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Exhibit 10.3    
  

CLOSING CONTRIBUTION, CONVEYANCE

AND ASSUMPTION AGREEMENT  

        This Closing Contribution, Conveyance and Assumption Agreement (this "Agreement") dated effective as of
12:01 a.m. Eastern Standard Time on November [    ], 2002 (the "Effective Time"), is entered into by and among
CROSSTEX ENERGY HOLDINGS INC., a Delaware corporation ("Holdings"), CROSSTEX ENERGY, INC., a Texas corporation
("CEI"), CROSSTEX ENERGY, L.P., a Delaware limited partnership ("MLP"), CROSSTEX ENERGY GP, LLC, a
Delaware limited liability company ("GP LLC"), CROSSTEX ENERGY GP, L.P., a Delaware limited partnership ("GP
LP"), CROSSTEX ENERGY SERVICES, L.P., a Delaware limited partnership ("OLP") and CROSSTEX PIPELINE, INC., a Texas
corporation ("CPI"). 

RECITALS  

        WHEREAS, the following actions have previously been taken prior to the date hereof: 

          1.  Holdings
formed GP LLC, and contributed $1,000 in capital to it as a capital contribution in exchange for all of the membership interests in GP LLC; 

          2.  GP
LLC and Holdings formed GP LP, with GP LLC contributing $1 in exchange for a 0.001% general partner interest of GP LP and Holdings contributing $999 in exchange for a
99.999% limited partner interest of GP LP; 

          3.  GP
LP and Holdings formed MLP, with GP LLC contributing $20 in exchange for a 2.0% general partner interest in MLP and Holdings contributing $980 in exchange for a 98.0%
limited partner interest of MLP; 

          4.  CEI
formed Crosstex Energy Services GP, LLC, a Delaware limited liability company ("OLP GP"), and contributed $1,000 in
capital to it as a capital contribution in exchange for all of the membership interests in OLP GP; 

          5.  OLP
GP and MLP formed OLP, with OLP GP contributing $1 in exchange for a 0.001% general partner interest of OLP and MLP contributing $999 in exchange for a 99.999%
limited partner interest of OLP; 

          6.  Crosstex
Energy Services, Ltd., a Texas corporation ("CESL") formed Crosstex Asset Management GP, LLC
("CAM GP"), and contributed $1,000 in capital to it as a capital contribution in exchange for all of the membership interests in CAM GP. 

          7.  CAM
GP and CESL formed Crosstex Asset Management, L.P., a Delaware limited partnership ("CAM LP"), with CAM GP
contributing $100 in exchange for a 1% general partner interest of CAM LP and CESL contributing $900 in exchange for a 99% limited partner interest of CAM LP; 

          8.  Crosstex
Gas Services, Inc., a Delaware corporation, merged into Holdings in accordance with the Delaware General Corporation Law
("DGCL"). 

          9.  Holdings
contributed all of its membership interest in GP LLC to CEI as a capital contribution. 

        10.  CEI
adopted a plan of complete liquidation. 

        11.  CEI
contributed its general partner interest in CESL to OLP GP as a capital contribution. 

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        12.  CESL
converted the 1.0% interest in CESL held by CEI into a 1.0% limited partner interest in CESL. 

        13.  CESL
contributed certain assets to CAM LP as a capital contribution. 

        14.  CESL
distributed its limited partner interest in CAM LP and its membership interest in CAM GP to each of CEI and Holdings, in accordance with their percentage ownership
interests in CESL. 

        15.  CEI
distributed its limited partner interest in CAM LP and its membership interest in CAM GP to Holdings. 

        16.  Holdings
contributed certain promissory notes to CAM LP as a capital contribution. 

        17.  CEI
contributed its 1.0% limited partner interest in CESL and all of its membership interest in OLP GP to MLP as a capital contribution. 

        18.  CEI
contributed a portion of its limited partner interest in MLP to GP LP as a capital contribution. 

        19.  Crosstex
Gulf Coast, LLC merged into OLP GP in accordance with the Texas Limited Liability Company Act ("Texas LLC Act")
and the Delaware Limited Liability Company Act and CESL merged into OLP in accordance with the Texas Revised Uniform Limited Partnership Act and the Delaware Revised Uniform Limited Partnership Act. 

        20.  Through
a series of transactions, OLP distributed all of its shares of common stock of CPI to Holdings. 

        21.  OLP
has entered into a credit agreement dated November [    ], 2002 with a syndicate of financial institutions led by Union Bank of
California, N.A. ("UBOC") providing for credit facilities aggregating up to $85 million ("Credit
Agreement"). 

        WHEREAS,
concurrently with the consummation of the transactions contemplated hereby and the initial public offering of the registered common units of MLP (the
"Offering"), each of the following matters shall occur in the order indicated: 

          1.  CEI
will enter into the First Amended and Restated Limited Liability Company Agreement of GP LLC. 

          2.  GP
LP and GP LLC will enter into that certain First Amended and Restated Agreement of Limited Partnership of GP LP. 

          3.  MLP
will enter into the Amended and Restated Limited Liability Company Agreement of OLP GP. 

          4.  The
MLP and GP LP will enter into that certain First Amended and Restated Agreement of Limited Partnership of the MLP ("MLP
Agreement"). 

          5.  CPI
will convert to Crosstex Pipeline, LLC, a Texas limited liability company ("CPLLC") in accordance with the Texas LLC
Act. 

          6.  Through
a series of Transactions, Holdings will contribute all of its equity interest in CPLLC to OLP in exchange for a portion of the limited partner interests of MLP. 

          7.  The
limited partner interests in MLP owned by Holdings will be converted into 4,667,000 subordinated units representing limited partner interests in the MLP
("Subordinated Units") and 333,000 common limited partner interests in the MLP ("Common Units"). 

          8.  From
the proceeds of the Offering, the MLP will pay transaction expenses and contribute the balance of proceeds of the Offering to OLP as a capital contribution. 

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        11.  OLP
will repay $[            ] of indebtedness to UBOC. 

        13.  MLP
will contribute the proceeds of the exercise of the Option (as defined in Section 3.5) to OLP as a capital contribution. 

        16.  CEI
will merge into Holdings in accordance with the DGCL and the Texas Business Corporation Act ("TBCA"). 

        NOW,
THEREFORE, in consideration of their mutual undertakings and agreements hereunder, the parties to this Agreement undertake and agree as follows: 

ARTICLE I

Recordation of Evidence of Ownership of Assets  

        In connection with the conversion under the Texas LLC Act and the merger under the DGCL and TBCA that are referred to in the recitals to this Agreement, the
parties to this Agreement acknowledge that certain jurisdictions in which the assets of the applicable parties to such mergers are located may require that documents be recorded by the entities
resulting from such conversion or merger in order to evidence title in such entities. All such documents shall evidence such new ownership and are not intended to modify, and shall not modify, any of
the terms, covenants and conditions herein set forth. 

ARTICLE II

Conversion of CPI, Contribution and Distribution of Interests,

Conversion of General and Limited Partnership Interests and Merger  

        Section 2.1    Conversion of CPI to CPLLC.    CPI converts to Crosstex Pipeline, LLC, a
Texas limited liability company ("CPLLC"). 

        Section 2.2    Contribution of CPLLC Interest.    

        (a)  Holdings
hereby grants, contributes, transfers, assigns and conveys to MLP, its successors and assigns, all right, title and interest of Holdings in and to a portion of
its membership interest in CPLLC (the "CPLLC Majority Interest"), such portion to be specifically determined by the parties hereto, and hereby grants,
contributes, transfers, assigns and conveys to CEI, its successors and assigns, all right, title and interest of Holdings in and to a portion of its membership interest in CPLLC (the
"CPLLC Minority Interest"), such portion to be specifically determined by the parties hereto, and MLP hereby accepts the CPLLC Majority Interest as a
contribution to the capital of MLP in exchange for a portion of the limited partner interests in MLP, such portion to be specifically determined by the parties hereto, and CEI hereby accepts the CPLLC
Minority Interest as a capital contribution. The sum of the portions of the membership interests in CPLLC to be contributed to CEI and MLP shall equal 100% of such membership interest. 

        (b)  CEI
hereby grants, contributes, transfers, assigns and conveys to GP LLC, its successors and assigns, all right, title and interest of Holdings in and to the CPLLC
Minority Interest, and GP LLC hereby accepts the CPLLC Minority Interest as a contribution of capital. 

        (c)  GP
LLC hereby grants, contributes, transfers, assigns and conveys to GP LP, its successors and assigns, all right, title and interest of GP LLC in and to the CPLLC
Minority Interest, and GP LP hereby accepts the CPLLC Minority Interest as a contribution of capital. 

        (d)  GP
LP hereby grants, contributes, transfers, assigns and conveys to MLP, its successors and assigns, all right, title and interest of GP LP in and to the CPLLC Minority
Interest, and MLP hereby accepts the CPLLC Minority Interest as a contribution to the capital of MLP in exchange for a portion of the limited partner interests in MLP (the "MLP
Interest"), such portion to be specifically determined by the parties hereto. 

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        (e)  MLP
hereby grants, contributes, transfers, assigns and conveys to OLP, its successors and assigns, all right, title and interest of MLP in and to the CPLLC Majority
Interest and the CPLLC Minority Interest, and OLP hereby accepts the CPLLC Majority Interest and the CPLLC Minority Interest as a capital contribution. 

        Section 2.3    Distribution of MLP Interest.    

        (a)  GP
LP hereby grants, distributes, transfers, assigns and conveys to CEI, its successors and assigns, all right, title and interest of GP LP in and to a percentage of the
MLP Interest equal to CEI's percentage ownership interest in GP LP (the "MLP Majority Interest"), and hereby grants, distributes, transfers, assigns and
conveys to GP LLC, its successors and assigns, all right, title and interest of MLP in and to a percentage of the MLP Units equal to GP LLC's percentage ownership interest in GP LP (the
"MLP Minority Interest"), and CEI and GP LLC hereby accept the MLP Majority Interest and the MLP Minority Interest, respectively, each as a
distribution. 

        (b)  GP
LLC hereby grants, distributes, transfers, assigns and conveys to CEI, its successors and assigns, all right, title and interest of GP LLC in and to the MLP Minority
Interest, and CEI accepts the MLP Interest as a distribution. 

        (c)  CEI
hereby grants, distributes, transfers, assigns and conveys to Holdings, its successors and assigns, all right, title and interest of CEI in and to the MLP Majority
Interest and the MLP Minority Interest, and Holdings accepts the MLP Majority Interest and the MLP Minority Interest, each as a dividend. 

        Section 2.4    Conversion of Limited Partner Interests of Holdings.    In accordance
with Section 5.2 of the MLP Agreement, the limited partner interests in MLP owned by Holdings will be converted into (i) 4,667,000 Subordinated Units and (ii) 333,000 Common
Units. 

        Section 2.5    Conversion of General Partner Interest of GP LP.    In accordance with
Section 5.2 of the MLP Agreement, the general partner interest and limited partner interest in the MLP owned by GP LP will be converted into (i) the General Partner Interest (as defined
in the MLP Agreement) and (ii) the Incentive Distribution Rights (as defined in the MLP Agreement). GP LP hereby acknowledges receipt of the General Partner Interest and the Incentive
Distribution Rights. 

        Section 2.6    Merger of CEI into Holdings.    CEI merges into Holdings by taking the
steps, executing the documents and making the filings necessary to effect such merger in accordance with the DGCL and TBCA. 

ARTICLE III

Public Offering and Use of Proceeds  

        Section 3.1    Public Cash Distribution.    The MLP acknowledges receipt of a cash
contribution of $[            ] million in cash ($[            ] million after payment of underwriting discounts and commissions)
obtained from
the Offering in exchange for 2,000,000 Common Units. 

        Section 3.2    MLP Capital Contribution to OLP.    Upon receipt by MLP of the cash
contribution set forth in Section 3.1 above, MLP will contribute to the capital of OLP cash in the amount of $[            ] million (having paid
$[            ] million for fees and expenses in connection with the Offering and related transactions) and OLP hereby acknowledges receipt of such cash. 

        Section 3.3    OLP Use of Proceeds.    The parties to this Agreement acknowledge that
OLP will use the cash received as set forth in Section 3.2 above for the repayment of $[            ] of debt owed to UBOC. 

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        Section 3.4    OLP Borrowing.    OLP will borrow
$[            ] million under the Credit Agreement. 

        Section 3.5    Purchase of Additional Common Units.    The underwriters of the Offering
were granted a 30-day option (the "Option") to purchase up to 300,000 Common Units. If the Option is exercised the parties to this Agreement
acknowledge that an additional cash contribution of $[            ] will be made from the public to MLP, through the underwriters, in exchange for 300,000 Common Units. 

        Section 3.6    Exercise of Over-Allotment Option.    In the event that the
Option is exercised, MLP hereby contributes the proceeds of the exercise of the Option (being cash in the amount of $[            ] million) to the capital of OLP, and OLP
hereby acknowledges receipt of such cash. 

        Section 3.7    OLP Use of Over-Allotment Proceeds.    The parties to this
Agreement acknowledge that OLP will use the cash received as set forth in Section 3.6 above for the repayment of $[            ] of debt owed to UBOC. 

ARTICLE IV

Further Assurances  

        From time to time after the date hereof, and without any further consideration, each of the parties to this Agreement shall execute, acknowledge and deliver all
such additional instruments, notices and other documents, and will do all such other acts and things, all in accordance with applicable law, as may be necessary or appropriate to more fully and
effectively carry out the purposes and intent of this Agreement. 

ARTICLE V

Miscellaneous  

        Section 5.1    Order of Completion of Transactions.    The transactions provided for in
Article II of this Agreement shall be completed on the date of this Agreement, immediately prior to the consummation of the Offering, in the order set forth in that article. The transactions
provided for in Article III of this Agreement shall be completed concurrently with the consummation of the Offering in the order set forth in that Article. 

        Section 5.2    Headings; References; Interpretation.    All article and section
headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words "hereof," "herein" and
"hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including without limitation, all exhibits attached hereto, and not to any particular
provision of this Agreement. All references herein to articles, sections, and exhibits shall, unless the context requires a different construction, be deemed to be references to the articles, sections
and exhibits of this Agreement, respectively, and all such exhibits attached hereto are hereby incorporated herein and made a part hereof for all purposes. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word "including"
following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar
items or matters, whether or not non-limiting language (such as "without limitation," "but not limited to," or words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. 

        Section 5.3    Successors and Assigns.    The Agreement shall be binding upon and inure
to the benefit of the parties signatory hereto and their respective successors and assigns. 

        Section 5.4    No Third Party Rights.    The provisions of this Agreement are intended
to bind the parties signatory hereto as to each other and are not intended to and do not create rights in any other 

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person or confer upon any other person any benefits, rights or remedies and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement. 

        Section 5.5    Counterparts.    This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on the parties hereto. 

        Section 5.6    Governing Law.    This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts made and to be performed wholly within such state without giving effect to conflict of law principles thereof, except to the
extent that it is mandatory that the law of some other jurisdiction, shall apply. 

        Section 5.7    Severability.    If any of the provisions of this Agreement are held by
any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not
invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and an equitable adjustment shall be
made and necessary provision added so as to give effect to the intention of the parties as expressed in this Agreement at the time of execution of this Agreement. 

        Section 5.8    Amendment or Modification.    This Agreement may be amended or modified
from time to time only by the written agreement of all the parties hereto. 

        Section 5.9    Integration.    This Agreement supersedes all previous understandings or
agreements between the parties, whether oral or written, with respect to its subject matter. This document is an integrated agreement which contains the entire understanding of the parties. No
understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment
hereto executed by the parties hereto after the date of this Agreement. 

        Section 5.10    Representations and Warranties.    Each party hereto represents and
warrants to each of the other parties hereto as follows: 

        (a)  Such
party has the right, power and authority for, and has taken all necessary corporate and other action to authorize, the execution, delivery and performance of the
transactions contemplated by this Agreement; 

        (b)  This
Agreement has been duty executed and delivered by the duly authorized officers of such party and constitutes the legal, valid and binding obligation of such party,
enforceable in accordance with its terms; and 

        (c)  Any
property or right being transferred and assigned by such party hereunder to another party is owned by such transferor/assignor, free and clear or all liens, claims
and encumbrances and upon such transfer the transferee/assignee will succeed to all right, title and ownership in such property or right. 

        THE
PARTIES ACKNOWLEDGE AND AGREE THAT, EXCEPT FOR THE FOREGOING REPRESENTATIONS AND WARRANTIES, ALL PROPERTY AND RIGHTS TRANSFERRED AND ASSIGNED PURSUANT TO THIS AGREEMENT ARE BEING
TRANSFERRED AND ASSIGNED ON AN AS-IS, WHERE-IS BASIS AND NO OTHER REPRESENTATIONS AND WARRANTIES ARE MADE WITH RESPECT TO SUCH PROPERTY OR RIGHTS. 

        Section 5.11    Costs.    Each transferee/assignee hereunder shall pay all sales, use
and similar taxes arising out of the contributions, conveyances and deliveries to be made hereunder, and shall pay all documentary, filing, recording, transfer, deed, and conveyance taxes and fees
required in connection therewith. 

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        Section 5.12    Deed; Bill of Sale; Assignment.    To the extent required by applicable
law, this Agreement shall also constitute a "deed," "bill of sale" or "assignment" of assets. 

[The
Remainder Of This Page is Intentionally Left Blank] 

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        IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the date first above written. 

	HOLDINGS:	 	CROSSTEX ENERGY HOLDINGS INC., a Delaware corporation
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	
CEI:	
 	

CROSSTEX ENERGY, INC., a Texas corporation
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	
MLP:	
 	

CROSSTEX ENERGY, L.P., a Delaware limited partnership
	 	 	By:	 	Crosstex Energy GP, L.P., a Delaware limited partnership, its general partner
	 	 	By:	 	        Crosstex Energy GP, LLC, a Delaware limited

        liability company, its general partner
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	
GP LLC:	
 	

CROSSTEX ENERGY GP, LLC, a Delaware limited liability company
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	
GP LP:	
 	

CROSSTEX ENERGY GP, L.P., a Delaware limited partnership
	 	 	By:	 	Crosstex Energy GP, LLC, a Delaware limited liability company, its general partner
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	
OLP:	
 	

CROSSTEX ENERGY SERVICES, LTD., a Delaware limited partnership
	 	 	By:	 	Crosstex Energy, Inc., a Texas corporation, its general partner
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

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CPI:	
 	

CROSSTEX PIPELINE, INC., a Texas corporation
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

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Exhibit 10.5    
  

EMPLOYMENT AGREEMENT  

        THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into this    day
of                        , 2002, by
and between Crosstex Energy GP, L.P., a Delaware limited partnership (the "Company"),
and                        , an individual
("Employee"), to be effective upon the closing of the initial public offering of equity securities of Crosstex Energy, L.P., a Delaware limited
partnership (the "Partnership") for which the Company serves as the sole general partner (the "Effective
Date"). 

        1.    Employment.    The Company agrees to employ Employee and Employee agrees to be employed by the Company upon the
terms and conditions of this Agreement, commencing on the date hereof and continuing until terminated as provided in Paragraph 9 below. 

        2.    Position and Duties.    While employed hereunder, Employee shall serve as
the                        of the Company and
shall have and may exercise all of the powers, functions, duties and responsibilities normally attributable to such position and shall have such additional duties and responsibilities commensurate
with such position as may from time to time be reasonably assigned to Employee by the board of directors (the "Board") of Crosstex Energy GP, LLC, a
Delaware limited liability company (the "General Partner"). Employee shall observe and comply with all lawful policies, directions and instructions of
the Board, which are consistent with the foregoing provisions of this Paragraph 2, and shall endeavor to promote the business, reputation and
interests of the Company and the Company's affiliates, including Crosstex Energy, L.P., a Delaware limited partnership (the "Partnership"). Employee
shall devote substantially all of his business time, attention, skill and efforts to the faithful and efficient performance of his duties hereunder. Notwithstanding the foregoing, Employee may engage
in the following activities so long as they do not interfere in any material respect with the performance of Employee's duties and responsibilities hereunder: (i) service on corporate, civic,
religious, educational and/or charitable boards or committees and (ii) management of his personal investments. Employee's place of employment hereunder shall be at the Company's principal
executive offices in the greater Dallas, Texas area. 

        3.    Compensation; Bonus.    For services rendered by Employee under this Agreement, the Company shall pay to
Employee an annual base salary of $                        (the "Salary"),
payable in accordance with the Company's payroll practice for its executives as it is
earned. The Board shall review the Salary at least annually and may adjust the amount of the Salary at any time as the Board may deem appropriate in its sole discretion; provided, however, that in no
event may the Salary be decreased below the above stated amount without the prior written consent of Employee. Employee shall be eligible for annual bonuses and participation in other
short-term or long-term incentive plans at the discretion of the Board. 

        4.    Expenses.    The Company shall reimburse Employee for all ordinary and necessary expenses incurred and paid by
Employee in the course of the performance of Employee's duties pursuant to this Agreement and consistent with the Company's policies in effect from time to time with respect to travel, entertainment
and other business expenses, and subject to the Company's requirements with respect to the manner of approval and reporting of such expenses. 

        5.    Additional Benefits    Employee shall be entitled to receive all employee benefits, fringe benefits, vacations
and other perquisites that may be offered by the Company to its executives as a group, including participation by Employee and, where applicable, Employee's dependents, in the various employee benefit
plans or programs (including pension plans, profit sharing plans, incentive plans, health plans, life insurance and disability insurance) provided to executives of the Company in general, subject to
meeting the eligibility requirements with respect to each of such benefit plans or 

1

 

programs. However, nothing in this Paragraph 5 shall be deemed to prohibit the Company from making any changes in any of the plans, programs or
benefits described herein. 

        6.    Covenant Not to Disclose Confidential Information.    Employee acknowledges that during the course of his
employment with the Company he has or will have access to and knowledge of certain information and data that the Company or any subsidiary, parent or affiliate of the Company considers confidential
and that the release of such information or data to unauthorized persons would be extremely detrimental to the Company. As a consequence, Employee hereby agrees and acknowledges that he owes a duty to
the Company not to disclose, and agrees that, during or after the term of his employment, without the prior written consent of the Company, he will not communicate, publish or disclose, to any person
anywhere or use any Confidential Information (as hereinafter defined) for any purpose other than carrying out his duties as contemplated by this Agreement. Employee will use his best efforts at all
times to hold in confidence and to safeguard any Confidential Information from falling into the hands of any unauthorized person and, in particular, will not permit any Confidential Information to be
read, duplicated or copied. Employee will return to the Company all Confidential Information in Employee's possession or under Employee's control when the duties of Employee no longer require
Employee's possession thereof, or whenever the Company shall so request, and in any event will promptly return all such Confidential Information if Employee's relationship with the Company is
terminated for any or no reason and will not retain any copies thereof. For purposes hereof the term "Confidential Information" shall mean any
information or data used by or belonging or relating to the Company or any subsidiary, parent or affiliate of the Company that is not known generally to the industry in which the Company or any
subsidiary, parent or affiliate of the Company is or may be engaged, including without limitation, any and all trade secrets, proprietary data and information relating to the Company's or any
subsidiary, parent or affiliate of the Company's past,
present or future business and products, price lists, customer lists, processes, procedures or standards, know-how, manuals, business strategies, records, drawings, specifications,
designs, financial information, whether or not reduced to writing, or information or data that the Company or any subsidiary, parent or affiliate of the Company advises Employee should be treated as
confidential information. 

        7.    Covenant Not to Compete.    

        (a)  In
partial consideration for the Company's agreement to provide Employee access to Confidential Information and the other benefits provided by this Agreement, Employee
agrees that while employed by the Company and until the later to occur of (i) one (1) year after the termination of such employment (for any reason) or (ii) the date on which the
Company is no longer obligated to make payments to Employee under this Agreement (the "Restricted Period"), Employee shall not, unless Employee receives
the prior written consent of the Board, own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any individual, partnership, joint venture, corporation, trust, unincorporated organization or any other entity (collectively, a
"Person") which competes with the Company or its affiliates in the (i) purchasing, selling, brokering or marketing of natural gas, including,
without limitation, locating buyers and sellers, preparing and negotiating purchase and sales contracts with the natural gas producers from which the Company purchased natural gas, or any customer of
the Company to whom the Company has sold gas to during the 12-month period preceding the termination of such employment; (ii) the gathering, treating, processing, and/or
transporting natural gas within a ten (10) mile radius of any plant, equipment or facilities owned, leased (as lessor or lessee) or operated by the Company, or its affiliates, as of the date of
the termination of such employment; (iii) treating of natural gas for the removal of carbon dioxide, hydrogen sulfide, or other contaminants in the states of Texas, Louisiana, Oklahoma and any
state in which the Company and its affiliates owns or operates a natural gas treating facility as of the date of the termination of such employment; (iv) brokering, marketing, purchase for
resale, purchase for inventory (i.e., any 

2

 

purchase other than immediate use in projects not otherwise restricted under the terms hereof), sale or lease (as lessor) of new or used equipment for treating natural gas for the removal of carbon
dioxide, hydrogen sulfide, or other contaminant; and (v) owning or operating of a business or facility that is engaged or will engage) in the business of fabricating new or refurbishing used
amine-treating facilities; provided, however, that following Employee's termination of employment the foregoing restriction shall apply only to (i) those areas where the Company or any
affiliate was actually doing business on the date of such termination of employment and (ii) those areas in respect of which the Company or any affiliate actively and diligently conducted at
any time during the 12-month period ended on such date of termination an analysis to determine whether or not it would commence doing business in such areas but, in the case of each such
area the foregoing restriction shall cease to apply when the Company or its affiliates ceases to actively conduct business (disregarding any temporary stoppages) in such area or, if applicable,
abandons its intent to conduct business in such area. 

        (b)  Employee
has carefully read and considered the provisions of this Paragraph 7 and, having done so, agrees that the
restrictions set forth in this Paragraph 7 (including the Restricted Period, scope of activity to be restrained and the geographical scope) are
fair and reasonable and are reasonably required for the protection of the interests of the Company, its officers, directors, employees, creditors and shareholders. Employee understands that the
restrictions contained in this Paragraph 7 may limit his
ability to engage in a business similar to the Company's business, but acknowledges that he will receive sufficiently high remuneration and other benefits from the Company hereunder to justify such
restrictions. 

        (c)  During
the Restricted Period, Employee shall not, whether for his own account or for the account of any other Person (excluding the Company), intentionally
(i) solicit, endeavor to entice or induce any employee of the Company to terminate his employment with the Company or accept employment with anyone else or (ii) interfere in a similar
manner with the business of the Company. 

        (d)  It
is specifically agreed that the Restricted Period, during which the agreements and covenants of Employee made herein shall be effective, shall be computed by
excluding from such computation any time which Employee is in violation of any provision of this Paragraph 7. 

        (e)  In
the event that any provision of this Paragraph 7 relating to the Restricted Period and/or the areas of
restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period or areas such court deems reasonable and enforceable, the Restricted Period and/or areas of
restriction deemed reasonable and enforceable by the court shall become and thereafter be the maximum time period and/or areas. 

        8.    Specific Performance.    Recognizing that irreparable damage will result to the Company in the event of the
breach or threatened breach of any of the foregoing covenants and assurances by Employee contained in Paragraphs 6 or 7 hereof, and that the Company's
remedies at law for any such breach or threatened breach will be inadequate, the Company and its successors and assigns, in addition to such other remedies that may be available to them, shall be
entitled to an injunction, including a mandatory injunction, to be issued by any court of competent jurisdiction ordering compliance with this Agreement or enjoining and restraining Employee, and each
and every person, firm or company acting in concert or participation with him, from the continuation of such breach and, in addition thereto, he shall pay to the Company all ascertainable damages,
including costs and reasonable attorneys' fees sustained by the Company by reason of the breach or threatened breach of said covenants and assurances. The obligations of Employee and the rights of the
Company, its successors and assigns under Paragraphs 6, 7, 8, 12, 16 and 18 of this Agreement shall survive the termination of this Agreement. The
covenants and obligations of Employee set forth in Paragraphs 6  

3

 

 and 7 hereof are in addition to and not in lieu of or exclusive of any other obligations and duties of Employee to the Company, whether express or implied in fact or in law. 

        9.    Term and Termination.    

        (a)  Subject
to Paragraph 9(b) and 9(c) below, the term of this Agreement shall commence as of the Effective Date, and
shall continue for a period of three (3) years. Commencing on the second
anniversary of the date of this Agreement, on a daily basis, the term of this Agreement shall be automatically extended by one additional day (such that the remaining term of this Agreement shall be
one year) until Executive's employment hereunder shall have terminated pursuant to this Paragraph 9. 

        (b)  Notwithstanding  Paragraph 9(a) above, this Agreement shall terminate immediately upon the death, Disability (as
hereinafter defined) or adjudication of legal incompetence of Employee, or upon the Company's ceasing to carry on its business or becoming bankrupt. For purposes of this Agreement, a
"Disability" shall mean a physical or mental condition of Employee that, in the good faith judgment of not less than a majority of the entire membership
of the Board (excluding Employee, if Employee is then a member of the Board), based upon certification by a licensed physician reasonably acceptable to Employee and the Board, (i) prevents
Employee from being able to perform the services required under this Agreement, (ii) has continued for a period of at least 180 days during any 12-month period, and
(iii) is expected to continue. 

        (c)  Notwithstanding
Paragraph 9(a) above, the Company may terminate Employee's employment at any time for Cause or
without Cause; provided, however, that in no event shall the Company be entitled to terminate Employee's employment hereunder prior to the Expiration Date unless the Board shall adopt, by the
affirmative vote of at least a majority of the entire membership of the Board (excluding Employee, if Employee is then a member of the Board), a resolution authorizing such termination and stating
that, in the opinion of the Board, sufficient reason exists for such termination. "Cause" means (i) Employee has failed to perform the duties
assigned to him and such failure has continued for thirty (30) days following delivery by the Company of written notice to Employee of such failure, (ii) Employee has been convicted of a
felony or misdemeanor involving moral turpitude, (iii) Employee has engaged in acts or omissions against the Company constituting dishonesty, breach of fiduciary obligation, or intentional
wrongdoing or misfeasance, (iv) Employee has acted intentionally or in bad faith in a manner that results in a material detriment to the assets, business or prospects of the Company, or
(v) Employee has breached any obligation under this Agreement. 

        (d)  In
the event that (1) the Company elects to terminate Employee's employment with the Company for Cause or the Company's ceasing to carry on its business or
becoming bankrupt or (2) Employee terminates his employment with the Company other than for Good Reason, the Company shall pay or provide to Employee: 

        (i)    such
Salary as Employee shall have earned up to the date of his termination; and 

        (ii)  such
other fringe benefits normally provided to employees of the Company as Employee shall have earned up to the date of his termination. 

        (e)  In
the event that (1) the Company elects to terminate Employee's employment with the Company during the three-year period referred to in  Paragraph 9(a) above and such termination is without Cause,
 (2) Employee's employment is terminated as a result of the death, disability,
adjudication of legal incompetence of Employee, (3) Employee terminates his employment for 

4

 

Good Reason or (4) a Change in Control occurs during the term of Employee's employment hereunder: the Company shall pay to Employee: 

        (i)    the
Company shall pay to Employee: 

        (A)  the
unpaid amount of Employee's Salary for the remainder of the term of this Agreement, which amounts shall be paid at the regularly scheduled times, as if such
termination or Change in Control had not occurred; 

        (B)  any
bonuses earned by Employee under any incentive plans under which Employee is a participant up to the date of such termination or Change in Control; and 

        (C)  such
other fringe benefits (other than any bonus, severance pay benefit or participation in the Company's 401(k) employee benefit plan) normally provided to employees of
the Company as Employee shall have earned up to the date of his termination or Change in Control; and 

        (ii)  Employee
shall be entitled to continue his participation in any health plans of the Company for the remainder of the term of this Agreement. 

The
amount payable to Employee under this Paragraph 9(e) is in lieu of, and not in addition to, any severance payment due or to become due to
Employee under any separate agreement or contract between Employee and the Company or pursuant to any severance payment plan, program or policy of the Company or any affiliate (collectively,
"Severance Plan"). Any severance amounts received by Employee under a Severance Plan shall be applied as an offset to (reduce or eliminate, as the case
may be) any future payments otherwise to be made to Employee under this Paragraph 9(e); i.e., no additional payments shall be made under this  Paragraph 9(e)
until the aggregate amount of the offsets hereunder equals the severance amounts received by Employee under the Severance Plan. 

For
purposes of this Agreement, a "Change in Control" shall be deemed to have occurred if (i) Crosstex Energy Holdings Inc., a Delaware
corporation, and/or its affiliates, collectively, no longer directly or indirectly holds a controlling interest in the General Partner and Employee does not remain employed by the Company after the
occurrence of such event or (ii) the General Partner has caused the sale of at least fifty percent (50%) of the assets of the Partnership. "Good
Reason" means any of the following: (i) the assignment to Employee of any duties materially inconsistent with Employee's position (including a materially adverse change
in Employee's office, title and reporting requirements), authority, duties or responsibilities; (ii) the Company's requiring Employee to be based at any office other than the offices in the
greater Dallas, Texas area; (iii) any termination by the Company of Employee's employment other
than as expressly permitted by this Agreement; (iv) a breach or violation by the Company of any material provision of this Agreement, which breach or violation remains unremedied for more than
30 days after written notice thereof is given to the Company by Employee. For purposes of this definition, no act or failure to act on the Company's part shall be considered a "Good Reason"
unless Employee has given the Company written notice of such act or failure to act within 30 days thereof and the Company fails to remedy such act or failure to act within 30 days of its
receipt of such notice. 

        (f)    Nothing
in this Agreement shall prevent or limit Employee's continuing or future participation in any plan, program, policy or practice provided by the Company for which
Employee may qualify, nor shall anything herein limit or otherwise affect such rights as Employee may have under any other contract or agreement with the Company or its affiliates. Amounts which are
vested benefits or which Employee is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company at or subsequent to the termination of
Employee's employment shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement; 

5

 

provided, however, the time period after such termination shall not be credited as continued employment of Employee for any purpose under any such plan, policy, practice or program. 

        10.    Gross Up Payment    

        (a)  If
the payments and benefits provided to Employee under this Agreement or under any other agreement with, or plan of, the Company (the "Total
Payment") (i) constitute a "parachute payment" as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") and exceed three times Employee's "base amount" as defined under Code Section 280G(b)(3) by less than 10% of three times Employee's base
amount, and (ii) would, but for this Paragraph 10(a), be subject to the excise tax imposed by Code Section 4999, then Employee's
payments and benefits under this Agreement shall be either (A) paid in full, or (B) reduced and payable only as to the maximum amount which would result in no portion of such payments
and benefits being subject to excise tax under Code Section 4999, whichever results in the receipt by Employee on an after-tax basis of the greatest amount of Total Payment (taking
into account the applicable federal, state and local income taxes, the excise tax imposed by Code Section 4999 and all other taxes (including any interest and penalties) payable by Employee).
If a reduction of the Total Payment is necessary, Employee shall be entitled to select which payments or benefits will be reduced and the manner and method of any such reduction of such payments and
benefits. Within 30 days after the amount of any required reduction in payments and benefits is finally determined under Paragraph 10(c),
Employee shall notify the Company in writing regarding which payments and benefits are to be reduced. If no notification is given by Employee, the Company will determine which payments and benefits to
reduce. If, as a result of any reduction required by this Paragraph 10(a), amounts previously paid to Employee exceed the amount to which
Employee is entitled, Employee will promptly return the excess amount to the Company. 

        (b)  If
the Total Payment constitutes a "parachute payment" as defined in Code Section 280G and exceeds three times Employee's "base amount" as defined under Code
Section 280G(b)(3) by 10% or more of three times Employee's base amount, the Company shall provide to Employee, in cash, an
additional payment in an amount to cover the full excise tax due under Code Section 4999, plus Employee's state and federal income, employment, excise, and other taxes (including interest and
penalties) on this additional payment (the "Gross-Up Payment"). Any amount payable under this Paragraph 10(b)  shall be paid as soon as possible
following the date of Employee's termination, but in no event later than 30 days after such date. 

        (c)  All
determinations required to be made under this Paragraph 10, including whether reductions are necessary or
whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be used in determining such Gross-Up Payment, shall be made by
the accounting firm used by the Company at the time of such determination (the "Accounting Firm"). The Accounting Firm shall provide detailed supporting
calculations both to the Company and to Employee within 15 business days of the receipt of notice from the Company or Employee that there has been a termination of Employee's employment, or such
earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity, or group effecting the change in control transaction,
Employee may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company. 

        (d)  In
the event Employee is entitled to a Gross-Up Payment under Paragraph 10(b) and the Internal Revenue
Service subsequently increases the excise tax computation described in Paragraph 10(b), the Company shall reimburse Employee for the full amount
necessary to make Employee whole on an after-tax basis (less any amounts received by Employee that Employee 

6

 

would not have received had the computations initially been computed as subsequently adjusted), including the value of any underpaid excise tax, and any related interest and/or penalties due to the
Internal Revenue Service. 

        11.    Satisfaction of Obligations.    The Company shall use its commercially reasonable efforts to obtain from the
Partnership all funds necessary to satisfy the Company's obligations to Employee under this Agreement to the extent permitted or required under the Partnership's limited partnership agreement. 

        12.    Waiver of Breach.    Failure of the Company to demand strict compliance with any of the terms, covenants or
conditions hereof shall not be deemed a waiver of the term, covenant or condition, nor shall any waiver or relinquishment by the Company of any right or power hereunder at any one time or more times
be deemed a waiver or relinquishment of the right or power at any other time or times. 

        13.    No Breach.    Employee represents and warrants to the Company that neither the execution nor delivery of this
Agreement, nor the performance of Employee's obligations hereunder will conflict with, or result in a breach of, any term, condition, or provision of, or constitute a default under, any obligation,
contract, agreement, covenant or instrument to which Employee is a party or under which
Employee is bound, including without limitation, the breach by Employee of a fiduciary duty to any former employers. 

        14.    Entire Agreement; Amendment.    This Agreement cancels and supersedes all previous agreements relating to the
subject matter of this Agreement, written or oral, between the parties hereto and contains the entire understanding of the parties hereto and shall not be amended, modified or supplemented in any
manner whatsoever except as otherwise provided herein or in writing signed by each of the parties hereto. 

        15.    Headings.    The headings of the paragraphs of this Agreement have been inserted for convenience of reference
only and shall in no way restrict or otherwise modify any of the terms or provisions hereof. 

        16.    Governing Law.    This Agreement and all rights and obligations of the parties hereunder shall be governed by,
and construed and interpreted in accordance with, the laws of the State of Delaware applicable to agreements made and to be performed entirely within the State, including all matters of enforcement,
validity and performance. 

        17.    Notice.    Any notice, request, consent or communication under this Agreement shall be effective only if it is
in writing and personally delivered or sent by certified mail, return receipt requested, postage prepaid, or by a nationally recognized overnight delivery service, with delivery confirmed, addressed
as follows: 

If
to the Company: 

Crosstex
Energy GP, L.P.

c/o Crosstex Energy GP, LLC

2501 Cedar Springs

Suite 600

Dallas, Texas 75201

Attn: Board of Directors 

7

 

With
Copy To: 

Thompson &
Knight L.L.P.

1700 Pacific Avenue

Suite 3300

Dallas, Texas 75201 

If
to Employee: 

[                        ]

2501 Cedar Springs

Suite 600

Dallas, Texas 75201 

or
such other persons and/or addresses as shall be furnished in writing by any party to the other party, and shall be deemed to have been given only upon its delivery in accordance with this  Paragraph 17. 

        18.    Assignment.    This Agreement is personal and not assignable by Employee but it may be assigned by the Company
without notice to or consent of Employee to, and shall thereafter be binding upon and enforceable by, any affiliate of the Company and any person that shall acquire or succeed to substantially all of
the business or assets of the Company (and such person shall be deemed included in the definition of the "Company" for all purposes of this Agreement) but is not otherwise assignable by the Company. 

        19.    Expenses.    If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 

[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 

8

 

        IN
WITNESS WHEREOF, the Company has caused this Employment Agreement to be duly executed, and Employee has hereunto set his hand, as of the day and year first above written. 

	 	 	CROSSTEX ENERGY GP, L.P.
	

 	
 	

By:	
 	

Crosstex Energy GP, LLC,

Its General Partner
	

 	
 	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	

 	
 	

EMPLOYEE:
	

 	
 	

    

	 	 	Name:	 	    

9

QuickLinks

Exhibit 10.5

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