. 

        "LIG Purchase and Sale Agreement" means the Purchase and Sale Agreement dated as of February 13, 2004 between the MLP and AEP
Energy Services Investments, Inc., a Delaware corporation (the "Seller"), as amended by the First Amendment dated as of February 13, 2004
between the MLP and the Seller. 

        "MLP" means Crosstex Energy, L.P., a Delaware limited partnership. 

        "OLP Common Units" has the meaning set forth in the Borrower Partnership Agreement. 

        "OLP Preferred Units" has the meaning set forth in the Borrower Partnership Agreement. 

        "Third Amendment" means the Third Amendment dated as of April 1, 2004 among the Borrower, the Banks and the Administrative Agent. 

        "Third Amendment Effective Date" means the date on which the Third Amendment to this Agreement becomes effective. 

        (d)   The
definition of "Asset-Based Audits" in Section 1.01 of the Credit Agreement is hereby deleted. 

        (e)   The
definition of "Banks" in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows: 

        "Banks" means the lenders listed on Schedule 1 hereto and each Eligible Assignee that shall become a party to this Agreement
pursuant to Section 9.06. 

        (f)    The
definition of "Change of Control" in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows: 

        "Change of Control" means (a) the General Partner is no longer the sole general partner of the Borrower, (b) the MLP owns
less than 99.999% of the OLP Common Units, (c) the failure of the MLP to own, directly or indirectly, 100% of the outstanding equity interests of any holder of the OLP Preferred Units or
(d) individuals who, at the beginning of any period of 12 consecutive months, constitute the General Partner's Board of Directors cease for any reason (other than death or disability) to
constitute a majority of the General Partner's Board of Directors then in office. 

        (g)   The
definition of "General Partner" in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows: 

        "General Partner" means Crosstex Operating GP, LLC, a Delaware limited liability company. 

        (h)   The
definitions of "Guarantor", "Guaranty", and "Reorganization" in Section 1.01 of the Credit Agreement are hereby amended by replacing "Limited Partner" with
"MLP" therein. 

        (i)    The
definition of "Limited Partner" in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows: 

        "Limited Partners" means the MLP and the holders of the OLP Preferred Units. 

        (j)    Each
reference in the Credit Agreement to "Limited Partner" shall be amended to refer to "Limited Partners". 

3

 

        (k)   The
definition of "Note Agreement" in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows: 

        "Note Agreement" means the Master Shelf Agreement dated as of June 3, 2003 among the Borrower, Prudential Investment
Management, Inc. and each of the initial noteholders party thereto, as amended by the Letter Amendment No. 1 dated as of April 1, 2004, as the same may be amended, modified or
supplemented from time-to-time as permitted by this Agreement. 

        (l)    The
definition of "Responsible Officer" in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows: 

        "Responsible Officer" means the Chief Executive Officer, President, Chief Financial Officer, any Executive Vice President, any Senior Vice
President, any Vice President, Treasurer or Assistant Treasurer of the General Partner. 

        (m)  The
definition of "Pledge Agreements" in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows: 

        "Pledge Agreement" means, collectively, (a) the Amended and Restated Pledge Agreement among the Partners and the Collateral Agent
in form and substance reasonably satisfactory to the Collateral Agent and the Banks, and (b) any other pledge agreements executed at any time in connection with securing any Obligations, in
each case as the same may hereafter be amended, modified or supplemented from time-to-time. 

        (n)   Section 2.01(b)
of the Credit Agreement is hereby amended by (i) replacing "$25,000,000" with "$50,000,000" in the second proviso of the first sentence
thereof and (ii) adding the following parenthetical at the end thereof: 

(other
than any reimbursements from the Banks to the Issuing Bank deemed to be Revolver B Advances) 

        (o)   Section 2.06(b)
of the Credit Agreement is hereby amended in its entirety as follows: 

        (b)   Agent Fees. The Borrower agrees to pay to the Administrative Agent for the benefit of the Administrative Agent or the
Lead Arranger, as applicable, the fees described in the letter dated as of February 26, 2004 from UBOC to the Borrower (the "Fee Letters"). 

        (p)   Section 4.19(a)
of the Credit Agreement is hereby amended in its entirety as follows: 

        (a)   The
General Partner is the sole general partner of the Borrower, and the Limited Partners are the only limited partners of the Borrower. As of the date hereof,
(i) the General Partner is the legal and beneficial owner of 0.001% of the OLP Common Units in the Borrower, and (ii) the MLP is the legal and beneficial owner of 99.999% of the OLP
Common Units in the Borrower and 100% of the membership interests of the General Partner. No part of the partnership interests in the Borrower or the membership interests of the General Partner is
subject to any Lien, other than preferential rights of the Partners under the Borrower Partnership Agreement and Liens in favor of the Collateral Agent. 

        (q)   Section 5.08
of the Credit Agreement is hereby amended by replacing "four occasions in any calendar year" with "two occasions in any calendar year" and by
deleting ", two of which shall be for the purpose of conducting Asset-Based Audits." 

4

 

        (r)   Section 5.10
of the Credit Agreement is hereby amended by adding the following prior to the period at the end thereof: 

;
provided that this Section 5.10 shall not apply to any guaranty by the Borrower or any Guarantor of Debt of the Borrower and/or a Finance Entity specifically permitted by
Section 6.02(k). 

        (s)   A
new Section 5.14 of the Credit Agreement is hereby added as follows: 

        Section 5.14.
Post-Closing Requirements. 

        (a)   Within
five Business Days following the Third Amendment Effective Date (or, with respect to the items listed in Section 5.14(a)(vii) below, within a
commercially reasonable period of time following the Third Amendment Effective Date) deliver or cause to be delivered to the Administrative Agent or the Collateral Agent, as applicable: 

          (i)  except
as otherwise provided by Section 5.14(b) below and as determined by the Collateral Agent in its reasonable discretion, new Security Documents and
appropriate UCC-1 and UCC-3 Financing Statements covering the Collateral for filing with the appropriate authorities covering the Property being acquired pursuant to the LIG
Acquisition Documents and the Reorganization (as defined in the Third Amendment); 

         (ii)  a
Guaranty executed by each of Crosstex Tuscaloosa, LLC, a Louisiana limited liability company, Crosstex LIG, LLC, a Louisiana limited liability company, and Crosstex
LIG Liquids, LLC, a Louisiana limited liability company (collectively, the "New Subsidiary Guarantors"), in form and substance reasonably satisfactory
to the Administrative Agent and the Banks; 

        (iii)  an
Amended and Restated Pledge Agreement executed among the General Partner, the MLP and the Collateral Agent in form and substance reasonably satisfactory to the
Collateral Agent and the Banks; 

        (iv)  a
Pledge Agreement executed by Crosstex Energy Services GP, LLC, in form and substance reasonably satisfactory to the Collateral Agent and the Banks; 

         (v)  a
certificate of the secretary or assistant secretary of the General Partner certifying (A) the existence of the Borrower and the General Partner, (B) its
organizational documents and the Borrower Partnership Agreement, (C) the resolutions of the General Partner approving the LIG Acquisition, the Cash Distribution, the Reorganization (each as
defined in the Third Amendment), the Third Amendment and the other Credit Documents executed and delivered on or before the date of such certificate, and (D) all documents evidencing other
necessary corporate, partnership or limited liability company action and governmental approvals, if any, with respect to the Third Amendment and the other Credit Documents executed and delivered on or
before the date of such certificate; 

        (vi)  a
certificate of the secretary or assistant secretary of each of the Guarantors certifying (A) either (1) that there have been no changes to its
organizational documents since the date such documents were last certified to the Administrative Agent and the Banks, or (2) its organizational documents, (B) the resolutions of the
governing body of such Guarantor approving the Third Amendment and the other Credit Documents executed and delivered on or before the date of such certificate, and (C) all documents evidencing
other necessary corporate, partnership or limited liability company action and governmental approvals, if any, with respect to the Third Amendment and the other Credit Documents executed and delivered
on or before the date of such certificate; 

5

 

       (vii)  certificates
of good standing, existence and authority for the Borrower, the General Partner, the MLP and each of the Guarantors from each of the states in which the
Borrower, each such Partner and each of the Guarantors is organized; 

      (viii)  supplements
to the Intercreditor Agreement executed by each of the New Subsidiary Guarantors; 

        (ix)  a
favorable opinion of Thompson & Knight L.L.P., outside Texas counsel to the Borrower, the General Partner, the MLP and the Guarantors; 

         (x)  a
favorable opinion of Taylor, Porter, Brooks & Phillips L.L.P., outside Louisiana counsel to the Borrower and the New Subsidiary Guarantors; 

        (xi)  certificate(s)
of insurance naming the Collateral Agent as loss payee or additional insured evidencing insurance which meets the requirements of this Agreement and the
Security Documents and which is in amount, form and substance and from an issuer satisfactory to the Collateral Agent; and 

       (xii)  such
other approvals, opinions, evidence and documents as any Bank, through the Administrative Agent, may reasonably request. 

        (b)   Within
120 days following the Third Amendment Effective Date deliver or cause to be delivered to the Collateral Agent the following, each in form, scope and
substance satisfactory to the Collateral Agent: 

          (i)  new
Mortgages, other Security Documents and appropriate UCC-1 and UCC-3 Financing Statements covering the Collateral for filing with the
appropriate authorities covering the Property being acquired by the Borrower and its Subsidiaries pursuant to the LIG Acquisition Documents and the Reorganization (as defined in the Third Amendment)
to the extent any of the foregoing were not required to be delivered by the Collateral Agent pursuant to subsection (a) of this Section 5.14; and 

         (ii)  a
favorable opinion of Taylor, Porter, Brooks & Phillips L.L.P., outside Louisiana counsel to the Borrower and the New Subsidiary Guarantors with respect to such
Security Documents. 

        (t)    Section 6.01(e)
of the Credit Agreement is hereby amended by adding "and the negative pledge contained in any agreement, instrument or document executed at any
time in connection with Debt permitted by Section 6.02(k); provided that any such negative pledge in connection with Debt permitted by Section 6.02(k) shall not place any restriction on
the creation or existence of any Lien now or hereafter securing the Obligations or, as a result of the creation or existence of any Lien securing the Obligations, cause or require the creation of any
Lien securing such Debt" at the end thereof; 

        (u)   Section 6.01(g)
of the Credit Agreement is hereby amended by replacing "$500,000" with "$1,000,000"; 

        (v)   Section 6.02
of the Credit Agreement is hereby amended as follows: 

          (i)  Section 6.02(f)
of the Credit Agreement is hereby amended by replacing "$5,000,000" with "$7,500,000"; 

         (ii)  Section 6.02(g)
of the Credit Agreement is hereby amended by replacing "$3,000,000" with "$10,000,000"; 

        (iii)  Section 6.02(i) of
the Credit Agreement is hereby amended by replacing "$5,000,000" with "$7,500,000" and by deleting "and" at the end thereof; 

6

 

        (iv)  Section 6.02(j)
of the Credit Agreement is hereby amended by replacing the period at the end thereof with "; and"; and 

         (v)  A
new Section 6.02(k) is hereby added as follows: 

(k)
unsecured Debt of the Borrower and/or a Finance Entity not exceeding $125,000,000 in an aggregate principal amount at any time outstanding and any unsecured guaranty of such Debt by the Borrower
or any Guarantor; provided that (i) such Debt is issued within 90 days of the Third Amendment Effective Date and (ii) the maturity of such Debt is at least five years after the
issuance thereof. 

        (w)  Section 6.04(g)
of the Credit Agreement is hereby amended by replacing "$3,000,000" with "$5,000,000". 

        (x)   Section 6.05(h)
of the Credit Agreement is hereby amended by replacing "Limited Partner" with "MLP." 

        (y)   Section 6.12
of the Credit Agreement is hereby amended in its entirety as follows: 

        Section 6.12.
[Intentionally omitted]. 

        (z)   Section 6.15
of the Credit Agreement is hereby amended by replacing "$60,000,000" with "$90,000,000" and by replacing "December 31, 2002" with
"March 31, 2004". 

        (aa) Section 6.17
of the Credit Agreement is hereby amended by replacing "$50,000,000" with "$125,000,000". 

        (bb) Section 7.01
of the Credit Agreement is hereby amended as follows: 

          (i)  Section 7.01(c)
of the Credit Agreement is amended by replacing "5.02, 5.07 or 5.13" with "5.02, 5.07, 5.13 or 5.14"; 

         (ii)  Section 7.01(d)
of the Credit Agreement is amended by replacing "$3,000,000" with "$5,000,000"; and 

        (iii)  Section 7.01(f)
of the Credit Agreement is amended by replacing "$3,000,000" with "$5,000,000". 

Section 2.
Consent and Waiver. The Banks hereby (a) consent to the LIG Acquisition, the Cash Distribution and the Reorganization,
(b) consent to the amendment and restatement of the Borrower Partnership Agreement in substantially the form delivered to the Administrative Agent on the date hereof and (c) waive any
and all Defaults or Events of Default arising or which may have heretofore arisen under the Credit Agreement or any of the Credit Documents resulting from the execution, delivery or performance of the
transactions and agreements in connection with the LIG Acquisition, the Cash Distribution, the Reorganization or the amendment and restatement of the Borrower Partnership Agreement. This waiver is
limited to the extent described herein and shall not be construed to be a consent to or a waiver of any other actions prohibited by the Credit Agreement or any other Credit Document. The
Administrative Agent and each of the Banks reserves the right to exercise any rights and remedies available to it in connection with any future defaults with respect to the Credit Agreement or any
other provision of any Credit Document, including, without limitation, Sections 6.03, 6.06, and 7.01(j) of the Credit Agreement. Further, if the Reorganization is not completed as described in the
Omnibus Agreement and such failure to be completed as described in the Omnibus Agreement would be materially adverse to the Banks, all consents granted hereunder shall be void. The Borrower agrees to
deliver to the Administrative Agent copies of all amendments, modifications or supplements to the Omnibus Agreement. 

7

 

Section 3.
Conditions Precedent. This Amendment shall become effective as of the date first set forth above when: 

        (a)   the
Borrower shall have paid to the Administrative Agent all costs and expenses which have been invoiced and are payable pursuant to Section 9.04 of the Credit
Agreement; 

        (b)   the
Administrative Agent shall have received all of the following, each dated the date hereof, in form and substance satisfactory to the Administrative Agent and in the
number of originals requested by the Administrative Agent: 

          (i)  this
Amendment, duly executed by the Borrower, the Banks and the Administrative Agent; 

         (ii)  new
Revolver A Notes in favor of each of the Banks, each in the face amount of such Bank's Revolver A Commitment and duly executed by the Borrower (the
"New Revolver A Notes"); 

        (iii)  new
Revolver B Notes in favor of each of the Banks, each in the face amount of such Bank's Revolver B Commitment and duly executed by the Borrower (the
"New Revolver B Notes"; together with the New Revolver A Notes, the "New Notes"); 

        (iv)  one
or more consents to this Amendment, duly executed by each Guarantor that has previously executed a Guaranty; 

         (v)  amendments
to each of the existing Mortgages in form and substance satisfactory to the Collateral Agent; 

        (vi)  copies
of the LIG Purchase and Sale Agreement certified by a Responsible Officer (A) as being true and correct copies of such documents as of the date hereof,
and (B) except as otherwise disclosed in writing and acceptable to the Administrative Agent (i) as being in full force and effect and no material term or condition thereof shall have
been amended, modified or waived after the execution thereof; and (ii) that to the knowledge of such Responsible Officer, none of the parties to the LIG Acquisition Documents shall have failed
to perform any material obligation or covenant required by the LIG Acquisition Documents to be performed or complied with by it on or before the date of closing of the LIG Acquisition; 

       (vii)  a
report by Barnes and Click, Inc. in form and substance satisfactory to the Administrative Agent and the Banks; 

      (viii)  a
Phase I environmental review by Flat Rock Energy Partners covering those Properties to be acquired in connection with the LIG Acquisition in form and substance
satisfactory to the Administrative Agent and the Banks; 

        (ix)  an
executed copy of the First Amendment to Note Agreement certified by a Responsible Officer as being a true and correct copy of such document as of the date hereof; 

         (x)  supplements
as required by Section 6.4(a) of the Intercreditor Agreement, executed by each New Bank; 

        (xi)  an
executed copy of the Omnibus Agreement certified by a Responsible Officer as being a true and correct copy of such document as of the date hereof; 

       (xii)  a
certificate from a Responsible Officer stating that (A) all representations and warranties of the Borrower set forth in the Credit Agreement and each of the
other Credit Documents to which it is a party are true and correct in all material respects, except to the extent any such representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall have been true and correct on such earlier 

8

 

date;
(B) no Default has occurred and is continuing; and (C) the conditions in this Section 3 have been met; and 

      (xiii)  such
other approvals, opinions, evidence and documents as any Bank, through the Administrative Agent, may reasonably request; 

        (c)   no
event or events has occurred which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect; 

        (d)   no
Default shall have occurred and be continuing; 

        (e)   the
representations and warranties of the Borrower and the Guarantors contained in this Amendment, Article IV of the Credit Agreement and in each of the other
Credit Documents executed and delivered on or before date hereof shall be true and correct in all material respects on and as of the date hereof, except to the extent any such representation or
warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall have been true and correct on such earlier date; 

        (f)    no
legal or regulatory action or proceeding has commenced and is continuing against the Borrower or any Guarantor which could reasonably be expected to cause a Material
Adverse Effect; 

        (g)   the
LIG Acquisition shall, simultaneously with the making of the related Borrowing, have been consummated by the Borrower, and all other conditions to the LIG
Acquisition shall have been satisfied in form and substance satisfactory to the Administrative Agent; 

        (h)   the
Collateral Agent shall have received satisfactory evidence that arrangements have been made so that the Liens granted to it under the Security Documents are or will
be Acceptable Security Interests and that all actions or filings necessary to protect, preserve and validly perfect such Liens have been made, taken or obtained (or will be upon the filing and
recording of the appropriate Security Documents), as the case may be, and are in full force and effect; 

        (i)    the
Administrative Agent shall be satisfied in its sole discretion as to the status of the Borrower's or Guarantor's, as applicable, title to the Properties acquired in
connection with the LIG Acquisition; and 

        (j)    the
Administrative Agent shall be satisfied in its sole discretion with its due diligence analysis and review of the Properties acquired pursuant to the LIG Acquisition. 

Section 4.
Representations and Warranties. The Borrower represents and warrants to the Banks and the Administrative Agent as set forth below: 

        (a)   The
execution, delivery and performance by the Borrower of this Amendment, the New Notes and the Credit Documents, as amended hereby and thereby, to which the Borrower
is a party are within the Borrower's legal powers, have been duly authorized by all necessary partnership action and do not (i) contravene the Borrower Partnership Agreement,
(ii) contravene any Governmental Rule or contractual restriction binding on or affecting the Borrower or (iii) result in or require the creation or imposition of any Lien (other than any
created by the Credit Documents) upon or with respect to any of the properties of the Borrower. 

        (b)   No
Governmental Action is required for the due execution, delivery or performance by the Borrower of this Amendment, the New Notes or any of the Credit Documents, as
amended hereby and thereby, to which the Borrower is a party. 

        (c)   This
Amendment, the New Notes and each of the Credit Documents, as amended hereby and thereby, to which the Borrower is a party constitute legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as 

9

 

the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors' rights generally or by general principles of equity. 

        (d)   Each
of the Security Documents constitutes an Acceptable Security Interest on the Collateral purported to be encumbered thereby, enforceable against all third parties in
all jurisdictions, and secures the payment of all obligations stated to be secured thereby under the Credit Documents, as amended hereby and by the New Notes, and the execution, delivery and
performance of this Amendment and the New Notes do not adversely affect any Lien of the Security Documents. 

        (e)   The
quarterly and annual financial statements most recently delivered to the Banks pursuant to Sections 5.01(c) and (d) of the Credit Agreement fairly present the
Consolidated financial condition of the Borrower and its Subsidiaries as of the respective dates thereof and the Consolidated results of the operations of the Borrower and its Subsidiaries for the
respective fiscal periods ended on such dates, all in accordance with GAAP applied on a consistent basis (subject to normal year-end audit adjustments and the absence of footnotes in the
case of the quarterly financial statements). Since December 31, 2003 there has been no material and adverse change in the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or any Subsidiary. The Borrower and its Subsidiaries have no material contingent liabilities except as disclosed in such financial statements or the notes
thereto. 

        (f)    There
is no pending or, to the knowledge of the Borrower, threatened action or proceeding affecting the Borrower or any Subsidiary before any Governmental Person,
referee or arbitrator that could reasonably be expected to have a Material Adverse Effect. 

        (g)   There
has been no amendment to the Borrower Partnership Agreement. The representations and warranties of the Borrower contained in the Credit Documents are correct on
and as of the date hereof as though made on and as of such date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such
representation or warranty shall have been true and correct on such earlier date. No event has occurred and is continuing, or would result from the effectiveness of this Amendment, that constitutes a
Default. 

Section 5.
Modification and Increase in Commitments. The Borrower, the Administrative Agent, and the Banks hereby agree that the Commitments of
the Banks under the Credit Agreement shall be modified to reflect the Commitments for the Banks set forth on the attached Schedule 1 and upon the effectiveness of this Amendment pursuant to
Section 3 above, each such Bank's Commitment shall be
the Commitment set forth on the attached Schedule 1. On the date hereof, each New Bank shall pay to the Administrative Agent, for the account of the Banks (other than the New Banks) an amount
equal to such New Bank's Pro Rata Share of the outstanding Advances. Such payment shall be made by wire transfer of immediately available funds to an account designated by the Administrative Agent.
Upon receipt of such funds, the Administrative Agent shall promptly pay to each Bank, by wire transfer in immediately available funds, the amount of each such Bank's ratable share of such payment,
such that after such payment, the Banks (including the New Banks) shall each hold its Pro Rata Share of the Advances. 

Section 6.
Addition of New Banks. Each of the New Banks (i) confirms that it has received a copy of the Credit Agreement, together with
copies of the financial statements referred to in Section 4.05 and 5.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Amendment; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Bank and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any other Credit Document; (iii) appoints and
authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its 

10

 

behalf
and to exercise such powers as it deems necessary under the Credit Agreement and any other Credit Document as are delegated to the Administrative Agent or the Collateral Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit
Agreement or any other Credit Document are required to be performed by it as a Bank; and (v) specifies as its Domestic Lending Office (and address for notices) the office set forth beneath its
name on Schedule 2 hereto. 

Section 7.
Reference to and Effect on the Credit Agreement. 

        (a)   On
and after the effective date of this Amendment, each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import
shall mean and be a reference to the Credit Agreement, and each reference in the other Credit Documents to "the Credit Agreement," "thereunder," "thereof," "therein" or words of like import referring
to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended by this Amendment. 

        (b)   Except
as specifically amended above and except for the issuance of the New Notes, the Credit Agreement and the other Credit Documents shall remain in full force and
effect and are hereby ratified and confirmed. Without limiting the generality of the foregoing, the Security Documents and all of the Collateral described therein do and shall continue to secure the
payment of all obligations stated to be secured thereby under the Credit Documents, as amended hereby and by the New Notes. 

        (c)   Except
as expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the
Administrative Agent or any Bank under any of the Credit Documents or constitute a waiver of any provision of any of the Credit Documents. 

Section 8.
Execution in Counterparts. This Amendment may be executed in any number of counterparts and by the parties hereto in separate
counterparts, each which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of an originally executed counterpart of this Amendment. 

Section 9.
Governing Law; Binding Effect. This Amendment shall be governed by, and construed and enforced in accordance with, the laws of the
State of Texas, and shall be binding upon the Borrower, the Administrative Agent, each Bank and their respective successors and assigns. 

Section 10.
Costs and Expenses. The Borrower agrees to pay on demand all costs and expenses of the Administrative Agent in connection with the
preparation, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder, including the reasonable fees and out-of-pocket
expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities hereunder and thereunder. 

[Remainder
of this page blank; signature page follows] 

11

 

        Effective
as of the 1st day of April, 2004. 

	

 	
 	

CROSSTEX ENERGY SERVICES, L.P.
	

 	
 	

By:	
 	

CROSSTEX OPERATING GP, LLC, General Partner
	

 	
 	

 	
 	

By:	

/s/  WILLIAM W. DAVIS      
 William W. Davis

Executive Vice President and Chief Financial Officer
	

 	
 	

UNION BANK OF CALIFORNIA, N.A., as Lead Arranger, Administrative Agent and Bank
	

 	
 	

By:	
 	

/s/  JOHN CLARK      
 John Clark

Vice President
	

 	
 	

By:	
 	

/s/  SEAN MURPHY      
 Name: Sean Murphy

Title: Vice President
	

 	
 	

THE ROYAL BANK OF CANADA, as Co-Arranger, Syndication Agent and Bank
	

 	
 	

By:	
 	

/s/  LORNE GARTNER      
 Name: Lorne Gartner

Title: Authorized Signatory
	

 	
 	

FLEET NATIONAL BANK, as Documentation Agent and Bank
	

 	
 	

By:	
 	

/s/  ROBERT D. VALBONA      
 Name: Robert D. Valbona

Title: Managing Director
	

 	
 	

U.S. BANK NATIONAL ASSOCIATION, as Bank
	

 	
 	

By:	
 	

/s/  MATTHEW J. PURCHASE      
 Name: Matthew J. Purchase

Title: Vice President
	

 	
 	

BANK OF AMERICA, N.A., as Bank
	

 	
 	

By:	
 	

/s/  STEVEN A. MACKENZIE      
 Name: Steven A. Mackenzie

Title: Vice President
	 	 	 	 	 	 

12

 

	

 	
 	

BNP PARIBAS, as Bank
	

 	
 	

By:	
 	

/s/  JOE ONISCHUK      
 Name: Joe Onischuk

Title: Director
	

 	
 	

By:	
 	

/s/  LARRY ROBINSON      
 Name: Larry Robinson

Title: Director
	

 	
 	

GENERAL ELECTRIC CAPITAL CORPORATION, as Bank
	

 	
 	

By:	
 	

/s/  SIMON DUNCAN      
 Name: Simon Duncan

Title: Manager—Operations
	

 	
 	

GUARANTY BANK, as Bank
	

 	
 	

By:	
 	

/s/  JIM R. HAMILTON      
 Name: Jim R. Hamilton

Title: Senior Vice President

13

QuickLinks

Exhibit 10.1

THIRD AMENDMENT

BACKGROUND

AGREEMENT

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