SENIOR SUBORDINATED UNIT PURCHASE AGREEMENT

Exhibit 10.1

Execution Copy

SENIOR SUBORDINATED UNIT

PURCHASE AGREEMENT

by and between

CROSSTEX ENERGY, L.P.

and

KAYNE ANDERSON MLP INVESTMENT COMPANY,

TORTOISE ENERGY CAPITAL CORPORATION

and

TORTOISE ENERGY INFRASTRUCTURE CORPORATION

Table of Contents

 - i -

Exhibit A — Form of Registration Rights Agreement

Exhibit B — Form of Opinion of Crosstex Counsel

 - ii -

SENIOR SUBORDIANTED UNIT PURCHASE AGREEMENT

     This SENIOR SUBORDINATED UNIT PURCHASE AGREEMENT, dated as of June 24, 2005 (this “ Agreement ”), is by and between CROSSTEX ENERGY, L.P., a Delaware limited partnership (“ Crosstex ”), and each of the purchasers set forth in Schedule A hereto (“the Purchasers ”).

     WHEREAS, Crosstex desires to finance a portion of its expansion projects through the sale of $50,000,000 of Senior Subordinated Units to the Purchasers and the Purchasers desire to collectively purchase $50,000,000 of Senior Subordinated Units from Crosstex in accordance with the provisions of this Agreement.

     WHEREAS, Crosstex has agreed to provide the Purchasers with certain registration rights with respect to the Common Units underlying the Senior Subordinated Units acquired pursuant hereto.

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

ARTICLE I
DEFINITIONS

     Section 1.01 Definitions . As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

     “Affiliate” means, with respect to a specified Person, any other Person, directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, “controlling”, “controlled by”, and “under common control with”) means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

     “Anniversary Date” means 180 days from the Closing Date.

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

     “Business Day” means any day other than a Saturday, Sunday, or a legal holiday for commercial banks in Houston, Texas.

     “Closing” shall have the meaning specified in Section 2.03 .

     “Closing Date” shall have the meaning specified in Section 2.03 .

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

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     “Common Units” means the common units representing limited partner interests in Crosstex.

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

     “Crosstex Credit Facility” means the Third Amended and Restated Credit Agreement dated as of March 31, 2005, by and among Crosstex, Crosstex Energy Services, L.P. and the lenders named therein.

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

     “Crosstex Master Shelf Agreement” means the Amended and Restated Senior Secured Notes Master Shelf Agreement, dated as of March 31, 2005 among Crosstex Energy, L.P., Crosstex Energy Services, L.P., Prudential Investment Management, Inc. and certain other parties, as amended by the Letter Amendment No. 1 to the Master Shelf Agreement, dated June 22, 2005.

     “Crosstex Material Adverse Effect” means any material and adverse effect on (a) the assets, liabilities, financial condition, business, operations, affairs or prospects of Crosstex and its Subsidiaries taken as a whole; (b) the ability of Crosstex and its Subsidiaries taken as a whole to carry out their business as such business is conducted as of the date hereof or to meet their obligations under the Basic Documents on a timely basis; or (c) the ability of Crosstex to consummate the transactions under any Basic Document; provided, however, that a Crosstex Material Adverse Effect shall not include any material and adverse effect on the foregoing to the extent such material and adverse effect results from, arises out of, or relates to (x) a general deterioration in the economy or changes in the general state of the industries in which the Crosstex Parties operate, except to the extent that the Crosstex Parties, taken as a whole, are adversely affected in a disproportionate manner as compared to other industry participants, (y) the outbreak or escalation of hostilities involving the United States, the declaration by the United States of a national emergency or war or the occurrence of any other calamity or crisis, including acts of terrorism, or (z) any change in accounting requirements or principles imposed upon Crosstex and its Subsidiaries or their respective businesses or any change in applicable Law, or the interpretation thereof.

     “Crosstex Parties” means Crosstex, the General Partner, and all of Crosstex’s Subsidiaries.

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

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

     “Delaware LP Act” shall have the meaning specified in Section 3.02 .

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.

     “GAAP” means generally accepted accounting principles in the United States of America in effect from time to time.

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     “General Partner” means Crosstex Energy GP, L.P., a Delaware limited partnership, and includes Crosstex Energy GP, LLC, a Delaware limited liability company and the general partner of Crosstex Energy GP, L.P.

     “Governmental Authority” means, with respect to a particular Person, any country, state, county, city and political subdivisions in which such Person or such Person’s Property is located or which exercises valid jurisdiction over any such Person or such Person’s Property, and any court, agency, department, commission, board, bureau or instrumentality of any of them and any monetary authority which exercises valid jurisdiction over any such Person or such Person’s Property. Unless otherwise specified, all references to Governmental Authority herein with respect to Crosstex means a Governmental Authority having jurisdiction over Crosstex, its Subsidiaries or any of their respective Properties.

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

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

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

     “Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. For the purpose of this Agreement, a Person shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.

     “NASDAQ” means the NASDAQ National Market.

     “Non-Disclosure Agreement” means the non-disclosure agreement between Crosstex and the Kayne Anderson MLP Investment Company dated April 30, 2005 and the non-disclosure agreement between Crosstex and Tortoise Energy Capital Corporation dated April 29, 2005, collectively.

     “Partnership Agreement” means the Third Amended and Restated Agreement of Limited Partnership of Crosstex dated as of the date hereof.

     “Partnership Securities” means any class or series of equity interest in Crosstex (but excluding any options, rights, warrants and appreciation rights relating to an equity interest in Crosstex), including without limitation Common Units, Senior Subordinated Units, Subordinated Units (as defined in the Partnership Agreement) and Incentive Distribution Rights (as defined in the Partnership Agreement).

     “Permits” means, with respect to Crosstex or any of its Subsidiaries, any licenses, permits, variances, consents, authorizations, waivers, grants, franchises, concessions,

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exemptions, orders, registrations and approvals of Governmental Authorities or other Persons necessary for the ownership, leasing, operation, occupancy or use of its Properties or the conduct of its businesses as currently conducted.

     “Person” means any individual, corporation, company, voluntary association, partnership, joint venture, trust, limited liability company, unincorporated organization or government or any agency, instrumentality or political subdivision thereof, or any other form of entity.

     “Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

     “Purchase Price” means $50,000,000.

     “Purchased Units” means the number of Senior Subordinated Units set forth on Schedule A hereto with respect to each Purchaser.

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

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

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

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

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

     “Senior Subordinated Unit Price” shall have the meaning specified in Section 2.07 .

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

     “Subordinated Units” means the subordinated units representing limited partner interests in Crosstex.

     “Subsidiary” means, as to any Person, any corporation or other entity of which: (i) such Person or a Subsidiary of such Person is a general partner or manager; or (ii) at least a majority of the outstanding equity interest having by the terms thereof ordinary voting power to elect a majority of the board of directors or similar governing body of such corporation or other entity (irrespective of whether or not at the time any equity interest of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more of its Subsidiaries.

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     Section 1.02 Accounting Procedures and Interpretation . Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all Crosstex Financial Statements and certificates and reports as to financial matters required to be furnished to the Purchasers hereunder shall be prepared, in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q promulgated by the Commission) and in compliance as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto.

ARTICLE II
AGREEMENT TO SELL AND PURCHASE

     Section 2.01 Authorization of Sale of Senior Subordinated Units . Crosstex has authorized the issuance and sale to the Purchasers of the Purchased Units.

     Section 2.02 Sale and Purchase . Subject to the terms and conditions hereof, Crosstex hereby agrees to issue and sell to each Purchaser, and each Purchaser hereby agrees to purchase from Crosstex, the number of Purchased Units as set forth on Schedule A (such number of Purchased Units set forth thereon with respect to each Purchaser), and each Purchaser agrees to pay Crosstex its allocated portion of the Purchase Price.

     Section 2.03 Closing . Subject to the terms and conditions hereof, the consummation of the purchase and sale of the Purchased Units hereunder (the “Closing”) shall take place on June 24, 2005 (such date, the “Closing Date”), at the offices of Vinson & Elkins, L.L.P., First City Tower, 1001 Fannin, Houston, Texas 77002.

     Section 2.04 Conditions to the Closing .

          (a) Mutual Conditions . The respective obligations of each party to consummate the purchase and issuance and sale of the Purchased Units shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions (any or all of which may be waived by a particular party on behalf of itself in writing, in whole or in part, to the extent permitted by applicable Law):

               (i) no statute, rule, order, decree or regulation shall have been enacted or promulgated, and no action shall have been taken, by any Governmental Authority of competent jurisdiction which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the transactions contemplated hereby or makes the transactions contemplated hereby illegal;

               (ii) there shall not be pending any suit, action or proceeding by any Governmental Authority seeking to restrain, preclude, enjoin or prohibit the transactions contemplated by this Agreement; and

               (iii) a notification form and supporting documentation, if any, related to the Common Units issuable on conversion of the Purchased Units shall have been filed with the NASDAQ.

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          (b) Purchasers’ Conditions . The obligation of each Purchaser to consummate the purchase of the Purchased Units shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions (any or all of which may be waived by such Purchaser in writing, in whole or in part, to the extent permitted by applicable Law):

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

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

               (iii) Crosstex shall have delivered, or caused to be delivered, to the Purchasers at the Closing, Crosstex’s closing deliveries described in Section 2.05 ;

          (c) Crosstex’s Conditions . The obligation of Crosstex to consummate the sale of the Purchased Units to each Purchaser shall be subject to the satisfaction on or prior to the Closing Date of the condition (which may be waived by Crosstex in writing, in whole or in part, to the extent permitted by applicable Law) that the representations and warranties of such Purchaser contained in this Agreement shall be true and correct in all material respects at and as of the Closing Date (except that representations made as of a specific date shall be required to be true and correct as of such date only).

     Section 2.05 Crosstex Deliveries . At the Closing, subject to the terms and conditions hereof, Crosstex will deliver, or cause to be delivered, to the Purchasers:

          (a) A certificate or certificates representing the Purchased Units (bearing the legend set forth in Section 4.05(e)) and meeting the requirements of the Partnership Agreement, free and clear of any Liens, other than transfer restrictions under applicable federal and state securities laws;

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

          (c) A cross-receipt executed by Crosstex and delivered to the Purchasers certifying that it has received the Purchase Price as of the Closing Date;

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

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

     Section 2.06 Purchasers’ Deliveries

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          (a) Payment to Crosstex of the Purchase Price hereto by wire transfer of immediately available funds to an account designated by Crosstex in writing;

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

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

     Section 2.07 Price Per Unit . The amount per Senior Subordinated Unit that each Purchaser will pay to Crosstex to purchase the Purchased Units (the “ Senior Subordinated Unit Price ”) shall be equal to the quotient of $50,000,000 divided by 1,495,410 units.

     Section 2.08 Lock-Up . Each Purchaser agrees that from and after Closing it will not sell any of the Purchased Units prior to the Anniversary Date.

ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATED TO CROSSTEX

     Crosstex represents and warrants to each Purchaser as follows:

     Section 3.01 Corporate Existence . Crosstex (a) is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware; and (b) has all requisite power and authority, and has all governmental licenses, authorizations, consents and approvals necessary, to own, lease, use and operate its Properties and carry on its business as its business is now being conducted, except where the failure to obtain such licenses, authorizations, consents and approvals would not be reasonably likely to have a Crosstex Material Adverse Effect. Each of Crosstex’s Subsidiaries has been duly incorporated or formed, as the case may be, and is validly existing and in good standing under the laws of the State or other jurisdiction of its incorporation or organization, as the case may be, and has all requisite power and authority, and has all governmental licenses, authorizations, consents and approvals necessary, to own, lease, use or operate its respective Properties and carry on its business as now being conducted, except where the failure to obtain such licenses, authorizations, consents and approvals would not be reasonably likely to have a Crosstex Material Adverse Effect. None of Crosstex nor any of its Subsidiaries are in default in the performance, observance or fulfillment of any provision of, in the case of Crosstex, the Partnership Agreement or its Certificate of Limited Partnership or, in the case of any Subsidiary of Crosstex, its respective certificate of incorporation, certification of formation, bylaws, limited liability company agreement or other similar organizational documents. Each of Crosstex and its Subsidiaries is duly qualified or licensed and in good standing as a foreign limited partnership, limited liability company or corporation, as applicable, and is authorized to do business in each jurisdiction in which the ownership or leasing of its respective Properties or the character of its respective operations makes such qualification necessary, except where the failure to obtain such qualification, license, authorization or good standing would not be reasonably likely to have a Crosstex Material Adverse Effect.

     Section 3.02 Capitalization and Valid Issuance of Purchased Units .

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          (a) As of the date of this Agreement, prior to the sale and issuance of the Purchased Units as contemplated hereby, the issued and outstanding limited partner interests of Crosstex consist of 8,798,919 Common Units, 9,334,000 Subordinated Units and the Incentive Distribution Rights, as defined in the Partnership Agreement. The only issued and outstanding general partner interests of Crosstex are the interests of the General Partner described in the Partnership Agreement. All outstanding Common Units, Subordinated 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 matters described in Section 17-607 of the Delaware Revised Uniform Limited Partnership Act (the “ Delaware LP Act ”)).

          (b) Other than the Crosstex Energy GP, LLC Long-Term Incentive Plan, Crosstex has no equity compensation plans that contemplate the issuance of partnership interests of Crosstex (or securities convertible into or exchangeable for partnership interests of Crosstex). No indebtedness having the right to vote (or convertible into or exchangeable for securities having the right to vote) on any matters on which Crosstex unitholders may vote are issued or outstanding. Except as set forth in the first sentence of this Section 3.02(b) or as are contained in the Partnership Agreement, there are no outstanding or authorized (i) options, warrants, preemptive rights, subscriptions, calls, or other rights, convertible or exchangeable securities, agreements, claims or commitments of any character obligating Crosstex or any of its Subsidiaries to issue, transfer or sell any partnership interests or other equity interest in, Crosstex or any of its Subsidiaries or securities convertible into or exchangeable for such partnership interests, (ii) obligations of Crosstex or any of its Subsidiaries to repurchase, redeem or otherwise acquire any partnership interests or equity interests of Crosstex or any of its Subsidiaries or any such securities or agreements listed in clause (i) of this sentence or (iii) voting trusts or similar agreements to which Crosstex or any of its Subsidiaries is a party with respect to the voting of the equity interests of Crosstex or any of its Subsidiaries. None of the offering or sale of the Senior Subordinated Units or the registration of the Common Units underlying the Senior Subordinated Units pursuant to the Registration Rights Agreement, all as contemplated by this Agreement, gives rise to any rights for or relating to the registration of any Common Units or other securities of the Partnership other than those rights granted to the General Partner or any of its Affiliates (as such term is defined in the Partnership Agreement) under Section 7.12 of the Partnership Agreement.

          (c) (i) All of the issued and outstanding equity interests of each of Crosstex’s Subsidiaries (except Crosstex DC Gathering Company, J.V.) are owned, directly or indirectly, by Crosstex free and clear of any Liens (except for such restrictions as may exist under applicable Law and except for such Liens as may be imposed under the Crosstex Credit Facility or the Crosstex Master Shelf Agreement), and all such ownership interests have been duly authorized, validly issued and are fully paid (to the extent required in the organizational documents of Crosstex’s Subsidiaries, as applicable) and non-assessable (except as such nonassessability may be affected by matters described in Section 17-607 of the Delaware LP Act, Section 18-607 of the Delaware Limited Liability Company Act (the “ Delaware LLC Act ”), Article 5.09 of the Texas Limited Liability Company Act, Sections 3.03, 5.02 and 6.07 of the Texas Revised Limited Partnership Act and Sections12:1327 and 12:1328 of the Louisiana Limited Liability Company Act) and free of preemptive rights, with no personal liability attaching to the

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ownership thereof, and (ii) except as disclosed in the Crosstex SEC Documents, neither Crosstex nor any of its Subsidiaries owns any shares of capital stock or other securities of, or interest in, any other Person, or is obligated to make any capital contribution to or other investment in any other Person.

          (d) The Senior Subordinated Units being purchased by each of the Purchasers hereunder and the limited partner interests represented thereby, will be duly authorized by Crosstex pursuant to the Partnership Agreement prior to the Closing and, when issued and delivered to such Purchaser against payment therefor in accordance with the terms of this Agreement, will be validly issued, fully paid (to the extent required by the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by matters described in Section 17-607 of the Delaware LP Act) and will be free of any and all Liens and restrictions on transfer, other than restrictions on transfer under the Partnership Agreement or this Agreement and under applicable state and federal securities laws.

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