Crosstex Energy, L.P.
1,800,000 Common Units
UNDERWRITING AGREEMENT
December 14, 2007
Goldman, Sachs & Co.
Wachovia Capital Markets, LLC
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Crosstex Energy, L.P., a Delaware limited partnership (the Partnership) proposes to sell an
aggregate of 1,800,000 common units (the Firm Units) of the Partnerships common units
representing limited partnership interests (the Common Units). In addition, the Partnership
proposes to grant to the underwriters (the Underwriters) named in Schedule 1 attached to
this agreement (this Agreement) options to purchase up to an aggregate of 270,000 Common Units on
the terms set forth in Section 2 (the Option Units). The Firm Units and the Option Units, if
purchased, are hereinafter collectively called the Units.
The Partnership, Crosstex Energy Services, L.P., a Delaware limited partnership (the
Operating Partnership), and Crosstex Operating GP, LLC, a Delaware limited liability company
(Operating GP), hereby confirm their agreement with the several Underwriters as set forth below.
The Partnership, the Operating Partnership, the General Partner and Operating GP are collectively
referred to herein as the Crosstex Parties. This is to confirm the agreement concerning the
purchase of the Units from the Partnership by the Underwriters.
The Partnership operates its business through Operating GP and the Operating Partnership.
Operating GP serves as the general partner of the Operating Partnership. The subsidiaries listed
on Schedule 2 hereto are collectively referred to herein as the Significant Subs. The
Crosstex Parties and the Significant Subs are collectively referred to herein as the Crosstex
Entities.
1. Representations, Warranties and Agreements of the Crosstex Parties. The Crosstex
Parties represent, warrant and agree that:
(a) A registration statement on Form S-3 with respect to the Units with respect to the
Units has (i) been prepared by the Partnership in conformity with the requirements of the
Securities Act of 1933, as amended (the Securities Act), and the rules and regulations (the
Rules and Regulations) of the Securities and Exchange Commission (the Commission)
thereunder; (ii) been filed with the Commission under the Securities Act; and (iii) become
effective under the Securities Act. As used in this Agreement, Effective Time means the
date and the time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared
effective by the Commission; Effective Date means the date of the Effective Time. The
base prospectus filed as part of such registration statement, in the form in which it has
most recently been filed with the Commission on or prior to the date of this Agreement, is
hereinafter called the Basic Prospectus; any preliminary prospectus (including any
preliminary prospectus supplement) relating to the Units filed with the Commission by the
Partnership pursuant to Rule 424(b) under the Securities Act is herein after called a
Preliminary Prospectus; Registration Statement means such registration statement,
including all exhibits and any documents incorporated by reference therein at such time and
any prospectus supplement relating to the Units filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations and deemed to be a part of the registration statement
pursuant to Rule 430B of the Rules and Regulations, each as amended at the Effective Time;
the Basic Prospectus, as amended and supplemented immediately prior to the Applicable Time
(as defined in Section 1(c) hereof), is hereinafter called the Pricing Prospectus; and
Prospectus means the form of the final prospectus, as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations. Reference made herein to any Basic
Prospectus, any Preliminary Prospectus or to the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under
the Securities Act, as of the date of such prospectus; any reference to any amendment or
supplement to the Basic Prospectus, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any post-effective amendment to the Registration Statement,
any prospectus supplement relating to the Units filed with the Commission pursuant to Rule
424(b) under the Securities Act and any documents filed under the Securities Exchange Act of
1934, as amended (the Exchange Act), and incorporated therein, in each case after the date
of the Basic Prospectus, any Preliminary Prospectus or the Prospectus, as the case may be;
and any reference to any amendment to the Registration Statement shall be deemed to include
any annual report of the Partnership filed with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration Statement that is
incorporated by reference in the Registration Statement and any issuer free writing
prospectus as defined in Rule 433 under the Securities Act relating to the Units is
hereinafter called an Issuer Free Writing Prospectus). The Commission has not issued any
order suspending the effectiveness of the Registration Statement or any part thereof, and no
proceeding for such purpose has been instituted or, to the knowledge of the Crosstex Parties,
threatened by the Commission.
(b) No order preventing or suspending the use of any Preliminary Prospectus or any
Issuer Free Writing Prospectus has been issued by the Commission, and any Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to the
requirements of the Securities Act and the Rules and Regulations, and did not contain an
untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Partnership by any Underwriter
through Goldman, Sachs & Co. or Wachovia Capital Markets, LLC expressly for use therein;
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(c)
For the purposes of this Agreement, the Applicable Time is 8:30 a.m. (Eastern
time) on the date of this Agreement. The Pricing Prospectus, as of the Applicable Time, did
not include any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and each Issuer Free Writing Prospectus listed on
Schedule 4 hereto does not conflict with the information contained in the
Registration Statement, the Pricing Prospectus or the Prospectus and each such Issuer Free
Writing Prospectus, as supplemented by and taken together with the Pricing Prospectus as of
the Applicable Time, did not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to statements or omissions made in an Issuer
Free Writing Prospectus or a Pricing Prospectus in reliance upon and in conformity with
information furnished in writing to the Partnership by or on behalf of any Underwriter
through Goldman, Sachs & Co. or Wachovia Capital Markets, LLC expressly for use therein;
(d) The Registration Statement conformed in all material respects at the Effective
Time, conforms in all material respects on the date hereof and will conform in all material
respects on the applicable Delivery Date (as defined in Section 4), and any post-effective
amendment to the Registration Statement filed after the date hereof will conform in all
material respects on the applicable effective date, as of the Initial Delivery Date (as
defined in Section 4) and as of any subsequent Delivery Date, as the case may be, to the
requirements of the Securities Act and the Rules and Regulations. The Prospectus will
conform in all material respects when filed with the Commission pursuant to Rule 424(b) and
on the applicable Delivery Date to the requirements of the Securities Act and the Rules and
Regulations. The Registration Statement, at the Effective Time, and the Prospectus, as of
its date and on the applicable Delivery Date, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein (in the case of the Prospectus, in the light of
the circumstances under which they were made) not misleading; provided, that no
representation or warranty is made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Partnership by or on behalf of any Underwriter through Goldman,
Sachs & Co. or Wachovia Capital Markets, LLC specifically for inclusion therein, which
information is specified in Section 9(e). The conditions for use of Form S-3, as set forth
in the General Instructions thereto, have been satisfied.
(e) The documents incorporated by reference in the Registration Statement, the Pricing
Prospectus and the Prospectus, when they became effective or when filed with the Commission,
as the case may be, conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed and incorporated by
reference in the Registration Statement and the
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Prospectus, when filed with Commission and on the applicable Delivery Date, will
conform in all material respects to the requirements of the Securities Act and the Exchange
Act, as applicable, and the rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading; and no such
documents were filed with the Commission since the Commissions close of business on the
business day immediately prior to the date of this Agreement and prior to the execution of
this Agreement, except as set forth on Schedule 4 hereto.
(f) The Partnership has been duly formed and is validly existing in good standing as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act (Delaware LP
Act) with full partnership power and authority to own or lease its properties and to
conduct its business in all material respects as described in the Registration Statement and
the Pricing Prospectus.
(g) Crosstex Energy GP, L.P., a Delaware limited partnership (the General Partner),
has been duly formed and is validly existing in good standing as a limited partnership under
the Delaware LP Act with full partnership power and authority to own or lease its
properties, to conduct its business and to act as a general partner of the Partnership in
all material respects as described in the Registration Statement and the Pricing Prospectus.
(h) Operating GP has been duly formed and is validly existing in good standing as a
limited liability company under the Delaware Limited Liability Company Act (the Delaware
LLC Act) with full limited liability company power and authority to own or lease its
properties and to conduct its business in all material respects as described in the
Registration Statement and the Pricing Prospectus. Operating GP has all necessary limited
liability company power and authority to act as general partner of the Operating
Partnership.
(i) The Operating Partnership has been duly formed and is validly existing in good
standing as a limited partnership under the Delaware LP Act with full partnership power and
authority to own or lease its properties and to conduct its business in all material
respects as described in the Registration Statement and the Pricing Prospectus.
(j) Each of the Significant Subsidiaries has been duly formed and is validly existing
in good standing under the laws of its respective jurisdiction of formation, with all
limited liability company or partnership, as the case may be, power and authority necessary
to own or hold its properties and conduct its business, in each case, in all material
respects as described in the Registration Statement and the Pricing Prospectus.
(k) Each of the Crosstex Entities is duly registered or qualified as a foreign limited
liability company or limited partnership, as the case may be, for the transaction of
business under the laws of each jurisdiction in which the character of the business
conducted by it or the nature or location of the properties owned or leased by it makes such
registration or qualification necessary, except where the failure to register or qualify
would not (i) have a material adverse effect on the business, prospects, financial
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condition or results of operations of the Crosstex Entities, taken as a whole
(Material Adverse Effect) or (ii) subject the limited partners of the Partnership to any
material liability or disability.
(l) The General Partner is the sole general partner of the Partnership with a 2%
general partner interest in the Partnership; such general partner interest has been duly
authorized and validly issued in accordance with the Partnership Agreement; and the General
Partner owns its general partner interest free and clear of all liens, encumbrances (except
restrictions on transferability contained in Section 4.6 of the Partnership Agreement or as
described in the Pricing Prospectus and the Prospectus), security interests, equities,
charges or claims.
(m) The issued and outstanding limited partner interests of the Partnership consist of
22,060,519 Common Units, 4,668,000 subordinated units representing subordinated limited
partnership interests in the Partnership (Subordinated Units), 12,829,650 senior
subordinated series C units representing senior subordinated limited partnership interests
in the Partnership (Senior Subordinated Series C Units), 3,875,340 senior subordinated
series D units representing senior subordinated limited partnership interests in the
Partnership (Senior Subordinated Series D Units) and the incentive distribution rights, as
defined in the Sixth Amended and Restated Agreement of Limited Partnership of the
Partnership (as the same has been and may be amended or restated at or prior to the
applicable Delivery Date, the Partnership Agreement) (the Incentive Distribution
Rights). All outstanding Common Units, Subordinated Units, Senior Subordinated Series C
Units, Senior Subordinated Series D Units and Incentive Distribution Rights and the limited
partner interests represented thereby have been duly authorized and validly issued in
accordance with the Partnership Agreement and are fully paid (to the extent required under
the Partnership Agreement) and nonassessable (except as such nonassessability may be
affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act).
(n) Crosstex Holdings, L.P., a Delaware limited partnership (Holdings), owns
5,332,000 Common Units and 4,668,000 Subordinated Units (all such Common and Subordinated
Units being collectively referred to herein as the Sponsor Units), and the General Partner
owns all of the Incentive Distribution Rights. Holdings owns the Sponsor Units and the
General Partner owns the Incentive Distribution Rights free and clear of all liens,
encumbrances (except with respect to the Incentive Distribution Rights, restrictions on
transferability contained in Section 4.7 of the Partnership Agreement or as described in the
Pricing Prospectus), equities security interests, charges or claims.
(o) At the Initial Delivery Date or the Option Units Delivery Date, as the case may be,
the Firm Units or the Option Units to be sold by the Partnership and the limited partner
interests represented thereby, will be duly authorized by the Partnership Agreement and,
when issued and delivered to the Underwriters against payment therefor in accordance with
the terms hereof, will be validly issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such nonassessability may be affected by
Sections 17-303, 17-607 and 17-804 of the Delaware
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LP Act or as otherwise described in the Pricing Prospectus under the caption
Description of the Common UnitsLimited Liability).
(p) Operating GP is the sole general partner of the Operating Partnership with a .001%
general partner interest in the Operating Partnership; such general partner interest has
been duly authorized and validly issued in accordance with the partnership agreement of the
Operating Partnership (as the same may be amended and restated at or prior to the applicable
Delivery Date, the Operating Partnership Agreement); Operating GP owns such general
partner interest free and clear of all liens, encumbrances (except restrictions on
transferability contained in Article IV of the Operating Partnership Agreement or as
described in the Prospectus), security interests, equities, charges or claims, except for
such liens, encumbrances, security interests, equities, charges and claims arising under the
Fourth Amended and Restated Credit Agreement, dated as of November 1, 2005 (as the same has
been amended prior to the date hereof, the Credit Agreement), among the Partnership, Bank
of America, N.A. and certain other parties and (ii) the Amended and Restated Note Purchase
Agreement, dated as of July 25, 2006 (as the same has been amended prior to the date hereof
and together with the notes issued thereunder, the Master Shelf Agreement), among the
Partnership, the Operating Partnership, Prudential Investment Management, Inc. and certain
other parties; the Partnership is the sole limited partner of the Operating Partnership with
a 99.999% limited partner interest in the Operating Partnership; such limited partner
interest has been duly authorized and validly issued in accordance with the Operating
Partnership Agreement and is fully paid (to the extent required under the Operating
Partnership Agreement) and nonassessable (except as such nonassessability may be affected by
Sections 17-303, 17-607 and 17-804 of the Delaware LP Act); and the Partnership owns such
limited partner interest free and clear of all liens, encumbrances (except restrictions on
transferability contained in Article IV of the Operating Partnership Agreement or as
described in the Pricing Prospectus), security interests, equities, charges or claims,
except for such liens, encumbrances, security interests, equities, charges and claims
arising under the Credit Agreement and the Master Shelf Agreement.
(q) The Partnership owns 100% of the issued and outstanding membership interests in
Operating GP; such membership interests have been duly authorized and validly issued in
accordance with the limited liability company agreement of Operating GP (as the same may be
amended or restated at or prior to the applicable Delivery Date, the Operating GP LLC
Agreement) and are fully paid (to the extent required under the Operating GP LLC Agreement)
and nonassessable (except as such nonassessability may be affected by Sections 18-607 and
18-804 of the Delaware LLC Act); and the Partnership owns such membership interest free and
clear of all liens, encumbrances (except restrictions on transferability as described in the
Pricing Prospectus or as otherwise contained in the Operating GP LLC Agreement), security
interests, equities, charges or claims, except for such liens, encumbrances, security
interests, equities, charges and claims arising under the Credit Agreement and the Master
Shelf Agreement.
(r) All of the outstanding partnership interests or membership interests, as the case
may be, of each of the Significant Subs have been duly and validly authorized and issued,
and are fully paid (to the extent required under the applicable limited partnership
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agreement or limited liability company agreement of each Significant Sub) and
nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607
and 17-804 of the Delaware LP Act or Sections 3.03, 5.02 and 6.07 of the Texas Revised
Limited Partnership Act (the Texas LP Act), as applicable, in the case of partnership
interests, or Sections 18-607 and 18-804 of the Delaware LLC Act, as applicable, in the case
of membership interests). The Operating Partnership directly or indirectly owns the
partnership interests or membership interests in each Significant Sub free and clear of all
liens, encumbrances (except restrictions on transferability as described in the Pricing
Prospectus or as otherwise contained in the applicable limited partnership agreement or
limited liability company agreement of each Significant Sub), security interests, equities,
charges or claims, except for such liens, encumbrances, security interests, equities,
charges and claims arising under the Credit Agreement and the Master Shelf Agreement.
(s) Crosstex Energy GP, LLC, a Delaware limited liability company (GP LLC), is the
sole general partner of the General Partner with a .001% general partner interest in the
General Partner; such general partner interest has been duly authorized and validly issued
in accordance with the partnership agreement of the General Partner (as the same may be
amended and restated at or prior to the applicable Delivery Date, the General Partner
Partnership Agreement and, together with the Partnership Agreement, the Operating
Partnership Agreement and the Operating GP LLC Agreement, the Operative Agreements); GP
LLC owns such general partner interest free and clear of all liens, encumbrances (except
restrictions on transferability as described in the Prospectus or as otherwise contained in
the General Partner Partnership Agreement), security interests, equities, charges or claims;
Holdings is the sole limited partner of the General Partner with a 99.999% limited partner
interest in the General Partner; such limited partner interest has been duly authorized and
validly issued in accordance with the General Partner Partnership Agreement and is fully
paid (to the extent required under the General Partner Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607
and 17-804 of the Delaware LP Act); and Holdings owns such limited partner interest free and
clear of all liens, encumbrances (except restrictions on transferability as described in the
Pricing Prospectus or as otherwise contained in the General Partner Partnership Agreement),
security interests, equities, charges or claims.
(t) Holdings owns 100% of the issued and outstanding membership interests in GP LLC;
such membership interests have been duly authorized and validly issued in accordance with
the limited liability company agreement of GP LLC (as the same may be amended or restated at
or prior to the applicable Delivery Date, the GP LLC Agreement) and are fully paid (to the
extent required under the GP LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act); and
Holdings owns its membership interests free and clear of all liens, encumbrances (except
restrictions on transferability as described in the Pricing Prospectus or as otherwise
contained in the GP LLC Agreement), security interests, equities, charges or claims.
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(u) The Partnership has no direct or indirect subsidiaries other than the Significant
Subs that, individually or in the aggregate, would be deemed a significant subsidiary as
such term is defined in Rule 405 promulgated under the Securities Act.
(v) The Partnership has all requisite power and authority to issue, sell and deliver
the Units to be sold by it, in accordance with and upon the terms and conditions set forth
in this Agreement, the Partnership Agreement, the Registration Statement, the Pricing
Prospectus and the Prospectus. At the Initial Delivery Date and the Option Units Delivery
Date, all partnership and limited liability company action, as the case may be, required to
be taken by the Crosstex Entities or any of their members or partners for the authorization,
issuance, sale and delivery of the Units and the consummation of the transactions
contemplated by this Agreement shall have been validly taken. This Agreement has been duly
and validly authorized, executed and delivered by each of the Crosstex Parties.
(w) The Partnership Agreement has been duly authorized, executed and delivered by the
General Partner and is a valid and legally binding agreement of the General Partner,
enforceable against the General Partner in accordance with its terms; the General Partner
Partnership Agreement has been duly authorized, executed and delivered by GP LLC and
Holdings and is a valid and legally binding agreement of GP LLC and Holdings, enforceable
against GP LLC and Holdings in accordance with its terms; the Operating Partnership
Agreement has been duly authorized, executed and delivered by Operating GP and the
Partnership and is a valid and legally binding agreement of Operating GP and the
Partnership, enforceable against Operating GP and the Partnership in accordance with its
terms; the Operating GP LLC Agreement has been duly authorized, executed and delivered by
the Partnership and is a valid and legally binding agreement of the Partnership, enforceable
against the Partnership in accordance with its terms; provided that, with respect to each
Operative Agreement, the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting
creditors rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and provided further,
that the indemnity, contribution and exoneration provisions contained in any of such
Operative Agreements may be limited by applicable laws and public policy.
(x) None of the offering, issuance and sale by the Partnership of the Units, the
execution, delivery and performance of this Agreement by the Crosstex Parties, or the
consummation of the transactions contemplated hereby (i) conflicts or will conflict with or
constitutes or will constitute a violation of the agreement of limited partnership, limited
liability company agreement, certificate or articles of incorporation or bylaws or other
organizational documents of any of the Crosstex Entities, (ii) conflicts or will conflict
with or constitutes or will constitute a breach or violation of, or a default (or an event
which, with notice or lapse of time or both, would constitute such a default) under any
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which any of the Crosstex Entities is a party or by which any of them or any of their
respective properties may be bound, (iii) violates or will violate any statute, law or
regulation or any order, judgment, decree or injunction of any court or
8
governmental agency or body directed to any of the Crosstex Entities or any of their
properties in a proceeding to which any of them or their property is a party or (iv) results
or will result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of any of the Crosstex Entities, which conflicts, breaches, violations,
defaults, liens, charges or encumbrances, in the case of clauses (ii), (iii) or (iv), would,
individually or in the aggregate, have a Material Adverse Effect or could materially impair
the ability of any of the Crosstex Entities to perform their obligations under this
Agreement or the Operative Agreements.
(y) No permit, consent, approval, authorization, order, registration, filing or
qualification (consent) of or with any court, governmental agency or body having
jurisdiction over the Crosstex Entities or any of their respective properties is required in
connection with the offering, issuance and sale by the Partnership of the Units, the
execution, delivery and performance of this Agreement by the Crosstex Parties or the
consummation by the Crosstex Parties of the transactions contemplated by this Agreement,
except for (i) such consents required under the Securities Act, the Exchange Act and state
securities or Blue Sky laws and (ii) such consents that have been, or prior to the Initial
Delivery Date will be, obtained.
(z) Except as described in the Prospectus or, in the case of transfer restrictions, as
set forth in the agreement of limited partnership, limited liability company agreement or
other organizational documents of the Crosstex Entities, there are no preemptive rights or
other rights to subscribe for or to purchase, nor any restriction upon the voting or
transfer of, any partnership or membership interests of any of the Crosstex Entities, in
each case pursuant to the agreement or certificate of limited partnership, limited liability
company agreement, certificate of formation or other organizational document of any of the
Crosstex Entities, or any other agreement or instrument to which any of such entities is a
party or by which any one of them may be bound. Neither the filing of the Registration
Statement nor the offering or sale of the Units as contemplated by this Agreement gives rise
to any rights for or relating to the registration of any Units or other securities of the
Partnership other than as have been waived. Except as described in the Prospectus, there
are no outstanding options or warrants to purchase any partnership or membership interests
in any of the Crosstex Entities.
(aa) None of the Crosstex Entities has sustained since the date of the latest audited
financial statements included or incorporated by reference in the Registration Statement,
the Pricing Prospectus and the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, investigation, order or decree,
otherwise than as set forth or contemplated in the Registration Statement, the Pricing
Prospectus and the Prospectus. Except as disclosed in the Registration Statement, the
Pricing Prospectus and the Prospectus, subsequent to the respective dates as of which such
information is given in the Registration Statement, the Pricing Prospectus and the
Prospectus (or any amendment or supplement thereto), (i) none of the Crosstex Entities has
incurred any liability or obligation, indirect, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that, singly or in the aggregate, is
material to the Crosstex Entities, (ii) there has not been any material change in the
9
capitalization or material increase in the short-term debt or long-term debt of the
Crosstex Entities and (iii) there has not been any material adverse change, or any
development involving or which may reasonably be expected to involve, singly or in the
aggregate, a prospective material adverse change in or affecting the general affairs,
business, prospects, properties, management, condition (financial or other), partners
capital, members equity, net worth or results of operations of the Crosstex Entities.
(bb) The historical financial statements (including the related notes and supporting
schedules) filed as part of the Registration Statement or included or incorporated by
reference in the Pricing Prospectus or the Prospectus comply as to form in all material
respects with the requirements of Regulation S-X under the Securities Act and present fairly
in all material respects the financial condition, results of operations and cash flows of
the entities purported to be shown thereby at the dates and for the periods indicated and
have been prepared in conformity with accounting principles generally accepted in the United
States applied on a consistent basis throughout the periods involved, except to the extent
described therein.
(cc) KPMG LLP, who have certified certain financial statements of the Partnership and
its consolidated subsidiaries, and have audited the effectiveness of the Partnerships
internal control over financial reporting and expressed an unqualified opinion on
managements assessment thereof, whose reports appears in the Prospectus or are incorporated
by reference therein and who have delivered the initial letter referred to in Section 7(g)
hereof, are independent public accountants as required by the Securities Act and the Rules
and Regulations.
(dd) The Operating Partnership and the Significant Subs have good and indefeasible
title to all real property and good title to all personal property described in the
Prospectus as owned by the Operating Partnership and the Significant Subs, free and clear of
all liens, claims, security interests, or other encumbrances, except (1) as described, and
subject to limitations contained, in the Registration Statement or Pricing Prospectus or
(2) such as do not materially interfere with the use of such properties taken as a whole as
they have been used in the past and are proposed to be used in the future as described in
the Registration Statement and the Prospectus, except, in each case, for such liens,
security interests, claims and encumbrances arising under the Credit Agreement and the
Master Shelf Agreement.
(ee) The Crosstex Entities maintain insurance covering the properties, operations,
personnel and businesses of the Crosstex Entities against such losses and risks as are
reasonably adequate to protect them and their businesses in a manner consistent with other
businesses similarly situated. None of the Crosstex Entities has received notice from any
insurer or agent of such insurer that substantial capital improvements or other expenditures
will have to be made in order to continue such insurance. All such insurance is outstanding
and duly in force on the date hereof and will be outstanding and duly in force on the
Initial Delivery Date and on any Option Units Delivery Date, if any.
(ff) Except as described in the Pricing Prospectus, there is (i) no action, suit or
proceeding before or by any court, arbitrator or governmental agency, body or official,
10
domestic or foreign, now pending or, to the knowledge of the Crosstex Entities,
threatened, to which any of the Crosstex Entities is or may be a party or to which the
business or property of any of the Crosstex Entities is or may be subject, (ii) no statute,
rule, regulation or order that has been enacted, adopted or issued by any governmental
agency or that has been formally proposed by any governmental agency and (iii) no
injunction, restraining order or order of any nature issued by a federal or state court or
foreign court of competent jurisdiction to which any of the Crosstex Entities is or may be
subject, that, in the case of clauses (i), (ii) and (iii) above, is reasonably likely to (A)
individually or in the aggregate have a Material Adverse Effect, (B) prevent or result in
the suspension of the offering and issuance of the Units, or (C) in any manner draw into
question the validity of this Agreement or the Operative Agreements.
(gg) There are no legal or governmental proceedings pending or, to the knowledge of the
Crosstex Entities, threatened, against any of the Crosstex Entities, or to which any of the
Crosstex Entities is a party, or to which any of their respective properties is subject,
that are required to be described in the Registration Statement or the Pricing Prospectus
but are not described as required, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the Registration Statement
or the Pricing Prospectus or to be filed as exhibits to the Registration Statement that are
not described or filed as required by the Securities Act.
(hh) No labor disturbance by the employees of the Crosstex Entities exists or, to the
knowledge of the Crosstex Parties, is imminent.
(ii) Each of the Crosstex Entities has filed (or has obtained extensions with respect
to) all material federal, state and foreign income and franchise tax returns required to be
filed through the date hereof, which returns are complete and correct in all material
respects, and has timely paid all taxes shown to be due, if any, pursuant to such returns,
other than those (i) which are being contested in good faith and for which adequate reserves
have been established in accordance with generally accepted accounting principles or
(ii) which, if not paid, would not have a Material Adverse Effect.
(jj) None of the Crosstex Entities is (i) in violation of its certificate or agreement
of limited partnership, limited liability company agreement, certificate or articles of
incorporation or bylaws or other organizational documents, (ii) in violation of any law,
statute, ordinance, administrative or governmental rule or regulation applicable to it or of
any order, judgment, decree or injunction of any court or governmental agency or body having
jurisdiction over it or (iii) in breach, default (or an event which, with notice or lapse of
time or both, would constitute such a default) or violation in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any agreement, indenture, lease or other instrument to which
it is a party or by which it or any of its properties may be bound, which breach, default or
violation in the case of clause (ii) or (iii) would, if continued, have a Material Adverse
Effect or could materially impair the ability of any of the Crosstex Entities to perform
their obligations under this Agreement or the Operative Agreements. To the knowledge of the
Crosstex Entities, no third party to any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which any of
11
the Crosstex Entities is a party or by which any of them is bound or to which any of
their properties is subject, is in default under any such agreement, which breach, default
or violation would, if continued, have a Material Adverse Effect.
(kk) None of the Crosstex Entities is now, and after sale of the Units to be sold by
the Partnership hereunder and application of the net proceeds from such sale as described in
the Pricing Prospectus and the Prospectus under the caption Use of Proceeds none of the
Crosstex Entities will be, an investment company within the meaning of the Investment
Company Act of 1940, as amended.
(ll) Each of the Crosstex Entities (i) makes and keeps accurate books and records and
(ii) maintains and has maintained effective internal control over financial reporting as
defined in Rule 13a-15 under the Exchange Act and a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are executed in accordance
with managements general or specific authorizations, (B) transactions are recorded as
necessary to permit preparation of the Crosstex Entities financial statements in conformity
with accounting principles generally accepted in the United States and to maintain
accountability for its assets, (C) access to the Crosstex Entities assets is permitted only
in accordance with managements general or specific authorization and (D) the recorded
accountability for the Crosstex Entities assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any differences.
(mm) (i) The Crosstex Entities have established and maintain disclosure controls and
procedures (as such term is defined in Rule 13a-15 under the Exchange Act), (ii) such
disclosure controls and procedures are designed to ensure that the information required to
be disclosed by the Partnership in the reports it files or submits under the Exchange Act is
accumulated and communicated to management of the Crosstex Entities, including their
respective principal executive officers and principal financial officers, as appropriate, to
allow timely decisions regarding required disclosure to be made and (iii) such disclosure
controls and procedures are effective in all material respects to perform the functions for
which they were established.
(nn) Since the date of the most recent balance sheet of the Partnership and its
consolidated subsidiaries reviewed or audited by KPMG LLP and the audit committee of the
board of directors of the General Partner, (i) the Partnership has not been advised of
(A) any significant deficiencies in the design or operation of internal controls that could
adversely affect the ability of the Partnership and each of its subsidiaries to record,
process, summarize and report financial data, or any material weaknesses in internal
controls and (B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the internal controls of the Partnership and each
of its subsidiaries, and (ii) there have been no changes in internal controls or in other
factors that could significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.
(oo) There is and has been no failure on the part of the Partnership and any of the
Partnerships directors or officers, in their capacities as such, to comply in all material
12
respects with the provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the Sarbanes-Oxley Act).
(pp) None of the Crosstex Entities have distributed and, prior to the later to occur of
(i) the Initial Delivery Date or any Option Units Delivery Date, if any, and (ii) completion
of the distribution of the Units, will not distribute, any prospectus (as defined under the
Securities Act) in connection with the offering and sale of the Units other than the
Registration Statement, any Preliminary Prospectus, the Prospectus or other materials, if
any, permitted by the Securities Act, including Rule 134 of the Rules and Regulations.
(qq) None of the Crosstex Entities (i) has taken, and none of such persons shall take,
directly or indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or manipulation of
the price of the Common Units to facilitate the sale or resale of the Common Units in
violation of any law, rule or regulation or (ii) since the initial filing of the
Registration Statement, except as contemplated by this Agreement, (A) has sold, bid for,
purchased or paid anyone any compensation for soliciting purchases of the Common Units or
(B) has paid or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Partnership.
(rr) The Partnership has made any required notice or filing regarding the listing of
the Units to The NASDAQ Stock Market, Inc.
(ss) Each of the Crosstex Entities has, or at the applicable Delivery Date will have,
such permits, consents, licenses, franchises, certificates and authorizations of
governmental or regulatory authorities (permits) as are necessary to own its properties
and to conduct its business in the manner described in the Pricing Prospectus, subject to
such qualifications as may be set forth in the Registration Statement and the Pricing
Prospectus and except for such permits that, if not obtained, would not, individually or in
the aggregate, have a Material Adverse Effect; each of the Crosstex Entities has fulfilled
and performed all its material obligations with respect to such permits which are due to
have been fulfilled and performed by such date in the manner described, and subject to the
limitations contained, in the Prospectus and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or results in any
impairment of the rights of the holder of any such permit, except for such revocations,
terminations and impairments that would not, individually or in the aggregate, have a
Material Adverse Effect.
(tt) Each of the Crosstex Entities has such consents, easements, rights-of-way, permits
or licenses from each person (collectively, rights-of-way) as are necessary to conduct its
business in the manner described, and subject to the limitations contained, in the Pricing
Prospectus, except for (i) qualifications, reservations and encumbrances that would not have
a Material Adverse Effect and (ii) such rights-of-way that, if not obtained, would not have,
individually or in the aggregate, a Material Adverse Effect; other than as set forth, and
subject to the limitations contained, in the Pricing Prospectus, each of the Crosstex
Entities has fulfilled and performed all its material obligations with respect to such
rights-of-way and no event has occurred that allows, or after notice or
13
lapse of time would allow, revocation or termination thereof or would result in any
impairment of the rights of the holder of any such rights-of-way, except for such
revocations, terminations and impairments that would not have a Material Adverse Effect;
and, except as described in the Pricing Prospectus, none of such rights-of-way contains any
restriction that is materially burdensome to the Crosstex Entities, taken as a whole.
(uu) Except as described in the Pricing Prospectus, the Crosstex Entities (i) are in
compliance with any and all applicable federal, state and local laws and regulations
relating to the protection of human health and safety and the environment or imposing
liability or standards of conduct concerning any Hazardous Material (as hereinafter defined)
(Environmental Laws), (ii) have received all permits required of them under applicable
Environmental Laws to conduct their respective businesses, (iii) are in compliance with all
terms and conditions of any such permit and (iv) do not have any liability in connection
with the release into the environment of any Hazardous Materials, except where such
noncompliance with Environmental Laws, failure to receive required permits, failure to
comply with the terms and conditions of such permits or liability in connection with such
releases would not, individually or in the aggregate, have a Material Adverse Effect. The
term Hazardous Material means (A) any hazardous substance as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended,
(B) any hazardous waste as defined in the Resource Conservation and Recovery Act, as
amended, (C) any petroleum or petroleum product, (D) any polychlorinated biphenyl and (E)
any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental Law.
Any certificate signed by any officer of any of the Crosstex Parties and delivered to the
Underwriters or counsel for the Underwriters in connection with the offering of the Units shall be
deemed a representation and warranty by such Crosstex Party, as to matters covered thereby, to each
Underwriter.
2. Purchase of the Units by the Underwriters. On the basis of the representations and
warranties contained in, and subject to the terms and conditions of, this Agreement, the
Partnership agrees to sell 1,800,000 Firm Units to the several Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase the number of Firm Units set forth
opposite that Underwriters name in Schedule 1 hereto. Each Underwriter shall be obligated
to purchase from the Partnership that number of Firm Units set forth opposite the name of such
Underwriter in Schedule 1.
In addition, the Partnership grants to the Underwriters an option to purchase up to 270,000
Option Units. Such option is exercisable in the event that the Underwriters sell more Common Units
than the number of Firm Units in the offering and as set forth in Section 4 hereof. Each
Underwriter agrees, severally and not jointly, to purchase the number of Option Units (subject to
such adjustments to eliminate fractional Common Units as the Underwriters may determine) that bears
the same proportion to the total number of Option Units to be sold on such Delivery Date as the
number of Firm Units set forth in Schedule 1 hereto opposite the name of such Underwriter
bears to the total number of Firm Units.
14
The price of both the Firm Units and any Option Units purchased by the Underwriters shall be
$32.10 per Common Unit.
The Partnership shall not be obligated to deliver any of the Firm Units or Option Units to be
delivered on the applicable Delivery Date, except upon payment for all such Units to be purchased
on such Delivery Date as provided herein.
3. Offering of Units by the Underwriters. Upon authorization by the Underwriters of
the release of the Firm Units, the several Underwriters propose to offer the Firm Units for sale
upon the terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Units. Delivery of and payment for the Firm Units
shall be made at 10:00 A.M., New York City time, on the third full business day following the date
of this Agreement or at such other date or place as shall be determined by agreement between the
Underwriters and the Partnership. This date and time are sometimes referred to as the Initial
Delivery Date. Delivery of the Firm Units shall be made to Goldman, Sachs & Co. for the account
of each Underwriter against payment by the several Underwriters through Goldman, Sachs & Co. of the
respective aggregate purchase prices of the Firm Units being sold by the Partnership to or upon the
order of the Partnership by wire transfer in immediately available funds to the accounts specified
by the Partnership. Time shall be of the essence, and delivery at the time specified pursuant to
this Agreement is a further condition of the obligation of each Underwriter hereunder. Delivery of
the Firm Units shall be made through the facilities of The Depository Trust Company unless the
Underwriters shall otherwise instruct.
The option granted in Section 2 will expire 30 days after the date of this Agreement and may
be exercised in whole or from time to time in part by written notice being given to the Partnership
by the Underwriters; provided that if such date falls on a day that is not a business day, the
option granted in Section 2 will expire on the next succeeding business day. Such notice shall set
forth the aggregate number of Option Units as to which the option is being exercised, the names in
which the Option Units are to be registered, the denominations in which the Option Units are to be
issued and the date and time, as determined by the Underwriters, when the Option Units are to be
delivered; provided, however, that this date and time shall not be earlier than the Initial
Delivery Date nor earlier than the second business day after the date on which the option shall
have been exercised nor later than the fifth business day after the date on which the option shall
have been exercised. The date and time the Option Units are delivered are sometimes referred to as
an Option Units Delivery Date, and the Initial Delivery Date and any Option Units Delivery Date
are sometimes each referred to as a Delivery Date.
5. Further Agreements of the Partnership. The Partnership agrees:
(a) To prepare the Prospectus in a form approved by the Underwriters and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commissions
close of business on the second business day following the execution and delivery of this
Agreement; to advise the Underwriters, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the
Underwriters with copies thereof; to file promptly all other
15
material required to be filed by the Partnership with the Commission pursuant to Rule
433(d) under the Securities Act; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Partnership with the Commission pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required in connection with the
offering or sale of the Units; to advise the Underwriters, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or other prospectus in respect of the
Units, of the suspension of the qualification of the Units for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of
any request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the use of any Preliminary
Prospectus or other prospectus or suspending any such qualification, to use promptly its
reasonable best efforts to obtain the withdrawal of such order;
(b) To furnish promptly to each of the Underwriters and to counsel for the Underwriters
a signed copy of the Registration Statement as originally filed with the Commission, and
each amendment thereto filed with the Commission, including all consents and exhibits filed
therewith;
(c) To deliver promptly to the Underwriters such number of the following documents as
the Underwriters shall reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission and each amendment thereto (in each case
excluding exhibits other than this Agreement and the computation of per unit earnings), (ii)
any Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus, which
in the case of the Prospectus, must be delivered prior to 10:00 a.m., New York City time, on
the business day next succeeding the date of this Agreement and (iii) any document
incorporated by reference in the Prospectus (excluding exhibits thereto); and, if the
delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under
the Securities Act) is required at any time after the effective date of the Registration
Statement in connection with the offering or sale of the Units and if at such time any
events shall have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus (or in lieu thereof, the
notice referred to in Rule 173(a) under the Securities Act) is delivered, not misleading,
or, if for any other reason it shall be necessary to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in the Prospectus in
order to comply with the Securities Act or the Exchange Act, to notify the Underwriters and
to file such document and to prepare and furnish without charge to each Underwriter and to
any dealer in securities as many copies as the Underwriters may from time to time reasonably
request of an amended or supplemented Prospectus that will correct such statement or
omission or effect such compliance;
16
(d) If, during the period when a prospectus relating to any of the Units is required to
be delivered under the Securities Act by any Underwriter or dealer, (i) any event relating
to or affecting the Partnership or of which the Partnership shall be advised in writing by
the Underwriters shall occur as a result of which, in the opinion of the Partnership or the
counsel for the Underwriters, the Prospectus as then amended or supplemented would include
any untrue statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which they were
made, not misleading or (ii) it shall be necessary to amend or supplement the Registration
Statement or the Prospectus to comply with the Securities Act, the Rules and Regulations,
the Exchange Act or the rules and regulations under the Exchange Act, the Partnership will
forthwith at its expense prepare and file with the Commission, and furnish to the
Underwriters a reasonable number of copies of, such amendment or supplement or other filing
that will correct such statement or omission or effect such compliance;
(e) The Partnership will not file any amendment or supplement to the Registration
Statement, the Basic Prospectus (or any other prospectus relating to the Units filed
pursuant to Rule 424(b) of the Rules and Regulations that differs from the Prospectus as
filed pursuant to such Rule 424(b)), of which the Underwriters shall not previously have
been advised or to which the Underwriters shall have reasonably objected in writing after
being so advised unless the Partnership shall have determined based upon the advice of
counsel that such amendment or supplement is required by law; and the Partnership will
promptly notify you after it shall have received notice thereof of the time when any
amendment to the Registration Statement becomes effective or when any supplement to the
Prospectus has been filed;
(f) As soon as practicable after the Effective Date but in any event not later than
sixteen months after the effective date of the Registration Statement (as defined in Rule
158(c) under the Securities Act), to make generally available to the Partnerships security
holders and to deliver to the Underwriters an earnings statement of the Partnership and its
subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Partnership, Rule 158);
(g) Promptly from time to time to take such action as the Underwriters may reasonably
request to qualify the Units for offering and sale under the securities laws of such
jurisdictions as the Underwriters may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Units; provided that in connection therewith
the Partnership shall not be required to (i) qualify as a foreign limited partnership in any
jurisdiction in which it would not otherwise be required to so qualify, (ii) file a general
consent to service of process in any such jurisdiction or (iii) subject itself to taxation
in any jurisdiction in which it would not otherwise be subject;
(h) For a period commencing on the date hereof and ending on the 90th day
after the date of the Prospectus (the Lock-Up Period), not to, directly or indirectly, (1)
offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or
device
17
that is designed to, or could be expected to, result in the disposition by any person
at any time in the future of) any Common Units or securities convertible into or
exchangeable for Common Units (other than the Units and Common Units issued pursuant to
employee benefit plans, qualified unit option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options, warrants or
rights), or sell or grant options, rights or warrants with respect to any Common Units or
securities convertible into or exchangeable for Common Units (other than the grant of
options pursuant to option plans existing on the date hereof), (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part, any of the
economic benefits or risks of ownership of such Common Units, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common Units or other
securities, in cash or otherwise, (3) file or cause to be filed a registration statement,
including any amendments, with respect to the registration of any Common Units or securities
convertible, exercisable or exchangeable into Common Units or any other securities of the
Partnership (other than any registration statement on Form S-8 and other than any
registration statement required to be filed relating to the Senior Subordinated Series C
Units, the Senior Subordinated Series D Units or the Common Units issuable or issued upon
conversion of the Subordinated Units, the Senior Subordinated Series C Units or the Senior
Subordinated Series D Units of the Partnership) or (4) publicly disclose the intention to do
any of the foregoing, in each case without the prior written consent of Goldman, Sachs & Co.
and Wachovia Capital Markets, LLC and to cause each officer and director of the Partnership
set forth on Schedule 3 hereto to furnish to the Underwriters, prior to the Initial
Delivery Date, a letter or letters, substantially in the form of Exhibit A hereto
(the Lock-Up Agreements);
(i) To apply the net proceeds from the sale of the Units being sold by the Partnership
as set forth in the Pricing Prospectus under the caption Use of Proceeds; and
(j) Upon request of any Underwriter, to furnish, or cause to be furnished, to such
Underwriter an electronic version of the Partnerships trademarks, servicemarks and
corporate logo for use on the website, if any, operated by such Underwriter for the purpose
of facilitating the on-line offering of the Units (the License); provided, however, that
the License shall be used solely for the purpose described above, is granted without any fee
and may not be assigned or transferred.
6. Additional Agreements.
(a) The Partnership represents and agrees that, without the prior consent of the Underwriters,
it has not made and will not make any offer relating to the Units that would constitute a free
writing prospectus as defined in Rule 405 under the Securities Act; each Underwriter represents
and agrees that, without the prior consent of the Partnership, it has not made and will not make
any offer relating to the Units that would constitute a free writing prospectus; any such free
writing prospectus the use of which has been consented to by the Partnership and the Underwriters
is listed on Schedule 4 hereto;
18
(b) The Partnership has complied and will comply with the requirements of Rule 433 under the
Securities Act applicable to any Issuer Free Writing Prospectus, including timely filing with the
Commission or retention where required and legending; and
(c) The Partnership agrees that if at any time following issuance of an Issuer Free Writing
Prospectus any event occurred or occurs as a result of which such Issuer Free Writing Prospectus
would conflict with the information in the Registration Statement, the Pricing Prospectus or the
Prospectus or would include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the circumstances then
prevailing, not misleading, the Partnership will give prompt notice thereof to the Underwriters
and, if requested by the Underwriters, will prepare and furnish without charge to each Underwriter
an Issuer Free Writing Prospectus or other document which will correct such conflict, statement or
omission; provided, however, that this representation and warranty shall not apply to any
statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and in
conformity with information furnished in writing to the Partnership by any Underwriter through
Goldman, Sachs & Co. or Wachovia Capital Markets, LLC expressly for use therein.
7. Expenses. The Partnership agrees, whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, to pay all costs, expenses, fees
and taxes incident to and in connection with (a) the authorization, issuance, sale and delivery of
the Units and any stamp duties or other taxes payable in that connection, and the preparation and
printing of certificates for the Units; (b) the preparation, printing and filing under the
Securities Act of the Registration Statement and any amendments and exhibits thereto, the Basic
Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus the Prospectus and any
amendment or supplement thereto; (c) the distribution of the Registration Statement as originally
filed and each amendment thereto and any post-effective amendments thereof (including, in each
case, exhibits), the Basic Prospectus, any Preliminary Prospectus, any Issuer Free Writing
Prospectus, the Prospectus and any amendment or supplement to thereto or any document incorporated
by reference therein, all as provided in this Agreement; (d) the printing and distribution of this
Agreement, any supplemental agreement among Underwriters and any other related documents in
connection with the offering, purchase, sale and delivery of the Units; (e) the transfer agent; (f)
any required review by the Financial Industry Regulatory Authority (the FINRA) of the terms of
sale of the Units; (g) the inclusion of the Units on The NASDAQ Global Select Market; (h) the
qualification of the Units under the securities laws of the several jurisdictions as provided in
Section 5(g) and the preparation, printing and distribution of a Blue Sky Memorandum, if any
(including related fees and expenses of counsel to the Underwriters); (i) the investor
presentations on any road show undertaken in connection with the marketing of the Units,
including, without limitation, expenses associated with any Internet roadshow, travel and lodging
expenses of the representatives and officers of the Partnership and the cost of any aircraft
chartered in connection with the road show; and (j) all other costs and expenses incident to the
performance of the obligations of the Partnership under this Agreement; provided that, except as
provided in this Section 7 and in Section 12, the Underwriters shall pay their own costs and
expenses, including the costs and expenses of their counsel, any transfer taxes on the Units which
they may sell and the expenses of advertising any offering of the Units made by the Underwriters
19
8. Conditions of Underwriters Obligations. The respective obligations of the
Underwriters hereunder are subject to the accuracy, when made and on each Delivery Date, of the
representations and warranties of the Crosstex Parties contained herein, to the performance by the
Crosstex Parties of their respective obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in accordance with
Section 5(a); all material required to be filed by the Partnership pursuant to Rule 433(d)
under the Securities Act shall have been filed with the Commission within the applicable
time period prescribed for such filings by Rule 433; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened by the Commission; no
stop order preventing or suspending the use of the Prospectus or any Issuer Free Writing
Prospectus shall have been issued and no proceeding for such purpose shall have been
initiated or threatened by the Commission; and any request of the Commission for inclusion
of additional information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Partnership on or prior
to such Delivery Date that the Registration Statement or the Prospectus or any amendment or
supplement thereto contains an untrue statement of a fact which, in the opinion of Vinson &
Elkins L.L.P., counsel for the Underwriters, is material or omits to state a fact which, in
the opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) All limited partnership and limited liability company proceedings and other legal
matters incident to the authorization, form and validity of this Agreement, the Units, the
Registration Statement, the Basic Prospectus and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the Crosstex
Parties shall have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Baker Botts L.L.P. shall have furnished to the Underwriters its written opinion, as
counsel to the Partnership, addressed to the Underwriters and dated such Delivery Date, in
form and substance reasonably satisfactory to the Underwriters, substantially in the form
attached hereto as Exhibit B.
(e) The Underwriters shall have received from Vinson & Elkins L.L.P., counsel for the
Underwriters, such opinion or opinions, dated such Delivery Date, with respect to the
issuance and sale of the Units, the Registration Statement, the Prospectus and other related
matters as the Underwriters may reasonably require, and the Partnership shall have furnished
to such counsel such documents as they reasonably request for the purpose of enabling them
to pass upon such matters.
(f) At the time of execution of this Agreement, the Underwriters shall have received
from KPMG LLP a letter, in form and substance satisfactory to the
20
Underwriters, addressed to the Underwriters and dated the date hereof (i) confirming
that they are independent registered public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, and (ii) stating, as of the
date hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the Prospectus, as
of a date not more than three days prior to the date hereof), the conclusions and findings
of such firm with respect to the financial information and other matters ordinarily covered
by accountants comfort letters to underwriters in connection with registered public
offerings.
(g) With respect to the letter of KPMG LLP referred to in the preceding paragraph and
delivered to the Underwriters concurrently with the execution of this Agreement (the
initial letter), the Partnership shall have furnished to the Underwriters a letter (the
bring-down letter) of such accountants, addressed to the Underwriters and dated such
Delivery Date (i) confirming that they are independent public accountants within the meaning
of the Securities Act and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the Commission,
(ii) stating, as of the date of the bring-down letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than three days prior to the
date of the bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letter and
(iii) confirming in all material respects the conclusions and findings set forth in the
initial letter.
(h) The Partnership shall have furnished to the Underwriters a certificate, dated such
Delivery Date, of its Chief Executive Officer and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of the Crosstex Parties in
Section 1 are true and correct on and as of such Delivery Date, and each of the
Crosstex Parties has complied with all its agreements contained herein and satisfied
all the conditions on its part to be performed or satisfied hereunder at or prior to
such Delivery Date;
(ii) No stop order suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for that purpose have been instituted or, to the
knowledge of such officers, threatened; and
(iii) They have carefully examined the Registration Statement and the
Prospectus and (A) nothing has come to their attention that would lead them to
believe that the Registration Statement, as of the Effective Time, and the
Prospectus, as of its date and as of such Delivery Date, contained or contains any
untrue statement of a material fact and omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein (in the
case of the Prospectus, in the light of the circumstances under which they were
21
made) not misleading, and (B) since the Effective Time, no event has occurred
that should have been set forth in a supplement or amendment to the Registration
Statement or the Prospectus that has not been so set forth.
(i) Except as set forth in the Registration Statement and the Pricing Prospectus, (i)
none of the Crosstex Entities shall have sustained, since the date of the latest audited
financial statements included or incorporated by reference in the Pricing Prospectus
exclusive of any amendment or supplement thereto after the date hereof), any loss or
interference with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action, order or
decree or (ii) since such date there shall not have been any change in the capitalization or
long-term debt of any of the Crosstex Entities or any change, or any development involving a
prospective change, in or affecting the condition (financial or otherwise), results of
operations, unitholders equity, properties, management, business or prospects of the
Crosstex Entities taken as a whole, the effect of which, in any such case described in
clause (i) or (ii), is, in the judgment of the Underwriters, so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the delivery of
the Units being delivered on such Delivery Date on the terms and in the manner contemplated
in the Prospectus.
(j) On or after the Applicable Time (i) no downgrading shall have occurred in the
rating accorded the Partnerships debt securities by any nationally recognized statistical
rating organization, as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative implications, its
rating of any of the Partnerships debt securities.
(k) On or after the Applicable Time, there shall not have occurred any of the
following: (i) trading in any securities of the Partnership shall have been suspended by
the Commission or by The NASDAQ Global Select Market, (ii) trading in securities generally
on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter
market, shall have been suspended or materially limited or the settlement of such trading
generally shall have been materially disrupted or minimum prices shall have been established
on any such exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (iii) a banking moratorium
shall have been declared by federal or state authorities, (iv) the United States shall have
become engaged in hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national emergency or war by
the United States or (v) there shall have occurred such a material adverse change in general
economic, political or financial conditions, including, without limitation, as a result of
terrorist activities after the date hereof (or the effect of international conditions on the
financial markets in the United States shall be such), as to make it, in the judgment of the
Underwriters, impracticable or inadvisable to proceed with the public offering or delivery
of the Units being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
22
(l) The Lock-Up Agreements between the Underwriters and the officers, directors and
certain unitholders of the Partnership set forth on Schedule 3, delivered to the
Underwriters on or before the date of this Agreement, shall be in full force and effect on
such Delivery Date.
(m) The Partnership shall have complied with the provisions of Section 5(d) hereof with
respect to the furnishing of prospectuses on the business day next succeeding the date of
this Agreement.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.
9. Indemnification and Contribution.
(a) The Crosstex Parties, jointly and severally, shall indemnify and hold harmless each
Underwriter, its directors, officers and employees and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Units), to which that Underwriter, director, officer, employee or
controlling person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained in the Registration
Statement, the Basic Prospectus, the Pricing Prospectus or the Prospectus or in any
amendment or supplement thereto, any Issuer Free Writing Prospectus or any issuer
information filed or required to be filed pursuant to Rule 433(d) under the Securities Act,
or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each Underwriter and each such director, officer, employee
or controlling person promptly upon demand for any legal or other expenses reasonably
incurred by that Underwriter, director, officer, employee or controlling person in
connection with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided, however, that
the Crosstex Parties shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in the Registration Statement,
the Basic Prospectus, the Pricing Prospectus or the Prospectus, or in any such amendment or
supplement thereto, or any Issuer Free Writing Prospectus, in reliance upon and in
conformity with written information concerning such Underwriter furnished to the Partnership
through the Underwriters by or on behalf of any Underwriter specifically for inclusion
therein, which information consists solely of the information specified in Section 9(e).
The foregoing indemnity agreement is in addition to any liability which the Crosstex Parties
may otherwise have to any Underwriter or to any director, officer, employee or controlling
person of that Underwriter.
23
(b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the
Crosstex Parties, their respective directors, officers and employees, and each person, if
any, who controls the Crosstex Parties within the meaning of Section 15 of the Securities
Act, from and against any loss, claim, damage or liability, joint or several, or any action
in respect thereof, to which the Crosstex Parties or any such director, officer, employee or
controlling person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained in the Registration
Statement, the Basic Prospectus, the Pricing Prospectus or the Prospectus or in any
amendment or supplement thereto, or any Issuer Free Writing Prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, the Basic Prospectus, the Pricing
Prospectus or the Prospectus or any such amendment or supplement thereto, or any Issuer Free
Writing Prospectus, in reliance upon and in conformity with written information concerning
such Underwriter furnished to the Partnership through the Underwriters by or on behalf of
that Underwriter specifically for inclusion therein, which information is limited to the
information set forth in Section 9(e) and shall reimburse the Crosstex Parties and any such
director, officer, employee or controlling person for any legal or other expenses reasonably
incurred by the Crosstex Parties or any such director, officer, employee or controlling
person in connection with investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability that any Underwriter may otherwise have
to the Crosstex Parties or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 9 of notice of
any claim or the commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under this Section 9, notify
the indemnifying party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under paragraphs (a) or (b) above except to the extent it has
been materially prejudiced by such failure and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under paragraphs (a) or (b) above. If any such claim or
action shall be brought against an indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under paragraphs (a) or (b) above for any legal or other
expenses subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that the
Underwriters shall have the right to employ counsel to represent jointly the Underwriters
and their respective directors, officers,
24
employees, and controlling persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the Underwriters against the Crosstex
Parties under this Section 9 if (i) the Crosstex Parties and the Underwriters shall have so
mutually agreed; (ii) the Crosstex Parties have failed within a reasonable time to retain
counsel reasonably satisfactory to the Underwriters; (iii) the Underwriters and their
respective directors, officers, employees and controlling persons shall have reasonably
concluded that there may be legal defenses available to them that are different from or in
addition to those available to the Crosstex Parties; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Underwriters or their
respective directors, officers, employees or controlling persons, on the one hand, and the
Crosstex Parties, on the other hand, and representation of both sets of parties by the same
counsel would be inappropriate due to actual or potential differing interests between them,
and in any such event the fees and expenses of such separate counsel shall be paid by the
Crosstex Parties. In no event shall such indemnifying parties be liable for the fees and
expenses of more than one counsel, including any local counsel, for all such indemnified
parties in connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim, action, suit or
proceeding and does not include any findings of fact or admissions of fault or culpability
as to the indemnified party, or (ii) be liable for any settlement of any such action
effected without its written consent, but if settled with the consent of the indemnifying
party or if there be a final judgment for the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and against any loss
or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 9 shall for any reason be
unavailable to or insufficient to hold harmless an indemnified party under Section 9(a) or
9(b) in respect of any loss, claim, damage or liability, or any action in respect thereof,
referred to therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits received by the Crosstex
Parties, on the one hand, and the Underwriters, on the other, from the offering of the Units
or (ii) if the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Crosstex Parties, on the one hand,
and the Underwriters, on the other, with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits received by the Crosstex
Parties, on the one hand, and the Underwriters, on the other, with respect to
25
such offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Units purchased under this Agreement (before deducting expenses)
received by the Crosstex Parties, as set forth in the table on the cover page of the
Prospectus, on the one hand, and the total underwriting discounts and commissions received
by the Underwriters with respect to the Units purchased under this Agreement, as set forth
in the table on the cover page of the Prospectus, on the other hand, bear to the total gross
proceeds from the offering of the Units under this Agreement, as set forth in the table on
the cover page of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Crosstex Parties on
the one hand or the Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such statement or
omission. The Crosstex Parties and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 9(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to above in this
Section 9(d) shall be deemed to include, for purposes of this Section 9(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this
Section 9(d), no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Units underwritten by it and distributed to the
public was offered to the public exceeds the amount of any damages that such Underwriter has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Underwriters
obligations to contribute as provided in this Section 9(d) are several in proportion to
their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Crosstex Parties acknowledge and agree
that the statements set forth in the Prospectus (i) in the last paragraph of the cover page
regarding delivery of the Units and, (ii) under the heading Underwriting, (A) the list of
Underwriters and their respective participation in the sale of the Units and (B) the fifth,
ninth, and tenth paragraphs are correct and constitute the only information concerning such
Underwriters furnished in writing to the Partnership by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the Prospectus.
10. Defaulting Underwriters. If, on any Delivery Date, any Underwriter defaults in
the performance of its obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Units that the defaulting Underwriter agreed but failed to
purchase on such Delivery Date in the respective proportions which the number of the Firm Units set
forth opposite the name of each remaining non-defaulting Underwriter in Schedule 1 hereto
bears to the total number of the Firm Units set forth opposite the names of all the
26
remaining non-defaulting Underwriters in Schedule 1 hereto; provided, however, that
the remaining non-defaulting Underwriters shall not be obligated to purchase any of the Units on
such Delivery Date if the total number of Units that the defaulting Underwriter or Underwriters
agreed but failed to purchase on such date exceeds 9.09% of the total number of Units to be
purchased on such Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of Units that it agreed to purchase on such
Delivery Date pursuant to the terms of Section 3. If the foregoing maximums are exceeded, the
remaining non-defaulting Underwriters, or those other underwriters satisfactory to the Underwriters
who so agree, shall have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Units to be purchased on such Delivery Date. If the
remaining Underwriters or other underwriters satisfactory to the Underwriters do not elect to
purchase the Units that the defaulting Underwriter or Underwriters agreed but failed to purchase on
such Delivery Date, this Agreement (or, with respect to any Option Units Delivery Date, the
obligation of the Underwriters to purchase, and of the Partnership to sell, the Option Units) shall
terminate without liability on the part of any non-defaulting Underwriter or the Crosstex Parties,
except that the Crosstex Parties will continue to be liable for the payment of expenses to the
extent set forth in Sections 7 and 12. As used in this Agreement, the term Underwriter includes,
for all purposes of this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto that, pursuant to this Section 10, purchases Units that a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have
to the Crosstex Parties for damages caused by its default. If other Underwriters are obligated or
agree to purchase the Units of a defaulting or withdrawing Underwriter, either the Underwriters or
the Partnership may postpone the Delivery Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Partnership or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or in any other
document or arrangement.
11. Termination. The obligations of the Underwriters hereunder may be terminated by
the Underwriters by notice given to and received by the Partnership prior to delivery of and
payment for the Firm Units if, prior to that time, any of the events described in Sections 8(i),
8(j) and 8(k) shall have occurred or if the Underwriters shall decline to purchase the Units for
any reason permitted under this Agreement.
12. Reimbursement of Underwriters Expenses. If (a) the Partnership shall fail to
tender the Units for delivery to the Underwriters by reason of any failure, refusal or inability on
the part of the Partnership to perform any agreement on its part to be performed, or because any
other condition of the Underwriters obligations hereunder required to be fulfilled by the Crosstex
Parties is not fulfilled for any reason or (b) the Underwriters shall decline to purchase the Units
for any reason permitted under this Agreement, other than in each case because of the events set
forth in clauses (ii) through (v) of Section 8(k), the Partnership will reimburse the Underwriters
for all reasonable out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of the Units, and upon
demand the Partnership shall pay the full amount thereof to the Underwriters. If this Agreement is
terminated pursuant to Section 10 by reason of the default of one or more
27
Underwriters, the Partnership shall not be obligated to reimburse any defaulting Underwriter
on account of those expenses.
13. No Fiduciary Duty. The Crosstex Parties acknowledge and agree that (i) the
purchase and sale of the Units pursuant to this Agreement is an arms-length commercial transaction
between the Crosstex Parties, on the one hand, and the Underwriters, on the other, (ii) in
connection therewith and with the process leading to such transaction each Underwriter is acting
solely as a principal and not the agent or fiduciary of the Crosstex Parties, (iii) no Underwriter
has assumed an advisory or fiduciary responsibility in favor of the Crosstex Parties with respect
to the offering contemplated hereby or the process leading thereto (irrespective of whether such
Underwriter has advised or is currently advising the Crosstex Parties on other matters) or any
other obligation to the Crosstex Parties except the obligations expressly set forth in this
Agreement and (iv) the Crosstex Parties have consulted their own legal and financial advisors to
the extent they deemed appropriate. The Crosstex Parties agree that they will not claim that the
Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a
fiduciary or similar duty to the Crosstex Parties, in connection with such transaction or the
process leading thereto.
14. Research Independence. In addition, the Crosstex Parties acknowledge that the
Underwriters research analysts and research departments are required to be independent from their
respective investment banking divisions and are subject to certain regulations and internal
policies, and that such Underwriters research analysts may hold views and make statements or
investment recommendations and/or publish research reports with respect to the Partnership and/or
the offering that differ from the views of its investment bankers. The Crosstex Parties hereby
waive and release, to the fullest extent permitted by law, any claims that the Crosstex Parties may
have against the Underwriters with respect to any conflict of interest that may arise from the fact
that the views expressed by their independent research analysts and research departments may be
different from or inconsistent with the views or advice communicated to the Crosstex Parties by
such Underwriters investment banking divisions. The Crosstex Parties acknowledge that each of the
Underwriters is a full service securities firm and as such from time to time, subject to applicable
securities laws, may effect transactions for its own account or the account of its customers and
hold long or short positions in debt or equity securities of the companies which may be the subject
of the transactions contemplated by this Agreement.
15. Notices, Etc. All statements, requests, notices and agreements hereunder shall be
in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or facsimile
transmission to each of: Goldman, Sachs & Co., 85 Broad Street, 23rd Floor, New York, New
York 10004, Attention: Registration Department and Wachovia Capital Markets, LLC, 375 Park
Avenue, 4th Floor, New York, New York 10152, Attention: Equity Syndicate Department; and
(b) if to the Crosstex Parties, shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Crosstex Parties set forth in the Registration Statement,
Attention: General Counsel (Fax: 214-721-9384);
28
provided, however, that any notice to an Underwriter pursuant to Section 9(c) shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its
acceptance telex to the Underwriters, which address will be supplied to any other party hereto by
the Underwriters upon request. Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof. The Crosstex Parties shall be entitled to act and rely upon
any request, consent, notice or agreement given or made on behalf of the Underwriters by Goldman,
Sachs & Co and Wachovia Capital Markets, LLC.
In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record
information that identifies their respective clients, including the Crosstex Parties, which
information may include the name and address of their respective clients, as well as other
information that will allow the underwriters to properly identify their respective clients.
16. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the Underwriters, the Crosstex Parties and their respective
successors. This Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (A) the representations, warranties, indemnities and agreements of the
Crosstex Parties contained in this Agreement shall also be deemed to be for the benefit of the
directors, officers and employees of the Underwriters and each person or persons, if any, who
control any Underwriter within the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Underwriters contained in Section 9(b) of this Agreement shall be deemed
to be for the benefit of the directors of the Crosstex Parties, the officers of the Crosstex
Parties who have signed the Registration Statement and any person controlling the Crosstex Parties
within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in this Section 16, any
legal or equitable right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
17. Survival. The respective indemnities, representations, warranties and agreements
of the Crosstex Parties and the Underwriters contained in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the
Units and shall remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
18. Definition of the Terms Business Day and Subsidiary. For purposes of this
Agreement, (a) business day means each Monday, Tuesday, Wednesday, Thursday or Friday that is not
a day on which banking institutions in New York are generally authorized or obligated by law or
executive order to close and (b) subsidiary has the meaning set forth in Rule 405 of the Rules
and Regulations.
19. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
20. Counterparts. This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be deemed to be an
original but all such counterparts shall together constitute one and the same instrument.
29
21. Headings. The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.
30
If the foregoing correctly sets forth the agreement among the Crosstex Parties and the
Underwriters, please indicate your acceptance in the space provided for that purpose below.
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Very truly yours, |
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CROSSTEX ENERGY, L.P. |
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By:
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Crosstex Energy GP, L.P., |
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its General Partner |
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By:
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Crosstex Energy GP, LLC, |
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its General Partner |
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By: |
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/s/ William W. Davis |
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Name: |
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William W. Davis |
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Title: |
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Executive Vice President and Chief Financial Officer |
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CROSSTEX ENERGY SERVICES, L.P. |
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By:
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Crosstex Operating GP, LLC, |
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its General Partner |
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/s/ William W. Davis |
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Name: |
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William W. Davis |
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Title: |
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Executive Vice President and Chief Financial Officer |
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CROSSTEX OPERATING GP, LLC |
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By: |
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/s/ William W. Davis |
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Name: |
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William W. Davis |
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Executive Vice President and Chief Financial Officer |
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Accepted: |
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Goldman, Sachs & Co. |
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/s/ Goldman, Sachs & Co. |
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Goldman Sachs & Co. |
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Wachovia Capital Markets, LLC |
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/s/ Lear Beyer |
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Authorized Representative Lear Beyer Managing Director Wachovia Capital Markets, LLC |
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32
SCHEDULE 1
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Number of |
Underwriters |
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Firm Units |
Goldman, Sachs & Co. |
|
|
900,000 |
|
|
|
|
|
|
Wachovia Capital Markets, LLC |
|
|
900,000 |
|
|
|
|
|
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Total |
|
|
1,800,000 |
|
|
|
|
|
|
SCHEDULE 2
SIGNIFICANT SUBSIDIARIES
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|
|
|
Jurisdiction of |
Subsidiary |
|
Formation |
Crosstex Operating GP, LLC
|
|
Delaware |
Crosstex Energy Services GP, LLC
|
|
Delaware |
Crosstex Energy Services, L.P.
|
|
Delaware |
Crosstex Gulf Coast Marketing Ltd.
|
|
Texas |
Crosstex Treating Services, L.P.
|
|
Delaware |
Crosstex North Texas Pipeline, L.P.
|
|
Texas |
Crosstex North Texas Gathering, L.P.
|
|
Texas |
Crosstex NGL Marketing, L.P.
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Texas |
Crosstex Processing Services, LLC
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|
Delaware |
SCHEDULE 3
PERSONS DELIVERING LOCK-UP AGREEMENTS
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Directors:
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Rhys J. Best |
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Bryan H. Lawrence |
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James C. Crain |
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Sheldon B. Lubar |
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Cecil E. Martin, Jr. |
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Robert F. Murchison |
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Kyle D. Vann |
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Officers:
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Barry E. Davis
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President and Chief Executive Officer |
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Jack M. Lafield
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Executive Vice President |
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Joe A. Davis
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|
Executive Vice President, General Counsel and Secretary |
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William W. Davis
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Executive Vice President and Chief Financial Officer |
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Robert S. Purgason
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Executive Vice President and Chief Operating Officer |
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Unitholders: |
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Crosstex Holdings, L.P. |
SCHEDULE 4
ISSUER FREE WRITING PROSPECTUSES
None
EXHIBIT A
LOCK-UP LETTER AGREEMENT
Goldman, Sachs & Co.
Wachovia Capital Markets, LLC
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
The undersigned understands that you (the Underwriters) propose to enter into an
Underwriting Agreement (the Underwriting Agreement) providing for the purchase by the
Underwriters of common units representing limited partnership interests (the Common Units) in
Crosstex Energy, L.P., a Delaware limited partnership (the Partnership), and that the
Underwriters propose to reoffer the Units to the public (the Offering).
In consideration of the execution of the Underwriting Agreement by the Underwriters, and for
other good and valuable consideration, the undersigned hereby irrevocably agrees that, without the
prior written consent of Goldman, Sachs & Co. and Wachovia Capital Markets, LLC, the undersigned
will not, directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any Common Units (including, without
limitation, Common Units that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange Commission and Common
Units that may be issued upon exercise of any option or warrant) or securities convertible into or
exercisable or exchangeable for Common Units (other than the Units), (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of Common Units, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Units or other securities, in cash or
otherwise, (3) make any demand for or exercise any right or cause to be filed a registration
statement, including any amendments thereto, with respect to the registration of any Common Units
or securities convertible into or, exercisable or exchangeable for Common Units or any other
securities of the Partnership or (4) publicly disclose the intention to do any of the foregoing,
for a period commencing on the date hereof and ending on the 90th day after the date of
the final prospectus relating to the Offering (such 90-day period, the Lock-Up Period).
In furtherance of the foregoing, the Partnership and its transfer agent are hereby authorized
to decline to make any transfer of securities if such transfer would constitute a violation or
breach of this Lock-Up Letter Agreement.
A-1
It is understood that, if the Partnership notifies the Underwriters that it does not intend to
proceed with the Offering, if the Underwriting Agreement does not become effective, or if the
Underwriting Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Units, the undersigned will be
released from its obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Partnership and the Underwriters will proceed with the
Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of factors, including market
conditions. Any Offering will only be made pursuant to an Underwriting Agreement, the terms of
which are subject to negotiation between the Partnership and the Underwriters.
[Signature page follows]
A-2
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Letter Agreement and that, upon request, the undersigned will
execute any additional documents necessary in connection with the enforcement hereof. Any
obligations of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
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Very truly yours, |
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By: |
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Name: |
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Title: |
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Dated:
[Signature Page to Lock-Up Agreement]
EXHIBIT B
FORM OF OPINION OF ISSUERS COUNSEL
(i) The Partnership has been duly formed and is validly existing in good standing as a
limited partnership under the Delaware LP Act with full partnership power and authority to
own or lease its properties and to conduct its business in all material respects as
described in the Registration Statement and the Prospectus.
(ii) The General Partner has been duly formed and is validly existing in good standing
as a limited partnership under the Delaware LP Act with full partnership power and authority
to own or lease its properties, to conduct its business and to act as a general partner of
the Partnership in all material respects as described in the Registration Statement and the
Prospectus.
(iii) Operating GP has been duly formed and is validly existing in good standing as a
limited liability company under the Delaware LLC Act with full limited liability company
power and authority to own or lease its properties and to conduct its business in all
material respects as described in the Registration Statement and the Prospectus. Operating
GP has all necessary limited liability company power and authority to act as general partner
of each of the Operating Partnership.
(iv) The Operating Partnership has been duly formed and is validly existing in good
standing as a limited partnership under the Delaware LP Act with full partnership power and
authority to own or lease its properties and to conduct its business in all material
respects as described in the Registration Statement and the Prospectus.
(v) Each of the Significant Subs has been duly formed and is validly existing in good
standing under the laws of its respective jurisdiction of formation or incorporation, as the
case may be, with all limited liability company or partnership, as the case may be, power
and authority necessary to own or hold its properties and conduct its business, in each
case, in all material respects as described in the Registration Statement and the
Prospectus.
(vi) Each of the Crosstex Parties and the Significant Subs is duly registered or
qualified as a foreign limited liability company or limited partnership, as the case may be,
for the transaction of business under the laws of each jurisdiction set forth in an exhibit
to such opinion.
(vii) The General Partner is the sole general partner of the Partnership with a 2%
general partner interest in the Partnership; such general partner interest has been duly
authorized and validly issued in accordance with the Partnership Agreement; and the General
Partner owns its general partner interest free and clear of all liens, encumbrances (except
restrictions on transferability contained in Section 4.6 of the Partnership Agreement or as
described in the Prospectus), security interests, equities, charges or claims (i) in respect
of which a financing statement under the Uniform Commercial Code of the State of Delaware
naming the General Partner as a debtor is on file in the office of the Secretary of State of
the State of Delaware or (ii) otherwise known to such counsel,
C-1
without independent investigation, other than those created by or arising under the
Delaware LP Act.
(viii) All outstanding Common Units, Subordinated Units, Senior Subordinated Series C
Units, Senior Subordinated Series D Units and Incentive Distribution Rights and the limited
partner interests represented thereby have been duly authorized and validly issued in
accordance with the Partnership Agreement and are fully paid (to the extent required under
the Partnership Agreement) and nonassessable (except as such nonassessability may be
affected by Sections 17-303, 17-607 and 17-804of the Delaware LP Act or as otherwise
described in the Prospectus under the caption Description of the Common UnitsLimited
Liability).
(ix) Holdings owns of record 5,332,000 Common Units and 4,668,000 Subordinated Units
(all such Common and Subordinated Units being collectively referred to herein as the
Sponsor Units), and the General Partner owns all of the Incentive Distribution Rights; and
Holdings owns its Sponsor Units and the General Partner owns the Incentive Distribution
Rights free and clear of all liens, encumbrances, security interests, charges or claims (i)
in respect of which a financing statement under the Uniform Commercial Code of the State of
Delaware naming Holdings or the General Partner as a debtor is on file in the office of the
Secretary of State of the State of Delaware or (ii) otherwise known to such counsel, without
independent investigation, other than those created by or arising under the Delaware LP Act
and, with respect to the Incentive Distribution Rights, restrictions on transferability
contained in Section 4.7 of the Partnership Agreement.
(x) At the Initial Delivery Date or the Option Units Delivery Date, as the case may be,
the Firm Units or the Option Units to be sold by the Partnership and the limited partner
interests represented thereby, will be duly authorized by the Partnership Agreement and,
when issued and delivered to the Underwriters against payment therefor in accordance with
the terms hereof, will be validly issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such nonassessability may be affected by
Sections 17-303, 17-607 and 17-804 of the Delaware LP Act or as otherwise described in the
Prospectus under the caption Description of the Common UnitsLimited Liability).
(xi) Operating GP is the sole general partner of the Operating Partnership with a .001%
general partner interest in the Operating Partnership; such general partner interest has
been duly authorized and validly issued in accordance with the Operating Partnership
Agreement; Operating GP owns such general partner interest free and clear of all liens,
encumbrances (except restrictions on transferability contained in Article IV of the
Operating Partnership Agreement or as described in the Prospectus), security interests,
equities, charges or claims, except for such liens, encumbrances, security interests,
equities, charges and claims (i) in respect of which a financing statement under the Uniform
Commercial Code of the State of Delaware naming the Operating GP as a debtor is on file in
the office of the Secretary of State of the State of Delaware or (ii) otherwise known to
such counsel, without independent investigation, other than those created by or arising
under the Delaware LP Act and other than those arising under the
C-2
Credit Agreement and the Master Shelf Agreement; the Partnership is the sole limited
partner of the Operating Partnership with a 99.999% limited partner interest in the
Operating Partnership; such limited partner interest has been duly authorized and validly
issued in accordance with the Operating Partnership Agreement and will be fully paid (to the
extent required under the Operating Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP
Act); and the Partnership owns such limited partner interest free and clear of all liens,
encumbrances (except restrictions on transferability contained in Article IV of the
Operating Partnership Agreement or as described in the Prospectus), security interests,
equities, charges or claims, except for such liens, encumbrances, security interests,
equities, charges and claims (i) in respect of which a financing statement under the Uniform
Commercial Code of the State of Delaware naming the Partnership as a debtor is on file in
the office of the Secretary of State of the State of Delaware or (ii) otherwise known to
such counsel, without independent investigation, other than those created by or arising
under the Delaware LP Act and other than those arising under the Credit Agreement and the
Master Shelf Agreement.
(xii) The Partnership owns of record 100% of the issued and outstanding membership
interests in Operating GP; such membership interests have been duly authorized and validly
issued in accordance with the Operating GP LLC Agreement and are fully paid (to the extent
required under the Operating GP LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act); and
the Partnership owns such membership interest free and clear of all liens, encumbrances
(except restrictions on transferability as described in the Prospectus or as otherwise
contained in the Operating GP LLC Agreement), security interests, equities, charges or
claims, except for such liens, encumbrances, security interests, equities, charges and
claims (i) in respect of which a financing statement under the Uniform Commercial Code of
the State of Delaware naming the Partnership as a debtor is on file in the office of the
Secretary of State of the State of Delaware or (ii) otherwise known to such counsel, without
independent investigation, other than those created by or arising under the Delaware LLC Act
and other than those arising under the Credit Agreement and the Master Shelf Agreement.
(xiii) The Operating Partnership directly or indirectly owns of record all of the
issued and outstanding partnership interests or membership interests in each Significant
Sub; such outstanding partnership interests or membership interests, as the case may be, of
each of the Significant Subs have been duly authorized and validly issued in accordance with
the applicable limited partnership agreement or limited liability company agreement of such
Significant Sub, and are fully paid (to the extent required under the applicable limited
partnership agreement or limited liability company agreement of each Significant Sub) and
nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607
and 17-804 of the Delaware LP Act or Sections 3.03, 5.02 and 6.07 of the Texas LP Act, as
applicable, in the case of partnership interests, or Section 18-607 and 18-804 of the
Delaware LLC Act in the case of membership interests); and the Operating Partnership owns
such partnership interests and membership interests free and clear of all liens,
encumbrances (except restrictions on transferability as described in the Prospectus or as
otherwise contained in the applicable
C-3
limited partnership agreement or limited liability company agreement of each
Significant Sub), security interests, equities, charges or claims, except for such liens,
encumbrances, security interests, equities, charges and claims (i) in respect of which a
financing statement under the Uniform Commercial Code of the State of Delaware or Texas, as
applicable, naming the Operating Partnership or Crosstex Energy Services GP, LLC, as
applicable, as a debtor is on file in the office of the Secretary of State of the State of
Delaware or Texas, as applicable, or (ii) otherwise known to such counsel, without
independent investigation, other than those created by or arising under the Delaware LP Act,
the Delaware LLC Act or the Texas LP Act, as applicable, and other than those arising under
the Credit Agreement and the Master Shelf Agreement.
(xiv) GP LLC is the sole general partner of the General Partner with a .001% general
partner interest in the General Partner; such general partner interest has been duly
authorized and validly issued in accordance with the General Partner Partnership Agreement;
GP LLC owns such general partner interest free and clear of all liens, encumbrances (except
restrictions on transferability as described in the Prospectus or as otherwise contained in
the General Partner Partnership Agreement), security interests, equities, charges or claims
(i) in respect of which a financing statement under the Uniform Commercial Code of the State
of Delaware naming GP LLC as a debtor is on file in the office of the Secretary of State of
the State of Delaware or (ii) otherwise known to such counsel, without independent
investigation, other than those created by or arising under the Delaware LLC Act; Holdings
is the sole limited partner of the General Partner with a 99.999% limited partner interest
in the General Partner; such limited partner interest has been duly authorized and validly
issued in accordance with the General Partner Partnership Agreement and is fully paid (to
the extent required under the General Partner Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of
the Delaware LP Act); and Holdings owns such limited partner interest free and clear of all
liens, encumbrances (except restrictions on transferability as described in the Prospectus
or as otherwise contained in the General Partner Partnership Agreement), security interests,
equities, charges or claims (i) in respect of which a financing statement under the Uniform
Commercial Code of the State of Delaware naming Holdings as a debtor is on file in the
office of the Secretary of State of the State of Delaware or (ii) otherwise known to such
counsel, without independent investigation, other than those created by or arising under the
Delaware LP Act.
(xv) The Partnership Agreement has been duly authorized, executed and delivered by the
General Partner and is a valid and legally binding agreement of the General Partner,
enforceable against the General Partner in accordance with its terms; the General Partner
Partnership Agreement has been duly authorized, executed and delivered by GP LLC and
Holdings and is a valid and legally binding agreement of GP LLC and Holdings, enforceable
against GP LLC and Holdings in accordance with its terms; the Operating Partnership
Agreement has been duly authorized, executed and delivered by Operating GP and the
Partnership and is a valid and legally binding agreement of Operating GP and the
Partnership, enforceable against Operating GP and the Partnership in accordance with its
terms; the Operating GP LLC Agreement has been duly authorized, executed and delivered by
the Partnership and is a valid and legally binding
C-4
agreement of the Partnership, enforceable against the Partnership in accordance with
its terms; provided, that with respect to each such Operative Agreement, the enforceability
thereof is subject to (A) applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws relating to or affecting creditors rights
generally and by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and (B) public policy, applicable law
relating to fiduciary duties and indemnification and an implied covenant of good faith and
fair dealing.
(xvi) The Agreement has been duly and validly authorized, executed and delivered by
each of the Crosstex Parties.
(xvii) Except as described in the Prospectus or, in the case of transfer restrictions,
as set forth in the agreement of limited partnership, limited liability company agreement or
other organizational documents of the Crosstex Parties or the Significant Subs, there are no
preemptive rights or other rights to subscribe for or to purchase, nor any restriction upon
the voting or transfer of, any partnership or membership interests of any of the Crosstex
Parties or the Significant Subs, in each case pursuant to the agreement or certificate of
limited partnership, limited liability company agreement, certificate of formation or other
organizational documents of any of the Crosstex Parties or the Significant Subs, or any
other agreement or instrument filed as an exhibit to the Registration Statement. To such
counsels knowledge, neither the filing of the Registration Statement nor the offering or
sale of the Units as contemplated by this Agreement gives rise to any rights for or relating
to the registration of any Units or other securities of the Partnership other than as have
been waived. To such counsels knowledge, except as described in the Prospectus and for
options and restricted units granted pursuant to employee benefits plans, qualified unit
option plans or other employee compensation plans, there are no outstanding options or
warrants to purchase any partnership or membership interests in any of the Crosstex Parties
or the Significant Subs.
(xviii) None of the offering, issuance and sale by the Partnership of the Units, the
execution, delivery and performance of this Agreement by the Crosstex Parties, or the
consummation of the transactions contemplated by the Agreement (i) constitutes or will
constitute a violation of the agreement of limited partnership, limited liability company
agreement or other organizational documents of any of the Crosstex Parties or the
Significant Subs, (ii) constitutes or will constitute a breach or violation of, or a default
(or an event which, with notice or lapse of time or both, would constitute such a default)
under any agreement filed or incorporated by reference as an exhibit to the Registration
Statement, (iii) violates or will violate the Delaware LP Act, the Delaware LLC Act, the
laws of the State of Texas or the federal laws of the United States of America, or (iv) to
our knowledge, results or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Crosstex Entities, which breaches, violations
or defaults, in the case of clauses (ii) or (iii), would, individually or in the aggregate,
have a Material Adverse Effect.
C-5
(xix) No permit, consent, approval, authorization, order, registration, filing or
qualification (consent) under the Delaware LP Act, the Delaware LLC Act, the federal law
of the United States of America or the laws of the state of Texas is required in connection
with the offering, issuance and sale by the Partnership of the Units, the execution,
delivery and performance of this Agreement by the Crosstex Parties or the consummation by
the Crosstex Parties of the transactions contemplated by this Agreement, except (i) for such
consents required under the Securities Act, the Exchange Act and state securities or Blue
Sky laws, as to which such counsel need not express any opinion, (ii) for such consents
that have been obtained or made, (iii) for such consents which, if not obtained, would not,
individually or in the aggregate, have a Material Adverse Effect or (iv) as disclosed in the
Registration Statement (including exhibits thereto), the Pricing Prospectus and any Free
Writing Prospectus.
(xx) The Registration Statement was declared effective under the Securities Act on July
18, 2006, and any required filing of the Prospectus pursuant to Rule 424(b) has been made in
the manner and within the time period required by such Rule. To such counsels knowledge,
no stop order suspending the effectiveness of the Registration Statement has been issued and
no proceeding for such purpose has been instituted or threatened by the Commission.
(xxi) The Registration Statement, at the Effective Time, and the Pricing Prospectus and
the Prospectus, as of their respective dates, were, on their face, appropriately responsive,
in all material respects, to the requirements of the Securities Act and the Rules and
Regulations, except that in each case such counsel need express no opinion with respect to
the financial statements and the notes and schedules thereto, and the other financial and
accounting data included or incorporated by reference in or omitted from the Registration
Statement, the Pricing Prospectus or the Prospectus.
(xxii) The statements in the Registration Statement and Prospectus under the captions
Description of the Common Units, and Description of Our Partnership Agreement, insofar
as they constitute descriptions of agreements or refer to statements of law or legal
conclusions, are accurate, in all material respects; and the Common Units, the Subordinated
Units, the Senior Subordinated Series C Units, the Senior Subordinated Series D Units and
the Incentive Distributions Rights conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus under the captions
Prospectus SummaryThe Offering, Description of the Common Units and Description of Our
Partnership Agreement.
(xxiii) To the knowledge of such counsel, (i) there are no legal or governmental
proceedings pending or threatened against any of the Crosstex Entities or to which any of
the Crosstex Entities is a party or to which any of their respective properties is subject
that are required to be described in the Pricing Prospectus and the Prospectus but are not
so described as required and (ii) there are no agreements, contracts, indentures, leases or
other instruments that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that are not described
or filed as required by the Securities Act.
C-6
(xxiv) The opinion of Baker Botts L.L.P. that is filed as Exhibit 8.1 to the
Registration Statement is confirmed, and the Underwriters may rely upon such opinion as if
it were addressed to them.
(xxv) None of the Crosstex Parties is an investment company as such term is defined
in the Investment Company Act of 1940, as amended.
In rendering such opinion, such counsel may state that its opinion is limited to matters
governed by the federal laws of the United States of America, the Delaware LP Act, the Delaware LLC
Act and the laws of the State of Texas.
Such counsel shall also have furnished to the Underwriters a written statement, addressed to
the Underwriters and dated such Delivery Date, in form and substance satisfactory to the
Underwriters, to the effect that (x) such counsel has acted as counsel to the Partnership in
connection with previous financing transactions and has acted as counsel to the Partnership in
connection with the preparation of the Registration Statement, the Pricing Prospectus and the
Prospectus, and (y) based on the foregoing, no facts have come to the attention of such counsel
that lead it to believe that the Registration Statement (other than (i) the financial statements
and schedules thereto and the auditors reports thereon, (ii) the other financial information
contained or incorporated by reference therein and (iii) exhibits thereto, as to which we have not
been asked to comment), as of the Effective Time, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (other than (i) the financial statements
and schedules thereto and the auditors reports thereon, (ii) the other financial information
contained or incorporated by reference therein and (iii) exhibits thereto, as to which we have not
been asked to comment), as of its date and as of such Delivery Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The foregoing opinion and statement may be qualified
by a statement to the effect that such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration Statement or the
Prospectus except to the extent set forth in paragraph (xxii) above.
In rendering such opinion, such counsel may (A) rely in respect of matters of fact upon
certificates of officers and employees of the Crosstex Entities and upon information obtained from
public officials, (B) assume that all documents submitted to them as originals are authentic, that
all copies submitted to them conform to the originals thereof, and that the signatures on all
documents examined by them are genuine, (C) state that their opinion is limited to federal laws,
the Delaware LP Act, the Delaware LLC Act and the laws of the State of Texas, (D) with respect to
the opinions expressed in paragraph (iv) above as to the due qualification or registration as a
foreign limited partnership or limited liability company, as the case may be, of each of the
Crosstex Parties and the Significant Subs, state that such opinions are based upon certificates of
foreign qualification or registration provided by the Secretary of State of the States listed on
Exhibit A to such opinion (each of which shall be delivered as of a date not more than fourteen
days prior to the applicable Delivery Date and shall be provided to you) and (E) state that they
express no opinion with respect to state or local taxes or tax statutes to which any of the limited
partners of the Partnership or any of the other Crosstex Entities may be subject.
C-7