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Exhibit 10.2


LETTER AMENDMENT NO. 1

to

MASTER SHELF AGREEMENT

        As of April 1, 2004

Prudential Investment Management, Inc.
The Prudential Insurance Company of America
Pruco Life Insurance Company
c/o Prudential Capital Group
Gateway Center Four
100 Mulberry Street
Newark, New Jersey 08102-4069

Ladies and Gentlemen:

        We refer to the Master Shelf Agreement dated as of June 3, 2003 (the "Agreement") among Crosstex Energy Services, L.P., a Delaware limited partnership (the "Company"), Prudential Investment Management, Inc. ("Prudential"), The Prudential Insurance Company of America ("PICA") and Pruco Life Insurance Company ("Pruco" and, together with Prudential and PICA, the "Purchasers"). Unless otherwise defined in this Letter Amendment No. 1 to Master Shelf Agreement (this "Amendment"), the terms defined in the Agreement shall be used herein as therein defined.

        The Company and its Affiliates propose to acquire LIG Pipeline Company, a Nevada corporation, pursuant to the Purchase and Sale Agreement dated as of February 13, 2004 between Crosstex Energy, L.P., a Delaware limited liability company (the "MLP") and AEP Energy Services Investments, Inc., a Delaware corporation, as amended by the First Amendment thereto dated as of February 13, 2004 (the "LIG Acquisition"). In order to effect the LIG Acquisition, the Company proposes to borrow funds under the Bank Agreement and distribute such funds in cash to the MLP (the "Cash Distribution"). The MLP proposes then to make a loan in the amount of the Cash Distribution to Crosstex Louisiana Energy, L.P., a subsidiary of the MLP ("Crosstex Louisiana"), in order to fund all or part of the purchase price in connection with the LIG Acquisition. In connection with the LIG Acquisition, the Company and its Affiliates propose to effect a reorganization as described in the Omnibus Agreement dated as of March 31, 2004 among the MLP, the Company, Crosstex Louisiana, Crosstex Operating GP, LLC, a Delaware limited liability company, the General Partner, LIG Liquids Holdings, L.P., a Delaware limited partnership, Crosstex Tuscaloosa, LLC, a Louisiana limited liability company, Crosstex Treating Services GP, LLC, a Delaware limited liability company, Crosstex Acquisition Management GP, LLC, a Delaware limited liability company, and Crosstex Gulf Coast Marketing Ltd., a Texas limited partnership (the "Omnibus Agreement"), which specifically provides that (a) Crosstex Louisiana will transfer substantially all of the assets acquired by it and its Subsidiaries pursuant to the LIG Acquisition to the Company and its Subsidiaries, (b) Crosstex Operating GP, LLC will be substituted as the general partner of the Company and (c) Crosstex Acquisition Management GP, LLC and Crosstex Treating Services GP, LLC will each merge with and into Crosstex Energy Services GP, LLC (the "Reorganization").

        In connection with the foregoing, the Company has requested that the Purchasers make certain amendments to the Agreement and grant a limited consent and waiver with respect to the LIG Acquisition, the Cash Distribution and the Reorganization. Subject to the terms and conditions specified herein, the Purchasers have indicated their willingness to make such amendments, and grant such limited consent and waiver, all as more particularly set forth herein. Accordingly, subject to satisfaction of the conditions set forth in paragraph 8 hereof, and in reliance on the representations and warranties of the Company set forth in paragraph 7 hereof, the Purchasers hereby agree with the Company to amend the Agreement as provided in paragraphs 1 through 5 below, and to grant the



limited consent and waiver specified in paragraph 6 below, effective in each case as of the Amendment No. 1 Effective Date (as defined in paragraph 8 below).

1.     Amendments to Paragraph 5. Affirmative Covenants.

        (a)   Paragraph 5C. Visitation Rights. Paragraph 5C of the Agreement is hereby amended by replacing "four occasions in any calendar year" with "two occasions in any calendar year".

        (b)   Paragraph 5K. Transactions with Affiliates. Paragraph 5K of the Agreement is hereby amended by adding the following prior to the period at the end thereof:

        (c)   Paragraph 5 of the Agreement is amended by adding a new paragraph 5P to the end thereof, to read as follows:

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2.     Amendments to Paragraph 6. Negative Covenants.

        (a)   Paragraph 6A(1). Current Ratio. Paragraph 6A(1) of the Agreement is amended by deleting such paragraph in its entirety and replacing it with the following:

        (b)   Paragraph 6A(4). Minimum Tangible Net Worth. Paragraph 6A(4) of the Agreement is amended by replacing "$60,000,000" with "$90,000,000" and replacing "December 31, 2002" with "March 31, 2004".

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        (c)   Paragraph 6C(1). Liens, Etc.

        (d)   Paragraph 6C(2). Debt.

        (e)   Paragraph 6C(3). Investments in Other Persons. Clause (vi) of paragraph 6C(3) of the Agreement is amended by replacing "Limited Partner" with "MLP".

        (f)    Paragraph 6C(5). Sales, Etc. of Property. Clause (vii) of paragraph 6C(5) of the Agreement is amended by replacing "$3,000,000" with "$5,000,000".

        (g)   Paragraph 6I. Amendment of Company Partnership Agreement. Paragraph 6I of the Agreement is amended by deleting such paragraph in its entirety and replacing it with the following:

        (h)   Paragraph 6J. Bank Agreement. Paragraph 6J of the Agreement is amended by replacing "$100,000,000" with "$200,000,000".

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3.     Amendments to Paragraph 7A. Acceleration.

        (a)   Clause (iii) of paragraph 7A of the Agreement is amended by replacing "$3,000,000" with "$5,000,000".

        (b)   Clause (v) of paragraph 7A of the Agreement is amended by replacing "5A(iii), 5E, 5I or 5N" with "5A(iii), 5E, 5I, 5N or 5P".

        (c)   Clause (xiii)(a) of paragraph 7A of the Agreement is amended by replacing "$3,000,000" with "$5,000,000".

4.     Amendment to Paragraph 8U. Ownership.

        Clause (a) of paragraph 8U of the Agreement is amended by deleting such clause in its entirety and replacing it with the following:

5.     Amendments to Paragraph 10B. Other Terms.

        (a)   Paragraph 10B of the Agreement is amended by inserting each of the following new definitions in the appropriate alphabetical positions:

        (b)   Paragraph 10B of the Agreement is further amended by replacing the definitions of "Bank Agreement", "Change of Control", "General Partner", "Limited Partner", "Pledge Agreements" and

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"Responsible Officer" therein with the following, and each reference in the Agreement to "Limited Partner" shall be amended to refer to "Limited Partners":

        (c)   Paragraph 10B of the Agreement is further amended by replacing "Limited Partner" with "MLP" in the definitions of "Guarantor" and "Guaranty" therein.

        (d)   Paragraph 10B of the Agreement is further amended by deleting the definition of "Renewal Fee" therein.

        6.     Limited Consent and Waiver. Subject to satisfaction of the conditions set forth in paragraph 8 hereof, and in reliance on the representations and warranties of the Company set forth in paragraph 7 hereof, effective as of the Amendment No. 1 Effective Date, the Purchasers hereby (i) consent to the LIG Acquisition, the Cash Distribution and the Reorganization, (ii) consent to the amendment and restatement of the Company Partnership Agreement, in the form delivered to the Purchasers on the date hereof (the "OLP Restatement") and (iii) waive any and all Defaults or Events of Default arising or which may heretofore have arisen under the Agreement or any of the other Loan Documents as a result of the execution, delivery or performance of the transactions and agreements in connection with the LIG Acquisition, the Cash Distribution, the Reorganization or the OLP Restatement; provided that if the Reorganization is not completed as described in the Omnibus Agreement and such failure to be completed as described in the Omnibus Agreement would be materially adverse to the Holders, the

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foregoing limited consent and waiver shall be void; provided, further, that the foregoing limited consent and waiver shall not apply to any violation of paragraph 6B of the Agreement (other than as a result of the Cash Distribution), to any amendment, modification or supplement to the definition of "Available Cash" in the Company Partnership Agreement or to any other amendment, restatement, supplement or other modification of the Company Partnership Agreement other than the OLP Restatement. The foregoing consent and waiver shall be limited precisely as written and shall relate solely to the Agreement in the manner and to the extent described herein, and nothing in this Amendment shall be deemed to (i) constitute a waiver of compliance by the Company with respect to any term, provision or condition of the Agreement or any other Loan Document except as specifically provided herein, or (ii) prejudice any right or remedy that any holder of Notes may now have (after giving effect to the foregoing consent and waiver) or may have in the future under or in connection with the Agreement or any other Loan Document. The Company agrees to deliver to each Purchaser copies of all amendments, modifications or supplements to the Omnibus Agreement.

        7.     Representations and Warranties. In order to induce the Purchasers to enter into this Amendment, the Company hereby represents and warrants as follows:

        (a)   The execution, delivery and performance by the Company of this Amendment and the Agreement, as amended hereby, have in each case been duly authorized by all necessary limited liability company, limited partnership or other organizational action and do not and will not (i) contravene the terms of the Company Partnership Agreement or the limited liability company agreement or certificate of formation (or other organizational documents) of the General Partner, the Company or any of their Subsidiaries, (ii) conflict with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any contractual obligation to which the General Partner, the Company or any of their Subsidiaries is a party and which could subject any holder of Notes to any liability, (iii) conflict with or result in any breach or contravention of any order, injunction, writ or decree of any governmental authority binding on the General Partner, the Company, any of their Subsidiaries or their respective properties, or (iv) violate any applicable law binding on or affecting the General Partner, the Company or any of their Subsidiaries.

        (b)   Each of the representations and warranties contained in paragraph 8 of the Agreement is true and correct on and as of the date hereof, and will be true and correct immediately upon, and as of the date of, consummation of the LIG Acquisition and the Reorganization, in each case except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date.

        (c)   On and as of the date hereof, and after giving effect to this Amendment, no Default or Event of Default exists under the Agreement.

        (d)   No Governmental Action is required for the due execution, delivery or performance by the Company or any of its Subsidiaries of this Amendment, the Agreement, as amended hereby, or any of the Loan Documents, as amended in connection herewith, to which the Company or any of its Subsidiaries is a party.

        (e)   This Amendment, the Agreement, as amended hereby, and each of the Loan Documents, as amended in connection herewith, to which the Company or any of its Subsidiaries is a party, constitute legal, valid and binding obligations of the Company or such Subsidiary, as applicable, enforceable against the Company or such Subsidiary, as applicable, in accordance with their respective terms.

        (f)    Each of the Liens under the Security Documents constitutes (and each of the Liens under the Security Documents to be delivered in connection with paragraph 5P of the Agreement, as amended hereby, will constitute) an Acceptable Security Interest on the Collateral purported to be encumbered thereby, enforceable against all third parties in all jurisdictions, securing the payment of all obligations stated to be secured thereby under such Security Documents, and the execution, delivery and

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performance of this Amendment and the Agreement, as amended hereby, do not adversely affect any Lien under any of the Security Documents.

        (g)   The quarterly and annual financial statements most recently delivered to the Purchasers pursuant to clauses (i) and (ii) of paragraph 5A of the Agreement fairly present the Consolidated financial condition of the Company and its Subsidiaries as of the respective dates thereof and the Consolidated results of the operations of the Company and its Subsidiaries for the respective fiscal periods ended on such dates, all in accordance with GAAP applied on a consistent basis (subject to normal year-end audit adjustments and the absence of footnotes in the case of the quarterly financial statements). Since December 31, 2003 there has been no material and adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of the Company or any of its Subsidiaries. The Company and its Subsidiaries have no material contingent liabilities except as disclosed in such financial statements or the notes thereto.

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

        8.     Conditions to Effectiveness. This Amendment shall become effective as of the date (the "Amendment No. 1 Effective Date") first above written when and if each of the conditions set forth in this paragraph 8 shall have been satisfied (or waived in writing by the Required Holder(s)).

        (a)   Execution and Delivery of Documents. Each Purchaser shall have received the following, each to be dated the date of execution and delivery thereof unless otherwise indicated, and each to be in form and substance satisfactory to such Purchaser and executed and delivered by each of the parties thereto, as applicable:

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        (b)   Accuracy of Representations and Warranties. The representations and warranties contained in paragraph 7 of this Amendment shall be true and correct as of the Amendment No. 1 Effective Date.

9.     Miscellaneous.

        (a)   Effect on Agreement. On and after the Amendment No. 1 Effective Date, each reference in the Agreement to "this Agreement", "hereunder", "hereof", or words of like import referring to the Agreement and each reference in the Notes and all other documents executed in connection with the Agreement to "the Agreement", "thereunder", "thereof", or words of like import referring to the Agreement shall mean the Agreement as amended by this Amendment. The Agreement, as amended by this Amendment, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy under the Agreement nor, except as specifically set forth and limited in paragraph 6 hereof, constitute a waiver of any provision of the Agreement. Without limiting the generality of the foregoing, nothing in this Amendment shall be deemed (i) to constitute a waiver of compliance or consent to noncompliance by the Company or any other Person with respect to any term, provision, covenant or condition of the Agreement or any other Loan Document not expressly described in paragraph 6 or (ii) to prejudice any right or remedy that any holder of Notes may now have (after giving effect to the waiver set forth in paragraph 6) or may have in the future under or in connection with the Agreement or any other Loan Document.

        (b)   Counterparts. This Amendment may be executed in any number of counterparts (including those transmitted by facsimile) and by any combination of the parties hereto in separate counterparts, each of which counterparts shall be an original and all of which taken together shall constitute one and the same Amendment. Delivery of this Amendment may be made by facsimile transmission of a duly executed counterpart copy hereof.

        (c)   Expenses. The Company confirms its agreement, pursuant to paragraph 11B of the Agreement, to pay promptly all out-of-pocket expenses of the Purchasers related to the preparation, negotiation, reproduction, execution and delivery of this Amendment and all matters contemplated hereby and thereby, including without limitation all fees and out-of-pocket expenses of the Purchasers' special counsel.

        (d)   Governing Law. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.

        (e)   Affirmation of Obligations. Notwithstanding that such consent is not required under the Guaranties, each of the Guarantors consents to the execution and delivery of this Amendment by the parties hereto. As a material inducement to the undersigned to amend the Agreement as set forth

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herein, each of the Guarantors respectively (i) acknowledges and confirms the continuing existence, validity and effectiveness of the Guaranty to which it is a party and (ii) agrees that the execution, delivery and performance of this Amendment shall not in any way release, diminish, impair, reduce or otherwise affect its obligations thereunder.

        (f)    FINAL AGREEMENT. THIS AMENDMENT, TOGETHER WITH THE AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

        {Remainder of this page blank; signature page follows.}

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        If you agree to the terms and provisions hereof, please evidence your agreement by executing and returning at least one counterpart to the Company at 2501 Cedar Springs, Suite 600, Dallas, Texas 85201.

    Very truly yours,

 

 

CROSSTEX ENERGY SERVICES, L.P.

 

 

By:

 

Crosstex Operating GP, LLC,
its general partner

 

 

 

 

By:

 
          /s/  WILLIAM W. DAVIS      
    Name: William W. Davis
    Title: Executive Vice President and Chief Financial Officer

Agreed to as of the Amendment Effective Date:

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

By:        
      /s/  RANDALL KOB      
Vice President
   

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:

 

 

 

 
      /s/  RANDALL KOB      
Vice President
   

PRUCO LIFE INSURANCE COMPANY

 

 

By:

 

 

 

 
      /s/  RANDALL KOB      
Vice President
   

 

 

 

 

 

Signature Page to Letter Amendment No. 1


        Agreed to and acknowledged by each of the undersigned for the purposes set forth in paragraph 9(e):

    GUARANTORS:

 

 

CROSSTEX ENERGY, L.P.

 

 

By:

 

Crosstex Energy GP, L.P.,
its general partner

 

 

 

 

By:

Crosstex Energy GP, LLC,
its general partner

 

 

 

 

 

By:
/s/  
WILLIAM W. DAVIS      
            Name: William W. Davis
Title: Executive Vice-President and Chief Financial Officer

 

 

CROSSTEX CCNG GATHERING LTD.
CROSSTEX CCNG MARKETING LTD.
CROSSTEX CCNG PROCESSING LTD.
CROSSTEX CCNG TRANSMISSION LTD.
CROSSTEX GULF COAST MARKETING LTD.
CROSSTEX GULF COAST TRANSMISSION LTD.

 

 

By:

 

Crosstex Energy Services GP, LLC,
general partner of each above limited partnership

 

 

 

 

By:

/s/  
WILLIAM W. DAVIS      
          Name: William W. Davis
Title: Executive Vice-President and Chief Financial Officer

 

 

CROSSTEX ALABAMA GATHERING SYSTEM, L.P.
CROSSTEX MISSISSIPPI INDUSTRIAL GAS SALES, L.P.
CROSSTEX MISSISSIPPI PIPELINE, L.P.
CROSSTEX SEMINOLE GAS, L.P.
CROSSTEX ACQUISITION MANAGEMENT, L.P.

 

 

By:

 

Crosstex Acquisition Management GP, LLC,
general partner of each above limited partnership

 

 

 

 

By:

/s/  
WILLIAM W. DAVIS      
          Name: William W. Davis
Title: Executive Vice-President and Chief Financial Officer

Signature Page to Letter Amendment No. 1


    CROSSTEX TREATING SERVICES, L.P.

 

 

By:

 

Crosstex Treating Services GP, LLC,
its general partner

 

 

 

 

By:

/s/  
WILLIAM W. DAVIS      
          Name: William W. Davis
Title: Executive Vice-President and Chief Executive Officer

Signature Page to Letter Amendment No. 1




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LETTER AMENDMENT NO. 1 to MASTER SHELF AGREEMENT