Southcross Energy Partners, L.P. (Form: 10-K, Received: 04/15/2013 08:06:42)

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Item 8. Financial Statements and Supplementary Data
PART IV

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K


ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 001-35719

Southcross Energy Partners, L.P.
(Exact name of registrant as specified in its charter)


DELAWARE (State or other jurisdiction of incorporation or organization)		45-5045230 (I.R.S. Employer Identification No.)
1700 Pacific Avenue, Suite 2900 Dallas, TX (Address of principal executive offices)		75201 (Zip Code)

(214) 979-3700
www.southcrossenergy.com
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered

Common Units of Limited Partner Interests		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller Reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of June 30, 2012, the last business day of the registrant's most recently completed second fiscal quarter, there was no public market for the registrant's Common Units. The registrant's common units began trading on the New York Stock Exchange ("NYSE") on November 7, 2012.

As of April 9, 2013, the registrant has 12,219,699 common units outstanding and 12,213,713 subordinated units outstanding. Our common units trade on the NYSE under the symbol "SXE".

DOCUMENTS INCORPORATED BY REFERENCE

None

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Explanatory Note

As generally used in the energy industry and in this Form 10-K, the following terms have the following meanings:

/d: Per day

Bbls: Barrels

Condensate: Hydrocarbons that are produced from natural gas reservoirs but remain liquid at normal temperature and pressure

Lean gas: Natural gas that is low in NGL content

MMBtu: One million British thermal units

Mcf: One thousand cubic feet

Mgal: One thousand gallons

MMcf: One million cubic feet

NGLs: Natural gas liquids, which consist primarily of ethane, propane, isobutane, normal butane, natural gasoline and stabilized condensate

Residue gas: The pipeline quality natural gas remaining after natural gas is processed and NGLs and other matters are removed

Rich gas: Natural gas that is high in NGL content

Throughput: The volume of natural gas or NGLs transported or passing through a pipeline, plant, terminal or other facility

y-grade: Commingled mix of NGL components extracted via natural gas processing normally consisting of ethane, propane, isobutane, butane and natural gasoline.

Southcross Energy Partners, L.P. and Southcross Energy LLC:

Southcross Energy Partners, L.P. (the "Partnership," "Southcross," the "Company" "we," "our," or "us"), which closed its initial public offering ("IPO") on November 7, 2012, is a Delaware limited partnership formed in April 2012. Southcross Energy LLC is a Delaware limited liability company, and the predecessor for accounting purposes (the "Predecessor") of the Partnership. References in this Form 10-K to the Partnership or the Company, when used for periods prior to the IPO, refer to Southcross Energy LLC and its consolidated subsidiaries, unless otherwise specifically noted. References in this Form 10-K to the Partnership or the Company, when used for periods beginning at or following the IPO, refer collectively to the Partnership and its consolidated subsidiaries. This Form 10-K reflects the consolidated assets, liabilities, results of operations and cash flows of Southcross Energy Partners, L.P. beginning November 7, 2012 and Southcross Energy LLC for periods ending prior to November 7, 2012.

In connection with the closing of the IPO, the following transactions occurred:

•: The Predecessor conveyed all of its limited liability company interests in its operating subsidiaries to Southcross Energy Operating, LLC ("Southcross Operating") as a capital contribution;
•: The Predecessor conveyed a limited liability company interest in Southcross Operating to Southcross Energy Partners GP, LLC, the Partnership's general partner ("General Partner") as a capital contribution with a value equal to 2.0% of the equity value of the Partnership (the "GP Contribution Interest");

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•: The General Partner conveyed the GP Contribution Interest to the Partnership in exchange for (i) 498,518 general partner units in the Partnership representing a continuation of its 2.0% general partner interest and (ii) the Partnership's incentive distribution rights ("IDRs");
•: The Predecessor conveyed its remaining interest in Southcross Operating to the Partnership in exchange for (i) 3,213,713 common units (1,863,713 common units subsequent to the purchase of 1,350,000 common units from the Predecessor when the underwriters fully exercised their option to purchase additional common units on November 26, 2012 (the "Over-Allotment Option")) representing a 12.9% limited partner interest (7.5% limited partner interest, including the exercise of the Over-Allotment Option), (ii) 12,213,713 subordinated units representing a 49.0% limited partner interest, (iii) the Partnership's assumption of the Predecessor's outstanding debt under its credit agreement, (iv) the right to receive $7.5 million sourced from new debt the Partnership incurred and (v) the right to receive $38.5 million in cash, a portion of which was used to reimburse the Predecessor for certain capital expenditures it incurred with respect to the contributed assets;
•: Pursuant to the Partnership's long-term incentive plan, the Partnership granted 146,000 phantom units, with distribution equivalent rights, to certain of our employees;
•: The Partnership issued 9,000,000 common units to the public (10,350,000 common units including the exercise of the Over-Allotment Option);
•: The Partnership used the proceeds from the IPO, net of underwriters' discounts, commissions and structuring fees, plus borrowings under the Partnership's senior secured credit facility to (i) repay the outstanding debt of $270.0 million under the Predecessor's credit agreement, (ii) make cash distributions to the Predecessor of $38.5 million including reimbursements for certain capital expenditures the Predecessor incurred and with respect to assets the Predecessor contributed to the Partnership and (iii) distribute $7.5 million to the Predecessor;
•: The Partnership utilized $25.2 million representing the funds received in connection with the Over-Allotment Option to purchase and retire 1,350,000 common units from the Predecessor.

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INDEX TO ANNUAL REPORT ON FORM 10-K

For the Year Ended December 31, 2012


PART I
Item 1.	Business	7
Item 1A.	Risk Factors	29
Item 1B.	Unresolved Staff Comments	59
Item 2.	Properties	59
Item 3.	Legal Proceedings	59
Item 4.	Mine Safety Disclosures	59
PART II
Item 5.	Market for Registrant's Common Equity, Related Unitholders Matters and Issuer Purchases of Units	60
Item 6.	Selected Financial Data	63
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	64
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	82
Item 8.	Financial Statements and Supplementary Data	84
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	125
Item 9A.	Controls and Procedures	125
Item 9B.	Other Information	125
PART III
Item 10.	Directors and Executive Officers and Corporate Governance	130
Item 11.	Executive Compensation	137
Item 12.	Security Ownership of Certain Management and Beneficial Owners and Management and Related Unitholder Matters	152
Item 13.	Certain Relationships and Related Transactions and Director Independence	155
Item 14.	Principal Accountant Fees and Services	158
PART IV
Item 15.	Exhibits and Financial Statement Schedules	159
	Signatures	162

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FORWARD-LOOKING INFORMATION

Investors are cautioned that certain statements contained in this Form 10-K as well as in periodic press releases and oral statements made by our management team during our presentations are "forward-looking" statements. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, and may contain the words "expect," "intend," "plan," "anticipate," "estimate," "believe," "will be," "will continue," "will likely result," and similar expressions, or future conditional verbs such as "may," "will," "should," "would," and "could." In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries, are also forward-looking statements. These forward-looking statements involve external risks and uncertainties, including, but not limited to, those described under the section entitled "Risk Factors" included herein.

Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond the control of our management team. All forward-looking statements in this Form 10-K and subsequent written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these risks and uncertainties. These risks and uncertainties include, among others:

•: the volatility of natural gas, crude oil, and NGL prices and for the price and demand of products derived from these commodities;
•: competitive conditions in our industry and the extent and success of producers replacing declining production and our success in obtaining new sources of supply;
•: industry conditions and supply of pipelines, processing and fractionation capacity relative to available natural gas from producers;
•: our dependence upon a relatively limited number of customers for a significant portion of our revenues;
•: actions or inactions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters and customers;
•: our ability to effectively recover NGLs at a rate equal to or greater than our contracted rates with customers;
•: our ability to produce and market NGLs at the anticipated differential to NGL index pricing;
•: our access to markets enabling us to match pricing indices for purchases and sales of gas and NGLs;
•: our ability to complete projects within budget and on schedule, including but not limited to, timely receipt of necessary government approvals and permits, our ability to control the costs of construction and other factors that may impact projects;
•: our ability to consummate acquisitions, successfully integrate the acquired businesses, realize anticipated cost savings and other synergies from any acquisitions;
•: our ability to manage over time changing exposure to commodity price risk;
•: the effectiveness of our hedging activities or our decisions not to undertake hedging activities;
•: our access to financing and ability to remain in compliance with our financing covenants;
•: our ability to generate sufficient operating cash flow to fund our minimum quarterly distribution;

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•: changes in general economic conditions;
•: the effects of downtime associated with our assets or the assets of third parties interconnected with our systems;
•: operating hazards, fires, natural disasters, weather-related delays, casualty losses and other matters beyond our control;
•: the effects of laws and governmental regulations and policies;
•: the effects of existing and future litigation; and
•: other financial, operational and legal risks and uncertainties detailed from time to time in our filings with the U.S. Securities and Exchange Commission.

Developments in any of these areas could cause actual results to differ materially from those anticipated or projected; or affect our ability to maintain distribution levels; or access necessary financial markets, or cause a significant reduction in the market price of our common units.

The foregoing list of risks and uncertainties may not contain all of the risks and uncertainties that could affect us. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not, in fact, occur. Accordingly, undue reliance should not be placed on these statements. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law.

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PART I

Item 1. Business

The following discussion of our business provides information regarding our principal gathering, transportation, processing, NGL fractionation and other assets. For a discussion of our results of operations, please read Item 7—"Management's Discussion and Analysis of Financial Condition and Results of Operations" of this report.

General Overview

Southcross Energy Partners, L.P. (the "Partnership," "Southcross," the "Company," "we," "our" or "us"), which closed its initial public offering ("IPO") on November 7, 2012, is a Delaware limited partnership formed in April 2012. Southcross Energy LLC is a Delaware limited liability company, and the predecessor for accounting purposes (the "Predecessor") of the Partnership. References in this Form 10-K to the Partnership or the Company, when used for periods prior to the IPO, refer to Southcross Energy LLC and its consolidated subsidiaries, unless otherwise specifically noted. References in this Form 10-K to the Partnership or the Company, when used for periods beginning at or following the IPO, refer collectively to the Partnership and its consolidated subsidiaries. This report reflects the consolidated assets, liabilities, results of operations and cash flows of Southcross Energy Partners, L.P. beginning November 7, 2012 and Southcross Energy LLC for periods ending prior to November 7, 2012. Southcross Energy LLC and its subsidiaries are controlled through investment funds and entities associated with Charlesbank Capital Partners, LLC ("Charlesbank").

The Partnership provides natural gas gathering, processing, treating, compression and transportation services and natural gas liquid ("NGL") fractionation and transportation services for its producer customers. We also source, purchase, transport and sell natural gas and NGLs to power generation, industrial and utility customers. Our assets are located in South Texas, Mississippi and Alabama and, as of December 31, 2012, included three gas processing plants, two NGL fractionation plants and approximately 2,700 miles of pipeline. Our South Texas assets operate in or within close proximity to the Eagle Ford shale region. Our assets are strategically positioned to provide transportation of natural gas and NGLs to power generation, industrial and utility customers as well as to unaffiliated pipelines. The Partnership is a midstream natural gas company and operates as one reportable segment.

Emerging Growth Company Status

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, ("JOBS Act"). For as long as we are deemed an emerging growth company, we may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. These provisions include:

•: an exemption from the auditor attestation requirement in the assessment of the emerging growth company's internal controls over financial reporting;
•: an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies;
•: an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; and
•: reduced disclosure about the emerging growth company's executive compensation arrangements pursuant to the rules applicable to smaller reporting companies.

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We may take advantage of these provisions until we are no longer an emerging growth company, which will occur on the earliest of:

i.: the last day of the fiscal year following the fifth anniversary of our IPO;
ii.: the last day of the fiscal year in which we have more than $1.0 billion in annual revenues;
iii.: the date on which we have more than $700 million in market value of our common units held by non-affiliates; or
iv.: the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period.

We have elected to adopt the reduced disclosure requirements described above, except that we have elected to opt out of the exemption that allows emerging growth companies to extend the transition period for complying with new or revised financial accounting standards.

Initial Public Offering

On November 7, 2012, we completed our IPO. After the completion of the IPO and the full exercise of the underwriters' over-allotment option to purchase additional common units, Southcross Energy LLC owns, on behalf of its members, the equity interests in Southcross Energy Partners GP, LLC, our general partner ("General Partner"), as well as common and subordinated units of the Partnership. Southcross Energy LLC's total direct and indirect equity ownership in the Partnership as of December 31, 2012 was 58.5%. Our common units are listed on the New York Stock Exchange ("NYSE") and are traded under the symbol "SXE."

Ownership Structure

The following table depicts our ownership structure as of December 31, 2012:

Description

Public common units	41.5	%
Southcross Energy LLC:
Common units	7.5	%
Subordinated units	49.0	%
General partner interest ⁽¹⁾	2.0	%

Total	100.0	%

⁽¹⁾: General partner interest is owned by Southcross Energy Partners GP, LLC which is 100% owned by Southcross Energy LLC.

Recent Events

•: Bonnie View NGL fractionation facility. In February 2013, we completed the expansion of our NGL capacity at our Bonnie View fractionation facility increasing its capacity to 22,500 Bbls/d. The plant initiated operations in the fourth quarter of 2012 with capacity of 11,500 Bbls/d. The plant fractionates y-grade NGLs from our Woodsboro processing plant and produces NGL component products.
•: Bee Line gas pipeline commences operations. In February 2013, we completed construction of our new 20-inch pipeline to move rich gas to our Woodsboro processing plant. The Bee Line is a 57-mile pipeline with capacity of 320 MMcf/d to our Woodsboro plant.

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•: Gregory processing and NGL fractionation facility. Our Gregory facility includes 135 MMcf/d of gas processing capacity and an associated 4,800 barrels per day NGL fractionation facility. We commenced a turnaround maintenance project in November 2012 and we shut down this plant in January 2013 to perform extensive turnaround maintenance activities and connect additional equipment to enhance NGL recoveries. As the turnaround maintenance was nearing completion on January 26, 2013, we experienced a fire at this facility. Damage was limited to a small portion of the facility and we completed repairs and resumed operations during April 2013.
•: Formosa Litigation. On March 5, 2013, a subsidiary of the Partnership filed suit against Formosa Hydrocarbons Company, Inc. ("Formosa"). The lawsuit seeks recoveries of losses which we believe our subsidiary experienced as a result of Formosa's failure to perform certain of its obligations under the gas processing contract between the parties. We cannot predict the outcome of such litigation.
•: New long-term sales contract. In March 2013, we entered into new firm sales contracts for propane, butane and natural gasoline produced at both our Bonnie View and Gregory NGL fractionation facilities. The new contracts provide assured markets at fixed differentials to NGL index prices which enhance our earnings.

Business Strategy

Our principal business objective is to increase the quarterly cash distributions that we pay to our unitholders over time by expanding the capacity and efficiency of our assets and by making selective acquisitions while ensuring the ongoing stability of our business. We expect to achieve this objective by pursuing the following business strategies:

•: Capitalize on organic growth opportunities, with a focus on high-growth areas such as the Eagle Ford shale. We intend to continue to evaluate and execute midstream projects involving the gathering, processing, treating, compression and transportation of natural gas and the fractionation of NGLs that enhance our existing systems as well as to aggregate supply and obtain access to premium markets for that supply. We plan to continue to focus on projects that we expect to increase our total throughput volume and generate attractive returns.
•: Continue to enhance the profitability of our existing assets. We intend to increase the profitability of our existing asset base by identifying new business opportunities and adding new volumes of natural gas supplies to our existing assets. Specifically, we plan to capture incremental processing and NGL fractionation margins from our existing throughput and to undertake additional initiatives to increase gas volumes and enhance utilization of our assets, as well as to continue to enhance cost efficiencies.
•: Pursue accretive acquisitions of complementary assets. We intend to pursue accretive acquisitions that strategically expand or complement our existing asset portfolio. We monitor the marketplace to identify and pursue such acquisitions, with a particular focus on regions with potential for additional near-term development. To identify potential acquisitions of businesses or assets, we seek to utilize our industry knowledge, network of customers and strategic asset base. We intend to pursue acquisition opportunities both independently and jointly with our sponsor Charlesbank.
•: Manage our exposure to commodity price risk. Because natural gas and NGL prices are volatile, we strive to mitigate the impact of fluctuations in commodity prices and to generate more stable cash flows. We have, and will continue to target, a contract portfolio that is heavily weighted towards fixed-fee and fixed-spread contracts, which are not directly sensitive to commodity price levels, while minimizing our direct exposure to commodity price fluctuations through hedging transactions when appropriate. We also will consider other methods of limiting commodity exposure, including the use of derivative instruments, as appropriate.

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•: Maintain sound financial practices to ensure our long-term viability. We intend to maintain our commitment to financial discipline, which we believe will serve the long-term interests of our unitholders. Consistent with such approach, we generally intend to fund the long-term capital requirements for expansion projects and acquisitions through a prudent combination of equity and debt capital.

Competitive Strengths

We believe that we are well-positioned to execute our business strategies successfully by capitalizing on the following competitive strengths:

•

Strategically located asset base. The majority of our assets are located in or within close proximity to the Eagle Ford shale area in South Texas, which is one of the most active drilling regions in the U.S. Our geographic diversity reduces our reliance on any particular region, basin or gathering system. We believe the high growth potential of our South Texas assets coupled with the established, long-lived nature of our Mississippi and Alabama assets provide us with the opportunity to generate growth over the next several years. In addition, all of our assets have access to major natural gas market areas.

•: South Texas. The close proximity of our South Texas system to the Eagle Ford shale area has allowed us to execute several recent organic capital projects in the area and to identify additional infrastructure needs adjacent to our existing systems. Our growth opportunities are impacted primarily by activity levels in our Eagle Ford Southcross pipeline catchment area. Our Eagle Ford Southcross pipeline catchment area includes multiple prospective production zones, including the Olmos tight sands formation, which overlays the Eagle Ford shale in areas connected by our pipeline systems. Our current activity provides us with a relationship with producers in the Eagle Ford shale region and an understanding of their future development plans and infrastructure needs. In addition, our South Texas systems benefit from access to the large industrial market in and around the Corpus Christi ship channel area.
•: Mississippi and Alabama. We believe we are a leading service provider in the Mississippi and Alabama regions in which we operate. Our assets provide critical supply to our power generation, industrial and utility customers, accessing the wholesale markets via intrastate and interstate pipeline interconnects as well as local demand from commercial and industrial consumers. Several of the large gas-fired power plants across the southern portion of Mississippi access their primary source of natural gas through our system.

•

Reliable cash flows underpinned by long-term, fixed-fee and fixed-spread contracts. We provide our services primarily under fixed-fee and fixed-spread contracts, which help to promote cash flow reliability and minimize our direct exposure to commodity price fluctuations.

•

Integrated midstream value chain. We provide a comprehensive package of services to natural gas producers and customers including natural gas gathering, processing, treating, compression and transportation and NGL fractionation and transportation. We believe our ability to move natural gas and NGLs from the wellhead to market provides us with several advantages in competing for new supplies of natural gas. Specifically, the integrated nature of our business allows us to provide multiple services related to a single supply of natural gas and take advantage of incremental opportunities that present themselves along the value chain. We believe that this ability provides us with the opportunity to compete favorably on price against other companies that do not provide a similar full suite of services. Providing multiple services to customers also gives us a better understanding of each customer's needs and the marketplace. In addition to the advantages with our producers and customers, our ability to source and transport natural gas to market also allows us to satisfy our commercial and industrial customers' demand for natural

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gas. We believe all of these factors provide a competitive advantage relative to companies which do not offer this range of midstream services.

•: Experienced and incentivized management and operating teams. Our senior executives have worked in several energy companies. Our executive officers have extensive experience in building, acquiring and managing midstream and other energy assets and are focused on optimizing our existing business and expanding our operations through disciplined development and accretive acquisitions. Many of our field operating managers and supervisors have long-standing experience operating our assets.
•: Supportive sponsor with significant industry expertise. Charlesbank, the principal owner of our General Partner, has substantial experience as a private equity investor in the energy and midstream sectors. Charlesbank's investment professionals have deep experience in identifying, evaluating, negotiating and financing acquisitions and investments in the midstream sector. We believe that Charlesbank provides us with strategic guidance, financial expertise and potential capital support that enhance our ability to grow our asset base and cash flow.

Our Operations

Our assets consist of gathering systems, intrastate pipelines, three natural gas processing plants, two NGL fractionators, and ancillary assets.

The following tables provide information regarding our assets as of and for the year ended December 31, 2012:

	As of December 31, 2012				Year ended December 31, 2012

Gathering systems and intrastate pipelines	Miles		Approximate design capacity (MMcf/d)		Approximate average throughput (MMcf/d)
South Texas		1,555		665		338
Mississippi/Alabama		1,145		720		207

Total		2,700		1,385		545

	As of December 31, 2012		Year ended December 31, 2012

Processing plants	Approximate design capacity (MMcf/d)		Approximate average processing volumes (MMcf/d)
Gregory		135		87
Conroe		50		23
Woodsboro		200		3

Total		385		113

	As of December 31, 2012		Year ended December 31, 2012

Fractionation plants	Fractionation capacity (Bbls/d)		Average output (Bbls/d)
Gregory		4,800		3,745
Bonnie View		11,500		416

Total		16,300		4,161

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We derive revenue primarily from fixed-fee and fixed-spread arrangements. For the year ended December 31, 2012, our fixed-fee and fixed-spread arrangements accounted for approximately 93% of our gross operating margin. Our contracts vary in duration from one month to ten years and the duration and pricing of our contracts vary depending upon several factors, including our competitive position, our acceptance of risks associated with longer-term contracts, and our desire to recoup over the term of a contract any capital expenditures that we are required to incur in order to provide service to our customers.

We continually seek new sources of natural gas supply and power generation, industrial and utility markets to increase the gas throughput volume on our gathering and pipeline systems and through our processing plants.

South Texas

The assets in our South Texas region are located between Houston and Freer, a city that is located approximately 50 miles west of Corpus Christi, Texas. As of December 31, 2012, these assets consisted of approximately 1,555 miles of pipeline ranging in diameter from 2 to 20 inches, our Woodsboro processing plant, our Bonnie View NGL fractionation plant, our Gregory processing plant and NGL fractionation plant, and our Conroe gathering system and its associated processing plant.

The majority of our pipelines in South Texas feed rich gas from multiple producing fields, including the Eagle Ford Shale, to our processing and NGL fractionation facilities at Woodsboro, Gregory and Conroe. The residue gas pipelines from our processing plants and the remaining pipelines

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in lean gas service in South Texas are used to serve multiple industrial and electric generation customers, and to deliver gas to a number of intrastate and interstate pipelines.

In 2012, we started our Woodsboro processing plant, a 200 MMcf/d cryogenic processing plant located in Refugio County, Texas, that significantly expanded our South Texas processing capacity and, along with our new Bonnie View NGL fractionation plant, considerably increased our NGL production capabilities.

In February 2013, we completed construction of our Bee Line pipeline, a 57 mile pipeline that added 320 MMcf/d of capacity to our system in order to move rich gas from the central Eagle Ford Shale area in Dewitt and Karnes counties to our Woodsboro processing plant.

Prior to startup of our Woodsboro processing plant, the majority of our customers' gas in South Texas had been delivered to third-party processing plants, including the Formosa processing plant located in Point Comfort, Texas and the Hilcorp processing plant located in Old Ocean, Texas. Our agreement with Formosa is in effect through May 31, 2013. The volumes of our gas covered by the agreement gradually decrease between January 2013 and the agreement termination date, after which all of our rich gas will be routed to our Woodsboro processing plant, our Gregory processing plant, and, if necessary, to other third party processing plants.

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Our Gregory processing plant is a cryogenic natural gas plant comprised of two units collectively having a total capacity of 135 MMcf/d. This plant processes natural gas from both a local gathering system and from sources elsewhere on our South Texas pipeline systems. NGLs produced at our Gregory processing plant are fractionated in our NGL fractionator located on the same site. The Gregory NGL fractionation plant has a total capacity of 4,800 Bbls/d.

We increased our NGL fractionation capacity via the completion of our new Bonnie View NGL fractionation plant. The plant began operations in the fourth quarter of 2012 and expanded its capacity to 22,500 Bbls/d in February 2013.

Purity ethane from our Gregory and Bonnie View plants is shipped via pipeline to a subsidiary of The Dow Chemical Company while remaining NGLs are shipped via pipeline or trucked to local markets.

In January 2013, we performed significant turnaround maintenance at our Gregory processing and NGL fractionation plants to increase their reliability and to increase NGL recoveries at the facility. We believe these enhancements will increase profitability and allow us to be more competitive in securing future gas supplies. As the turnaround maintenance was nearing completion, on January 26, 2013, we experienced a fire at the facility. Damage was limited to a small portion of the facility and we completed repairs and resumed operations during April 2013. We maintain property insurance which is expected to cover most of the repair costs related to the damage caused by the fire, less our $250,000 deductible. We also maintain business interruption insurance, which is effective after a 30-day waiting period subsequent to an event of loss. While there will be some financial impact in the first quarter of 2013 due to reduced operations at our Gregory facility, we do not foresee a material or lasting operational or financial impact from the fire.

Our Conroe processing plant and gathering system operate together on a stand-alone basis north of Houston in Montgomery County, Texas to gather, process, sell and recycle natural gas. The processing plant is a 50 MMcf/d cryogenic natural gas plant. We have fixed-fee processing contracts with producers, under which the majority of the residue gas from the Conroe plant is returned to the producers for gas lift purposes. We sell the remaining residue gas and NGLs to unaffiliated parties.

Mississippi and Alabama

The assets in our Mississippi region are located principally in the southern half of the state and comprise the largest intrastate pipeline system in Mississippi. The Mississippi assets consist of 626 miles of pipeline ranging in diameter from 2 to 20 inches with an estimated design capacity of 345 MMcf/d and two treating plants. Our system throughput volumes in Mississippi are affected by both on-system gas production volumes and customers' demand for gas. The system has the capability to receive natural gas from three unaffiliated interstate pipelines—Southeast Supply Header, Southern Natural

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Gas Company (SONAT) and Texas Eastern—to supplement supply on the system or to market gas off the system.

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The assets in our Alabama region are located in northwest and central Alabama and consist of 519 miles of natural gas gathering pipeline ranging from 2 to 16 inches in diameter with an estimated design capacity of 375 MMcf/d. The primary gas supply to the system is coal bed methane gas from the Black Warrior Basin with incremental volumes gathered from conventional gas wells.

Competition

The natural gas gathering, compression, processing, transportation and marketing business and the NGL fractionation business are highly competitive. Our competitors include other midstream companies, producers and intrastate and interstate pipelines. Competition for natural gas volumes is based primarily on commercial terms, reliability, service levels, flexibility, access to markets, location, available capacity, connection costs and fuel efficiencies. Our principal competitors are Copano Energy, L.L.C., DCP Midstream LLC, Energy Transfer Partners, L.P., Enterprise Products Partners LP, Gulf South Pipeline Company, LP, Kinder Morgan Energy Partners LP, Southeast Supply Header, LLC and Teak Midstream LLC.

In addition to competing for natural gas supply volumes, we face competition for customer markets, which is based primarily on the proximity of pipelines to the markets, price and assurance of supply.

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Customers and Concentration of Credit Risk

The Partnership's markets are in Texas, Alabama and Mississippi and we have a concentration of trade accounts receivable due from customers engaged in the purchase and sale of natural gas and NGL products, and other services. These concentrations of customers may affect our overall credit risk as these customers may be similarly affected by changes in economic, regulatory or other factors. The Partnership analyzes customers' historical financial and operational information prior to extending credit and monitors creditworthiness on a periodic basis.

Formosa and Sherwin Alumina Company ("Sherwin") were significant customers of the Partnership in 2012. Revenues from Formosa and Sherwin were $120.4 million or 24.3% and $54.5 million or 11.0%, respectively, for the year ended December 31, 2012. Curtailments and other actions by Formosa impacted our operations and results in 2012. Our agreement with Formosa expires on May 31, 2013.

Governmental Regulation

We are subject to regulation by the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (the "PHMSA") pursuant to the Natural Gas Pipeline Safety Act of 1968 (the "NGPSA"), and the Pipeline Safety Improvement Act of 2002 (the "PSIA"), which was reauthorized and amended by the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 (the "PIPESA"). The NGPSA regulates safety requirements in the design, construction, operation and maintenance of gas pipeline facilities, while the PSIA establishes mandatory inspections for all U.S. oil and natural gas transmission pipelines in high-consequence areas. The PHMSA has developed regulations implementing the PSIA that require transportation pipeline operators to implement integrity management programs, including more frequent inspections and other measures to ensure pipeline safety in "high consequence areas," such as high population areas. Recently enacted pipeline safety legislation, the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, reauthorizes funding for federal pipeline safety programs, increases penalties for safety violations, establishes additional safety requirements for newly constructed pipelines and requires studies of certain safety issues that could result in the adoption of new regulatory requirements for existing pipelines.

The PHMSA issued advance notices of proposed rulemaking on a range of topics relating to the safety of gas and NGL pipelines, among other pipelines. The advance notices of proposed rulemaking requested comment on a number of topics, including whether to extend regulation to certain pipelines currently exempt from federal safety regulations and whether to extend integrity management regulations to additional pipelines. The PHMSA has not yet taken further action on the issues raised in the advance notices of proposed rulemaking. The PHMSA also recently published an advisory bulletin providing guidance on verification of records related to pipeline maximum allowable operating pressure. Although we have reviewed our records in regard to such matters, no final determination has yet been made as to whether our records will meet those requirements. Additionally, the National Transportation Safety Board has recently recommended that the PHMSA make a number of changes to its rules, including removing an exemption from most safety inspections for natural gas pipelines installed before 1970.

While we cannot predict the outcome of proposed legislative or regulatory initiatives, such legislative and regulatory changes could have a material effect on our operations, particularly by extending more stringent and comprehensive safety regulations (such as integrity management requirements) to pipelines and gathering lines not previously subject to such requirements. Further legislative and regulatory changes may also result in higher penalties for the violation of federal pipeline safety regulations. While we expect any legislative or regulatory changes to allow us time to become compliant with new requirements, costs associated with compliance may have a material effect on our operations. We cannot predict with any certainty at this time the terms of any new laws or rules

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or the costs of compliance associated with such requirements, but we regularly inspect our pipelines and third parties assist us in interpreting the results of the inspections.

States are largely preempted by federal law from regulating pipeline safety for interstate lines but most states are certified by the U.S. Department of Transportation (the "DOT") to assume responsibility for enforcing federal intrastate pipeline regulations and inspection of intrastate pipelines. States may adopt stricter standards for intrastate pipelines than those imposed by the federal government for interstate lines; however , states vary considerably in their authority and capacity to address pipeline safety. State standards may include requirements for facility design and management in addition to requirements for pipelines. We do not anticipate any significant difficulty in complying with applicable state laws and regulations. Our natural gas and natural gas products pipelines have continuous inspection and compliance programs designed to keep the facilities in compliance with pipeline safety and pollution control requirements.

In addition, we are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act, (the "OSHA"), and comparable state statutes, the purposes of which are to protect the health and safety of workers, both generally and within the pipeline industry. In addition, the OSHA hazard communication standard, the Environmental Protection Agency, ("EPA"), community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained concerning hazardous materials used or produced in our operations and that such information be provided to employees, state and local government authorities and citizens. We and the entities in which we own an interest are also subject to OSHA Process Safety Management regulations, which are designed to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable or explosive chemicals. These regulations apply to any process which involves a chemical at or above the specified thresholds or any process which involves flammable liquid or gas, pressurized tanks, caverns and wells in excess of 10,000 pounds at various locations. Flammable liquids stored in atmospheric tanks below their normal boiling points without the benefit of chilling or refrigeration are exempt. We have an internal program of inspection designed to monitor and enforce compliance with worker safety requirements. We believe that we are in material compliance with all applicable laws and regulations relating to worker health and safety.

We and the entities in which we own an interest are also subject to:

•: The EPA's Chemical Accident Prevention Provisions, also known as the Risk Management Plan requirements, which are designed to prevent the accidental release of toxic, reactive, flammable or explosive materials;
•: OSHA Process Safety Management Regulations, which are designed to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable or explosive materials; and
•: Department of Homeland Security Chemical Facility Anti-Terrorism Standards, which are designed to regulate the security of high-risk chemical facilities.

Regulation of Operations

Regulation of pipeline gathering and transportation services, natural gas sales and transportation of NGLs may affect certain aspects of our business and the market for our products and services.

Intrastate Pipelines

Our transmission lines are subject to state regulation of rates and terms of service. In Texas, the regulatory system allows rates to be negotiated on a customer-by-customer basis and are subject to a complaint-based review process. In rare circumstances, as allowed by statute, regulators may initiate a rate review. Although Texas does not have an "open access" requirement, there is a

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"non-discriminatory access" requirement, which is subject to a complaint-based review. In Mississippi and Alabama, the regulatory systems allow special contracts that are negotiated on a customer-by-customer basis for approval by the applicable state commission.

Section 311 Pipelines

Intrastate transportation of natural gas is largely regulated by the state in which such transportation takes place. Several of our intrastate pipeline subsidiaries, Southcross CCNG Transmission Ltd., Southcross Gulf Coast Transmission Ltd., Southcross Mississippi Pipeline, L.P. and Southcross Alabama Pipeline LLC, also provide interstate transportation services. The rates, terms and conditions of such services are subject to the Federal Energy Regulatory Commission (the "FERC") jurisdiction under Section 311 of the Natural Gas Policy Act, ("NGPA"), and Part 284 of the FERC's regulations. Pipelines providing transportation service under Section 311 are required to provide services on an open and nondiscriminatory basis. The NGPA regulates, among other things, the provision of transportation services by an intrastate natural gas pipeline on behalf of an interstate natural gas pipeline or a local distribution company or LDC served by an interstate natural gas pipeline. Under Section 311, rates charged for intrastate transportation must be fair and equitable, and amounts collected in excess of fair and equitable rates are subject to refund with interest. The rates under Section 311 approved by the FERC are maximum rates and we may negotiate at or below such rates. Currently, the FERC reviews our maximum rates every five years and such maximum rates may increase or decrease as a result of such reviews. At this time, the next rate review will be February 1, 2014. The terms and conditions of service set forth in the intrastate pipeline's statement of operating conditions are also subject to the FERC's review and approval. Should the FERC determine not to authorize rates equal to or greater than our currently approved Section 311 rates, our business may be adversely affected. Failure to observe the service limitations applicable to transportation and storage services under Section 311, failure to comply with the rates approved by the FERC for Section 311 service, and/or failure to comply with the terms and conditions of service established in the pipeline's FERC-approved statement of operating conditions could result in alteration of jurisdictional status, and/or the imposition of administrative, civil and criminal remedies or sanctions.

Hinshaw Pipelines

Similar to intrastate pipelines, Hinshaw pipelines, by definition, also operate within a single state. We have a Mississippi pipeline segment which is categorized as a Hinshaw pipeline. Also, similar to pipelines operating under Section 311 of the NGPA, Hinshaw pipelines can receive gas from outside their state without becoming subject to FERC's NGA jurisdiction. Specifically, Section 1(c) of the NGA exempts from the FERC's NGA jurisdiction those pipelines that transport gas in interstate commerce if (1) they receive natural gas at or within the boundary of a state, (2) all the gas is consumed within that state and (3) the pipeline is regulated by a state commission. Following the enactment of the NGPA, the FERC issued Order No. 63 authorizing Hinshaw pipelines to apply for authorization to transport natural gas in interstate commerce in the same manner as intrastate pipelines operating pursuant to Section 311 of the NGPA. Hinshaw pipelines frequently operate pursuant to blanket certificates to provide transportation and sales service under the FERC's regulations.

Historically, the FERC did not require intrastate and Hinshaw pipelines to meet the same rigorous transactional reporting guidelines as interstate pipelines. However, as discussed below, in 2010, the FERC issued a new rule, Order No. 735, which increases FERC regulation of certain intrastate and Hinshaw pipelines. See "—Market Behavior Rules; Reporting Requirements."

Gathering Pipeline Regulation

Section 1(b) of the NGA exempts natural gas gathering facilities from the jurisdiction of the FERC. We believe that our natural gas pipelines meet the traditional tests that the FERC has used to

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determine that a pipeline is a gathering pipeline and is, therefore, not subject to FERC jurisdiction. The distinction between FERC-regulated transmission services and federally unregulated gathering services, however, has been the subject of substantial litigation, and the FERC determines whether facilities are gathering facilities on a case-by-case basis, so the classification and regulation of our gathering facilities are subject to change based on future determinations by the FERC, the courts or U.S. Congress. State regulation of gathering facilities generally includes various safety, environmental and, in some circumstances, nondiscriminatory take requirements and complaint-based rate regulation. In recent years, the FERC has taken a more light-handed approach to regulation of the gathering activities of interstate pipeline transmission companies, which has resulted in a number of such companies transferring gathering facilities to unregulated affiliates. As a result of these activities, natural gas gathering may begin to receive greater regulatory scrutiny at both the state and federal levels. Our natural gas gathering operations could be adversely affected should they be subject to more stringent application of state or federal regulation of rates and services. Our natural gas gathering operations also may be or become subject to additional safety and operational regulations relating to the design, installation, testing, construction, operation, replacement and management of gathering facilities. Additional rules and legislation pertaining to these matters are considered or adopted from time to time. We cannot predict what effect, if any, such changes might have on our operations, but the industry could be required to incur additional capital expenditures and increased costs depending on future legislative and regulatory changes.

Our natural gas gathering operations are subject to ratable take and common purchaser statutes in most of the states in which we operate. These statutes generally require our gathering pipelines to take natural gas without undue discrimination as to source of supply or producer. These statutes are designed to prohibit discrimination in favor of one producer over another producer or one source of supply over another source of supply. The regulations under these statutes can have the effect of imposing some restrictions on our ability as an owner of gathering facilities to decide with whom we contract to gather natural gas. The states in which we operate have adopted a complaint-based regulation of natural gas gathering activities, which allows natural gas producers and shippers to file complaints with state regulators in an effort to resolve grievances relating to gathering access and rate discrimination. We cannot predict whether such a complaint will be filed against us in the future. Failure to comply with state regulations can result in the imposition of administrative, civil and criminal remedies. To date, there have been no adverse effects to our systems due to these regulations.

Market Behavior Rules; Reporting Requirements

On August 8, 2005, Congress enacted the Energy Policy Act of 2005, ("the EPAct 2005"). Among other matters, the EPAct 2005 amended the NGA to add an anti-manipulation provision that makes it unlawful for any entity to engage in prohibited behavior in contravention of rules and regulations to be prescribed by the FERC and, furthermore, provides the FERC with additional civil penalty authority. On January 19, 2006, the FERC, issued Order No. 670, a rule implementing the anti-manipulation provision of the EPAct 2005, and subsequently denied rehearing. The rules make it unlawful for any entity, directly or indirectly in connection with the purchase or sale of natural gas subject to the jurisdiction of the FERC or the purchase or sale of transportation services subject to the jurisdiction of the FERC to (1) use or employ any device, scheme or artifice to defraud; (2) to make any untrue statement of material fact or omit to make any such statement necessary to make the statements made not misleading; or (3) to engage in any act or practice that operates as a fraud or deceit upon any person. The new anti-manipulation rules apply to interstate gas pipelines and storage companies and intrastate gas pipelines and storage companies that provide interstate services, such as Section 311 service, as well as otherwise non-jurisdictional entities to the extent the activities are conducted "in connection with" gas sales, purchases or transportation subject to FERC jurisdiction. The new anti-manipulation rules do not apply to activities that relate only to intrastate or other non-jurisdictional sales or gathering, but only to the extent such transactions do not have a "nexus" to

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jurisdictional transactions. The EPAct 2005 also amends the NGA and the NGPA to give the FERC authority to impose civil penalties for violations of these statutes, up to $1,000,000 per day per violation for violations occurring after August 8, 2005. In connection with this enhanced civil penalty authority, the FERC issued a policy statement on enforcement to provide guidance regarding the enforcement of the statutes, orders, rules and regulations it administers, including factors to be considered in determining the appropriate enforcement action to be taken. Should we fail to comply with all applicable FERC-administered statutes, rule, regulations and orders, we could be subject to substantial penalties and fines.

The EPAct 2005 also added a Section 23 to the NGA authorizing the FERC to facilitate price transparency in markets for the sale or transportation of physical natural gas in interstate commerce. In 2007, the FERC took steps to enhance its market oversight and monitoring of the natural gas industry by issuing several rulemaking orders designed to promote gas price transparency and to prevent market manipulation. In December 2007, the FERC issued a final rule on the annual natural gas transaction reporting requirements, as amended by subsequent orders on rehearing, or Order No. 704. Order No. 704 requires buyers and sellers of annual quantities of natural gas of 2,200,000 MMBtu or more, including entities not otherwise subject to the FERC's jurisdiction, to provide by May 1 of each year an annual report to the FERC describing their aggregate volumes of natural gas purchased or sold at wholesale in the prior calendar year to the extent such transactions utilize, contribute to or may contribute to the formation of price indices. Order No. 704 also requires market participants to indicate whether they report prices to any index publishers and, if so, whether their reporting complies with the FERC's policy statement on price reporting. In June 2010, the FERC issued the last of its three orders on rehearing and clarification further clarifying its requirements.

In May 2010, the FERC issued Order No. 735, which requires intrastate pipelines providing transportation services under Section 311 of the NGPA and Hinshaw pipelines operating under Section 1(c) of the NGA to report on a quarterly basis more detailed transportation and storage transaction information, including: rates charged by the pipeline under each contract; receipt and delivery points and zones or segments covered by each contract; the quantity of natural gas the shipper is entitled to transport, store, or deliver; the duration of the contract; and whether there is an affiliate relationship between the pipeline and the shipper. Order No. 735 further requires that such information must be supplied through a new electronic reporting system and will be posted on the FERC's website, and that such quarterly reports may not contain information redacted as privileged. The FERC promulgated this rule after determining that such transactional information would help shippers make more informed purchasing decisions and would improve the ability of both shippers and the FERC to monitor actual transactions for evidence of market power or undue discrimination. Order No. 735 also extends the Commission's periodic review of the rates charged by the subject pipelines from three years to five years. Order No. 735 became effective on April 1, 2011.

In October 2010, the FERC issued a Notice of Inquiry seeking public comment on the issue of whether and how parties that hold firm capacity on some intrastate pipelines can allow others to use their capacity, including to what extent buy/sell transactions should be permitted and whether the FERC should consider requiring such pipelines to offer capacity release programs. In the Notice of Inquiry, the FERC granted a blanket waiver regarding such transactions while the FERC is considering these policy issues. The comment period has ended but the FERC has not yet issued an order.

State Utility Regulation

Some of our operations in Texas are specifically subject to the Texas Gas Utility Regulatory Act, as implemented by the Railroad Commission of Texas ("RRC"). Generally, the RRC has authority to ensure that rates charged for natural gas sales or transportation services are just and reasonable. Our gas utilities, Southcross CCNG Gathering Ltd., Southcross CCNG Transmission Ltd. and Southcross

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Gulf Coast Transmission Ltd., are required to file gas tariffs and Southcross NGL Pipeline, L.P. has filed a NGL tariff with the RRC.

In Mississippi, the Mississippi Public Service Commission ("MPSC") considers Southcross Mississippi Industrial Gas Sales, L.P. ("MIGS") a utility and it is necessary to get contract approval for the negotiated contract. MIGS is a transporter to an end-user, the Leaf River Cellulose Plant, which is located within Mississippi.

In Alabama, the Alabama Public Service Commission ("APSC") requires a gas utility to file "special negotiated contracts" with the APSC for approval. The requirement includes our Southcross Alabama Gathering System, L.P. and Southcross Alabama Pipeline LLC.

Additional rules and legislation pertaining to these matters are considered or adopted from time to time. We cannot predict what effect, if any, such changes might have on our operations, but the industry could be required to incur additional capital expenditures and increased costs depending on future legislative and regulatory changes.

Sales of Natural Gas and NGLs

Historically, the transportation and sale or resale of natural gas in interstate commerce has been regulated by the FERC under the NGA, the NGPA and regulations issued under those statutes. In the past, the federal government has regulated the prices at which natural gas could be sold. While sales by producers of natural gas can currently be made at market prices, Congress could reenact price controls in the future. Deregulation of wellhead natural gas sales began with the enactment of the NGPA and culminated in adoption of the Natural Gas Wellhead Decontrol Act which removed all price controls affecting wellhead sales of natural gas effective January 1, 1993.

The price at which we sell natural gas is currently not subject to federal rate regulation and, for the most part, is not subject to state regulation. However, with regard to our physical sales of these energy commodities, we are required to observe anti-market manipulation laws and related regulations enforced by the FERC. Should we violate the anti-market manipulation laws and regulations, we could also be subject to related third-party damage claims by, among others, sellers, royalty owners and taxing authorities.

Sales of NGLs are currently not regulated and are made at negotiated prices. Nevertheless, Congress could enact price controls in the future.

As discussed above, the price and terms of access to pipeline transportation are subject to extensive federal and state regulation. The FERC is continually proposing and implementing new rules and regulations affecting interstate natural gas pipelines and those initiatives may also affect the intrastate transportation of natural gas both directly and indirectly.

Anti-terrorism Measures

The Department of Homeland Security Appropriation Act of 2007 requires the Department of Homeland Security (the "DHS") to issue regulations establishing risk-based performance standards for the security of chemical and industrial facilities, including oil and gas facilities that are deemed to present "high levels of security risk." The DHS issued an interim final rule in April 2007 regarding risk-based performance standards to be attained pursuant to this act and, on November 20, 2007, further issued an Appendix A to the interim rules that establish chemicals of interest and their respective threshold quantities that will trigger compliance with these interim rules. Covered facilities that are determined by DHS to pose a high level of security risk will be required to prepare and submit Security Vulnerability Assessments and Site Security Plans as well as comply with other regulatory requirements, including those regarding inspections, audits, recordkeeping and protection of chemical-terrorism vulnerability information. Three of our facilities (the Gregory, Conroe and Woodsboro plants)

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have more than the threshold quantity of listed chemicals; therefore, a "Top Screen" evaluation was submitted to the DHS. The DHS reviewed this information and determined that none of the facilities are considered high-risk chemical facilities.

Cyber Security Measures

While we are currently not subject to governmental standards for the protection of computer-based systems and technology from cyber threats and attacks, proposals to establish such standards are being considered in the U.S. Congress and by U.S. Executive Branch departments and agencies, including the Department of Homeland Security, and we may become subject to such standards in the future. Currently, we are implementing our own cyber security programs and protocols; however, we cannot guarantee their effectiveness. A significant cyber-attack could have a material effect on operations and those of our customers.

Environmental Matters

General

Our operation of pipelines, plants and other facilities for natural gas gathering, processing, treating, compression and transportation, and for NGL fractionation and transportation services are subject to stringent and complex federal, state and local laws and regulations relating to the protection of the environment. As an owner or operator of these facilities, we must comply with these laws and regulations at the federal, state and local levels. These laws and regulations can restrict or impact our business activities in many ways, such as:

•: requiring the installation of pollution-control equipment or otherwise restricting the way we operate or imposing additional costs on our operations;
•: managing or otherwise regulating the way we handle and secure toxic, reactive, flammable or explosive materials to prevent or minimize the release of such materials;
•: limiting or prohibiting construction activities in sensitive areas, such as wetlands, coastal regions or areas inhabited by endangered or threatened species;
•: delaying system modification or upgrades during permit reviews;
•: requiring investigatory and remedial actions to mitigate pollution conditions caused by our operations or attributable to former operations; and
•: enjoining the operations of facilities deemed to be in non-compliance with permits issued pursuant to or permit requirements imposed by such environmental laws and regulations.

Failure to comply with these laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties. Certain environmental statutes impose strict joint and several liability for costs required to clean up and restore sites where substances, hydrocarbons or wastes have been disposed or otherwise released. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment.

The trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment and, thus, there can be no assurance as to the amount or timing of future expenditures for environmental compliance or remediation and actual future expenditures may be different from the amounts we currently anticipate. We try to anticipate future regulatory requirements that might be imposed and plan accordingly to remain in compliance with changing environmental laws and regulations and to minimize the costs of such compliance. We also actively

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participate in industry groups that help formulate recommendations for addressing existing or future regulations.

We do not believe that compliance with federal, state or local environmental laws and regulations will have a material adverse effect on our business, financial position or results of operations or cash flows. In addition, we believe that the various environmental activities in which we are presently engaged are not expected to materially interrupt or diminish our operational ability to gather, process, treat, compress and transport natural gas and fractionate and transport NGLs. We cannot assure you, however, that future events, such as changes in existing laws or enforcement policies, the promulgation of new laws or regulations or the development or discovery of new facts or conditions will not cause us to incur significant costs. Below is a discussion of the material environmental laws and regulations that relate to our business. We believe that we are in substantial compliance with all of these environmental laws and regulations.

Hazardous Substances and Waste

Our operations are subject to environmental laws and regulations relating to the management and release of hazardous substances, solid and hazardous wastes and petroleum hydrocarbons. These laws generally regulate the generation, storage, treatment, transportation and disposal of solid and hazardous waste and may impose strict joint and several liability for the investigation and remediation of affected areas where hazardous substances may have been released or disposed. For instance, the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA" or the "Superfund Law"), and comparable state laws impose liability, without regard to fault or the legality of the original conduct, on certain classes of persons that contributed to the release of a hazardous substance into the environment. We may handle hazardous substances within the meaning of CERCLA, or similar state statutes, in the course of our ordinary operations and, as a result, may be jointly and severally liable under CERCLA for all or part of the costs required to cleanup sites at which these hazardous substances have been released into the environment.

We also generate industrial wastes that are subject to the requirements of the Resource Conservation and Recovery Act (the "RCRA"), and comparable state statutes. While RCRA regulates both solid and hazardous wastes, it imposes strict requirements on the generation, storage, treatment, transportation and disposal of hazardous wastes. We generate little hazardous waste; however, it is possible that these wastes, which could include wastes currently generated during our operations, will in the future be designated as "hazardous wastes" and, therefore, be subject to more rigorous and costly disposal requirements. Moreover, from time to time, the EPA and state regulatory agencies have considered the adoption of stricter disposal standards for non-hazardous wastes, including natural gas wastes. Any such changes in the laws and regulations could have a material adverse effect on our maintenance capital expenditures and operating expenses or otherwise impose limits or restrictions on our operations or those of our customers.

We currently own or lease properties where hydrocarbons are being or have been handled for many years. Although previous operators have utilized operating and disposal practices that were standard in the industry at the time, hydrocarbons or other wastes may have been disposed of or released on or under the properties owned or leased by us or on or under the other locations where these hydrocarbons and wastes have been transported for treatment or disposal. These properties and the wastes disposed thereon may be subject to CERCLA, RCRA and analogous state laws. Under these laws, we could be required to remove or remediate previously disposed wastes (including wastes disposed of or released by prior owners or operators), to clean up contaminated property (including contaminated groundwater) or to perform remedial operations to prevent future contamination. We are not currently aware of any facts, events or conditions relating to such requirements that could materially impact our operations or financial condition.

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Oil Pollution Act

In 1991, the EPA adopted regulations under the Oil Pollution Act (the "OPA"). These oil pollution prevention regulations, as amended several times since their original adoption, require the preparation of a Spill Prevention Control and Countermeasure Plan ("SPCC") for facilities engaged in drilling, producing, gathering, storing, processing, refining, transferring, distributing, using, or consuming oil and oil products, and which due to their location, could reasonably be expected to discharge oil in harmful quantities into or upon the navigable waters of the U.S. The owner or operator of an SPCC-regulated facility is required to prepare a written, site-specific spill prevention plan, which details how a facility's operations comply with the requirements. To be in compliance, the facility's SPCC plan must satisfy all of the applicable requirements for drainage, bulk storage tanks, tank car and truck loading and unloading, transfer operations (intrafacility piping), inspections and records, security, and training. Most importantly, the facility must fully implement the SPCC plan and train personnel in its execution. We believe that none of our facilities is materially adversely affected by such requirements, and the requirements are not expected to be any more burdensome to us than to any other similarly situated companies.

Air Emissions

Our operations are subject to the federal Clean Air Act (the "CAA"), and comparable state and local laws and regulations. These laws and regulations regulate emissions of air pollutants from various industrial sources, including our compressor stations and processing plants, and also impose various monitoring and reporting requirements. Such laws and regulations may require that we obtain pre-approval for the construction or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with air permits containing various emissions and operational limitations and utilize specific emission control technologies to limit emissions. Our failure to comply with these requirements could subject us to monetary penalties, injunctions, conditions or restrictions on operations and, potentially, criminal enforcement actions. We believe that we are in substantial compliance with these requirements. We may be required to incur certain capital expenditures in the future for air pollution control equipment in connection with obtaining and maintaining operating permits and approvals for air emissions. We believe, however, that our operations will not be materially adversely affected by such requirements, and the requirements are not expected to be any more burdensome to us than to any other similarly situated companies.

On August 20, 2010, the EPA published new regulations under the CAA to control emissions of hazardous air pollutants from existing stationary reciprocating internal combustion engines. On May 22, 2012, the EPA proposed amendments to the final rule in response to several petitions for reconsideration. The EPA finalized the proposed amendments on January 14, 2013. With the passed amendment, the impacts of this rule will likely not have any material financial impact on our operations. The rule will require us to undertake certain activities, including following prescribed maintenance practices for engines (which are consistent with our existing practices). Compliance with the final rule currently is required by October 2013.

On June 28, 2011, the EPA issued a final rule, effective August 29, 2011, modifying existing regulations under the CAA that established new source performance standards for manufacturers, owners and operators of new, modified and reconstructed stationary internal combustion engines. The final rule may require us to undertake significant expenditures, including expenditures for purchasing, installing, monitoring and maintaining emissions control equipment. Compliance with the final rule is not required until at least 2013. On January 14, 2013, the EPA issued minor amendments to the rule. We are currently evaluating the impact that this final rule and proposed amendments will have on our operations.

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On April 17, 2012, the EPA approved final rules that establish new air emission controls for oil and natural gas production and natural gas processing operations. This new rule addresses emissions of various pollutants frequently associated with oil and natural gas production and processing activities. For new or reworked hydraulically-fractured gas wells, the final rule requires controlling emissions through flaring until 2015, when the rule requires the use of reduced emission, or "green", completions. The rule also establishes specific new requirements, effective in 2012, for emissions from compressors, controllers, dehydrators, storage tanks, gas processing plants and certain other equipment. This rule may require a number of modifications to our and our customers' operations, including the installation of new equipment to control emissions. Compliance with such rules could result in additional costs, including increased capital expenditures and operating costs, for us and our customers which may adversely impact our business.

Water Discharges

The Federal Water Pollution Control Act (the "Clean Water Act"), and analogous state laws impose restrictions and strict controls regarding the discharge of pollutants into state waters as well as waters of the U.S. and impose requirements affecting our ability to conduct construction activities in waters and wetlands. Certain state regulations and the general permits issued under the Federal National Pollutant Discharge Elimination System program prohibit the discharge of pollutants and chemicals. Spill prevention, control and countermeasure requirements of federal laws require appropriate containment berms and similar structures to help prevent the contamination of regulated waters in the event of a hydrocarbon tank spill, rupture or leak. In addition, the Clean Water Act and analogous state laws require individual permits or coverage under general permits for discharges of storm water runoff from certain types of facilities. These permits may require us to monitor and sample the storm water runoff from certain of our facilities. Some states also maintain groundwater protection programs that require permits for discharges or operations that may impact groundwater conditions. Federal and state regulatory agencies can impose administrative, civil and criminal penalties for non-compliance with discharge permits or other requirements of the Clean Water Act and analogous state laws and regulations. We believe that compliance with existing permits and compliance with foreseeable new permit requirements under the Clean Water Act and state counterparts will not have a material adverse effect on our financial condition, results of operations or cash flow.

Safe Drinking Water Act

The underground injection of oil and natural gas wastes are regulated by the Underground Injection Control program authorized by the Safe Drinking Water Act. The primary objective of injection well operating requirements is to ensure the mechanical integrity of the injection apparatus and to prevent migration of fluids from the injection zone into underground sources of drinking water. We believe that our facilities will not be materially adversely affected by such requirements.

Endangered Species

The Endangered Species Act (the "ESA") restricts activities that may affect endangered or threatened species or their habitats. While some of our pipelines may be located in areas that are designated as habitats for endangered or threatened species, we believe that we are in substantial compliance with the ESA. However, the designation of previously unidentified endangered or threatened species could cause us to incur additional costs or become subject to operating restrictions or bans or limit future development activity in the affected areas.

National Environmental Policy Act

The National Environmental Policy Act, (the "NEPA"), establishes a national environmental policy and goals for the protection, maintenance and enhancement of the environment and provides a process

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for implementing these goals within federal agencies. A major federal agency action having the potential to impact significantly the environment requires review under NEPA and, as a result, many activities requiring FERC approval must undergo NEPA review. Many of our activities are covered under categorical exclusions which results in a shorter NEPA review process. The Council on Environmental Quality has announced an intention to reinvigorate NEPA reviews and, on March 12, 2012, issued final guidance that may result in longer review processes that could lead to delays and increased costs that could materially adversely affect our revenues and results of operations.

Climate Change

Recent scientific studies have suggested that emissions of certain gases, commonly referred to as "greenhouse gases" or "GHG" and including carbon dioxide and methane, may be contributing to warming of the Earth's atmosphere. In response to the scientific studies, international negotiations to address climate change have occurred. The United Nations Framework Convention on Climate Change, also known as the "Kyoto Protocol," became effective on February 16, 2005 as a result of these negotiations, but the U.S. did not ratify the Kyoto Protocol. At the end of 2009, an international conference to develop a successor to the Kyoto Protocol issued a document known as the Copenhagen Accord. Pursuant to the Copenhagen Accord, the U.S. submitted a greenhouse gas emission reduction target of 17 percent by 2020 compared to 2005 levels. We continue to monitor the international efforts to address climate change. Their effect on our operations cannot be determined with any certainty at this time.

In the U.S., legislative and regulatory initiatives are underway to limit GHG emissions. The U.S. Congress has considered legislation that would control GHG emissions through a "cap and trade" program and several states have already implemented programs to reduce GHG emissions. The U.S. Supreme Court determined that GHG emissions fall within the federal CAA definition of an "air pollutant," and in response the EPA promulgated an endangerment finding paving the way for regulation of GHG emissions under the CAA. In 2010, the EPA issued a final rule, known as the "Tailoring Rule," that makes certain large stationary sources and modification projects subject to permitting requirements for greenhouse gas emissions under the Clean Air Act.

In addition, on September 22, 2009, the EPA issued a final rule requiring the monitoring and reporting of greenhouse gas emissions from specified large greenhouse gas emission sources in the U.S. beginning in 2011 for emissions occurring in 2010. Our Gregory and Conroe processing facilities are currently required to report under this rule. On November 30, 2010, the EPA published a final rule expanding its existing GHG emissions reporting rule for petroleum and natural gas facilities, including natural gas transmission compression facilities that emit 25,000 metric tons or more of carbon dioxide equivalent per year. The rule, which went into effect on December 30, 2010, requires reporting of greenhouse gas emissions by regulated facilities to the EPA by September 2012 for emissions during 2011 and annually thereafter. We submitted timely the reports required under this rule and have adopted procedures for future required reporting.

Because regulation of GHG emissions is relatively new, further regulatory, legislative and judicial developments are likely to occur. Such developments may affect how these GHG initiatives will impact us. Moreover, while the U.S. Supreme Court held in its June 2011 decision in American Electric Power Co., Inc. v. Connecticut that with respect to claims concerning GHG emissions, the federal common law of nuisance was displaced by the federal Clean Air Act, the Court left open the question whether tort claims against GHG emissions sources alleging property damage may proceed under state common law. There thus remains some litigation risk for such claims. Due to the uncertainties surrounding the regulation of and other risks associated with GHG emissions, we cannot predict the financial impact of related developments on us.

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Legislation or regulations that may be adopted to address climate change could also affect the markets for our products by making our products more or less desirable than competing sources of energy. To the extent that our products are competing with higher greenhouse gas emitting energy sources, our products would become more desirable in the market with more stringent limitations on greenhouse gas emissions. To the extent that our products are competing with lower greenhouse gas emitting energy sources such as solar and wind, our products would become less desirable in the market with more stringent limitations on greenhouse gas emissions. We cannot predict with any certainty at this time how these possibilities may affect our operations.

The majority of scientific studies on climate change suggest that stronger storms may occur in the future in the areas where we operate, although the scientific studies are not unanimous. Due to their location, our operations along the Gulf Coast are vulnerable to operational and structural damages resulting from hurricanes and other severe weather systems and our insurance may not cover all associated losses. We are taking steps to mitigate physical risks from storms, but no assurance can be given that future storms will not have a material adverse effect on our business.

Employees

As a result of the IPO transactions and the conveyance of Southcross Energy LLC's subsidiaries, we had 156 employees who provided direct, full-time support to our operations during the transition period from November 7, 2012 to December 31, 2012. On January 1, 2013, all employees were transferred to our General Partner. None of these employees are covered by collective bargaining agreements, and our General Partner considers its employee relations to be good. Currently, we do not have any employees. The officers of our General Partner manage our operations and activities and oversee its 156 employees.

Available Information and Corporate Governance Documents

Available Information

We file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to such reports, as well as other documents electronically with the U.S Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended ("Exchange Act"). From time-to-time, we also may file registration and related statements pertaining to equity or debt offerings. We provide access free of charge to all of these materials, as soon as reasonably practicable after such materials are filed with, or furnished to the SEC, on our Internet site located at www.southcrossenergy.com .

The public may obtain such reports from the SEC's Internet website at www.sec.gov . The public may also read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1 (800) SEC-0330.

Corporate Governance Documents

Our Corporate Governance Guidelines, Code of Business Conduct and Ethics and the charters of the audit committee and the compensation committee of our General Partner's board of directors also are available on our Internet website. Also we will provide, free of charge, a copy of any of our governance documents listed above upon written request to our General Partner's corporate secretary at our principal executive office. Our principal executive offices are located at 1700 Pacific Avenue, Suite 2900, Dallas, Texas 75201 and our telephone number is 1 (214) 979-3700.

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Item 1A. Risk Factors

You should carefully consider the following risk factors, together with all of the other information included in this report, when deciding whether to invest in us. Limited partner interests are inherently different from capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. You should be aware that the occurrence of any of the events described in this report could have a material adverse effect on our business, financial condition, results of operations and cash flows. In such event, we may be unable to make distributions to our unitholders and the trading price of our common units could decline.

Risks Related to Our Business

We may not have sufficient cash from operations following the establishment of cash reserves and payment of fees and expenses, including cost reimbursements to our General Partner, to enable us to pay the minimum quarterly distribution, or any distribution, to holders of our common and subordinated units.

We may not have sufficient available cash from operating surplus each quarter to enable us to pay the minimum quarterly distribution. The amount of cash we can distribute on our units principally depends upon the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on, among other things:

•: the volume of natural gas we gather, process, treat, compress and transport and the volume of NGLs we fractionate and transport;
•: the level of production of oil and natural gas and the resultant market prices of oil, natural gas and NGLs;
•: damage to pipelines, facilities, plants, related equipment and surrounding properties caused by hurricanes, earthquakes, floods, fires, severe weather, explosions and other natural disasters and acts of terrorism including damage to third party pipelines or facilities upon which we rely for transportation and processing services;
•: outages at the processing or NGL fractionation facilities owned by us or third parties caused by mechanical failure and maintenance, construction and other similar activities;
•: leaks or accidental releases of products or other materials into the environment, whether as a result of human error or otherwise;
•: prevailing economic and market conditions;
•: realized prices received for natural gas and NGLs;
•: fixed-fees associated with our services;
•: the market prices of natural gas and NGLs relative to one another, which affects our processing margins;
•: capacity charges and volumetric fees associated with our transportation services;
•: the level of competition from other midstream energy companies in our geographic markets;
•: the level of our operating, maintenance and general and administrative costs; and
•: regulatory action affecting the supply of, or demand for, natural gas, the maximum transportation rates we can charge on our pipelines, our existing contracts, our operating costs or our operating flexibility.

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In addition, the actual amount of cash we will have available for distributions will depend on other factors, some of which are beyond our control, including:

•: the level of capital expenditures we make;
•: the cost of acquisitions, if any;
•: our debt service requirements and other liabilities;
•: fluctuations in our working capital needs;
•: our ability to borrow funds and access capital markets;
•: restrictions contained in our debt agreements;
•: the amount of cash reserves established by our General Partner; and
•: other business risks affecting our cash levels.

Because of the natural decline in production from existing wells in our areas of operation, our success depends in part on producers replacing declining production and also on our ability to obtain new sources of natural gas. Any decrease in the volumes of natural gas that we gather, compress, process, treat or transport or in the volumes of NGLs that we fractionate or transport could adversely affect our business and operating results.

The natural gas volumes that support our business depend on the level of production from natural gas wells connected to our systems, which may be less than expected and will naturally decline over time. As a result, our cash flows associated with these wells also will decline over time. In order to maintain or increase throughput levels on our systems, we must obtain new sources of natural gas. The primary factors affecting our ability to obtain non-dedicated sources of natural gas include (i) the level of successful drilling activity in our areas of operation, (ii) our ability to compete for volumes from successful new wells and (iii) our ability to compete successfully for volumes from sources connected to other pipelines.

We have no control over the level of drilling activity in our areas of operation, the amount of reserves associated with wells connected to our systems or the rate at which production from a well declines. In addition, we have no control over producers or their drilling or production decisions, which are affected by, among other things:

•: the availability and cost of capital;
•: prevailing and projected oil, natural gas and NGL prices;
•: demand for oil, natural gas and NGLs;
•: levels of reserves;
•: geological considerations;
•: environmental or other governmental regulations, including the availability of drilling permits and the regulation of hydraulic fracturing; and
•: the availability of drilling rigs and other costs of production and equipment.

Fluctuations in energy prices can also greatly affect the development of oil and natural gas reserves. Drilling and production activity generally decreases as natural gas, oil or NGL prices decrease. Declines in natural gas, oil or NGL prices could have a negative impact on exploration, development and production activity, and sustained low prices could lead to a material decrease in such activity. Sustained reductions in exploration or production activity in our areas of operation could lead to reduced utilization of our assets.

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Because of these and other factors, even if natural gas and liquid reserves are known to exist in areas served by our assets, producers may choose not to develop those reserves. If reductions in drilling activity result in our inability to maintain the current levels of throughput on our systems, those reductions could reduce our revenue and cash flow and adversely affect our ability to make cash distributions to our unitholders.

We do not obtain independent evaluations of natural gas and liquid reserves connected to our gathering and transportation systems on a regular or ongoing basis; therefore, in the future, volumes of natural gas on our systems could be less than we anticipate.

We do not obtain independent evaluations of the natural gas reserves connected to our systems on a regular or ongoing basis. Accordingly, we do not have independent estimates of total reserves dedicated to some or all of our systems or the anticipated life of such reserves. If the total reserves or estimated life of the reserves connected to our gathering and transportation systems are less than we anticipate and we are unable to secure additional sources of natural gas, it could have a material adverse effect on our business, results of operations, financial condition and our ability to make cash distributions to our unitholders.

Our success depends on drilling activity and our ability to attract and maintain customers in a limited number of geographic areas.

A significant portion of our assets is located in the Eagle Ford shale area, and we intend to focus our future capital expenditures largely on developing our business in this area. As a result, our financial condition, results of operations and cash flows are significantly dependent upon the demand for our services in this area. Due to our focus on this area, an adverse development in natural gas production from this area would have a significantly greater impact on our financial condition and results of operations than if we spread expenditures more evenly over a wider geographic area.

Natural gas and NGL prices are volatile, and a change in these prices in absolute terms, or an adverse change in the prices of natural gas and NGLs relative to one another, could adversely affect our gross operating margin and cash flow and our ability to make cash distributions to our unitholders.

We are subject to risks due to frequent and often substantial fluctuations in commodity prices. In the past, the prices of natural gas, NGLs and other commodities have been extremely volatile, and we expect this volatility to continue. Our future cash flow may be materially adversely affected if we experience significant, prolonged pricing deterioration.

The markets for and prices of natural gas, NGLs and other commodities depend on factors that are beyond our control. These factors include the supply of and demand for these commodities, which fluctuate with changes in market and economic conditions and other factors, including:

•: worldwide economic conditions;
•: worldwide political events, including actions taken by foreign oil and natural gas producing nations;
•: worldwide weather events and conditions, including natural disasters and seasonal changes;
•: the levels of domestic production and consumer demand;
•: the availability of transportation systems with adequate capacity;
•: the volatility and uncertainty of regional pricing differentials;
•: the price and availability of alternative fuels;
•: the effect of energy conservation measures;

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•: the nature and extent of governmental regulation and taxation;
•: fluctuations in demand from electric power generators and industrial customers; and
•: the anticipated future prices of oil, natural gas, NGLs and other commodities.

Our exposure to direct commodity price risk and volatility in costs to market products may vary.

We currently generate a large portion of our revenues pursuant to fixed-fee contracts under which we are paid based on the volumes of natural gas that we gather, process, treat, compress and transport and the volumes of NGLs we fractionate and transport, rather than the value of the underlying natural gas or NGLs. Consequently, this portion of our existing operations and cash flows have limited direct exposure to commodity price levels. Although we intend to enter into similar fixed-fee contracts with new customers in the future, our efforts to obtain such contractual terms may not be successful. We may acquire or develop additional midstream assets or change the arrangements under which we process our volumes. These changes may also impact our transportation and gathering costs in a manner that increases our exposure to commodity price risk. Future exposure to the volatility of oil and natural gas prices could have a material adverse effect on our business, results of operations and financial condition and our ability to make distributions.

In addition, another large portion of our revenues is generated pursuant to fixed-spread contracts under which we strive to buy and sell equal volumes of natural gas and NGLs at prices based upon the same index price of the commodity. Our ability to do this is based upon a number of factors, including willingness of customers to accept the same index as a basis, physical differences in geography, product specifications, and ability to market products at the anticipated differential from the pricing index.

Unexpected volume changes due to production variability or to gathering, plant or pipeline system disruptions may increase our exposure to commodity price movements.

We sell processed natural gas to third parties at plant tailgates, pipeline pooling points or at inlet meters to the sites of industrial and utility customers. These sales may be interrupted by disruptions to volumes anywhere along the system. We attempt to balance sales with volumes supplied, but unexpected volume variations due to production variability or to gathering, plant or pipeline system disruptions may expose us to volume imbalances which, in conjunction with movements in commodity prices, could materially impact our income from operations and cash flow.

We may not successfully balance our purchases and sales of natural gas, which would increase our exposure to commodity price risks.

We purchase from producers and other suppliers a substantial amount of the natural gas that flows through our pipelines and processing facilities for sale to third parties, including natural gas marketers and other purchasers. We are exposed to fluctuations in the price of natural gas through volumes sold pursuant to commodity-sensitive arrangements and, to a lesser extent, through volumes sold pursuant to our fixed-spread contracts.

In order to mitigate our direct commodity price exposure, we typically attempt to balance our natural gas sales with our natural gas purchases on an aggregate basis across all of our systems. We may not be successful in balancing our purchases and sales, and as such may become exposed to fluctuations in the price of natural gas. Our overall net position with respect to natural gas can change over time and our exposure to fluctuations in natural gas prices could materially increase, which in turn could result in increased volatility in our revenue, gross operating margin and cash flows.

Although we enter into back-to-back purchases and sales of natural gas in our fixed-spread contracts in which we purchase natural gas from producers or suppliers at receipt points on our systems and simultaneously sell a similar volume of natural gas at delivery points on our systems, we may not

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be able to mitigate all exposure to commodity price risks. Any of these actions could cause our purchases and sales to become unbalanced. If our purchases and sales are unbalanced, we will face increased exposure to commodity price risks, which in turn could result in increased volatility in our revenue, gross operating margin and cash flows. To the extent that we are exposed to intra-month commodity price fluctuations, we enter into monthly swing swaps.

Our industry is highly competitive, and increased competitive pressure could adversely affect our business and operating results.

We compete with other similarly sized midstream companies in our areas of operation. Some of our competitors are large companies that have greater financial, managerial and other resources than we do. In addition, some of our competitors have assets in closer proximity to natural gas supplies and have available idle capacity in existing assets that would not require new capital investments for use. Our competitors may expand or construct gathering, compression, treating, processing or transportation systems or NGL fractionation facilities that would create additional competition for the services we provide to our customers. In addition, our customers may develop their own gathering, compression, treating, processing or transportation systems or NGL fractionation facilities in lieu of using ours. Our ability to renew or replace existing contracts with our customers at rates sufficient to maintain current revenue and cash flow could be adversely affected by the activities of our competitors and our customers. All of these competitive pressures could have a material adverse effect on our business, results of operations, financial condition and ability to make cash distributions to our unitholders.

Our gathering, processing and transportation contracts subject us to renewal risks.

We gather, purchase, process, treat, compress, transport and sell most of the natural gas and NGLs on our systems under contracts with terms of various durations. As these contracts expire, we may have to negotiate extensions or renewals with existing suppliers and customers or enter into new contracts with other suppliers and customers. We may be unable to obtain new contracts on favorable commercial terms, if at all. We also may be unable to maintain the economic structure of a particular contract with an existing customer or the overall mix of our contract portfolio. To the extent we are unable to renew our existing contracts on terms that are favorable to us or successfully manage our overall contract mix over time, our revenue, gross operating margin and cash flows could decline and our ability to make cash distributions to our unitholders could be materially and adversely affected.

We depend on a relatively limited number of customers for a significant portion of our revenues. The loss of, or material nonpayment or nonperformance by, any one or more of these customers could adversely affect our ability to make cash distributions to our unitholders.

A significant percentage of our revenue is attributable to a relatively limited number of customers. Our top ten customers accounted for 65.5% of our revenue for the year ended December 31, 2012. We have gathering, processing and/or transportation and/or sales contracts with each of these customers of varying duration and commercial terms. If we are unable to renew our contracts with one or more of these customers on favorable terms, we may not be able to replace any of these customers in a timely fashion, on favorable terms or at all. In addition, some of our customers may have material financial and liquidity issues or may, as a result of operational incidents or other events, be disproportionately affected as compared to larger, better capitalized companies. Any material nonpayment or nonperformance by any of our key customers could have a material adverse effect on our revenue, gross operating margin and cash flows and our ability to make cash distributions to our unitholders. In any of these situations, our revenue and cash flows and our ability to make cash distributions to our unitholders may be adversely affected. We expect our exposure to concentrated risk of non-payment or non-performance to continue as long as we remain substantially dependent on a relatively limited number of customers for a substantial portion of our revenue.

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Two customers, Formosa and Sherwin accounted for 24.3% and 11.0%, respectively of our revenue for the year ended December 31, 2012. We have a contract to sell to Formosa natural gas that is supplied to us by our producers for processing at its facility. We then share in the value stream created by Formosa's processing plant. The contract that enables us to use Formosa's processing facility will expire on May 31, 2013. If we are unable to access Formosa's processing facility prior to May 2013, we expect to have the ability to take the same natural gas volume from our producers and process it at one of our own facilities. If we do not have the ability to process this level of natural gas volume, it may have an adverse effect on our revenue, cash flows and our ability to make cash distributions to our unitholders.

If third-party pipelines or other midstream facilities interconnected to our gathering or transportation systems become partially or fully unavailable, or if the volumes we gather or transport do not meet the natural gas and NGL quality requirements of such pipelines or facilities, our gross operating margin and cash flow and our ability to make distributions to our unitholders could be adversely affected.

Our natural gas gathering and transportation pipelines, NGL pipelines and processing facilities connect to other pipelines or facilities owned and operated by unaffiliated third parties, such as Tennessee Gas Pipeline Company, Florida Gas Transmission Company, LLC, Gulf South Pipeline Company, LP, Kinder Morgan Energy Partners LP, Southern Natural Gas Company, Energy Transfer Partners, L.P., Seadrift Pipeline Corporation and others. The continuing operation of such third-party pipelines, processing plants and other midstream facilities is not within our control. These pipelines, plants and other midstream facilities may become unavailable because of testing, turnarounds, line repair, reduced operating pressure, lack of operating capacity, regulatory requirements, curtailments of receipt or deliveries due to insufficient capacity or because of damage from natural disasters or other operational hazards. In addition, if the costs to us to access and transport on these third-party pipelines significantly increase, our profitability could be reduced. If any such increase in costs occurred, if any of these pipelines or other midstream facilities become unable to receive, transport or process natural gas, or if the volumes we gather or transport do not meet the natural gas quality requirements of such pipelines or facilities, our gross operating margin and ability to make cash distributions to our unitholders could be adversely affected.

Significant portions of our pipeline systems and processing plants have been in service for several decades and we have a limited ownership history with respect to all of our assets. There could be unknown events or conditions or increased maintenance or repair expenses and downtime associated with our pipelines and processing and treating plants that could have a material adverse effect on our business and operating results.

Significant portions of our pipeline systems and processing plants have been in service for many decades. Our executive management team has a limited history of operating our assets. There may be historical occurrences or latent issues regarding our pipeline systems that our executive management team may be unaware of and that may have a material adverse effect on our business and results of operations. The age and condition of our pipeline systems could also result in increased maintenance or repair expenditures, and any downtime associated with increased maintenance and repair activities could materially reduce our revenue. Any significant increase in maintenance and repair expenditures or loss of revenue due to the age or condition of our pipeline systems could adversely affect our business and results of operations and our ability to make cash distributions to our unitholders.

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Our business involves many hazards and operational risks, some of which may not be fully covered by insurance. If a significant accident or event occurs for which we are not adequately insured or if we fail to recover all anticipated insurance proceeds for significant accidents or events for which we are insured, our operations and financial results could be adversely affected.

Our operations are subject to all of the risks and hazards inherent in the gathering, compressing, treating, processing and transportation of natural gas and the fractionation and transportation of NGLs, including:

•: damage to pipelines and plants, related equipment and surrounding properties caused by hurricanes, tornadoes, floods, fires and other natural disasters, acts of terrorism and actions by third parties;
•: inadvertent damage from construction, vehicles, farm and utility equipment;
•: leaks of natural gas and other hydrocarbons or losses of natural gas as a result of human error, the malfunction of equipment or facilities;
•: ruptures, fires and explosions; and
•: other hazards that could also result in personal injury and loss of life, pollution and suspension of operations.

These risks could result in substantial losses due to personal injury and/or loss of life, severe damage to and destruction of property and equipment and pollution or other environmental damage. These risks may also result in curtailment or suspension of our operations. A natural disaster or other hazard affecting the areas in which we operate could have a material adverse effect on our operations. We are not fully insured against all risks inherent in our business. In addition, although we are insured for environmental pollution resulting from environmental accidents that occur on a sudden and accidental basis, we may not be insured against all environmental accidents that might occur, some of which may result in toxic tort claims. If a significant accident or event occurs for which we are not fully insured, it could adversely affect our operations and financial condition. Furthermore, we may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates. As a result of market conditions, premiums and deductibles for certain of our insurance policies may substantially increase. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. Additionally, we may be unable to recover from prior owners of our assets, pursuant to our indemnification rights, for potential environmental liabilities.

We intend to grow our business in part by seeking strategic acquisition opportunities. If we are unable to make acquisitions on economically acceptable terms from third parties, our future growth will be affected, and the acquisitions we do make may reduce, rather than increase, our cash generated from operations on a per unit basis.

Our ability to grow is affected, in part, by our ability to make acquisitions that increase our cash generated from operations on a per unit basis. The acquisition component of our strategy is based, in large part, on our expectation of ongoing divestitures of midstream energy assets by industry participants. A material decrease in such divestitures would limit our opportunities for future acquisitions and could adversely affect our ability to grow our operations and increase our cash distributions to our unitholders.

If we are unable to make accretive acquisitions from third parties, whether because we are (i) unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts, (ii) unable to obtain financing for these acquisitions on economically acceptable terms because our amended Credit Facility restricts us from making acquisitions or (iii) outbid by competitors or for any other reason, then our future growth and ability to increase cash distributions could be limited.

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Furthermore, even if we do make acquisitions that we believe will be accretive, these acquisitions may nevertheless result in a decrease in the cash generated from operations on a per unit basis.

Any acquisition involves potential risks, including, among other things:

•: mistaken assumptions about volumes, revenue and costs, including synergies;
•: an inability to secure adequate customer commitments to use the acquired systems or facilities;
•: the risk that natural gas reserves expected to support the acquired assets may not be of the anticipated magnitude or may not be developed as anticipated;
•: an inability to integrate successfully the assets or businesses we acquire, particularly given the relatively small size of our management team and its limited history with our assets;
•: coordinating geographically disparate organizations, systems and facilities;
•: the assumption of unknown liabilities;
•: limitations on rights to indemnity from the seller;
•: mistaken assumptions about the overall costs of equity or debt;
•: the diversion of management's and employees' attention from other business concerns;
•: unforeseen difficulties operating in new geographic areas and business lines; and
•: customer or key employee losses at the acquired businesses.

If we consummate any future acquisitions, our capitalization and results of operations may change significantly, and our unitholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds and other resources.

Our growth strategy requires access to new capital. Tightened capital markets or increased competition for investment opportunities could impair our ability to grow.

We continuously consider and enter into discussions regarding potential acquisitions or growth capital expenditures. Any limitations on our access to new capital will impair our ability to execute this strategy. If the cost of such capital becomes too expensive, our ability to develop or acquire strategic and accretive assets will be limited. We may not be able to raise the necessary funds on satisfactory terms, if at all. The primary factors that influence our initial cost of equity include market conditions, including our then current unit price, fees we pay to underwriters and other offering costs, which include amounts we pay for legal and accounting services. The primary factors influencing our cost of borrowing include interest rates, credit spreads, covenants, underwriting or loan origination fees and similar charges we pay to lenders.

Weak economic conditions and the volatility and disruption in the financial markets could increase the cost of raising money in the debt and equity capital markets substantially while diminishing the availability of funds from those markets. Also, as a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining money from the credit markets generally has increased as many lenders and institutional investors have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at maturity at all or on terms similar to our current debt and reduced and, in some cases, ceased to provide funding to borrowers. These factors may impair our ability to execute our growth strategy.

In addition, we are experiencing increased competition for the types of assets we contemplate purchasing. Weak economic conditions and competition for asset purchases could limit our ability to fully execute our growth strategy.

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We may not have access to capital due to deterioration of conditions in the global capital markets, weakening of macroeconomic conditions and negative changes in financial performance.

In general, we rely, in large part, on banks and capital markets to fund our operations, contractual commitments and refinance existing debt. These markets can experience high levels of volatility and access to capital can be constrained for an extended period of time. In addition to conditions in the capital markets, a number of other factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for both secured and unsecured debt. These factors include our financial performance. If we are unable to secure financing on acceptable terms, our other sources of funds, including available cash, bank facilities, and cash flow from operations may not be adequate to fund our operations, contractual commitments and refinance existing debt.

Because our common units are yield-oriented securities, increases in interest rates could adversely impact our unit price, our ability to issue equity or incur debt for acquisitions or other purposes and our ability to make cash distributions at our intended levels.

Interest rates may increase in the future. As a result, interest rates on our future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly. As with other yield-oriented securities, our unit price is impacted by our level of our cash distributions and implied distribution yield. The distribution yield is often used by investors to compare and rank yield-oriented securities for investment decision-making purposes. Therefore, changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in our units, and a rising interest rate environment could have an adverse impact on our unit price, our ability to issue equity or incur debt for acquisitions or other purposes and our ability to make cash distributions at our intended levels.

Debt we incur in the future may limit our flexibility to obtain financing and to pursue other business opportunities.

As of December 31, 2012, we had total indebtedness of $191 million. Our future level of debt could have important consequences to us, including the following:

•: our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;
•: our funds available for operations, future business opportunities and cash distributions to unitholders will be reduced by that portion of our cash flow required to make interest payments on our debt;
•: we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and
•: our flexibility in responding to changing business and economic conditions may be limited.

Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service any future indebtedness, we will be forced to take actions such as reducing distributions, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets or seeking additional equity capital. We may not be able to effect any of these actions on satisfactory terms or at all.

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A shortage of skilled labor in the midstream natural gas industry could reduce labor productivity and increase costs, which could have a material adverse effect on our business and results of operations.

The gathering, processing, treating, compression and transportation of natural gas and NGL fractionation and transportation services require skilled laborers in multiple disciplines such as equipment operators, mechanics and engineers, among others. We have from time to time encountered shortages for these types of skilled labor. If we experience shortages of skilled labor in the future, our labor and overall productivity or costs could be materially and adversely affected. If our labor prices increase or if we experience materially increased health and benefit costs with respect to our General Partner's employees, our results of operations could be materially and adversely affected.

Restrictions in our credit facility could adversely affect our business, financial condition, results of operations, ability to make distributions to unitholders and value of our common units.

We are dependent upon the earnings and cash flow generated by our operations in order to meet our debt service obligations and to make cash distributions to our unitholders. The operating and financial restrictions and covenants in our credit facility and any future financing agreements could restrict our ability to finance future operations or capital needs or to expand or pursue our business activities, which may, in turn, limit our ability to make cash distributions to our unitholders. Our credit facility limits our ability among other things, to:

•: incur or guarantee additional debt;
•: make distributions on or redeem or repurchase units;
•: make certain investments and acquisitions;
•: make capital expenditures;
•: incur certain liens or permit them to exist;
•: enter into certain types of transactions with affiliates;
•: merge or consolidate with another company; and
•: transfer, sell or otherwise dispose of assets.

Our credit facility contains covenants requiring us to maintain certain financial ratios. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet those ratios and tests.

The provisions of our credit facility may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions. In addition, a failure to comply with the provisions of our credit facility could result in a default or an event of default that could enable our lenders, subject to the terms and conditions of the credit facility, to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable. If the payment of our debt is accelerated, our assets may be insufficient to repay such debt in full, and our unitholders could experience a partial or total loss of their investment.

For a complete description of long-term debt, see Part II, Item 8, "Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 6—Long-Term Debt."

Increased regulation of hydraulic fracturing could result in reductions or delays in natural gas production by our customers, which could adversely impact our revenues.

A portion of our customers' natural gas production is developed from unconventional sources, such as shales, that require hydraulic fracturing as part of the completion process. Hydraulic fracturing

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involves the injection of water, sand and chemicals under pressure into the formation to stimulate gas production. Legislation to amend the Safe Drinking Water Act to repeal the exemption for hydraulic fracturing from the definition of "underground injection" and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, were proposed in recent sessions of Congress. Congress may consider legislation to amend the Safe Drinking Water Act to subject hydraulic fracturing operations to regulation under that Act's Underground Injection Control Program and to require disclosure of chemicals used in the hydraulic fracturing process. Scrutiny of hydraulic fracturing activities continues in other ways, with the EPA having commenced a multi-year study of the potential environmental impacts of hydraulic fracturing, the results of which are anticipated to be available between 2012 and 2014. In addition, on October 20, 2011, the EPA announced its intention to propose regulations by 2014 under the federal Clean Water Act to develop standards for wastewater discharges from hydraulic fracturing and other natural gas production activities.

Several states have also proposed or adopted legislative or regulatory restrictions on hydraulic fracturing. We cannot predict whether any other legislation will be enacted and if so, what its provisions would be. If additional levels of regulation and permits are required through the adoption of new laws and regulations at the federal or state level, that could lead to delays, increased operating costs and prohibitions for producers who drill near our pipelines which could reduce the volumes of natural gas available to move through our gathering systems which could materially adversely affect our revenue and results of operations.

On April 17, 2012, the EPA approved final rules that establish new air emission controls for oil and natural gas production and natural gas processing operations. This new rule addresses emissions of various pollutants frequently associated with oil and natural gas production and processing activities. The rule also establishes specific new requirements, effective in 2012, for emissions from compressors, controllers, dehydrators, storage tanks, gas processing plants and certain other equipment. This rule may require a number of modifications to our and our customers' operations, including the installation of new equipment to control emissions. Compliance with such rules could result in additional costs, including increased capital expenditures and operating costs, for us and our customers, which may adversely impact our cash flows and results of operations.

Our pipelines may become subject to more stringent safety regulation.

Recently enacted pipeline safety legislation, the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, reauthorizes funding for federal pipeline safety programs, increases penalties for safety violations, establishes additional safety requirements for newly constructed pipelines, and requires studies of certain safety issues that could result in the adoption of new regulatory requirements for existing pipelines. The Pipeline and Hazardous Materials Safety Administration of the DOT has also published an advanced notice of proposed rulemaking to solicit comments on the need for changes to its safety regulations, including whether to revise the integrity management requirements and add new regulations governing the safety of gathering lines. Such legislative and regulatory changes could have a material effect on our operations and costs of transportation service due to more stringent and comprehensive safety regulation and higher penalties for violations of those regulations.

Our construction of new assets may not result in revenue increases and will be subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our results of operations and financial condition.

One of the ways we intend to grow our business is through organic growth projects. The construction of additions or modifications to our existing systems and the construction of new midstream assets involve numerous regulatory, environmental, political, legal and economic uncertainties that are beyond our control. Such expansion projects may also require the expenditure of

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significant amounts of capital, and financing may not be available on economically acceptable terms or at all. If we undertake these projects, they may not be completed on schedule, at the budgeted cost, or at all. Moreover, our revenue may not increase immediately upon the expenditure of funds on a particular project.

For instance, if we expand a pipeline, the construction may occur over an extended period of time, yet we will not receive any material increases in revenue until the project is completed and placed into service. Moreover, we could construct facilities to capture anticipated future growth in production in a region in which such growth does not materialize or only materializes over a period materially longer than expected. Since we are not engaged in the exploration for and development of natural gas and oil reserves, we often do not have access to third-party estimates of potential reserves in an area prior to constructing facilities in that area. To the extent we rely on estimates of future production in our decision to construct additions to our systems, such estimates may prove to be inaccurate as a result of the numerous uncertainties inherent in estimating quantities of future production. As a result, new facilities may not attract enough throughput to achieve our expected investment return, which could adversely affect our results of operations and financial condition.

In addition, the construction of additions to our existing gathering and transportation assets may require us to obtain new rights-of-way or environmental authorizations. We may be unable to obtain such rights-of-way or authorizations and may, therefore, be unable to connect new natural gas volumes to our systems or capitalize on other attractive expansion opportunities. Additionally, it may become more expensive for us to obtain new rights-of-way or authorizations or to renew existing rights-of-way or authorizations. If the cost of renewing or obtaining new rights-of-way or authorizations increases materially, our cash flows could be adversely affected.

A change in the jurisdictional characterization or regulation of our assets by federal, state or local regulatory agencies or a change in policy by those agencies could result in increased regulation of our assets which could materially and adversely affect our financial condition, results of operations and cash flows.

Intrastate transportation facilities that do not provide interstate transmission services and gathering facilities (whether or not they provide interstate transportation services) are exempt from the jurisdiction of the FERC under the NGA. Although the FERC has not made any formal determinations with respect to any of our facilities, we believe that our intrastate natural gas pipelines and related facilities that are not engaged in providing interstate transmission services are engaged in exempt gathering and intrastate transportation and, therefore, are not subject to FERC jurisdiction. We also believe that our natural gas gathering pipelines meet the traditional tests that the FERC has used to determine if a pipeline is a gathering pipeline and is therefore not subject to the FERC's jurisdiction. The distinction between FERC-regulated transmission services and federally unregulated gathering services has been the subject of substantial litigation and, over time, the FERC's policy for determining which facilities it regulates has changed. In addition, the distinction between FERC-regulated transmission facilities, on the one hand, and intrastate transportation and gathering facilities, on the other, is a fact-based determination made by the FERC on a case-by-case basis. If the FERC were to consider the status of an individual facility and determine that the facility and/or services provided by it are not exempt from FERC regulation under the NGA, the rates for, and terms and conditions of, services provided by such facility would be subject to regulation by the FERC under the NGA. Such regulation could decrease revenue, increase operating costs, and, depending upon the facility in question, could adversely affect our results of operations and cash flows. In addition, if any of our facilities were found to have provided services or otherwise operated in violation of the NGA or the Natural Gas Policy Act of 1978, or NGPA, this could result in the imposition of civil penalties as well as a requirement to disgorge charges collected for such service in excess of the cost-based rate established by the FERC.

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Some of our intrastate pipelines provide interstate transportation service regulated under Section 311 of the Natural Gas Policy Act of 1978, or NGPA. Rates charged under NGPA Section 311 are limited to rates deemed by FERC to be "fair and equitable." Accordingly, such regulation may prevent us from recovering our full cost of service allocable to such interstate transportation service. In addition, some of our intrastate pipelines may be subject to complaint-based state regulation with respect to our rates and terms and conditions of service, which may prevent us from recovering some of our costs of providing service. The inability to recover our full costs due to FERC and state regulatory oversight and compliance could materially and adversely affect our revenues.

Moreover, FERC regulation affects our gathering, transportation and compression business generally. The FERC's policies and practices across the range of its natural gas regulatory activities, including, for example, its policies on open access transportation, market transparency, market manipulation, ratemaking, capacity release, segmentation and market center promotion, directly and indirectly affect our gathering and pipeline transportation business. In addition, the classification and regulation of our gathering and intrastate transportation facilities also are subject to change based on future determinations by the FERC, the courts or Congress.

State regulation of gathering facilities generally includes various safety, environmental and, in some circumstances, nondiscriminatory take requirements and complaint-based rate regulation. In recent years, the FERC has taken a more light-handed approach to regulation of the gathering activities of interstate pipeline transmission companies, which has resulted in a number of these companies transferring gathering facilities to federally unregulated affiliates. As a result of these activities, natural gas gathering may begin to receive greater regulatory scrutiny at both the state and federal levels.

We are subject to stringent environmental laws and regulations that may expose us to significant costs and liabilities.

Our natural gas gathering, compression, treating and transportation operations and NGL fractionation services are subject to stringent and complex federal, state and local environmental laws and regulations that govern the discharge of materials into the environment or otherwise relate to environmental protection. Examples of these laws include:

•: the federal Clean Air Act and analogous state laws that impose obligations related to air emissions;
•: the federal Comprehensive Environmental Response, Compensation, and Liability Act, also known as CERCLA or the Superfund law, and analogous state laws that regulate the cleanup of hazardous substances that may be or have been released at properties currently or previously owned or operated by us or at locations to which our wastes are or have been transported for disposal;
•: the federal Water Pollution Control Act, also known as the Clean Water Act, and analogous state laws that regulate discharges from our facilities into state and federal waters, including wetlands;
•: the federal Oil Pollution Act, also known as OPA, and analogous state laws that establish strict liability for releases of oil into waters of the U.S.;
•: the federal Resource Conservation and Recovery Act, also known as RCRA, and analogous state laws that impose requirements for the storage, treatment and disposal of solid and hazardous waste from our facilities;
•: the Endangered Species Act, also known as the ESA; and

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•: the Toxic Substances Control Act, also known as TSCA, and analogous state laws that impose requirements on the use, storage and disposal of various chemicals and chemical substances at our facilities.

These laws and regulations may impose numerous obligations that are applicable to our operations, including the acquisition of permits to conduct regulated activities, the incurrence of capital or operating expenditures to limit or prevent releases of materials from our pipelines and facilities, and the imposition of substantial liabilities and remedial obligations for pollution resulting from our operations or at locations currently or previously owned or operated by us. Numerous governmental authorities, such as the U.S. Environmental Protection Agency, or the EPA, and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them, oftentimes requiring difficult and costly corrective actions or costly pollution control measures. Failure to comply with these laws, regulations and permits may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations and the issuance of injunctions limiting or preventing some or all of our operations. In addition, we may experience a delay in obtaining or be unable to obtain required permits or regulatory authorizations, which may cause us to lose potential and current customers, interrupt our operations and limit our growth and revenue.

There is a risk that we may incur significant environmental costs and liabilities in connection with our operations due to historical industry operations and waste disposal practices, our handling of hydrocarbon and other wastes and potential emissions and discharges related to our operations. Joint and several, strict liability may be incurred, without regard to fault, under certain of these environmental laws and regulations in connection with discharges or releases of hydrocarbon wastes on, under or from our properties and facilities, many of which have been used for midstream activities for a number of years, oftentimes by third parties not under our control. Private parties, including the owners of the properties through which our gathering or transportation systems pass and facilities where our wastes are taken for reclamation or disposal, may also have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal injury or property damage. In addition, changes in environmental laws occur frequently, and any such changes that result in additional permitting obligations or more stringent and costly waste handling, storage, transport, disposal or remediation requirements could have a material adverse effect on our operations or financial position. We may not be able to recover all or any of these costs from insurance.

We may incur greater than anticipated costs and liabilities as a result of pipeline integrity management program testing and related repairs.

The DOT, through its Pipeline and Hazardous Materials Safety Administration, has adopted regulations requiring pipeline operators to develop integrity management programs for transmission pipelines located where a leak or rupture could harm "high consequence areas" unless the operator effectively demonstrates by risk assessment that the pipeline could not affect the area. High consequence areas include high population areas, areas that are sources of drinking water, ecological resource areas that are unusually sensitive to environmental damage from a pipeline release and commercially navigable waterways. The regulations require operators, including us, to:

•: perform ongoing assessments of pipeline integrity;
•: identify and characterize applicable threats to pipeline segments that could impact a high consequence area;
•: maintain processes for data collection, integration and analysis;
•: repair and remediate pipelines as necessary; and
•: implement preventive and mitigating actions.

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Moreover, the recently enacted Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 could result in the adoption of additional regulatory requirements that will apply to us. In addition, many states, including the states in which we operate, have adopted regulations similar to existing DOT regulations for intrastate pipelines. Although many of our pipeline facilities fall within a class that is currently not subject to these requirements, we may incur significant costs and liabilities associated with repair, remediation, preventative or mitigation measures associated with our non-exempt pipelines, particularly in South Texas. We have incurred costs of approximately $1.8 million during 2012 in order to complete the testing required by existing DOT regulations and their state counterparts. This expenditure included all costs associated with repairs, remediations, preventative and mitigating actions related to the 2012 testing program. Additionally, should we fail to comply with DOT or comparable state regulations, we could be subject to penalties and fines. If future DOT pipeline integrity management regulations were to require that we expand our integrity management program to currently unregulated pipelines, including gathering lines, costs associated with compliance may have a material effect on our operations.

Climate change legislation, regulatory initiatives and litigation could result in increased operating costs and reduced demand for the natural gas services we provide.

In recent years, the U.S. Congress has considered legislation to restrict or regulate emissions of greenhouse gases, or GHGs, such as carbon dioxide and methane, that may be contributing to global warming. It presently appears unlikely that comprehensive climate legislation will be passed by either house of Congress in the near future, although energy legislation and other initiatives are expected to be proposed that may be relevant to GHG emissions issues. In addition, almost half of the states, either individually or through multi-state regional initiatives, have begun to address GHG emissions, primarily through the planned development of emission inventories or regional GHG cap and trade programs. Most of these cap and trade programs work by requiring either major sources of emissions, such as electric power plants, or major producers of fuels, such as refineries and gas processing plants, to acquire and surrender emission allowances. The number of allowances available for purchase is reduced each year until the overall GHG emission reduction goal is achieved. Depending on the scope of a particular program, we could be required to purchase and surrender allowances for GHG emissions resulting from our operations (e.g., at compressor stations). Although most of the state-level initiatives have to date been focused on large sources of GHG emissions, such as electric power plants, it is possible that smaller sources such as our gas-fired compressors could become subject to GHG-related regulation. Depending on the particular program, we could be required to control emissions or to purchase and surrender allowances for GHG emissions resulting from our operations.

Independent of Congress, the EPA is beginning to adopt regulations controlling GHG emissions under its existing Clean Air Act authority. For example, on December 15, 2009, the EPA officially published its findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to human health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth's atmosphere and other climatic changes. These findings by the EPA allow the agency to proceed with the adoption and implementation of regulations that would restrict emissions of greenhouse gases under existing provisions of the federal Clean Air Act. In 2009, the EPA adopted rules regarding regulation of GHG emissions from motor vehicles. In addition, on September 22, 2009, the EPA issued a final rule requiring the monitoring and reporting of greenhouse gas emissions from specified large greenhouse gas emission sources in the U.S. beginning in 2011 for emissions occurring in 2010. Our Gregory and Conroe processing facilities are currently required to report under this rule. On November 30, 2010, the EPA published a final rule expanding its existing GHG emissions reporting rule for petroleum and natural gas facilities, including natural gas transmission compression facilities that emit 25,000 metric tons or more of carbon dioxide equivalent per year. The rule, which went into effect on December 30, 2010, requires reporting of greenhouse gas emissions by regulated facilities to the EPA by September 2012 for emissions during 2011 and annually

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thereafter. We timely submitted the reports required under this rule and have adopted procedures for future required reporting. However, operational or regulatory changes could require some or all of our other facilities to be required to report GHG emissions at a future date. In 2010, EPA also issued a final rule, known as the "Tailoring Rule," that makes certain large stationary sources and modification projects subject to permitting requirements for greenhouse gas emissions under the Clean Air Act. Several of the EPA's greenhouse gas rules are being challenged in pending court proceedings and, depending on the outcome of such proceedings, such rules may be modified or rescinded or the EPA could develop new rules.

Although it is not possible at this time to accurately estimate how potential future laws or regulations addressing greenhouse gas emissions would impact our business, any future federal or state laws or implementing regulations that may be adopted to address greenhouse gas emissions could require us to incur increased operating costs and could adversely affect demand for the natural gas we gather, treat or otherwise handle in connection with our services. The potential increase in the costs of our operations resulting from any legislation or regulation to restrict emissions of greenhouse gases could include new or increased costs to operate and maintain our facilities, install new emission controls on our facilities, acquire allowances to authorize our greenhouse gas emissions, pay any taxes related to our greenhouse gas emissions and administer and manage a greenhouse gas emissions program. While we may be able to include some or all of such increased costs in the rates charged by our pipelines or other facilities, such recovery of costs is uncertain. Moreover, incentives to conserve energy or use alternative energy sources could reduce demand for natural gas, resulting in a decrease in demand for our services. We cannot predict with any certainty at this time how these possibilities may affect our operations.

The adoption and implementation of new statutory and regulatory requirements for swap transactions could have an adverse impact on our ability to hedge risks associated with our business and increase the working capital requirements to conduct these activities.

In July 2010 federal legislation known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. The Dodd-Frank Act provides new statutory requirements for swap transactions, including oil and gas hedging transactions. These statutory requirements must be implemented through regulation, primarily through rules to be adopted by the Commodity Futures Trading Commission, or the CFTC. The Dodd-Frank Act provisions are intended to change fundamentally the way swap transactions are entered into, transforming an over-the-counter market in which parties negotiate directly with each other into a regulated market in which most swaps are to be executed on registered exchanges or swap execution facilities and cleared through central counterparties. Many market participants will be newly regulated as swap dealers or major swap participants, with new regulatory capital requirements and other regulations that may impose business conduct rules and mandate how they hold collateral or margin for swap transactions. All market participants will be subject to new reporting and recordkeeping requirements.

The impact of the Dodd-Frank Act on our hedging activities is uncertain at this time, and the CFTC has not yet promulgated final regulations implementing the key provisions. Although we do not believe we will need to register as a swap dealer or major swap participant, and do not believe we will be subject to the new requirements to trade on an exchange or swap execution facility or to clear swaps through a central counterparty, we may have new regulatory burdens. Moreover, the changes to the swap market as a result of Dodd-Frank implementation could significantly increase the cost of entering into new swaps or maintaining existing swaps, materially alter the terms of new or existing swap transactions and/or reduce the availability of new or existing swaps.

Depending on the rules and definitions adopted by the CFTC, we might in the future be required to provide cash collateral for our commodities hedging transactions under circumstances in which we do not currently post cash collateral. Posting of such additional cash collateral could impact liquidity

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and reduce our cash available for capital expenditures or other partnership purposes. A requirement to post cash collateral could therefore reduce our willingness or ability to execute hedges to reduce commodity price uncertainty and thus protect cash flows. If we reduce our use of swaps as a result of the Dodd-Frank Act and regulations, our results of operations may become more volatile and our cash flows may be less predictable.

Discord, conflict, and lack of compromise within and amongst the executive and legislative branches of the U.S. government relative to federal government budgeting, taxation policies, government expenditures, and U.S. borrowing/debt ceiling limits could adversely affect our business and operating results.

The inability of the legislative and executive branches of the U.S. government to pass a federal government budget, address tax revenue requirements, control deficit spending, and effectively manage short and long-term U.S. government borrowing, debt ratings, and debt ceiling adjustments, could negatively impact U.S. domestic and global financial markets thereby reducing demand by our customers for our services thereby reducing revenues. Similarly, if our suppliers face challenges in obtaining credit, in selling their products, or otherwise in operating their businesses, they may become unable to continue to offer the materials we purchase from them. These actions could result in reductions in our revenues, increased price competition, or increased operating costs, which could adversely affect our business results of operations and financial condition.

Our ability to operate our business effectively could be impaired if we fail to attract and retain key management personnel.

Our ability to operate our business and implement our strategies will depend on our continued ability to attract and retain highly skilled management personnel with midstream natural gas industry experience. Competition for these persons in the midstream natural gas industry is intense. Given our size, we may be at a disadvantage, relative to our larger competitors, in the competition for these personnel. We may not be able to continue to employ our senior executives and key personnel or attract and retain qualified personnel in the future, and our failure to retain or attract our senior executives and key personnel could have a material adverse effect on our ability to effectively operate our business.

The loss of key personnel could adversely affect our ability to operate.

Our success is dependent upon the efforts of our senior management, as well as on our ability to attract and retain senior management. Our senior executive officers have significant experience in the natural gas industry and have developed strong relationships with a broad range of industry participants. The loss of any of these executives could prevent us from implementing our business strategy and have a material adverse effect on our relationships with these industry participants, our results of operations and ability to make cash distributions to our unitholders.

We do not have employees. We rely solely on officers and employees of the General Partner to operate and manage our business.

If we fail to develop or maintain an effective system of internal controls, we may not be able to report our financial results timely and accurately or prevent fraud, which would likely have a negative impact on the market price of our common units.

We are subject to the public reporting requirements of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), including the rules thereunder that will require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. Effective internal controls are necessary for us to provide reliable and timely financial reports, prevent fraud and

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to operate successfully as a publicly traded partnership. We prepare our consolidated financial statements in accordance with GAAP, but our internal accounting controls may not meet all standards applicable to companies with publicly traded securities. Our efforts to develop and maintain our internal controls may not be successful, and we may be unable to maintain effective controls over our financial processes and reporting in the future or to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, which we refer to as Section 404.

Given the difficulties inherent in the design and operation of internal controls over financial reporting, in addition to our limited accounting personnel and management resources, we can provide no assurance as to our, or our independent registered public accounting firm's, future conclusions about the effectiveness of our internal controls, and we may incur significant costs in our efforts to comply with Section 404. Any failure to implement and maintain effective internal controls over financial reporting will subject us to regulatory scrutiny and a loss of confidence in our reported financial information, which could have an adverse effect on our business and would likely have a negative effect on the trading price of our common units.

Although we will be required to disclose changes made in our internal control and procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the fiscal year ending December 31, 2013. In addition, pursuant to the recently enacted JOBS Act, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an "emerging growth company," which may be through December 31, 2017.

We are incurring increased costs as a result of being a new publicly traded partnership.

We have limited history operating as a publicly traded partnership. As a publicly traded partnership, we are incurring significant legal, accounting and other expenses. In addition, Sarbanes-Oxley and related rules subsequently implemented by the SEC and the NYSE have required changes in the corporate governance practices of publicly traded companies. These rules and regulations are increasing our legal and financial compliance costs and to make activities more time-consuming and costly. For example, as a result of becoming a publicly traded partnership, we are required to have at least three independent directors, create an audit committee and adopt policies regarding internal controls and disclosure controls and procedures, including the preparation of reports on internal controls over financial reporting. In addition, we are incurring additional costs associated with our publicly traded partnership reporting requirements. We also expect these new rules and regulations to make it more difficult and more expensive for our General Partner to obtain director and officer liability insurance and to possibly result in our General Partner having to accept reduced policy limits and coverage. As a result, it may be more difficult for our General Partner to attract and retain qualified persons to serve on its board of directors or as executive officers.

The amount of cash we have available for distribution to holders of our common and subordinated units depends primarily on our cash flow rather than on our profitability, which may prevent us from making distributions, even during periods in which we record net income.

The amount of cash we have available for distribution depends primarily upon our cash flow and not solely on profitability, which will be affected by non-cash items. As a result, we may make cash distributions during periods when we record losses for financial accounting purposes and may not make cash distributions during periods when we record net earnings for financial accounting purposes.

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Risks Inherent in an Investment in Us

Southcross Energy LLC owns and controls our General Partner, which has sole responsibility for conducting our business and managing our operations as well as has limited duties to us and our unitholders. Southcross Energy LLC and our General Partner have conflicts of interest with us and they may favor their own interests to the detriment of us and our other unitholders.

Southcross Energy LLC controls our General Partner, and has the authority to appoint all of the officers and directors of our General Partner, some of whom are also officers of Charlesbank, the entity that controls Southcross Energy LLC. Although our General Partner has a fiduciary duty to manage us in a manner that is beneficial to us and our unitholders, the directors and officers of our General Partner also have a duty to manage our General Partner in a manner that is beneficial to its ultimate owner, Southcross Energy LLC. Conflicts of interest may arise between Southcross Energy LLC and our General Partner, on the one hand, and us and our unitholders, on the other hand. In resolving these conflicts of interest, our General Partner may favor its own interests and the interests of Southcross Energy LLC over our interests and the interests of our unitholders. These conflicts include the following situations, among others:

•: Neither our partnership agreement nor any other agreement requires Southcross Energy LLC to pursue a business strategy that favors us.
•: Our General Partner is allowed to take into account the interests of parties other than us, such as Southcross Energy LLC, in resolving conflicts of interest.
•: Our partnership agreement replaces the fiduciary duties that would otherwise be owed by our General Partner to us and our unitholders with contractual standards governing its duties to us and our unitholders, limits our General Partner's liabilities, and also restricts the rights of our unitholders with respect to actions that, without the limitations, might constitute breaches of fiduciary duty.
•: Except in limited circumstances, our General Partner has the power and authority to conduct our business without unitholder approval.
•: Our General Partner determines the amount and timing of asset purchases and sales, borrowings, issuances of additional partnership securities and the creation, reduction or increase of reserves, each of which can affect the amount of cash that is distributed to our unitholders.
•: Our General Partner determines the amount and timing of any capital expenditures and whether a capital expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure, which does not reduce operating surplus. This determination can affect the amount of cash that is distributed to our unitholders and to our General Partner and the ability of the subordinated units to convert to common units.
•: Our General Partner determines which costs incurred by it are reimbursable by us.
•: Our General Partner may cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make a distribution on the subordinated units, to make incentive distributions or to accelerate the expiration of the subordination period.
•: Our partnership agreement permits us to classify up to $35.0 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be used to fund distributions on our subordinated units or to our General Partner in respect of the general partner interest or the incentive distribution rights.

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•: Our partnership agreement does not restrict our General Partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf.
•: Our General Partner intends to limit its liability regarding our contractual and other obligations.
•: Our General Partner may exercise its right to call and purchase all of the common units not owned by it and its affiliates if they own more than 80% of the common units.
•: Our General Partner controls the enforcement of the obligations that it and its affiliates owe to us.
•: Our General Partner decides whether to retain separate counsel, accountants or others to perform services for us.
•: Our General Partner may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our General Partner's incentive distribution rights without the approval of the conflicts committee of the board of directors of our General Partner or our unitholders. This election may result in lower distributions to our common unitholders in certain situations.

Charlesbank is not limited in its ability to compete with us and is not obligated to offer us the opportunity to acquire additional assets or businesses, which could limit our ability to grow and could adversely affect our results of operations and cash available for distribution to our unitholders.

Charlesbank is not prohibited from owning assets or engaging in businesses that compete directly or indirectly with us. Charlesbank may acquire, construct or dispose of additional midstream or other assets and may be presented with new business opportunities, without any obligation to offer us the opportunity to purchase or construct such assets or to engage in such business opportunities. Moreover, while Charlesbank may offer us the opportunity to buy additional assets from it, it is under no contractual obligation to do so and we are unable to predict whether or when such acquisitions might be completed. Charlesbank is a leading private equity firm with significantly greater resources than us and has experience making investments in midstream energy businesses. Charlesbank may compete with us for investment opportunities and may own interests in entities that compete with us.

Pursuant to the terms of our partnership agreement, the doctrine of corporate opportunity, or any analogous doctrine, does not apply to our General Partner or any of its affiliates, including its executive officers and directors, and Charlesbank. Any such person or entity that becomes aware of a potential transaction, agreement, arrangement or other matter that may be an opportunity for us will not have any duty to communicate or offer such opportunity to us. Any such person or entity will not be liable to us or to any limited partner for breach of any duty by reason of the fact that such person or entity pursues or acquires such opportunity for itself, directs such opportunity to another person or entity or does not communicate such opportunity or information to us. This may create actual and potential conflicts of interest between us and affiliates of our General Partner and result in less than favorable treatment of us and our unitholders.

The market price of our common units may fluctuate significantly, and you could lose all or part of your investment.

There were 10,350,000 publicly traded common units at December 31, 2012. In addition, affiliates of our General Partner own 1,863,713 common units and 12,213,713 subordinated units. You may not be able to resell your common units at or above your acquisition price. Additionally, a lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of the common units and limit the number of investors who are able to buy the common units.

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The market price of our common units may decline and be influenced by many factors, some of which are beyond our control, including:

•: our quarterly distributions;
•: our quarterly or annual earnings or those of other companies in our industry;
•: the loss of a large customer;
•: announcements by us or our competitors of significant contracts or acquisitions;
•: changes in accounting standards, policies, guidance, interpretations or principles;
•: general economic conditions;
•: the failure of securities analysts to cover our common units or changes in financial estimates by analysts;
•: future sales of our common units; and
•: other factors described in these "Risk Factors."

Our General Partner intends to limit its liability regarding our obligations.

Our General Partner intends to limit its liability under contractual arrangements so that the counterparties to such arrangements have recourse only against our assets, and not against our General Partner or its assets. Our General Partner may therefore cause us to incur indebtedness or other obligations that are nonrecourse to our General Partner. Our partnership agreement provides that any action taken by our General Partner to limit its liability is not a breach of our General Partner's fiduciary duties, even if we could have obtained more favorable terms without the limitation on liability. In addition, we are obligated to reimburse or indemnify our General Partner to the extent that it incurs obligations on our behalf. Any such reimbursement or indemnification payments would reduce the amount of cash otherwise available for distribution to our unitholders.

Our partnership agreement requires that we distribute all of our available cash, which could limit our ability to grow and make acquisitions.

We expect that we will distribute all of our available cash to our unitholders and will rely primarily upon external financing sources, including commercial bank borrowings and the issuance of debt and equity securities, to fund our acquisitions and expansion capital expenditures. As a result, to the extent we are unable to finance growth externally, our cash distribution policy will significantly impair our ability to grow.

In addition, because we distribute all of our available cash, we may not grow as quickly as businesses that reinvest their available cash to expand ongoing operations. To the extent we issue additional units in connection with any acquisitions or expansion capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level. There are no limitations in our partnership agreement or our credit facility on our ability to issue additional units, including units ranking senior to the common units. The incurrence of additional commercial borrowings or other debt to finance our growth strategy would result in increased interest expense, which, in turn, may impact the available cash that we have to distribute to our unitholders.

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While our partnership agreement requires us to distribute all of our available cash, our partnership agreement, including provisions requiring us to make cash distributions contained therein, may be amended. Our partnership agreement generally may not be amended during the subordination period without the approval of our public common unitholders. However, our partnership agreement can be amended with the consent of our General Partner and the approval of a majority of the outstanding common units (including common units held by affiliates of our General Partner) after the subordination period has ended. As of December 31, 2012, affiliates of our General Partner owned, directly or indirectly, 15.3% of the outstanding common units and all of our outstanding subordinated units.

Reimbursements due to our General Partner and its affiliates for services provided to us or on our behalf will reduce cash available for distribution to our common unitholders. The amount and timing of such reimbursements will be determined by our General Partner.

Prior to making any distribution on our common units, we will reimburse our General Partner and its affiliates, including Southcross Energy LLC, for expenses they incur and payments they make on our behalf. Under our partnership agreement, we will reimburse our General Partner and its affiliates for certain expenses incurred on our behalf and includes, among other items, compensation expense for all employees required to manage and operate our business. Our partnership agreement provides that our General Partner will determine in good faith the expenses that are allocable to us. The reimbursement of expenses and payment of fees, if any, to our General Partner and its affiliates will reduce the amount of available cash to pay cash distributions to our common unitholders.

Our partnership agreement replaces our General Partner's fiduciary duties to holders of our common and subordinated units with contractual standards governing its duties.

Our partnership agreement contains provisions that eliminate the fiduciary duties to which our General Partner would otherwise be held by state fiduciary duty law and replaces those duties with several different contractual standards. For example, our partnership agreement permits our General Partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our General Partner, free of any duties to us and our unitholders other than the implied contractual covenant of good faith and fair dealing, which means that a court will enforce the reasonable expectations of the partners where the language in the partnership agreement does not provide for a clear course of action. This entitles our General Partner to consider only the interests and factors that it desires and relieves it of any duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or our limited partners. Examples of decisions that our General Partner may make in its individual capacity include:

•: how to allocate corporate opportunities among us and its affiliates;
•: whether to exercise its limited call right;
•: whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our General Partner;
•: how to exercise its voting rights with respect to the units it owns;
•: whether to elect to reset target distribution levels;
•: whether to transfer the incentive distribution rights or any units it owns to a third party; and

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•: whether or not to consent to any merger or consolidation of the partnership or amendment to the partnership agreement.

By purchasing a common unit, a common unitholder agrees to become bound by the provisions in the partnership agreement, including the provisions discussed above.

Our partnership agreement restricts the rights of holders of our common and subordinated units with respect to actions taken by our General Partner that might otherwise constitute breaches of fiduciary duty.

Our partnership agreement contains provisions that restrict the rights of unitholders with respect to actions taken by our General Partner that might otherwise constitute breaches of fiduciary duty under state fiduciary duty law. For example, our partnership agreement provides that:

•

whenever our General Partner makes a determination or takes, or declines to take, any other action in its capacity as our General Partner, our General Partner is required to make such determination, or take or decline to take such other action, in good faith, meaning it subjectively believed that the decision was in the best interest of the partnership and our unitholders, and except as specifically provided by our partnership agreement, will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;

•

our General Partner will not have any liability to us or our unitholders for decisions made in its capacity as a General Partner so long as such decisions are made in good faith;

•

our General Partner and its officers and directors will not be liable for monetary damages to us, our limited partners or their assignees resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our General Partner or its officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and

•

our General Partner will not be in breach of its obligations under the partnership agreement (including any duties to us or our unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is:

•: approved by the conflicts committee of the board of directors of our General Partner, although our General Partner is not obligated to seek such approval;
•: approved by the vote of a majority of the outstanding common units, excluding any common units owned by our General Partner and its affiliates;
•: determined by the board of directors of our General Partner to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or
•: determined by the board of directors of our General Partner to be fair and reasonable to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us.

In connection with a situation involving a transaction with an affiliate or a conflict of interest, any determination by our General Partner must be made in good faith. If an affiliate transaction or the resolution of a conflict of interest is not approved by our common unitholders or the conflicts committee and the board of directors of our General Partner determines that the resolution or course of action taken with respect to the affiliate transaction or conflict of interest satisfies either of the standards set forth in the final two subclauses above, then it will be presumed that, in making its

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decision, the board of directors acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.

Our partnership agreement provides that our conflicts committee may be comprised of one or more independent directors. If we establish a conflicts committee with only one independent director, your interests may not be as well served as if we had a conflicts committee comprised of at least two independent directors. A single-member conflicts committee would not have the benefit of discussion with, and input from, other independent directors.

Our General Partner may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our General Partner's incentive distribution rights without the approval of the conflicts committee of our General Partner's board or our unitholders. This election may result in lower distributions to our common unitholders in certain situations.

Our General Partner has the right, at any time when there are no subordinated units outstanding and it has received incentive distributions at the highest level to which it is entitled (48.0%) for each of the prior four consecutive fiscal quarters, to reset the initial target distribution levels at higher levels based on our cash distribution at the time of the exercise of the reset election. Following a reset election by our General Partner, the minimum quarterly distribution will be reset to an amount equal to the average cash distribution per unit for the two fiscal quarters immediately preceding the reset election (such amount is referred to as the "reset minimum quarterly distribution"), and the target distribution levels will be reset to correspondingly higher levels based on percentage increases above the reset minimum quarterly distribution.

We anticipate that our General Partner would exercise this reset right in order to facilitate acquisitions or internal growth projects that would not be sufficiently accretive to cash distributions per common unit without such conversion; however, it is possible that our General Partner could exercise this reset election at a time when we are experiencing declines in our aggregate cash distributions or at a time when our General Partner expects that we will experience declines in our aggregate cash distributions in the foreseeable future. In such situations, our General Partner may be experiencing, or may expect to experience, declines in the cash distributions it receives related to its incentive distribution rights and may therefore desire to be issued common units, which are entitled to specified priorities with respect to our distributions and which therefore may be more advantageous for the General Partner to own in lieu of the right to receive incentive distribution payments based on target distribution levels that are less certain to be achieved in the then-current business environment. As a result, a reset election may cause our common unitholders to experience dilution in the amount of cash distributions that they would have otherwise received had we not issued common units to our General Partner in connection with resetting the target distribution levels related to our General Partner's incentive distribution rights.

Holders of our common units have limited voting rights and are not entitled to elect our General Partner or its directors.

Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management's decisions regarding our business. Unitholders have no right on an annual or ongoing basis to elect our General Partner or its board of directors. The board of directors of our General Partner will be chosen by Southcross Energy LLC. Furthermore, if the unitholders are dissatisfied with the performance of our General Partner, they will have little ability to remove our General Partner. As a result of these limitations, the price at which the common units will trade could be diminished because of the absence or reduction of a takeover premium in the trading price. Our partnership agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our

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operations, as well as other provisions limiting the unitholders' ability to influence the manner or direction of management.

Even if holders of our common units are dissatisfied, they cannot initially remove our General Partner without its consent.

Our unitholders are currently unable to remove our General Partner without its consent because our General Partner and its affiliates own sufficient units to be able to prevent its removal. The vote of the holders of at least 66 ² / 3 % of all outstanding limited partner units voting together as a single class is required to remove our General Partner. As of December 31, 2012, affiliates of our General Partner own 57.6% of our outstanding common and subordinated units. Also, if our General Partner is removed without cause during the subordination period and units held by our General Partner and its affiliates are not voted in favor of that removal, all remaining subordinated units will automatically convert into common units and any existing arrearages on our common units will be extinguished. A removal of our General Partner under these circumstances would adversely affect our common units by prematurely eliminating their distribution and liquidation preference over our subordinated units, which would otherwise have continued until we had met certain distribution and performance tests. Cause is narrowly defined to mean that a court of competent jurisdiction has entered a final, non-appealable judgment finding our General Partner liable for actual fraud or willful or wanton misconduct in its capacity as our General Partner. Cause does not include most cases of charges of poor management of the business, so the removal of our General Partner because of the unitholder's dissatisfaction with our General Partner's performance in managing our partnership will most likely result in the termination of the subordination period and the conversion of all subordinated units to common units.

Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.

Unitholders' voting rights are further restricted by a provision of our partnership agreement providing that any units held by a person that owns 20% or more of any class of units then outstanding, other than our General Partner, its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our General Partner, cannot vote on any matter.

Our General Partner interest or the control of our General Partner may be transferred to a third party without unitholder consent.

Our General Partner may transfer its General Partner interest to a third party in a merger or in a sale of all or substantially all of its assets without the consent of the unitholders. Furthermore, our partnership agreement does not restrict the ability of Southcross Energy LLC to transfer all or a portion of its ownership interest in our General Partner to a third party. The new owner of our General Partner would then be in a position to replace the board of directors and officers of our General Partner with its own designees and thereby exert significant control over the decisions made by the board of directors and officers. This effectively permits a "change of control" without the vote or consent of the unitholders.

We may issue additional units without your approval, which would dilute your existing ownership interests.

Our partnership agreement does not limit the number of additional limited partner interests that we may issue at any time without the approval of our unitholders. The issuance by us of additional common units or other equity securities of equal or senior rank will have the following effects:

•: our existing unitholders' proportionate ownership interest in us will decrease;

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•: the amount of cash available for distribution on each unit may decrease;
•: because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholders will increase;
•: the ratio of taxable income to distributions may increase;
•: the relative voting strength of each previously outstanding unit may be diminished; and
•: the market price of the common units may decline.

Southcross Energy LLC may sell units in the public or private markets, and such sales could have an adverse impact on the trading price of the common units.

As of December 31, 2012, Southcross Energy LLC held an aggregate of 1,863,713 common units and 12,213,713 subordinated units. All of the subordinated units will convert into common units at the end of the subordination period. The sale of these units in the public or private markets could have an adverse impact on the price of the common units or on any trading market that may develop.

Our General Partner has a limited call right that may require you to sell your units at an undesirable time or price.

If at any time our General Partner and its affiliates own more than 80% of the common units, our General Partner will have the right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by unaffiliated persons at a price that is not less than their then-current market price, as calculated pursuant to the terms of our partnership agreement. As a result, you may be required to sell your common units at an undesirable time or price and may not receive any return on your investment. You may also incur a tax liability upon a sale of your units. As of December 31, 2012, Southcross Energy LLC owned approximately 15.3% of our 12,213,713 outstanding common units. At the end of the subordination period, assuming no additional issuances of common units (other than upon the conversion of the subordinated units), Southcross Energy LLC will own approximately 57.6% of our outstanding common units.

Your liability may not be limited if a court finds that unitholder action constitutes control of our business.

A general partner of a partnership generally has unlimited liability for the obligations of the partnership, except for those contractual obligations of the partnership that are expressly made without recourse to the general partner. Our partnership is organized under Delaware law, and we conduct business in a number of other states. The limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some of the other states in which we do business. You could be liable for any and all of our obligations as if you were a general partner if a court or government agency were to determine that:

•: we were conducting business in a state but had not complied with that particular state's partnership statute; or
•: your right to act with other unitholders to remove or replace our General Partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitute "control" of our business.

Unitholders may have liability to repay distributions that were wrongfully distributed to them.

Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under Section 17-607 of the Delaware Revised Uniform Limited Partnership Act,

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we may not make a distribution to you if the distribution would cause our liabilities to exceed the fair value of our assets. Delaware law provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount. Substituted limited partners are liable both for the obligations of the assignor to make contributions to the partnership that were known to the substituted limited partner at the time it became a limited partner and for those obligations that were unknown if the liabilities could have been determined from the partnership agreement. Neither liabilities to partners on account of their partnership interest nor liabilities that are non-recourse to the partnership are counted for purposes of determining whether a distribution is permitted.

Tax Risks

Our tax treatment depends on our status as a partnership for federal income tax purposes. If the Internal Revenue Service (IRS) were to treat us as a corporation for federal income tax purposes, which would subject us to entity-level taxation, then our cash available for distribution to our unitholders would be substantially reduced.

The anticipated after-tax economic benefit of an investment in the common units depends largely on our being treated as a partnership for federal income tax purposes. We have not requested a ruling from the IRS on this or any other tax matter affecting us.

Despite the fact that we are a limited partnership under Delaware law, it is possible in certain circumstances for a partnership such as ours to be treated as a corporation for federal income tax purposes. A change in our business or a change in current law could cause us to be treated as a corporation for federal income tax purposes or otherwise subject us to taxation as an entity.

If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate, which is currently a maximum of 35%, and would likely pay state and local income tax at varying rates. Distributions would generally be taxed again as corporate dividends (to the extent of our current and accumulated earnings and profits), and no income, gains, losses, deductions, or credits would flow through to our unitholders. Because a tax would be imposed upon us as a corporation, our cash available for distribution to our unitholders would be substantially reduced. Therefore, if we were treated as a corporation for federal income tax purposes, there would be material reduction in the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the value of our common units.

Our partnership agreement provides that, if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us to entity-level taxation for federal, state or local income tax purposes, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact of that law on us.

If we were subjected to a material amount of additional entity-level taxation by individual states, it would reduce our cash available for distribution to our unitholders.

Changes in current state law may subject us to additional entity-level taxation by individual states. Because of widespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms of taxation. Imposition of any such taxes may substantially reduce the cash available for distribution to our unitholders. Our partnership agreement provides that, if a law is enacted or existing law is modified or interpreted in a manner that subjects us to entity-level taxation, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact of that law on us.

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The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.

The present federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may be modified by administrative, legislative or judicial interpretation at any time. For example, from time to time members of the U.S. Congress propose and consider substantive changes to the existing federal income tax laws that affect publicly traded partnerships. We are unable to predict whether any such changes will ultimately be enacted. However, it is possible that a change in law could affect us and may be applied retroactively. Any such changes could negatively impact the value of an investment in our common units.

Unitholders' share of our income will be taxable to them for federal income tax purposes even if they do not receive any cash distributions from us.

Because a unitholder will be treated as a partner to whom we will allocate taxable income that could be different in amount than the cash we distribute, a unitholder's allocable share of our taxable income will be taxable to it, which may require the payment of federal income taxes and, in some cases, state and local income taxes, on their share of our taxable income even if the unitholder receives no cash distributions from us. Our unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax liability that results from that income.

If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted and the cost of any IRS contest will reduce our cash available for distribution to our unitholders.

We have not requested a ruling from the IRS with respect to our treatment as a partnership for federal income tax purposes. The IRS may adopt positions that differ from the positions we take or may take, and the IRS's positions may ultimately be sustained. It may be necessary to resort to administrative or court proceedings to sustain some or all the positions we take or may take. A court may not agree with some or all of our counsel's conclusions or the positions we take. Any contest with the IRS, and the outcome of any IRS contest, may have an adverse impact on the market for our common units and the price at which they trade. In addition, our costs of any contest with the IRS will be borne indirectly by our unitholders and our General Partner because the costs will reduce our cash available for distribution.

Tax gain or loss on the disposition of our common units could be more or less than expected.

If a unitholder sells his or her common units, a gain or loss will be recognized for federal income tax purposes equal to the difference between the amount realized and their tax basis in those common units. Because distributions in excess of their allocable share of our net taxable income decrease their tax basis in their common units, the amount, if any, of such prior excess distributions with respect to the common units they sell will, in effect, become taxable income to them if they sell such common units at a price greater than their tax basis in those common units, even if the price they receive is less than their original cost. Furthermore, a substantial portion of the amount realized on any sale of their common units, whether or not representing gain, may be taxed as ordinary income due to potential recapture items, including depreciation recapture. In addition, because the amount realized includes a unitholder's share of our nonrecourse liabilities, if our unitholders sell their common units, they may incur a tax liability in excess of the amount of cash they receive from the sale.

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Tax-exempt entities and non-U.S. persons face unique tax issues from owning our common units that may result in adverse tax consequences to them.

Investment in common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts (known as IRAs), and non-U.S. persons raises issues unique to them. Distributions to non-U.S. persons will be reduced by withholding taxes at the highest applicable effective tax rate, and non-U.S. persons will be required to file federal income tax returns and pay tax on their share of our taxable income. If our unitholders are a tax-exempt entity or a non-U.S. person, such unitholders should consult a tax advisor before investing in our common units.

We will treat each purchaser of common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units.

Because we cannot match transferors and transferees of common units and because of other reasons, we have adopted depreciation and amortization positions that may not conform to all aspects of existing Treasury Regulations. A successful IRS challenge to those positions could adversely affect the amount of tax benefits available to our unitholders. It also could affect the timing of these tax benefits or the amount of gain from their sale of common units and could have a negative impact on the value of our common units or result in audit adjustments to our unitholders tax returns.

We prorate our items of income, gain, loss and deduction for federal income tax purposes between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders.

We will prorate our items of income, gain, loss and deduction for federal income tax purposes between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The use of this proration method may not be permitted under existing Treasury Regulations. Recently, however, the U.S. Treasury Department issued proposed regulations that provide a safe harbor pursuant to which publicly traded partnerships may use a similar monthly simplifying convention to allocate tax items among transferor and transferee unitholders. Nonetheless, the proposed regulations do not specifically authorize the use of the proration method we have adopted. If the IRS were to challenge this method or new Treasury regulations were issued, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.

A unitholder whose common units are loaned to a "short seller" to effect a short sale of common units may be considered as having disposed of those common units. If so, such unitholder would no longer be treated for federal income tax purposes as a partner with respect to those common units during the period of the loan and may recognize gain or loss from the disposition.

Because a unitholder whose common units are loaned to a "short seller" to effect a short sale of common units may be considered as having disposed of the loaned common units, he may no longer be treated for federal income tax purposes as a partner with respect to those common units during the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan to the short seller, any of our income, gain, loss or deduction with respect to those common units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those common units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to consult a tax advisor to discuss whether it is advisable to

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modify any applicable brokerage account agreements to prohibit their brokers from loaning their common units.

We will adopt certain valuation methodologies and monthly conventions for federal income tax purposes that may result in a shift of income, gain, loss and deduction between our General Partner and our unitholders. The IRS may challenge this treatment, which could adversely affect the value of the common units.

When we issue additional units or engage in certain other transactions, we will determine the fair market value of our assets and allocate any unrealized gain or loss attributable to our assets to the capital accounts of our unitholders and our General Partner. Our methodology may be viewed as understating the value of our assets. In that case, there may be a shift of income, gain, loss and deduction between certain unitholders and our General Partner, which may be unfavorable to such unitholders. Moreover, under our valuation methods, subsequent purchasers of common units may have a greater portion of their Internal Revenue Code Section 743(b) adjustment allocated to our tangible assets and a lesser portion allocated to our intangible assets. The IRS may challenge our valuation methods, or our allocation of the Section 743(b) adjustment attributable to our tangible and intangible assets, and allocations of taxable income, gain, loss and deduction between our General Partner and certain of our unitholders.

A successful IRS challenge to these methods or allocations could adversely affect the amount of taxable income or loss being allocated to our unitholders. It also could affect the amount of taxable gain from our unitholders' sale of common units and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders' tax returns without the benefit of additional deductions.

The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in the termination of our partnership for federal income tax purposes.

We will be considered to have technically terminated our partnership for federal income tax purposes if there is a sale or exchange of 50% or more of the total interests in our capital and profits within a twelve-month period. For purposes of determining whether the 50% threshold has been met, multiple sales of the same interest will be counted only once. Our technical termination would, among other things, result in the closing of our taxable year for all unitholders, which would result in us filing two tax returns (and our unitholders could receive two Schedules K-1 if relief was not available, as described below) for one fiscal year and could result in a deferral of depreciation deductions allowable in computing our taxable income. In the case of a unitholder reporting on a taxable year other than a fiscal year ending December 31, the closing of our taxable year may also result in more than twelve months of our taxable income or loss being includable in his taxable income for the year of termination. Our termination currently would not affect our classification as a partnership for federal income tax purposes, but instead we would be treated as a new partnership for tax purposes. If treated as a new partnership, we must make new tax elections and could be subject to penalties if we are unable to determine that a termination occurred. The IRS has recently announced a publicly traded partnership technical termination relief program whereby, if a publicly traded partnership that technically terminated requests publicly traded partnership technical termination relief and such relief is granted by the IRS, among other things, the partnership will only have to provide one Schedule K-1 to unitholders for the year notwithstanding two partnership tax years.

As a result of investing in our common units, our unitholders may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire properties.

In addition to federal income taxes, our unitholders will likely be subject to other taxes, including state and local taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are

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imposed by the various jurisdictions in which we conduct business or control property now or in the future, even if they do not live in any of those jurisdictions. Our unitholders will likely be required to file state and local income tax returns and pay state and local income taxes in some or all of these various jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with those requirements. We initially expect to conduct business in South Texas, Mississippi and Alabama. Some of these states currently impose a personal income tax on individuals. As we make acquisitions or expand our business, we may control assets or conduct business in additional states that impose a personal income tax. It is our unitholders responsibility to file all federal, state and local tax returns.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our real property falls into two categories:

1.: parcels that we own in fee title, and
2.: parcels in which our interest derives from leases, easements, rights-of-way, permits or licenses from landowners or governmental authorities, permitting the use of such land for our operations.

Portions of the land on which our plants and other major facilities are located are owned by us in fee title, and we believe that we have satisfactory title to these lands. The remainder of the land on which our plant sites and major facilities are located are held by us pursuant to surface leases between us, as lessee, and the fee owner of the lands, as lessors.

We are not aware of any challenge to the underlying fee title of any material lease, easement, right-of-way, permit or license held by us or to our title to any material lease, easement, right-of-way, permit or lease, and we believe that we have satisfactory title to all of our material leases, easements, rights-of-way, permits and licenses. A description of our properties is included in Item 1—"Business" and incorporated herein by reference.

Item 3. Legal Proceedings

From time-to-time, we are party to certain legal, regulatory or administrative proceedings that arise in the ordinary course and are incidental to our business. There are currently no such pending proceedings to which we are a party that our management believes will have a material effect on our results of operations, cash flows or financial condition.

On March 5, 2013, a subsidiary of the Partnership filed suit against Formosa. The lawsuit seeks recoveries of losses which we believe our subsidiary experienced as a result of Formosa's failure to perform certain of its obligations under the gas processing contract between the parties. We cannot predict the outcome of such litigation.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities

Market Information

Our common units have been listed on the New York Stock Exchange since November 7, 2012 under the symbol "SXE." The following table sets forth the high and low sales prices of our common units and the per unit distributions declared for the quarter ended December 31, 2012. Distributions are recorded when paid.

	Unit Prices

	Unit Prices				Distributions per common unit
	High		Low		Distributions per common unit			Record date	Payment date
Quarter Ended	$	23.96	$	22.08	$	0.24	⁽²⁾	February 11, 2013	February 14, 2013
December 31, 2012 ⁽¹⁾

⁽¹⁾: From November 7, 2012, the day our common units began trading on the NYSE through December 31, 2012.
⁽²⁾: Pro-rated cash distribution for the portion of the quarter following the closing of the Partnership's IPO on November 7, 2012 which corresponds to the minimum quarterly distribution of $0.40 per unit or $1.60 on an annualized basis.

The last reported sale price of our common units on the NYSE on April 9, 2013, was $19.98 and there were 3,198 unitholders of record of our common units. As of April 9, 2013, we have issued 12,213,713 subordinated units and 498,518 general partner units, for which there is no established trading market.

Distribution of Available Cash

General. Our partnership agreement requires that, within 45 days after the end of each quarter, beginning with the quarter ending December 31, 2012, we distribute all of our available cash to unitholders of record on the applicable record date.

Definition of Available Cash. Available cash generally means, for any quarter, all cash on hand at the end of that quarter:

•

less the amount of cash reserves established by our General Partner at the date of determination of available cash for that quarter to:

•: provide for the proper conduct of our business (including reserves for our future capital expenditures and anticipated future credit needs);
•: comply with applicable law, any of our debt instruments or other agreements; or
•: provide funds for distributions to our unitholders and to our General Partner for any one or more of the next four quarters (provided that our General Partner may not establish cash reserves for distributions unless it determines that the establishment of reserves will not prevent us from distributing the minimum quarterly distribution on all common units and any cumulative arrearages on such common units for the current quarter);

•

plus, if our General Partner so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter.

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Working capital borrowings are generally borrowings that are made under a credit facility or another arrangement, are used solely for working capital purposes or to pay distributions to unitholders, and are intended to be repaid within 12 months.

Minimum Quarterly Distribution. We intend to make a minimum quarterly distribution to the holders of our common units and subordinated units of $0.40 per unit, or $1.60 on an annualized basis, to the extent we have sufficient cash from our operations after the establishment of cash reserves and the payment of costs and expenses, including reimbursements of expenses to our General Partner. However, there is no guarantee that we will pay the minimum quarterly distribution on our units in any quarter. Even if our cash distribution policy is not modified or revoked, the amount of distributions paid under our policy and the decision to make any distribution is determined by our General Partner, taking into consideration the terms of our partnership agreement and requirements under our credit agreement.

General Partner Interest and Incentive Distribution Rights

Our General Partner is currently entitled to 2% of all distributions that we make prior to our liquidation. Our General Partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its current General Partner interest. Our General Partner's initial 2% interest in our distributions will be reduced if we issue additional limited partner units in the future and our General Partner does not contribute a proportionate amount of capital to us to maintain its 2% general partner interest.

Our General Partner also currently holds incentive distribution rights that entitle it to receive increasing percentages, up to a maximum of 50%, of the cash we distribute from operating surplus in excess of $0.46 per unit per quarter. The maximum distribution of 50% includes distributions paid to our General Partner on its 2% general partner interest and assumes that our General Partner maintains its general partner interest at 2%. The maximum distribution of 50% does not include any distributions that our General Partner may receive on any limited partner units that it owns.

The following table illustrates the percentage allocations of available cash from operating surplus between the unitholders and our General Partner based on the specified target distribution levels. The amounts set forth under "Marginal Percentage Interest in Distributions" are the percentage interests of our General Partner and the unitholders in any available cash from operating surplus we distribute up to and including the corresponding amount in the column "Total Quarterly Distribution Per Unit Target Amount." The percentage interests shown for our unitholders and our General Partner for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below for our General Partner include its 2% general partner interest and assume that our General Partner has contributed any additional capital necessary to maintain its 2% general partner interest, our General Partner has not transferred its incentive distribution rights and that there are no arrearages on common units.

		Marginal percentage interest in distributions

	Total quarterly distribution per unit target amount	Unitholders			General Partner
Minimum quarterly distribution	$0.40		98	%		2	%
First target distribution	$0.40 up to $0.46		98	%		2	%
Second target distribution	above $0.46 up to $0.50		85	%		15	%
Third target distribution	above $0.50 up to $0.60		75	%		25	%
Thereafter	above $0.60		50	%		50	%

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Performance Graph

The following performance graph compares the cumulative total unitholder return of our common units with the Standard & Poor's 500 Stock Index ("S&P 500") and the Alerian MLP Index for the period from our IPO (November 7, 2012) to December 31, 2012, assuming an initial investment of $100.

Comparison of Cumulative Total Return

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Item 6. Selected Financial Data

The information in this section should be read in conjunction with Part II, Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations", and Item 8., "Financial Statements and Supplementary Data." The preparation of our consolidated financial statements requires us to make a number of significant judgments and estimates, as well as consider a number of uncertainties. As such, the information reflected in the table below may not be indicative of our future results of operations or financial condition. The following table includes selected financial data as of and for each of the four years from Southcross Energy LLC's predecessor's inception through the period ended December 31, 2012 (in thousands, except per unit data and volume data).

													Southcross Energy LLC's Predecessor


	Year Ended December 31,
	Year Ended December 31,									June 2, 2009 through December 31, 2009 ⁽¹⁾			January 1, 2009 through July 31, 2009
	2012 ⁽¹⁾			2011 ⁽¹⁾			2010 ⁽¹⁾			June 2, 2009 through December 31, 2009 ⁽¹⁾			January 1, 2009 through July 31, 2009
Statement of operations data:
Revenues	$	496,129		$	523,149		$	498,747		$	206,634		$	330,870
Income from operations	$	3,289		$	16,388		$	19,733		$	9,325		$	1,798
Net income (loss)	$	(4,488	)	$	7,539		$	9,719		$	4,408		$	1,721
Less:
Net loss from January 1, 2012 through
November 6, 2012		(260	)

Net loss for partners	$	(4,228	)
General partner's interest		(85	)

Limited partners' interest	$	(4,143	)

Net loss from January 1, 2012 through November 6, 2012		(260	)
Less deemed dividend on:
Redeemable preferred units		(2,693	)		(1,553	)		—			—			—
Series B redeemable preferred units		(4,696	)		—			—			—			—
Series C redeemable preferred units		(2,012	)		—			—			—			—
Preferred units		(13,249	)		(14,131	)		(12,802	)		(4,818	)		—

Net loss attributable to Southcross Energy LLC common unitholders	$	(22,910	)	$	(8,145	)	$	(3,083	)	$	(410	)	$	1,721

Basic and diluted earnings per unit
Net loss allocated to limited partner common units (from November 7, 2012 through December 31, 2012)	$	(2,072	)
Weighted average number of limited partner common units outstanding		12,213,713
Loss per common unit	$	(0.17	)
Net loss allocated to Southcross Energy LLC common units	$	(22,910	)	$	(8,145	)	$	(3,083	)	$	(410	)	$	1,721
Weighted average number of Southcross Energy LLC common units outstanding		1,198,429			1,197,876			1,197,257			1,197,007			n/a
Loss per Southcross Energy LLC common unit ⁽²⁾	$	(19.12	)	$	(6.79	)	$	(2.57	)	$	(0.34	)	$	n/a
Performance measures:
Distributions declared per unit ⁽³⁾	$	0.24		$	n/a		$	n/a		$	n/a		$	n/a
Other financial data:
Adjusted EBITDA ⁽⁴⁾	$	24,019		$	28,957		$	30,869		$	16,517		$	9,236
Gross operating margin ⁽⁴⁾	$	71,640		$	62,569		$	59,316		$	27,589		$	29,502
Maintenance capital expenditures	$	5,193		$	5,317		$	3,402		$	3,025		$	565
Expansion capital expenditures	$	164,623		$	150,669		$	1,843		$	1,669		$	250
Operating data:
Average throughput volumes of natural gas (MMBtu/d)		553,093			506,975			471,265			492,350			592,243
Average volume of processed gas (MMBtu/d)		206,045			155,475			153,557			166,018			188,642
Average volume of NGLs sold (Bbls/d)		9,385			5,131			5,557			5,369			5,757
Realized prices on natural gas volumes sold/Btu ($/MMBtu)	$	2.83		$	4.05		$	4.42		$	3.97		$	3.95
Realized prices on NGL volumes sold/gal ($/gal)	$	0.87		$	1.35		$	1.10		$	1.01		$	0.69
Balance sheet data (at period end):
Cash and cash equivalents	$	7,490		$	1,412		$	20,323		$	5,724
Trade accounts receivable	$	50,994		$	41,234		$	35,059		$	39,956
Property, plant, and equipment, net	$	550,603		$	369,861		$	229,309		$	235,065
Total assets	$	618,605		$	420,385		$	289,643		$	287,808
Total debt (current and long term)	$	191,000		$	208,280		$	115,000		$	119,949

⁽¹⁾: Reflects financial data of Southcross Energy Partners, L.P. from November 7, 2012 to December 31, 2012 subsequent to our IPO, and Southcross Energy LLC for periods ending prior to November 7, 2012.
⁽²⁾: Earnings per unit of Southcross Energy LLC prior to the initial public offering of Southcross Energy Partners, L.P.
⁽³⁾: A distribution of $0.24 attributable to fourth quarter 2012 is the first distribution declared by the Partnership and corresponds to the minimum quarterly distribution of $0.40 per unit, or $1.60 on an annualized basis, pro-rated for the portion of the quarter following the closing of the Partnership's initial public offering on November 7, 2012. This distribution was declared and paid in February 2013 therefore no accrual was required as of December 31, 2012.
⁽⁴⁾: See Part II. Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations" for definition of Non-GAAP financial metrics and reconcilation of Non-GAAP metrics to its most directly comparable GAAP financial measure.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of our historical consolidated financial condition and results of operations that is intended to help the reader understand our business, results of operations and financial condition. It should be read in conjunction with other sections of this report, including our historical consolidated financial statements and accompanying notes thereto included in Part II—Item 8 of this report.

This Management's Discussion and Analysis and Financial Condition and Results of Operations includes the following sections:

•: Overview and How We Evaluate our Operations
•: Current Year Highlights
•: Results of Operations
•: Liquidity and Capital Resources
•: Off-Balance Sheet Arrangements
•: Contractual Obligations
•: Critical Accounting Estimates
•: New Accounting Pronouncements

Overview and How We Evaluate our Operations

Overview

Southcross Energy Partners, L.P. (the "Partnership," "Southcross," the "Company", "we", "our" or "us"), which closed its initial public offering ("IPO") on November 7, 2012, is a Delaware limited partnership formed in April 2012. Southcross Energy LLC is a Delaware limited liability company, and Southcross Energy LLC is our predecessor for accounting purposes (the "Predecessor"). References in this Form 10-K to the Partnership or the Company, when used for periods prior to the IPO, refer to Southcross Energy LLC and its consolidated subsidiaries, unless otherwise specifically noted. References in this Form 10-K to the Partnership or the Company, when used for periods beginning at or following the IPO, refer collectively to the Partnership and its consolidated subsidiaries. This report reflects the consolidated assets, liabilities, results of operations and cash flows of Southcross Energy Partners, L.P. beginning November 7, 2012 and Southcross Energy LLC for periods ending prior to November 7, 2012.

The Partnership provides natural gas gathering, processing, treating, compression and transportation services and natural gas liquid ("NGL") fractionation and transportation services for its producer customers. We also source, purchase, transport and sell natural gas and NGLs to our power generation, industrial and utility customers. Our assets are located in South Texas, Mississippi and Alabama and as of December 31, 2012 include three gas processing plants, two NGL fractionation plants and approximately 2,700 miles of pipeline. Our South Texas assets operate in or within close proximity to the Eagle Ford shale region. Our assets are strategically positioned to provide transportation of natural gas and NGLs to power generation, industrial and utility customers as well as to unaffiliated intrastate and interstate pipelines. The Partnership is a midstream natural gas company and operates as one reportable segment.

Industry Conditions and Trends

Our business environment and corresponding operating results are affected by key trends discussed below. Our expectations are based on assumptions made by us and information currently available to us. To the extent our underlying assumptions about, or interpretations of, available information prove

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to be incorrect, our actual results may vary materially from our expected results. Key trends that we monitor while managing our business include natural gas supply and demand dynamics overall and in our markets as well as growth production from U.S. shale plays, with specific attention on the Eagle Ford shale region.

A critical component of energy supply and demand in the United States is natural gas. Recently, the price of natural gas has been at relatively low levels. The primary driver behind this trend is increased production, especially from unconventional sources, such as natural gas shale plays, high levels of natural gas in storage and warm winter weather.

According to the U.S. Energy Information Administration, average annual natural gas production in the United States increased significantly from 2008 through 2011 with modest growth of natural gas consumption over the same period, thereby increasing storage. According to the Texas Railroad Commission, well permits increased from 2011 to 2012 in the Eagle Ford shale region by approximately 47% from 2,826 to 4,143 permitted.

We believe that growth opportunities for our business through increased demand for natural gas are likely to occur, especially as there is continued increased use of natural gas production in locations such as the Eagle Ford shale region.

Our Operations

Our integrated operations provide a full range of complementary services from wellhead to market, including gathering natural gas at the wellhead, treating natural gas to meet downstream pipeline and customer quality standards, transporting natural gas and NGLs on our pipeline, processing natural gas to separate the NGLs from the natural gas, fractionating the resulting NGLs into the various components and selling or delivering pipeline quality natural gas and NGLs to various industrial and energy markets as well as interstate pipeline systems. Through our network of pipelines, we connect our suppliers of natural gas to our customers, which include local distribution companies, and industrial, commercial and power generation customers.

Our results are determined primarily by the volumes of natural gas we gather and process, the efficiency of our processing plants and NGL fractionation plants, the commercial terms of our contractual arrangements, natural gas and NGL prices, and our operations and maintenance expense. We manage our business to attempt to maximize the gross operating margin we earn from contracts balanced against any risks we assume in our contracts. Our contracts vary in duration from one month to ten years and the pricing under our contracts varies depending upon several factors, including our competitive position, our acceptance of risks associated with longer-term contracts and our desire to recoup over the term of the contract any capital expenditures that we are required to incur in order to provide service to our customers. We purchase, gather, process, transport and sell natural gas and purchase, fractionate, and sell NGLs primarily pursuant to the following arrangements:

•: Fixed-Fee. We receive a fixed-fee per unit of natural gas volume that we gather at the wellhead, process, treat, compress and/or transport for our customers, or we receive a fixed-fee per unit of NGL volume that we fractionate. Some of our arrangements also provide for a fixed-fee for guaranteed transportation capacity on our systems.
•: Fixed-Spread. Under these arrangements, we purchase natural gas and NGLs from producers or suppliers at receipt points off our systems at an index price plus or minus a fixed price differential and sell these volumes of natural gas and NGLs at delivery points on our systems at the same index price, plus or minus a fixed price differential. By entering into such back-to-back purchases and sales, we are able to mitigate our risk associated with changes in the general commodity price levels of natural gas and NGLs. We remain subject to variations in our fixed-spreads to the extent we are unable to precisely match volumes purchased and sold in a given

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time period or are unable to secure the supply or to produce or market the necessary volume of products at our anticipated differentials to the index price.

•: Commodity-Sensitive. In exchange for our processing services, we may remit to a customer a percentage of the proceeds from our sales, or a percentage of the physical volume, of residue natural gas and/or NGLs that result from our natural gas processing, or we may purchase NGLs from customers at set fixed NGL recoveries and retain the balance of the proceeds or physical commodity for our own account. These arrangements are generally combined with fixed-fee and fixed-spread arrangements for processing services and, therefore, represent only a portion of a processing contract's value. The revenues we receive from these arrangements directly correlate with fluctuating general commodity price levels of natural gas and NGLs and the volume of NGLs recovered relative to the fixed recovery obligations.

We assess gross operating margin opportunities across our integrated value stream, so that processing margins may be supplemented by gathering and transportation fees and opportunities to sell residue gas at fixed-spreads. Gross operating margin earned under fixed-fee and fixed-spread arrangements is directly related to the volume of natural gas that flows through our systems and is generally independent from general commodity price levels. A sustained decline in commodity prices could result in a decline in volumes entering our system and, thus, a decrease in gross operating margin for our fixed-fee and fixed-spread arrangements.

Below is a table summarizing our contract mix (in thousands):

	Year ended December 31,

	2012					2011					2010
	Gross margin		Percent of total gross operating margin			Gross margin		Percent of total gross operating margin			Gross margin		Percent of total gross operating margin
Fixed-fee	$	48,055		67.0	%	$	32,340		51.7	%	$	27,541		46.4	%
Fixed-spread		18,737		26.2	%		14,544		23.2	%		15,521		26.2	%

Sub-total		66,792		93.2	%		46,884		74.9	%		43,062		72.6	%
Commodity sensitive		4,848		6.8	%		15,685		25.1	%		16,254		27.4	%

Total gross operating margin	$	71,640		100.0	%	$	62,569		100.0	%	$	59,316		100.0	%

How We Evaluate Our Operations

Our management uses a variety of financial and operational metrics to analyze our performance. We view these metrics as important factors in evaluating our profitability and review these measurements on at least a quarterly basis for consistency and trend analysis. These performance metrics include (i) volume, (ii) gross operating margin, (iii) operations and maintenance expenses, (iv) Adjusted EBITDA and (v) distributable cash flow.

Volume —We determine and analyze volumes by operating unit, but report overall volumes after elimination of intercompany deliveries. The volume of natural gas and NGLs on our systems depends on the level of production from natural gas wells connected to our systems and also from wells connected with other pipeline systems that are interconnected with our systems.

Gross Operating Margin —Gross operating margin of our contracts is one of the metrics we use to measure and evaluate our performance. Gross operating margin is not a measure calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We define gross operating margin as the sum of contract revenues less the cost of natural gas and NGLs sold. For our fixed-fee contracts, we record the fee as revenue and there is no offsetting cost of

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natural gas and NGLs sold. For our fixed-spread and commodity-sensitive arrangements, we record as revenue all of our proceeds from the sale of the natural gas or NGLs and record as an expense the associated cost of natural gas and NGLs sold.

Operations and Maintenance Expense —Our management seeks to maximize the profitability of our operations in part by minimizing, to the extent appropriate, expenses directly tied to operating and maintaining our assets. Direct labor costs, insurance costs, ad valorem and property taxes, repair and non-capitalized maintenance costs, integrity management costs, utilities, and contract services comprise the most significant portion of our operations and maintenance expense. These expenses are relatively stable and largely independent of volumes delivered through our systems, but may fluctuate depending on the activities performed during a specific period.

Adjusted EBITDA and Distributable Cash Flow —We believe that Adjusted EBITDA is a widely accepted financial indicator of our operational performance and ability to incur and service debt, fund capital expenditures and make distributions. Adjusted EBITDA is not a measure calculated in accordance with GAAP, as it does not include deductions for items such as depreciation, amortization, interest and income taxes, which may be necessary to maintain the business. We define Adjusted EBITDA as net income, plus interest expense, income tax expense, depreciation and amortization expense, certain non-cash charges such as non-cash equity compensation, unrealized losses on commodity derivative contracts and selected charges and transaction costs that are unusual or non-recurring, less interest income, income tax benefit, unrealized gains on commodity derivative contracts and selected gains that are unusual or non-recurring. Adjusted EBITDA should not be considered an alternative to net income, operating cash flow or any other measure of financial performance presented in accordance with GAAP.

Adjusted EBITDA is used as a supplemental measure by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess:

•: the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
•: the ability of our assets to generate cash sufficient to support the Partnership's indebtedness and make future cash distributions;
•: operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure; and
•: the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.

We define distributable cash flow as Adjusted EBITDA plus interest income, less cash paid for interest expense, taxes and maintenance capital expenditures and use distributable cash flow to analyze our performance. Distributable cash flow does not reflect changes in working capital balances.

Distributable cash flow is used to assess:

•: the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions to our unitholders; and
•: the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.

Non-GAAP Financial Measures

Gross operating margin, Adjusted EBITDA and distributable cash flow are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures provides useful information to investors in assessing our financial condition and results of

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operations. Net income is the GAAP measure most directly comparable to each of gross operating margin and Adjusted EBITDA. The GAAP measure most directly comparable to distributable cash flow is net cash provided by operating activities. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as an analytical tool because each excludes some but not all items that affect the most directly comparable GAAP financial measure. You should not consider any of gross operating margin, Adjusted EBITDA or distributable cash flow in isolation or as a substitute for analysis of our results as reported under GAAP. Because gross operating margin, Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Reconciliations of Non-GAAP financial Measures

The following table presents a reconciliation of gross operating margin to net (loss) income (in thousands):

	Year ended December 31,

	2012			2011			2010
Gross operating margin	$	71,640		$	62,569		$	59,316
Add (deduct):
Income tax expense		(246	)		(261	)		(1	)
Interest expense		(5,767	)		(5,348	)		(10,013	)
Loss on extinguishment of debt		(1,764	)		(3,240	)		—
General and administrative expense		(13,842	)		(9,129	)		(7,490	)
Depreciation and amortization expense		(18,977	)		(12,345	)		(10,987	)
Operations and maintenance expense		(35,532	)		(24,707	)		(21,106	)

Net (loss) income	$	(4,488	)	$	7,539		$	9,719

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The following table presents a reconciliation of net cash flows provided by operating activities to net (loss) income, Adjusted EBITDA, and distributable cash flow (in thousands):

	Year ended December 31,

	2012			2011			2010
Net cash flows provided by operating activities	$	24,323		$	20,007		$	25,493
Add (deduct):
Depreciation and amortization expense		(18,977	)		(12,345	)		(10,987	)
Unit-based compensation		(630	)		—			—
Loss on extinguishment of debt		(1,764	)		(3,240	)		—
Deferred financing costs amortization		(1,183	)		(882	)		(2,158	)
Gain on sales of plant, property and equipment		—			522			13
Unrealized derivatives loss		(141	)		(21	)		—
Changes in operating assets and liabilities:
Trade accounts receivable		9,760			2,806			(4,897	)
Prepaid expenses and other		1,246			497			(560	)
Other non-current assets		(1,786	)		2,155			(158	)
Accounts payable and accrued expenses		(16,517	)		(2,759	)		3,836
Accrued expenses and other liabilities		1,181			799			(863	)

Net (loss) income	$	(4,488	)	$	7,539		$	9,719

Add (deduct):
Depreciation and amortization expense		18,977			12,345			10,987
Interest expense		5,767			5,348			10,013
Unrealized derivatives loss		141			21			—
Loss on extinguishment of debt		1,764			3,240			—
Unit-based compensation		630			—			—
Transaction costs		—			203			149
Income tax expense		246			261			1
Management fees		568			—			—
Expenses associated with significant items		414			—			—

Adjusted EBITDA	$	24,019		$	28,957		$	30,869

Add (deduct):
Cash interest, net		(4,584	)		(4,466	)		(7,855	)
Income tax expense		(246	)		(261	)		(1	)
Maintenance capital expenditures		(5,193	)		(5,317	)		(3,402	)

Distributable cash flow	$	13,996		$	18,913		$	19,611

Current Year Highlights

The following events took place during 2012 and in early 2013 and have impacted or are likely to impact our financial condition and results of operations. The following should be read in conjunction with Part I, Item 1., "Business" of this report for a more detailed account of such events.

Financing Activities

In connection with the closing of the IPO:

•: Our General Partner conveyed a limited liability company interest in Southcross Operating to the Partnership in exchange for (i) 498,518 general partner units in the Partnership representing

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a continuation of its 2.0% general partner interest; and (ii) the Partnership's incentive distribution rights ("IDRs");

•: Southcross Energy LLC conveyed its remaining interest in Southcross Operating to the Partnership in exchange for (i) 1,863,713 common units (after the underwriters fully exercised their option to purchase additional common units on November 26, 2012 (the "Over-Allotment Option")) representing a 7.5% limited partner interest (ii) 12,213,713 subordinated units representing a 49.0% limited partner interest, (iii) the Partnership's assumption of Southcross Energy LLC's outstanding debt under its credit agreement, (iv) the right to receive $7.5 million sourced from new debt the Partnership incurred and (v) the right to receive $38.5 million in cash, a portion of which was used to reimburse Southcross Energy LLC for certain capital expenditures it incurred with respect to the contributed assets;
•: The Partnership issued 10,350,000 common units to the public including the exercise of the Over-Allotment Option, and received $187.8 million in net proceeds from the IPO, net of underwriters' discount and commissions, structuring fees, and IPO costs. These proceeds plus borrowings under the Partnership's $350.0 million senior secured credit facility with Wells Fargo Bank, N.A., and a syndicate of lenders (the "Senior Secured Credit Facility") were used to repay the outstanding debt of $270.0 million under Southcross Energy LLC's pre-existing credit agreement;

The Partnership may utilize its senior secured credit facility for working capital requirements and capital expenditures, the purchase of assets, the payment of distributions, repurchase of units and general purposes of the Partnership. For a complete description of Long-Term Debt, see Part II, Item 8, "Financial Statements and Supplementary Data—Notes to the Financial Statements—Note 6—Long-Term Debt".

Key Factors Affecting Operating Results and Financial Condition

•: Bonnie View NGL fractionation facility. In November 2012 we commenced operations and in February 2013, we completed the expansion of our NGL capacity at our Bonnie View fractionation facility increasing its capacity to 22,500 Bbls/d. The plant initiated operations with capacity of 11,500 Bbls/d. The plant fractionates y-grade NGLs produced at our Woodsboro processing plant and produces NGL component products.
•: Bonnie View startup lost revenue and expenses. During the start-up of our Bonnie View fractionation facility in the fourth quarter of 2012, we experienced periods of reduced recoveries and production of off-specification NGLs, which forced us to sell some products at reduced prices or leave NGLs in the natural gas stream and sell them at natural gas equivalent prices.
•: Bee Line gas pipeline commences operations. The Bee Line pipeline commenced gas deliveries in the fourth quarter of 2012 after partial completion of the pipeline. In February 2013, we completed construction of the 20-inch pipeline to move rich gas to our Woodsboro processing plant. The Bee Line is a 57-mile pipeline with capacity of 320 MMcf/d.
•: Gregory processing and NGL fractionation facility. Our Gregory facility includes 135 MMcf/d of gas processing capacity and an associated 4,800 barrels per day NGL fractionation facility. We commenced a turnaround maintenance project in November 2012 and we shut in this plant in January 2013 to perform extensive turnaround maintenance activities and connect additional equipment to enhance NGL recoveries. As the turnaround maintenance was nearing completion on January 26, 2013, we experienced a fire at this facility. Damage was limited to a small portion of the facility and we completed repairs and resumed operations during April 2013.
•: Formosa shut down and curtailment. In the third quarter of 2012, Formosa shut down its plant for 34 days. In addition, we were curtailed by approximately 518,748 MMBtu and 1,316,214 MMBtu

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of gas processing volumes by Formosa in the third and fourth quarter of 2012, respectively. Also Formosa adjusted ethane and propane recoveries to our detriment and in violation of our contract in the third quarter of 2012 and again in the fourth quarter of 2012.

•: Public company costs. We incurred significantly more general and administrative expenses in 2012 as a result of preparing to become and becoming a publicly traded master limited partnership in November 2012.
•: New facility operating costs. We incurred significantly more operations and maintenance costs associated with the startup of our Woodsboro and Bonnie View facilities in 2012.

As discussed above, during the fourth quarter 2012 and into first quarter 2013 we encountered operational difficulties related to a startup of our new Bonnie View NGL fractionator, curtailments and other actions by our third-party processor, and a fire on January 26, 2013 at our Gregory facility that prolonged the shutdown of the facility. We believe these items are now largely behind us. We completed the expansion of our Bonnie View NGL fractionator in February 2013. In addition, our Gregory facility became fully operational in April 2013 after repairing damage caused by the fire. These items, however, adversely impacted our operating results in the fourth quarter of 2012 and into the first quarter of 2013. As a result of this negative impact, we believed it was unlikely that we would be in compliance with our financial covenants calculated for the quarter ending March 31, 2013, such that we negotiated with our lenders and secured more favorable financial covenants and amended our Credit Facility. As a result of the amendments and after giving effect of the equity infusion and its use to repay debt on April 12, 2013, we have $27.2 million of borrowing capacity under our amended Credit Facility. Consequently, we believe we have and will continue to have sufficient liquidity to operate our business as the amended Credit Facility provides us with more favorable financial covenants than were provided previously and we believe these more favorable terms will allow us to operate our business and continue to meet our commitments. Please read "Liquidity and Capital Resources—Long-Term Debt" for a description of the amendments we have entered into with respect to our Credit Facility.

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Results of Operations

The following table summarizes our results of operations (in thousands, except operating data):

	Year ended December 31,

	2012			2011			2010
Revenues	$	496,129		$	523,149		$	498,747
Expenses:
Cost of natural gas and liquids sold		424,489			460,580			439,431
Operations and maintenance		35,532			24,707			21,106
Depreciation and amortization		18,977			12,345			10,987
General and administrative		13,842			9,129			7,490

Total expenses		492,840			506,761			479,014

Income from operations		3,289			16,388			19,733
Loss on extinguishment of debt		(1,764	)		(3,240	)		—
Interest expense		(5,767	)		(5,348	)		(10,013	)

(Loss) income before income tax expense		(4,242	)		7,800			9,720
Income tax expense		(246	)		(261	)		(1	)

Net (loss) income	$	(4,488	)	$	7,539		$	9,719

Other financial data:
Adjusted EBITDA	$	24,019		$	28,957		$	30,869
Gross operating margin	$	71,640		$	62,569		$	59,316
Maintenance capital expenditures	$	5,193		$	5,317		$	3,402
Expansion capital expenditures	$	164,623		$	150,669		$	1,843
Operating data:
Average throughput of gas (MMBtu/d)		553,093			506,975			471,265
Average volume of processed gas (MMBtu/d)		206,045			155,475			153,557
Average volume of NGLs sold (Bbls/d)		9,385			5,131			5,557
Realized prices on natural gas volumes sold/Btu ($/MMBtu)	$	2.83		$	4.05		$	4.42
Realized prices on NGL volumes sold/gal ($/gal)	$	0.87		$	1.35		$	1.10

The following table summarizes our average natural gas throughput volumes, amount of NGLs delivered, and volume of processed gas:

	Year ended December 31,

	2012		2011		2010
Average throughput volumes of natural gas (MMBtu/d)
South Texas		352,458		363,545		343,317
Mississippi/Alabama		200,635		143,430		127,948

Total average throughput volumes of natural gas		553,093		506,975		471,265

Average volume of NGLs sold (Bbls/d)		9,385		5,131		5,557
Average volume of processed gas (MMBtu/d)		206,045		155,475		153,557

2012 Compared with 2011

Volume and overview —Our average throughput volume of natural gas increased by 9.1% to 553,093 MMBtu/d in 2012 compared to 506,975 MMBtu/d in 2011. The increase was driven primarily by our

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Mississippi/Alabama systems which increased 39.9% in 2012 due to twelve months of throughput on our pipeline and gathering system that we acquired from Enterprise Alabama Intrastate, LLC ("EAI") in September 2011 compared to four months of activity in 2011. Our South Texas throughput volumes in 2012 decreased by 3.0% compared to 2011. This decrease in our South Texas throughput volumes reflects the offsetting effects of declining lean gas supply and increasing rich gas supply, the latter of which was largely timed to occur as we increased our processing and fractionation capacity late in 2012. NGLs sold increased by 82.9% to 9,385 Bbls/d in 2012 primarily the result of an increase in rich gas volumes processed at our facilities from the Eagle Ford Share area.

Our gross operating margin increased by 14.5% to $71.6 million in 2012, primarily the result of higher processing fees and gathering fees and the benefit of eight additional months of operations from the acquisition of EAI which offset negative effects occurring during 2012 of lost revenue during startup of facilities, curtailments of processed volumes and other negative factors.

The Partnership incurred a net loss of $4.5 million in 2012 compared to net income of $7.5 million in 2011. This was due primarily to higher operations and maintenance expenses of $10.8 million, a $6.6 million increase in depreciation and amortization expense, and a $4.7 million increase in general and administrative expenses resulting from the growth of our business exceeding the benefits of our higher gross operating margin. As a result of our recapitalization in 2012, we incurred a loss on extinguishment of debt, which was lower than such loss in 2011. Adjusted EBITDA decreased 17.1% to $24.0 million in 2012 compared to $29.0 million in the prior year, due primarily to higher operations and maintenance expense, and general and administrative expenses as stated above, offset by an improvement in gross operating margin. We estimate the impact to Adjusted EBITDA due to processing plant outages and curtailments at the Formosa processing plant in 2012 was approximately $5.3 million.

Revenue —Our revenue for 2012 was $496.1 million compared to $523.1 million in 2011. The decrease of $27.0 million or 5.2% was due primarily to lower pricing of natural gas and NGL products, partially offset by a 9.1% increase in throughput volumes and 82.9% increase in NGLs sold as discussed above. We realized average natural gas and NGL prices of $2.83/MMBtu and $0.87/gal, respectively, in 2012 compared to $4.05/MMBtu and $1.35/gal, respectively, in 2011.

Cost of natural gas and NGLs sold —The cost of natural gas and liquids sold was $424.5 million in 2012 compared to $460.6 million in 2011. The $36.1 million or 7.8% decrease was due to lower prices of natural gas and NGLs offset by the cost of increased NGL volumes.

Operations and maintenance expense —Operations and maintenance expense increased $10.8 million or 43.8% to $35.5 million in 2012. This increase was due primarily to $4.0 million related to the startup of the Woodsboro and Bonnie View facilities, $2.1 million resulting from the inclusion of eight additional months of the EAI pipeline and gathering system, $3.0 million at our Gregory processing facility for outages and a maintenance turnaround in December 2012, increased pipeline integrity costs of $0.6 million, $0.4 million in higher equipment and vehicle rentals, increased cathodic protection costs of $0.3 million, and higher other operations and maintenance expenses of $0.6 million.

General and administrative ("G&A") expense —G&A expenses were $13.8 million in 2012 compared to $9.1 million in 2011 representing a $4.7 million or 51.6% increase. This increase was due primarily to increased employment-related expenses of $3.3 million and increased professional fees of $1.0 million, both primarily associated with preparing to become and then becoming a publicly traded master limited partnership, and increased insurance of $0.4 million, as we continued to build out our corporate and support infrastructure.

Depreciation and amortization expense —Depreciation and amortization expense was $19.0 million for 2012 or an increase of $6.6 million or 53.7%. The increase in this expense primarily was the result

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of the EAI acquisition in September 2011 and growth capital expenditures made during the second half of 2011 and in 2012.

Loss on extinguishment of debt —In 2012, we incurred a loss on the extinguishment of debt of $1.8 million in connection with the repayment of $270.0 million of Southcross Energy LLC's assumed debt balance following our IPO consisting of a partial write-down of deferred financing costs. In 2011, we incurred a loss on the extinguishment of debt of $3.2 million relating to the partial write-down of deferred financing costs on a previous credit agreement which was amended in June 2011.

Interest expense —Net interest expense increased $0.4 million, or 7.8%, to $5.8 million in 2012 compared to $5.3 million in 2011. The increase was due to higher average borrowings of $230.4 million in 2012 compared to $147.4 million in 2011, partially offset by increased capitalized interest of $6.3 million in 2012 compared to $1.8 million in 2011. For the years ended December 31, 2012 and December 31, 2011, our average effective interest rate, as calculated for financial reporting purposes, was 3.95% and 3.58%, respectively.

2011 Compared with 2010

Volume and overview —Our average throughput volume of natural gas increased by 7.6% to 506,975 MMBtu/d in 2011, compared to 471,265 MMBtu/d in 2010. Our South Texas throughput volumes in 2011 increased by 5.9% compared to the same period in 2010. This increase in our South Texas throughput volumes reflects stronger activity through our system in the last four months of 2011, in part as a result of new contracts that we executed to support the completion of our McMullen pipeline extension. Our volumes in South Texas were unfavorably impacted by two events during 2011: (i) the shutdown of our Gregory processing plant for 31 days during June and July in order to repair a dehydrator unit; and (ii) a 31 day shutdown in September and October by Formosa at its processing plant in order to complete an expansion construction project, which forced us to shutdown natural gas supply to, and interrupted processing at, this facility. Our Mississippi and Alabama throughput volumes were up 12.1% for 2011 compared to 2010. This increase is due to the inclusion of four months of throughput on our pipeline and gathering system that we acquired in connection with the EAI acquisition in 2011. Without this additional volume, our average daily throughput volumes would have declined by 17.2% for our Mississippi and Alabama assets for 2011 compared to 2010. This decline was due primarily to lower demand from the South Mississippi Electric Power Association, or SMEPA, and the impact on our Delta Pipeline resulting from the flooding of the Mississippi River in the second quarter of 2011. For NGLs, the average volume delivered per day for 2011 was 215.5 Mgal, compared to 233.4 Mgal for 2010, a decrease of 7.7%. This decrease was due in part to the shutdown of our Gregory processing plant for 31 days in June and July 2011 and severe cold weather in February and March 2011. Without the Gregory processing plant shutdown, we estimate our average daily volume delivered would have been 225.4 Mgal for 2011.

Our gross operating margin in 2011 improved to $62.6 million compared to $59.3 million in 2010, an increase of 5.5%, primarily as a result of slightly higher treating / producer fee-based revenues as well as a greater price spread between NGL and natural gas prices and the benefit of four months of operations from the EAI acquisition, which more than offset lower NGL volumes. We estimate that our gross operating margin in 2011 was negatively impacted by $2.1 million as a result of the unexpected closure of our Gregory processing plant and the forced closures of the Formosa processing plant in September and October 2011. For part of the year, we were capacity bound by our inability to process all of the wet gas in our system. This constraint was the impetus for our future growth capital expenditure plans and the construction of the Bonnie View NGL fractionation plant. We generated net income for 2011 of $7.5 million compared to net income of $9.7 million for 2010. This decrease was due primarily to a loss on extinguishment of debt of $3.2 million, higher operating and maintenance expenses of $3.6 million and increased depreciation and amortization expense of $1.3 million, partially offset by lower interest expense. Adjusted EBITDA decreased by 6.3% to $28.9 million in 2011

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compared to $30.9 million in 2010, due primarily to higher operating and maintenance expenses and increased G&A expenses, partially offset by an improvement in gross operating margin.

Revenue —Our total revenue in 2011 was $523.1 million, compared to $498.7 million in 2010. This increase of $24.4 million, or 4.9%, was due primarily to the inclusion of four months of results from the EAI acquisition, which contributed $11.0 million in revenues. We also had a 22.7% increase in realized average NGL prices, a 17.4% increase in fee-based revenues, partially offset by a 7.7% decline in NGL volumes. We realized average natural gas and NGL prices of $4.05/MMBtu and $1.35/gal, respectively, in 2011 compared to $4.42/MMBtu and $1.10/gal, respectively, in 2010.

Cost of natural gas and NGLs sold —Our cost of natural gas and liquids sold in 2011 was $460.6 million compared to $439.4 million in 2010. This increase was due to the increased natural gas throughput in South Texas and, in part, to the inclusion of four months of throughput on our Alabama pipeline and gathering system that we acquired in 2011.

Operations and maintenance expense —The expenses related to operating and maintaining our assets in 2011 were $24.7 million compared to $21.1 million in 2010. This increase of $3.6 million was due primarily to the inclusion of four months of expenses relating to the operation of the EAI pipeline and gathering system, increased expenditures on pipeline integrity, higher expenses for chemicals used at our facilities and building up our engineering capability to support our expansion plans.

General and administrative ("G&A") expenses —G&A expenses in 2011 were $8.9 million compared to $7.3 million in 2010. This increase of $1.6 million was due primarily to increased employment-related expenses as we continued to build up our corporate infrastructure. We incurred approximately $0.2 million of acquisition-related expenses, including legal, consulting and professional fees in 2011 in connection with the acquisition of EAI on September 1, 2011. This compares to $0.1 million of transaction costs for bank fees related to our acquisition of the Crosstex Energy, L.P. assets that we incurred in 2010.

Depreciation and amortization expense —Depreciation and amortization expense in 2011 was $12.3 million compared to $11.0 million in 2010 primarily as a result of the EAI acquisition and growth capital expenditures made during 2011.

Loss on extinguishment of debt —For 2011, we recorded a loss on the extinguishment of debt of $3.2 million relating to the write off of deferred financing fees on our previous credit agreement as a result of entering into our existing credit agreement on June 10, 2011.

Interest expense —In 2011, interest expense was $5.4 million, compared to $10.0 million in 2010. This decrease was due primarily to $1.8 million of interest expense being capitalized in 2011 as part of construction costs of our new facilities, the lower amortization of deferred financing fees in 2011 compared to 2010, and favorable interest rate margins obtained under an amendment to our credit agreement that we entered into on December 30, 2010. For the years ended December 31, 2011 and December 31, 2010, our average effective interest rate, as calculated for financial reporting purposes, was 3.58% and 8.90%, respectively.

Liquidity and Capital Resources

Sources of Liquidity

Cash generated from operations, investments by Charlesbank and other investors, and borrowings under our Predecessor's Amended and Restated Credit Agreement dated June 10, 2011, ("Southcross' Credit Agreement") and the Partnership's Second Amended and Restated $350 million senior secured credit facility, dated as of November 7, 2012, as amended (the "Credit Facility") have been our primary sources of historical liquidity. Prior to our IPO, our primary cash requirements consisted of operating and G&A expenses, capital expenditures to sustain existing operations or generate additional revenues, interest payments on outstanding debt and acquisitions of new assets or businesses.

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The Partnership expects to fund short term cash requirements, such as operating and G&A expenses and maintenance capital expenditures to sustain existing operations, primarily through operating cash flows. We expect to fund long-term cash requirements, such as for expansion projects and acquisitions, through several sources, including operating cash flows, borrowings under our Credit Facility and issuances of additional equity and debt securities, as appropriate and subject to market conditions. The Partnership's ability to fund expansion projects through the use of its Credit Facility is limited during the remainder of 2013 and the 18 month period ending June 30, 2015 under the amendments entered into on March 27, 2013 and April 12, 2013. The Partnership does not expect these limitations to significantly affect current operations or future projects. See "Long-Term Debt" below for a description of the amendments to the Credit Facility.

Capital resources. The Partnership's business is capital-intensive, requiring significant investment to maintain and upgrade existing operations. Our capital requirements have consisted primarily of and will continue to be:

•: maintenance capital expenditures, which are capital expenditures made to replace partially or fully depreciated assets to maintain the existing operating capacity of our assets and to extend their useful lives, or other capital expenditures that are incurred in maintaining existing system volumes and related cash flows; and
•: expansion capital expenditures, which are capital expenditures made to expand or increase the efficiency of the existing operating capacity of our assets. Expansion capital expenditures include expenditures that facilitate an increase in volumes within our operations, whether through construction or acquisition.

During the year ended December 31, 2012, capital expenditures totaled $169.8 million, consisting of $5.2 million of maintenance capital and $164.6 million of expansion capital. The expansion capital expenditures during 2012 related mainly to (i) our 200 MMcf/d Woodsboro processing plant in Refugio County, Texas, (ii) our Bonnie View NGL fractionation facility, and (iii) our new Bee Line pipeline which was completed in February 2013.

Outlook. Cash flow is affected by a number of factors, some of which we cannot control. These factors include prices and demand for our services, operational risks, volatility in commodity prices or interest rates, industry and economic conditions, conditions in the financial markets, and other factors.

Commodity prices and financial market conditions continue to support opportunities for volume growth from shale resource plays. The Partnership's ability to benefit from growth projects to accommodate strong drilling activity is subject to operational risks and uncertainties such as the uncertainty inherent in some of the assumptions underlying design specifications for new, modified or expanded facilities. These risks also impact third-party service providers and their facilities. Delays or underperformance of our facilities or third-party facilities may adversely affect our ability to generate cash from operations and comply with our obligations, including the covenants under our debt instruments. For example, we encountered operational difficulties in connection with the start-up of our Bonnie View fractionator, the curtailment by our third party operator and a fire at our Gregory Facility that had a negative impact on our results in the fourth quarter of 2012 and first quarter 2013. In other cases, actual production delivered may fall below volume estimates that we relied upon in deciding to pursue an acquisition or other growth project. Future cash flow and the Partnership's ability to comply with its debt covenants would likewise be affected adversely if we experienced declining volumes over a sustained period in combination with unfavorable commodity prices.

Our historical financing strategy for funding long-term capital expenditures has been to target a roughly equal mix of debt and equity financing and a consolidated leverage ratio which complied with our credit agreement covenants. During the fourth quarter 2012 and into the first quarter 2013 we encountered operational difficulties having an adverse impact our operating results. As a result of this

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negative impact, we believed it was unlikely that we would be in compliance with our financial covenants calculated for the quarter ending March 31, 2013, such that we negotiated with our lenders and secured more favorable financial covenants and amended our Credit Facility. As a result of the amendments to the Credit Facility, and after giving effect of the equity infusion and its use to repay debt on April 12, 2013, we have $27.2 million of borrowing capacity under our amended Credit Facility. Consequently, we believe we have and will continue to have sufficient liquidity to operate our business as the amended Credit Facility provides us with more favorable financial covenants than were provided previously and we believe these more favorable terms will allow us to operate our business and continue to meet our commitments. If the Partnership exceeds its target leverage ratio, as we expect we will from time to time for significant capital projects, acquisitions or other investments, we anticipate reducing leverage through the issuance of additional equity.

Outstanding indebtedness decreased by $17.3 million to $191.0 million as of December 31, 2012 associated with our recapitalization in connection with the IPO. Debt outstanding was initially $150.0 million which was $120.0 million lower than our November 6, 2012 debt balance immediately prior to our IPO.

We believe that cash from operations, cash on hand and available capacity under our amended Credit Facility will provide liquidity to meet future short term capital requirements and to fund committed capital expenditures for the remainder of 2013. The sufficiency of these liquidity sources to fund necessary and committed capital needs will be dependent upon our ability to meet our newly established covenant requirements of our amended Credit Facility. Please read "Liquidity and Capital Resource—Long-Term Debt" for a description of the amendments we have entered into with respect to our Credit Facility.

Organic expansion projects and acquisitions are key elements of our business strategy. We intend to finance the Partnership's growth capital primarily through the issuance of debt and equity. The timing, size or success of any acquisition or expansion effort and the associated potential capital commitments are unpredictable. To consummate acquisitions or capital projects, we may require access to additional capital. Our access to capital over the longer term will depend on our future operating performance, financial condition and credit rating and, more broadly, on the availability of equity and debt financing, which will be affected by prevailing conditions in our industry, the economy and the financial markets and other financial and business factors, many of which are beyond our control.

Off-Balance Sheet Arrangements

None.

Cash Flows

The following table provides a summary of our cash flows by category (in thousands):

	Year ended December 31,

	2012			2011			2010
Net cash provided by operating activities	$	24,323		$	20,007		$	25,493
Net cash used in investing activities	$	(169,816	)	$	(144,602	)	$	(5,231	)
Net cash provided by (used in) financing activities	$	151,571		$	105,684		$	(5,663	)

2012 Compared with 2011

Operating Activities —Net cash provided by operating activities was $24.3 million in 2012, compared to $20.0 million in 2011. The increase in cash provided by operating activities of $4.3 million primarily was a result of the positive effect of a decline in the change in operating assets and liabilities of

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$9.6 million, driven primarily by growth in volumes and accrued operating and maintenance costs at our Gregory facility and higher ad valorem taxes. These factors were partially offset by lower net income, net of non-cash charges of $5.3 million.

Investing Activities —Net cash used in investing activities was $169.8 million in 2012 compared to $144.6 million in 2011. The increase in cash used in investing activities primarily was a result of increases in expansion capital expenditures associated with our growth activities.

Financing Activities —Net cash provided by financing activities was $151.6 million in 2012 compared to $105.7 million in 2010. The increase in cash provided by financing activities of $45.9 million primarily was a result of IPO proceeds of $187.8 million offset by distributions to Southcross Energy LLC of $71.2 million.

2011 Compared with 2010

Operating activities —Net cash provided by operating activities was $20.0 million in 2011, compared to $25.5 million in 2010. The decrease in cash provided by operating activities primarily was a result of negative changes of $6.2 million in operating assets and liabilities related to interest payable, other non-current assets and prepaid assets, partially offset by the higher net income, net of non-cash charges of $0.7 million.

Investing activities —Net cash used in investing activities was $144.6 million in 2011 compared to $5.2 million in 2010. The increase in cash used in investing activities primarily was a result of a significant increase in expansion capital expenditures associated with our growth plans and the payment of $21.8 million for the acquisition of EAI.

Financing activities —Net cash provided by (used in) financing activities was $105.7 million in 2011 compared to ($5.7) million in 2010. The change in cash provided by financing activities primarily was a result of increased net borrowings of $93.3 million under our existing credit facility and a capital contribution of $15.0 million by Charlesbank and other existing investors, partially offset by the payment of debt amendment costs of $2.7 million in 2011 compared to the net repayment of debt of $4.9 million and payment of debt financing costs of $0.8 million in 2010.

Long-Term Debt

During fourth quarter 2012 and into first quarter 2013 we encountered operational challenges caused by several events:

•: longer than anticipated startup of our new Bonnie View NGL fractionator;
•: curtailments and other actions by our third-party processor, which we believe were not contractually justified and we have taken actions to enforce; and
•: a fire on January 26, 2013, at our Gregory facility as turnaround maintenance was nearing completion, which prolonged the shutdown of the facility.

These items negatively impacted our operating results and as a result of this negative impact we believed it was unlikely that we would be in compliance with our financial covenants calculated for the quarter ending March 31, 2013, such that we negotiated with our lenders and secured more favorable financial covenants associated with our Credit Facility.

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$10.0 million into the Collateral Account as required under the First Amendment. Pursuant to the First Amendment, we are allowed to pay our quarterly cash distribution of available cash for the first quarter 2013 in an amount not to exceed the amount then on deposit in the Collateral Account. Because the First Amendment did not modify our requirement to meet the financial covenants under the Credit Facility beginning March 31, 2013 we further amended our Credit Facility as discussed below.

On April 12, 2013 we entered into the limited waiver and second amendment (the "Second Amendment") to the Credit Facility which waived our defaults relating to financial covenants for the period ending March 31, 2013 and provided more favorable financial covenants until we give notice under the amended Credit Facility that we have achieved a Target Leverage Ratio (as defined in the Second Amendment) of 4.25 to 1.00 for one quarter or 4.50 to 1.00 for two consecutive quarters, calculated excluding the benefit of cash on deposit in the Collateral Account and any equity cure amounts (the "Target Leverage Test"). Our available credit continues to be subject to the availability limits described in the First Amendment.

As a condition to the Second Amendment, Southcross Energy LLC and our General Partner deposited into the Collateral Account a total of $34.2 million, including the $10.0 million previously deposited under the First Amendment. Additionally, Southcross Energy LLC and our General Partner agreed to deposit into the Collateral Account the proceeds they receive from cash distributions on units in us that are attributable to the quarters ending March 31, 2013, June 30, 2013, September 30, 2013 and December 31, 2013.

The Second Amendment provides for, among other things, the following:

•: the lenders waived defaults relating to financial covenants for the quarter ending March 31, 2013;
•: an increase in our letters of credit sublimit from $31.5 million to $50.0 million;
•: an increase in our interest rate to be the London Interbank Offered Rate ("LIBOR") plus 4.50% until the Target Leverage Ratio is achieved, thereafter reverting to the existing terms of no more than LIBOR plus 3.25%;
•: a minimum Consolidated EBITDA (as defined in the Credit Facility) of $9.0 million for the second quarter of 2013, with no maximum Consolidated Total Leverage Ratio covenant for such period;
•: an increase in the allowed maximum adjusted consolidated total leverage ratio to 7.25 to 1.0 starting with the quarter ended September 30, 2013, declining each quarter thereafter until reaching 4.50 to 1.0 in the first quarter of 2015;
•: the minimum consolidated interest coverage ratio was changed to 2.25 to 1.00 for the periods ending September 30, 2013 and December 31, 2013 and 2.50 to 1.00 for the periods ending March 31, 2014 and thereafter;
•: until the Target Leverage Ratio is achieved, a limit to our growth capital expenditures of $25.0 million for the remainder of 2013 and $25.0 million for the 18 months ended June 30, 2015; provided that if additional cash, as required under the Second Amendment, is placed in the Collateral Account, such expenditures may be increased to $28.0 million each period;
•: until the Target Leverage Ratio is achieved, distributions to our unitholders are effectively limited to our established minimum quarterly distribution of not more than $0.40 per unit;
•: a required infusion of $40.0 million into the Partnership from the Collateral Account ($34.2 million plus $5.8 million of distributions attributable to the quarter ending March 31, 2013) by Southcross Energy LLC and/or our General Partner during the second quarter of 2013

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in exchange for new equity securities, which are required to be non-cash pay until the Target Leverage Test has been satisfied; and

•: until the Target Leverage Ratio is achieved, the application of proceeds from any new equity issuances or asset sales to reduce the then outstanding debt.

If, for the calendar quarters ending on or before December 31, 2013, we fail to comply with the financial covenants of the Amended Credit Facility ("Financial Covenant Default") we have the right (which cannot be exercised more than two times) to cure such Financial Covenant Default by having Southcross Energy LLC and/or our General Partner deposit into the Collateral Account the amount required by the Second Amendment to cure such Financial Covenant Default.

As of April 12, 2013, after giving effect of the equity infusion and resulting repayment of debt, we have $27.2 million of borrowing capacity under our amended Credit Facility. As a result, we believe we have and will continue to have sufficient liquidity to operate our business as the Second Amendment provides us with more favorable financial covenants than were provided previously and we believe these more favorable terms will allow us to operate our business and continue to meet our commitments.

Private Placement of Series A Convertible Preferred Units

On April 12, 2013, to satisfy our requirements under our amended Credit Facility as discussed above, we entered into a Series A Convertible Preferred Unit Purchase Agreement with Southcross Energy LLC, pursuant to which we issued and sold 1,466,325 Series A Convertible Preferred Units (the "Series A Preferred Units") and agreed to sell, by June 30, 2013, an additional 248,675 Series A Preferred Units to Southcross Energy LLC for a cash purchase price of $22.86 per Series A Preferred Unit in a privately negotiated transaction (the "Private Placement").

The Private Placement resulted in proceeds to us of $33.5 million. We also received a $0.7 million capital contribution from our General Partner to maintain its 2.0% general partner interest in us. When we sell to Southcross Energy LLC the additional 248,675 Series A Preferred Units for $5.7 million, our General Partner will make an additional capital contribution to us of $0.1 million.

The total capital infusion to the Partnership of $40.0 million, from all sales of Series A Preferred Units and General Partner capital contributions were and will be used to reduce borrowings under our amended Credit Facility providing us with additional borrowing capacity For a complete description, see Part II, Item 8, "Financial Statements and Supplementary Data—Notes to the Financial Statements—Note 6—Long-Term Debt and Note 14—Partners' Capital".

Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2012 (in thousands):

	Total		Less Than 1 Year		1-3 Years		3-5 Years		More than 5 Years

Long-term debt:
Principal ⁽¹⁾	$	191,000	$	—	$	—	$	191,000	$	—
Interest ⁽²⁾		37,094		7,545		15,089		14,460		—
Vehicle fleet lease		1,098		445		653		—		—
Office lease		1,382		401		981		—		—

Total	$	230,574	$	8,391	$	16,723	$	205,460	$	—

⁽¹⁾: Contractual obligations related to long-term debt assume $191.0 million outstanding as of December 31, 2012 is paid off at maturity in November 2017.
⁽²⁾: Interest is estimated at the weighted average interest rate for the year ended December 31, 2012 of 3.95% for periods through November 2017.

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Critical Accounting Policies and Estimates

In our financial reporting process, we employ methods, estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of our financial statements. These methods, estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates if the underlying assumptions prove to be incorrect. The following describes the estimation risk currently underlying our most significant financial statement items:

Revenue Recognition Policies and Use of Estimates for Revenues and Expenses

In general, we recognize revenue from customers when all of the following criteria are met:

•: persuasive evidence of an exchange arrangement exists;
•: delivery has occurred or services have been rendered;
•: the price is fixed or determinable; and
•: collectability is reasonably assured.

We record revenue for natural gas and NGL sales and transportation services over the period in which they are earned (i.e., either physical delivery of product has taken place or the services designated in the contract have been performed). While we make every effort to record actual volume and price data, there may be times where we need to use estimates for certain revenues and expenses. If the assumptions underlying our estimates prove to be substantially incorrect, it could result in material adjustments in results of operation.

Depreciation Methods and Estimated Useful Lives of Property, Plant and Equipment

In general, depreciation is the systematic and rational allocation of an asset's cost, less its residual value (if any), to the periods it benefits. The majority of our property, plant and equipment is depreciated using the straight-line method, which results in depreciation expense being incurred evenly over the life of an asset. Our estimate of depreciation expense incorporates management assumptions regarding the useful economic lives and residual values of our assets. We believe such assumptions are reasonable; however, circumstances may develop that would cause us to change these assumptions, which would change our depreciation amounts prospectively. Examples of such circumstances include:

•: changes in laws and regulations that limit the estimated economic life of an asset;
•: changes in technology that render an asset obsolete;
•: changes in expected salvage values; or
•: significant changes in the forecast life of proved reserves of applicable gas production basins, if any.

Measuring Recoverability of Long-Lived Assets

Long-lived assets such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Examples of such events or changes might be production declines that are not replaced by new discoveries or long-term decreases in the demand or price of natural gas and NGLs. Long-lived assets with carrying values that are not expected to be recovered through forecast future cash flows are written-down to their estimated fair values. We evaluate the asset for recoverability by estimating the undiscounted future cash flows expected to be derived from operating the asset as a going concern. We determine the fair value of the asset by using our weighted average cost of capital to discount the

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present value of the future cash flows. The carrying value of a long-lived asset is not recoverable if it exceeds the present value of the estimated future cash flows expected to result from the use and eventual disposition of the asset. An impairment charge will be recorded to reduce the carrying amount to its estimated fair value.

New Accounting Pronouncements

For a complete description of new accounting pronouncements, see Part II, Item 8. "Financial Statements and Supplementary Data—Notes to Financial Statements—Note 2—Basis of Presentation and Summary of Significant Accounting Policies".

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk.

We are exposed to the impact of market fluctuations in the prices of natural gas, NGLs and condensate. Both profitability and cash flow are affected by volatility in the prices of these commodities. Natural gas and NGL prices are impacted by changes in the supply and demand for natural gas and NGLs, as well as market uncertainty. Adverse effects on cash flow from increases or reductions in natural gas and NGL product prices could adversely affect our ability to make distributions to unitholders. We manage this commodity price exposure through an integrated strategy that includes management of the commercial terms of our contract portfolio by entering into fixed-fee-based or fixed-spread arrangements whenever possible and the use of swing swaps. Swing swaps are generally short term in nature (one month) and are usually entered into to protect against changes in the volume of daily versus first-of-month index priced gas supplies or markets. We have not entered into any long-term derivative contracts to manage exposure to commodity price risk. Natural gas and NGL prices, however, also can affect profitability indirectly by influencing the level of drilling activity in our areas of operation. We are a net seller of NGLs and, as such, financial results also are exposed to fluctuations in NGL price levels.

A hypothetical increase or decrease in commodity prices by 1.0% would have changed our gross operating margin by $0.1 million and $0.3 million for the years ended December 31, 2012 and 2011, respectively.

Interest Rate Risk

We have exposure to changes in interest rates on indebtedness. In March 2012, our Predecessor entered into an interest rate swap contract for $150.0 million notional amount of debt. The contract, which was transferred to the Partnership in conjunction with the IPO, effectively caps the Partnership's LIBOR based interest rate exposure on $150.0 million of debt at 0.54% through June 30, 2014.

The credit markets have recently experienced historical lows in interest rates. As the overall economy strengthens, it is possible that monetary policy will tighten, resulting in higher interest rates. Interest rates on floating rate credit facilities and future debt offerings could be higher than current levels, causing the Partnership's financing costs to increase accordingly.

A hypothetical increase or decrease in interest rates by 1.0% would have changed our interest expense by $1.2 million and $1.5 million for the years ended December 31, 2012 and 2011, respectively.

Risk Relating to NGLs

Recovery Commitments

We have operational exposure under several gas supply and transportation agreements that contain fixed percentage NGL recovery obligations. To the extent that we do not produce, sell or re-deliver

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under transportation agreements at least as many gallons of NGL as required under those respective supply and transportation agreements, we are exposed to the equivalent replacement cost of the respective NGL products (e.g. ethane, propane) at NGL market prices net of contractual discounts, offset by the value of the unrecovered NGL products sold at methane natural gas prices. Similarly, to the extent that we produce, sell or re-deliver more gallons of NGL under transportation agreements than required under these agreements, we are able to sell the excess NGL products for our own account.

A hypothetical increase or decrease in volumes recovered of 1.0% would have changed our gross operating margin by $0.9 million and $0.8 million for the years ended December 31, 2012 and 2011, respectively.

Pricing Differential

We are exposed to the risk that we will be unable to sell NGLs at the expected differential to index prices necessary to preserve fixed-spread margins. To the extent that we do not produce marketable purity NGL products, due to operational disruptions or NGL market disruptions, we could realize lower than expected differentials to index prices.

A hypothetical increase or decrease of $0.01 in our realized NGL gross operating margin spread per gallon would have changed our gross operating margin by $1.4 million and $0.8 million for the years ended December 31, 2012 and 2011, respectively.

Impact of Seasonality

The results of operations were not affected materially by seasonality.

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Item 8. Financial Statements and Supplementary Data

SOUTHCROSS ENERGY PARTNERS, L.P.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page

Report of Independent Registered Public Accounting Firm			85
Consolidated Balance Sheets as of December 31, 2012 and 2011			86
Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011 and 2010			87
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2012, 2011, and 2010			88
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010			89
Consolidated Statements of Changes in Partners' Capital and Members' Equity for the Years Ended December 31, 2012, 2011 and 2010			90
Notes to Consolidated Financial Statements			91
Supplemental Financial Information
Supplemental Selected Quarterly Financial Information (Unaudited)			124

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Southcross Energy Partners GP, LLC and the Unitholders of Southcross Energy Partners, L.P.

Dallas, Texas

We have audited the accompanying consolidated balance sheets of Southcross Energy Partners, L.P., and subsidiaries (the "Partnership") as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and partners' capital and members' equity for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Southcross Energy Partners, L.P. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Dallas, Texas

April 15, 2013

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SOUTHCROSS ENERGY PARTNERS, L.P.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for unit data)

	December 31, 2012			December 31, 2011

ASSETS
Current assets:
Cash and cash equivalents	$	7,490		$	1,412
Trade accounts receivable		50,994			41,234
Prepaid expenses		1,762			950
Other current assets		1,001			561

Total current assets		61,247			44,157
Property, plant and equipment, net		550,603			369,861
Intangible assets, net		1,624			1,681
Other assets		5,131			4,686

Total assets	$	618,605		$	420,385

LIABILITIES, PREFERRED UNITS, PARTNERS' CAPITAL AND MEMBERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	96,801		$	50,439
Current maturities of long-term debt		—			17,490
Other current liabilities		3,586			5,007

Total current liabilities		100,387			72,936
Long-term debt		191,000			190,790
Other non-current liabilities		751			21

Total liabilities		292,138			263,747

Commitments and contingencies (Note 11)
Preferred units of Southcross Energy LLC:
Redeemable preferred units		—			16,554
Series B redeemable preferred units		—			—
Series C redeemable preferred units		—			—
Preferred units		—			150,249
Partners' capital and members' equity:
Partners' capital:
Common units—(12,213,713 units issued and outstanding as of December 31, 2012)		194,365			—
Subordinated units—(12,213,713 units issued and outstanding as of December 31, 2012)		125,951			—
General Partner interest		6,628			—
Accumulated other comprehensive loss		(477	)		—
Members' equity of Southcross Energy LLC:
Common equity—Class A (1,415,729 units issued and outstanding as of December 31, 2011)		—			1,416
Common equity—Class B (57,279 units issued and outstanding as of December 31, 2011)		—			57
Accumulated deficit		—			(11,638	)

Total partners' capital and members' equity		326,467			(10,165	)

Total liabilities, preferred units, partners' capital and members' equity	$	618,605		$	420,385

See accompanying notes to these consolidated financial statements.

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SOUTHCROSS ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for unit and per unit data)

	Year ended December 31,

	2012			2011			2010
Revenues	$	496,129		$	523,149		$	498,747
Expenses:
Cost of natural gas and liquids sold		424,489			460,580			439,431
Operations and maintenance		35,532			24,707			21,106
Depreciation and amortization		18,977			12,345			10,987
General and administrative		13,842			9,129			7,490

Total expenses		492,840			506,761			479,014

Income from operations		3,289			16,388			19,733
Loss on extinguishment of debt		(1,764	)		(3,240	)		—
Interest expense		(5,767	)		(5,348	)		(10,013	)

(Loss) income before income tax expense		(4,242	)		7,800			9,720
Income tax expense		(246	)		(261	)		(1	)

Net (loss) income	$	(4,488	)	$	7,539		$	9,719

Less:
Net loss from January 1, 2012 through November 6, 2012		(260	)

Net loss attributable to partners	$	(4,228	)
General partner's interest		(85	)

Limited partners' interest	$	(4,143	)

Net loss from January 1, 2012 through November 6, 2012	$	(260	)
Less deemed dividend on:
Redeemable preferred units		(2,693	)		(1,553	)		—
Series B redeemable preferred units		(4,696	)		—			—
Series C redeemable preferred units		(2,012	)		—			—
Preferred units		(13,249	)		(14,131	)		(12,802	)

Net loss attributable to Southcross Energy LLC common unitholders	$	(22,910	)	$	(8,145	)	$	(3,083	)

Basic and diluted earnings per unit
Net loss allocated to limited partner common units (from November 7, 2012 through December 31, 2012)	$	(2,072	)
Weighted average number of limited partner common units outstanding		12,213,713
Loss per common unit	$	(0.17	)
Net loss allocated to limited partner subordinated units	$	(2,072	)
Weighted average number of limited partner subordinated units outstanding		12,213,713
Loss per subordinated unit	$	(0.17	)
Net loss allocated to Southcross Energy LLC common units	$	(22,910	)	$	(8,145	)	$	(3,083	)
Weighted average number of Southcross Energy LLC common units outstanding		1,198,429			1,197,876			1,197,257
Loss per Southcross Energy LLC common unit	$	(19.12	)	$	(6.79	)	$	(2.57	)

See accompanying notes to these consolidated financial statements.

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SOUTHCROSS ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Year ended December 31,

	2012			2011		2010
Net (loss) income	$	(4,488	)	$	7,539	$	9,719
Other comprehensive loss
Hedging losses reclassified to earnings		268			—		—
Adjustment in fair value of derivatives		(745	)		—		—

Total other comprehensive loss		(477	)		—		—

Comprehensive income (loss)	$	(4,965	)	$	7,539	$	9,719

See accompanying notes to these consolidated financial statements.

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SOUTHCROSS ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year ended December 31,

	2012			2011			2010
Cash flows from operating activities:
Net (loss) income	$	(4,488	)	$	7,539		$	9,719
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		18,977			12,345			10,987
Unit-based compensation		630			—			—
Loss on extinguishment of debt		1,764			3,240			—
Deferred financing costs amortization		1,183			882			2,158
Gain on sale of property, plant and equipment		—			(522	)		(13	)
Unrealized derivatives loss		141			21			—
Changes in operating assets and liabilities:
Trade accounts receivable		(9,760	)		(2,806	)		4,897
Prepaid expenses and other		(1,246	)		(497	)		560
Other non-current assets		1,786			(2,155	)		158
Accounts payable and accrued expenses		16,517			2,759			(3,836	)
Other liabilities		(1,181	)		(799	)		863

Net cash provided by operating activities		24,323			20,007			25,493

Cash flows from investing activities:
Capital expenditures		(169,816	)		(123,347	)		(5,245	)
Acquisition of Enterprise Alabama Intrastate, LLC		—			(21,777	)		—
Proceeds from sale of property, plant and equipment		—			522			14

Net cash used in investing activities		(169,816	)		(144,602	)		(5,231	)

Cash flows from financing activities:
Proceeds from issuance of common units, net		187,764			—			—
Borrowings under our credit agreements		297,500			229,400			14,195
Repayments of our credit agreements		(314,780	)		(136,119	)		(19,144	)
Financing costs		(5,178	)		(2,710	)		(752	)
Repayment of equity note		—			113			38
Repurchase and retirement of Southcross Energy LLC common units		(15,300	)		—			—
Proceeds from issuance of redeemable preferred units		—			15,000			—
Proceeds from issuance of Series B redeemable preferred units		42,800			—			—
Proceeds from issuance of Series C redeemable preferred units		30,000			—			—
Distribution to Southcross Energy LLC		(46,030	)		—			—
Purchase and retirement of Partnership common units		(25,205	)		—			—

Net cash provided by (used in) financing activities		151,571			105,684			(5,663	)

Net increase (decrease) in cash and cash equivalents		6,078			(18,911	)		14,599
Cash and cash equivalents—Beginning of period		1,412			20,323			5,724

Cash and cash equivalents—End of period	$	7,490		$	1,412		$	20,323

Cash paid for interest	$	10,552		$	7,994		$	6,241
Cash paid for taxes	$	315		$	272		$	133
Non-cash transactions:
Accounts payable related to capital expenditures	$	40,707		$	10,862		$	632

See accompanying notes to these consolidated financial statements.

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SOUTHCROSS ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL AND MEMBERS' EQUITY

(In thousands)

	Partners' Capital												Southcross Energy LLC Members' Equity

	Limited Partners									Accumulated Other Comprehensive Loss
	Limited Partners						General Partner						Common Class A			Common Class B			Accumulated Deficit
	Common			Subordinated			General Partner						Common Class A			Common Class B			Accumulated Deficit			Total
BALANCE—December 31, 2009	$	—		$	—		$	—		$	—		$	1,414		$	57		$	(410	)	$	1,061
Receipt of payment from unit note holder		—			—			—			—			1			—			—			1
Net income		—			—			—			—			—			—			9,719			9,719
Deemed dividend on preferred units		—			—			—			—			—			—			(12,802	)		(12,802	)

BALANCE—December 31, 2010	$	—		$	—		$	—		$	—		$	1,415		$	57		$	(3,493	)	$	(2,021	)

Receipt of payment from unit note holder		—			—			—			—			1			—			—			1
Net income		—			—			—			—			—			—			7,539			7,539
Deemed dividend on:		—			—			—			—			—			—			—			—
Redeemable Preferred Units		—			—			—			—			—			—			(1,553	)		(1,553	)
Preferred Units		—			—			—			—			—			—			(14,131	)		(14,131	)

BALANCE—December 31, 2011	$	—		$	—		$	—		$	—		$	1,416		$	57		$	(11,638	)	$	(10,165	)

Net loss attributable to the period January 1, 2012 through November 6, 2012		—			—			—			—			—			—			(260	)		(260	)
Deemed dividend on:
Redeemable Preferred Units		—			—			—			—			—			—			(2,693	)		(2,693	)
Series B Redeemable Preferred Units		—			—			—			—			—			—			(4,696	)		(4,696	)
Series C Redeemable Preferred Units		—			—			—			—			—			—			(2,012	)		(2,012	)
Preferred Units		—			—			—			—			—			—			(13,249	)		(13,249	)
Repurchase and retirement of Southcross Energy LLC common units		—			—			—			—			(131	)		—			(15,169	)		(15,300	)
Contribution by Southcross Energy LLC		43,274			164,464			6,713			—			(1,285	)		(57	)		49,717			262,826
Issuance of common units, net		187,764			—			—			—			—			—			—			187,764
Distributions to Southcross Energy LLC		(9,589	)		(36,441	)		—			—			—			—			—			(46,030	)
Purchase and retirement of Partnership common units		(25,205	)		—			—			—			—			—			—			(25,205	)
Unit-based compensation		192			—			—			—			—			—			—			192
Net loss attributable to the period November 7, 2012 through December 31, 2012		(2,071	)		(2,072	)		(85	)		—			—			—			—			(4,228	)
Net effect of cash flow hedges		—			—			—			(477	)		—			—			—			(477	)

BALANCE—December 31, 2012	$	194,365		$	125,951		$	6,628		$	(477	)	$	—		$	—		$	—		$	326,467

See accompanying notes to these consolidated financial statements.

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SOUTHCROSS ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Organization

Southcross Energy Partners, L.P. (the "Partnership," "Southcross," the "Company," "we," "our," or "us") is a Delaware limited partnership formed in April 2012 for the purpose of acquiring and operating the midstream assets of Southcross Energy LLC, a Delaware limited liability company, and its subsidiaries. Southcross Energy LLC was formed in 2009 for the purpose of acquiring and operating midstream assets in anticipation of an initial public offering of the Partnership's units. Through a series of transactions described in Note 14, Southcross Energy LLC contributed all of its operating subsidiaries (its net assets on a historical cost basis) to the Partnership, excluding certain liabilities and all preferred units, and became the holding company of the Partnership. Southcross Energy LLC holds all of the equity interests in Southcross Energy Partners GP, LLC ("General Partner"), as well as all subordinated units and a portion of the common units of the Partnership. Southcross Energy LLC and its subsidiaries are controlled through investment funds and entities associated with Charlesbank Capital Partners, LLC ("Charlesbank").

Liquidity Considerations

Amended Senior Secured Credit Facility

During the fourth quarter 2012 and into the first quarter 2013 we encountered operational challenges caused by several events:

•: longer than anticipated startup of our new Bonnie View NGL fractionator;
•: curtailments and other actions by our third-party processor, which we believe were not contractually justified and we have taken actions to enforce (See Note 11); and
•: a fire on January 26, 2013, at our Gregory facility as turnaround maintenance was nearing completion, which prolonged the shutdown of the facility (See Note 19).

These items impacted our operating results adversely and as a result of this negative impact we believed it was unlikely that we would be in compliance with our financial covenants calculated for the quarter ending March 31, 2013, such that we negotiated with our lenders and secured more favorable financial covenants associated with our Senior Secured Credit Facility ("Credit Facility").

On March 27, 2013, we entered into the first amendment (the "First Amendment") to the Credit Facility. As a result of the First Amendment, our letters of credit sublimit was reduced from $75.0 million to $31.5 million and our available credit was reduced from $350.0 million to $250.0 million, plus the sum of any amounts placed on deposit in a collateral account of our General Partner (the "Collateral Account"), plus letters of credit outstanding. Our General Partner deposited $10.0 million into the Collateral Account as required under the First Amendment. Pursuant to the First Amendment, we are allowed to pay our quarterly cash distribution of available cash for the first quarter 2013 in an amount not to exceed the amount then on deposit in the Collateral Account. Because the First Amendment did not modify our requirement to meet the financial covenants under the Credit Facility beginning March 31, 2013 we further amended our Credit Facility as discussed below.

As discussed in Note 6, on April 12, 2013 we entered into the limited waiver and second amendment (the "Second Amendment") to the Credit Facility which waived our defaults relating to financial covenants for the period ending March 31, 2013 and provided more favorable financial covenants until we give notice under the amended Credit Facility that we have achieved a Target

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SOUTHCROSS ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS (Continued)

Leverage Ratio (as defined in the Second Amendment) of 4.25 to 1.00 for one quarter or 4.50 to 1.00 for two consecutive quarters, calculated excluding the benefit of cash on deposit in the Collateral Account and any equity cure amounts (the "Target Leverage Test"). Our available credit continues to be subject to the availability limits described in the First Amendment.

The Second Amendment provides for, among other things, the following:

•: the lenders waived defaults relating to financial covenants for the quarter ending March 31, 2013;
•: an increase in our letters of credit sublimit from $31.5 million to $50.0 million;
•: an increase in our interest rate to be the London Interbank Offered Rate ("LIBOR") plus 4.50% until the Target Leverage Ratio is achieved, thereafter reverting to the existing terms of no more than LIBOR plus 3.25%;
•: a minimum Consolidated EBITDA (as defined in the Credit Facility) of $9.0 million for the second quarter of 2013, with no maximum Consolidated Total Leverage Ratio covenant for such period;
•: an increase in the allowed maximum adjusted consolidated total leverage ratio to 7.25 to 1.0 starting with the quarter ended September 30, 2013, declining each quarter thereafter until reaching 4.50 to 1.0 in the first quarter of 2015;
•: the minimum consolidated interest coverage ratio was changed to 2.25 to 1.00 for the periods ending September 30, 2013 and December 31, 2013 and 2.50 to 1.00 for the periods ending March 31, 2014 and thereafter;
•: until the Target Leverage Ratio is achieved, a limit to our growth capital expenditures of $25.0 million for the remainder of 2013 and $25.0 million for the 18 months ended June 30, 2015; provided that if additional cash, as required under the Second Amendment, is placed in the Collateral Account, such expenditures may be increased to $28.0 million for each period;
•: until the Target Leverage Ratio is achieved, distributions to our unitholders are effectively limited to our established minimum quarterly distribution of not more than $0.40 per unit;
•: a required infusion of $40.0 million into the Partnership from the Collateral Account ($34.2 million plus $5.8 million of distributions attributable to the quarter ending March 31, 2013) by Southcross Energy LLC and/or our General Partner during the second quarter of 2013 in exchange for new equity securities, which are required to be non-cash pay until the Target Leverage Test has been satisfied; and
•: until the Target Leverage Ratio is achieved, the application of proceeds from any new equity issuances or asset sales are to reduce the then outstanding debt.

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SOUTHCROSS ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS (Continued)

If, for the calendar quarters ending on or before December 31, 2013, we fail to comply with the financial covenants of the amended Credit Facility ("Financial Covenant Default") we have the right (which cannot be exercised more than two times) to cure such Financial Covenant Default by having Southcross Energy LLC and/or our General Partner deposit into the Collateral Account the amount required by the Second Amendment to cure such Financial Covenant Default.

As of April 12, 2013, after giving effect of the equity infusion and resulting repayment of debt, we have $27.2 million of borrowing capacity under our amended Credit Facility. As a result, we believe we have and will continue to have sufficient liquidity to operate our business as the Second Amendment provides us with more favorable financial covenants than were provided previously, and we believe these more favorable terms will allow us to operate our business and continue to meet our commitments.

Private Placement of Series A Convertible Preferred Units

As further discussed in Note 14, on April 12, 2013, to satisfy our requirements under our amended Credit Facility as discussed above, we entered into a Series A Convertible Preferred Unit Purchase Agreement with Southcross Energy LLC, pursuant to which we issued and sold 1,466,325 Series A Convertible Preferred Units (the "Series A Preferred Units") and agreed to sell, by June 30, 2013, an additional 248,675 Series A Preferred Units to Southcross Energy LLC for a cash purchase price of $22.86 per Series A Preferred Unit in a privately negotiated transaction (the "Private Placement").

The Private Placement resulted in proceeds to us of $33.5 million. We also received a $0.7 million capital contribution from our General Partner to maintain its 2.0% general partner interest in us. When we sell to Southcross Energy LLC the additional 248,675 Series A Preferred Units for $5.7 million, our General Partner will make an additional capital contribution to us of $0.1 million.

Initial Public Offering

On November 7, 2012, Southcross completed its initial public offering (the "IPO") and after the completion of the IPO and full exercise of the underwriters' over-allotment option, Southcross Energy LLC's direct and indirect equity ownership in the Partnership was 58.5%. As the series of transactions described in Note 14 relate to entities under common control, these consolidated financial statements reflect the assets, liabilities, results of operations and cash flows of the Partnership beginning November 7, 2012 and Southcross Energy LLC as of and for the periods ending prior to November 7, 2012. There was no change in the basis of accounting as a result of the IPO or the transactions described in Note 14. Unless the context states otherwise, references to "we," "us," "our," "Partnership," "Company" or like terms refer to Southcross Energy Partners, L.P. and its subsidiaries.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS (Continued)

The following table depicts the ownership structure of the Partnership as of December 31, 2012:

Description

Public common units	41.5	%
Southcross Energy LLC:
Common units	7.5	%
Subordinated units	49.0	%
General partner units ⁽¹⁾	2.0	%

Total	100.0	%

⁽¹⁾: General partner units are owned by Southcross Energy Partners GP, LLC which is 100% owned by Southcross Energy LLC.

Description of Business

The Partnership is a midstream natural gas company with operations in South Texas, Mississippi and Alabama. We operate as one reportable segment and provide, through our subsidiaries, natural gas gathering, processing, treating, compression and transportation services and natural gas liquids ("NGL") fractionation and transportation services for our producer customers, and source, purchase, transport and sell natural gas and NGLs to power generation, industrial and utility customers.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements and related notes present the consolidated balance sheets as of December 31, 2012 and 2011 and the consolidated statements of operations, consolidated statements of comprehensive income, consolidated statements of cash flows and changes in partners' capital and members' equity for the periods ended December 31, 2012, 2011 and 2010. As a result of our IPO, there was no change in the accounting basis of the contributed net assets of Southcross Energy LLC. Information included in these financial statements and related notes are presented as if the Partnership and Southcross Energy LLC were the same entity, except with respect to associated changes in capitalization as described in Note 14.

The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Our consolidated financial statements include the accounts of Southcross and its 100% owned subsidiaries. We eliminate all intercompany balances and transactions in preparing consolidated financial statements. In management's opinion, all necessary adjustments to present fairly our results of operations, financial position and cash flows for the relevant periods have been made and all such adjustments are of a normal and recurring nature.

Principles of Consolidation

We consolidate entities when we have the ability to control or direct the operating and financial decisions of the entity or when we have a significant interest in the entity that gives us the ability to

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2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

direct the activities that are significant to that entity. The determination of our ability to control, direct or exert significant influence over an entity involves the use of judgment. We do not have ownership in any variable interest entities.

Use of Estimates

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts we report as assets, liabilities, revenues and expenses and disclosure in these consolidated financial statements. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and investments in highly liquid financial instruments purchased with original maturities of three months or less. Our cash equivalents consist primarily of temporary investments of cash in short-term money market instruments.

Allowance for Doubtful Accounts

In evaluating the collectability of its accounts receivable, the Partnership performs ongoing credit evaluations of its customers and adjusts payment terms based upon payment history and each customer's current creditworthiness, as determined by the Partnership's review of such customer's credit information. The Partnership extends credit on an unsecured basis to many of its customers. At December 31, 2012 and 2011, we have recorded no allowance for uncollectable accounts receivable.

Long-Lived Assets

Our property, plant and equipment is recorded at its original cost of construction or, upon acquisition, at fair value of the assets acquired. For assets we construct, we capitalize direct costs, such as labor and materials, and indirect costs, such as overhead and interest. Costs associated with obtaining rights of way agreements and easements to facilitate the building and maintenance of new pipelines are capitalized and we depreciate such costs over the life of the associated pipeline. We capitalize major units of property replacements or improvements and expense minor items. We use the straight-line method of depreciation to depreciate property, plant and equipment over the estimated useful lives of the assets.

When we retire property, plant and equipment, we charge accumulated depreciation for the original cost of the assets in addition to the cost to remove, sell or dispose of the assets, less their salvage value. We include gains or losses on dispositions of assets in operations and maintenance expense in our consolidated statements of income.

Our intangible assets consist of acquired long-term supply and gas gathering contracts. We amortize these contracts on a straight-line basis over the 30 year expected useful lives of the contracts.

We evaluate our long-lived assets, which include finite-lived intangible assets, for impairment when events or circumstances indicate that their carrying values may not be recovered. These events include, but are not limited to, market declines that are believed to be other than temporary, changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset and adverse changes in the legal or business environment such as adverse actions by regulators. If an event occurs, we evaluate

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2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

the recoverability of our carrying value based on the long-lived asset's ability to generate future cash flows on an undiscounted basis. If the undiscounted cash flows are not sufficient to recover the long-lived asset's carrying value, or if we decide to sell a long-lived asset or group of assets, we adjust the carrying values of the asset downward, if necessary, to their estimated fair value. Our fair value estimates are generally based on assumptions market participants would use, including market data obtained through the sales process or an analysis of expected discounted cash flows. At December 31, 2012 and 2011, we have recorded no impairment of long-lived assets.

Other Assets

Other assets primarily include financing costs incurred in connection with borrowings of long-term debt that are deferred and charged to interest expense over the term of the related debt.

Asset Retirement Obligations

The Partnership evaluates whether any future asset retirement obligations ("AROs") exist and estimates the costs for such AROs for certain future events. We do not have sufficient information to reasonably estimate any future AROs, because the Partnership has no intention of discontinuing the use of any significant assets or does not have a legal obligation to do so. We are not aware of any AROs as of December 31, 2012 and 2011. An ARO will be recorded in the periods where management can reasonably determine the settlement dates or the period in which the expense is incurred.

Environmental Costs and Other Contingencies

We recognize liabilities for environmental and other contingencies when we have an exposure that indicates it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Where the most likely outcome of a contingency can be reasonably estimated, we accrue a liability for that amount. Where the most likely outcome cannot be estimated, a range of potential losses is established and no specific amount in that range is more likely than any other, the low end of the range is accrued. We are not aware of any liabilities for environmental or other contingencies as of December 31, 2012 and 2011.

Revenue Recognition

The Partnership records revenue and related costs for natural gas and NGL sales and transportation services in the period in which they are earned. Revenue primarily consists of the sale of NGLs along with fees earned from its gathering and processing operations. Under certain agreements, the Partnership purchases natural gas from producers at receipt points on the pipeline systems and then sells the natural gas, or produced NGLs, if any, at delivery points on its systems. The Partnership records revenue and cost of product sold on a gross basis for these transactions where the Partnership acts as principal and takes title to the natural gas or NGLs. The Partnership also has contracts where it does not take title to the natural gas and charges fees for providing services such as gathering, treating or transportation and records these fees separately in revenues as transportation, gathering and processing fees. The Partnership recognizes revenue when all of the following criteria are met: persuasive evidence of an exchange arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and, collectability is reasonably assured.

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2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Partnership derives revenue in its business from the following types of arrangements:

•: Fixed-Fee. We receive a fixed-fee per unit of natural gas volume that we gather at the wellhead, process, treat, compress and/or transport for our customers, or we receive a fixed-fee per unit of NGL volume that we fractionate. Some of our arrangements also provide a fixed-fee for guaranteed transportation capacity on our systems.
•: Fixed-Spread. Under these arrangements, we purchase natural gas and NGLs from producers or suppliers at receipt points on our systems at an index price plus or minus a fixed price differential and sell these volumes of natural gas and NGLs at delivery points on our systems at the same index price, plus or minus a fixed price differential. By entering into such back-to-back purchases and sales, we are able mitigate our risk associated with changes in the general commodity price levels of natural gas and NGLs. We remain subject to variations in our fixed-spreads to the extent we are unable to precisely match volumes purchased and sold in a given time period or are unable to secure the supply or to produce or market the necessary volume of products at our anticipated differentials to the index price.
•: Commodity-Sensitive. In exchange for our processing services, we may remit to a customer a percentage of the proceeds from our sales, or a percentage of the physical volume, of residue natural gas and/or NGLs that result from our natural gas processing, or purchase NGLs from customers at set fixed NGL recoveries and retain the balance of the proceeds or physical commodity for our own account. These arrangements generally are combined with fixed-fee and fixed-spread arrangements for processing services and, therefore, represent only a portion of the value of a processing contract. The revenues we receive from these arrangements directly correlate with fluctuating general commodity price levels of natural gas and NGLs and the volume of NGLs recovered relative to the fixed recovery obligations.

Fair Value of Financial Instruments

The Partnership uses a valuation framework based upon inputs that market participants use in pricing an asset or liability, which are classified into two categories: observable inputs and unobservable inputs. Observable inputs represent market data obtained from independent sources. Unobservable inputs reflect the Partnership's own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. These two types of inputs are further segregated pursuant the following hierarchy:

•: Level 1—Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting entity has the ability to access at the measurement date.
•: Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
•: Level 3—Unobservable inputs that reflect the entity's own assumptions about the assumptions market participants would use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.

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2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Partnership's financial instruments include cash and cash equivalents, accounts receivable, accounts payable, fixed rate debt, variable rate debt and swap contracts based upon interest rate and natural gas price indices. The Partnership does not hold or issue financial instruments or derivative financial instruments for trading purposes.

Derivative Instruments

In its normal course of business, the Partnership enters into month-ahead swap contracts in order to hedge economically its exposure to certain intra-month natural gas index pricing risk. The Partnership manages its interest rate risk through interest rate swaps.

The Partnership measures the derivatives at fair value on a recurring basis using the best information and techniques available, which are primarily Level 2 inputs as defined in the fair value hierarchy (See Note 5).

Comprehensive Income

To the extent that the Partnership's cash flow hedge is effective, unrealized gains and losses will be recorded as accumulated other comprehensive income and will be transferred to income and recognized as interest expense in the period the underlying hedged transactions (interest payments) are recorded. Any hedge ineffectiveness will be recognized in interest expense immediately.

Unit-Based Compensation

Unit-based awards which settle in common units are classified as equity and are recognized in the financial statements at their grant date fair value. Unit-based awards which settle in cash are classified as liabilities and remeasured at every balance sheet date through settlement, such that the vested portion of the liability is adjusted to reflect its revised fair value through compensation expense. Compensation expense associated with unit-based awards, adjusted for forfeitures, is recognized within general and administrative expenses on the Partnership's consolidated statements of operations from the date of the grant over the vesting period.

Income Taxes

No provision for federal or state income taxes is included in our results of operations as such income is taxable directly to the partners of the Partnership. Each partner is responsible for its share of federal and state income tax. Net earnings for financial statement purposes may differ significantly from taxable income reportable to each partner as a result of differences between the tax basis and financial reporting basis of assets and liabilities.

We are responsible for our portion of the Texas margin tax that is included in Southcross Energy LLC's consolidated Texas franchise tax return. Our current tax liability will be assessed based on the gross revenue apportioned to Texas. The margin tax qualifies as an income tax under GAAP, which requires us to recognize the impact of this tax on the temporary differences between the financial statement assets and liabilities and their tax basis attributable to such tax.

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2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Uncertain Tax Positions

We evaluate the uncertainty in tax positions taken or expected to be taken in the course of preparing our consolidated financial statements to determine whether the tax positions are more likely than not of being sustained by the applicable tax authority. Tax positions with respect to tax at the partnership level deemed not to meet the more likely than not threshold would be recorded as a tax benefit or expense in the current year.

Earnings per Unit

Net income (loss) per unit is calculated under the two-class method of computing earnings per unit when participating or multiple classes of securities exist. Under this method, undistributed earnings or losses for a period are allocated based on the contractual rights of each security to share in those earnings as if all of the earnings for the period had been distributed.

Basic net income (loss) per unit excludes dilution and is computed by dividing net income (loss) attributable to common limited partner units by the weighted average number of common limited partner units outstanding during the period. Dilutive net income (loss) per unit reflects potential dilution from the potential issuance of common limited partner units. Dilutive net income (loss) per unit is computed by dividing net income (loss) attributable to common limited partner units by the weighted average number of common limited partner units outstanding during the period increased by the number of additional common limited partner units that would have been outstanding if the dilutive potential common limited partner units had been issued.

New Accounting Pronouncements

Accounting standard-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements to determine their impact, if any, on our financial statements.

In June 2011, the Financial Accounting Standards Board ("FASB") issued an accounting standards update on "Presentation of Comprehensive Income". This update amended existing guidance by allowing only two options for presenting the components of net income and other comprehensive income: (1) in a single continuous financial statement, statement of comprehensive income or (2) in two separate but consecutive financial statements, consisting of an income statement followed by a separate statement of other comprehensive income.

The Partnership adopted this standard effective January 1, 2012, which changed presentation of certain financial statements, but did not have any material or other impact on our financial statements.

In February 2013, the FASB issued an accounting standards update on "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." This update requires that we report reclassifications out of accumulated other comprehensive income and their effect on net income by component or financial statement line effective for our quarterly filing for the three months ended March 31, 2013. We do not expect this to impact our consolidated financial results, as the only required change is the format of our presentation.

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3. ACQUISITIONS

Enterprise Alabama Intrastate, LLC

Southcross Energy LLC acquired Enterprise Alabama Intrastate, LLC ("EAI") from Enterprise GTM Holdings L.P. for $21.8 million on September 1, 2011. EAI owned 388 miles of 2 to 16 inch natural gas pipeline assets located in northwest and central Alabama, and provided gathering, transportation and compression services and engaged in the purchase and sale of natural gas. EAI's identifiable assets acquired and liabilities assumed were recorded based upon the fair values determined on the date of acquisition.

The fair values of the EAI property, plant and equipment were determined based upon assumptions related to expected future cash flows, discount rates and asset lives using currently available information. Southcross Energy LLC utilized a mix of the cost, income and market approaches to determine the estimated fair values of such assets. The fair value measurements and models were classified as non-recurring Level 3 measurements.

Southcross Energy LLC completed its assessment of the fair value of the assets acquired and liabilities assumed as of March 31, 2012 and determined the consideration given was equal to the fair value of net assets acquired. As a result, no goodwill was recorded.

The reconciliation of the fair value of the assets acquired and liabilities assumed related to the EAI purchase price was as follows (in thousands):


Purchase Price—Cash		21,777
Current assets	$	3,374
Property, plant, and equipment		19,300
Intangible assets		1,700

Total assets acquired		24,374
Current liabilities		2,597

Total liabilities assumed		2,597

Net identifiable assets acquired	$	21,777

Southcross Energy LLC attributed $1.7 million to intangible assets associated with long-term supply and gathering contracts assumed in the acquisition (See Note 8).

In the third quarter of 2011, Southcross Energy LLC expensed $0.2 million of transaction costs associated with the acquisition of EAI. These costs are reported within general and administrative expenses.

The following unaudited pro forma financial information of the Partnership assumes that the EAI acquisition occurred on January 1, 2010 and includes adjustments for income from operations, including

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3. ACQUISITIONS (Continued)

depreciation and amortization, as well as the effects of financing the acquisition (in thousands, except unit information):

	Year Ended December 31, 2011						Year Ended December 31, 2010

	Southcross			Combined			Southcross			Combined
Total revenue	$	523,149		$	548,152		$	498,747		$	541,618
Net income		7,539			7,789			9,719			8,891
Net loss attributable to common unitholders		(8,145	)		(7,895	)		(3,083	)		(3,911	)
Net loss per unit—(basic and diluted)		(6.79	)		(6.59	)		(2.57	)		(3.27	)

The unaudited pro forma information is not necessarily indicative of what the Partnership's results of operations would have been if the transaction had occurred on that date, or what the financial position or results from operations will be for any future periods. For the period from September 1, 2011 through December 31, 2011, EAI contributed $11.0 million in revenues and $0.8 million in net income to Southcross Energy LLC's results of operations.

4. NET INCOME PER LIMITED PARTNER UNIT AND DISTRIBUTIONS

Earnings Per Unit of the Partnership

The following is a reconciliation of net loss attributable to limited partners and the limited partner units used in the basic and diluted earnings per unit calculations for the year ended December 31, 2012. (in thousands, except per unit data)

Allocation of Net loss

	Year ended December 31, 2012

Net loss	$	(4,488	)
Less:
Net loss from January 1, 2012 through November 6, 2012		(260	)

Net loss attributable to partners	$	(4,228	)

General partner's interest	$	(85	)
Limited partners' interest:
Common	$	(2,072	)
Subordinated	$	(2,072	)

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4. NET INCOME PER LIMITED PARTNER UNIT AND DISTRIBUTIONS (Continued)

Net Loss Per Limited Partners' Interest

Year ended December 31, 2012	Common			Subordinated

Interest in net loss	$	(2,072	)	$	(2,072	)
Weighted-average units—basic		12,214			12,214
Effect of diluted units ⁽¹⁾		—			—

Weighted-average units—diluted		12,214			12,214

Basic earnings per unit:
Net loss per unit	$	(0.17	)	$	(0.17	)
Diluted earnings per unit:
Net loss per unit	$	(0.17	)	$	(0.17	)

⁽¹⁾: Because we had a net loss for the year ended December 31, 2012, the weighted average units outstanding are the same for basic and diluted net loss per common unit. At December 31, 2012, the amount of unvested common units that were not included in the computation of diluted per unit amounts was 144,500.

Distributions

Our First Amended and Restated Agreement of Limited Partnership ("Partnership Agreement") requires that, within 45 days after the end of each quarter, beginning with the quarter ending December 31, 2012, we distribute all of our available cash to unitholders of record on the applicable record date, as determined by our General Partner. We intend to make a minimum quarterly distribution to the holders of our common units and subordinated units of $0.40 per unit, or $1.60 on an annualized basis, to the extent we have sufficient cash from our operations after the establishment of cash reserves and the payment of costs and expenses, including reimbursements of expenses to our General Partner. However, there is no guarantee that we will pay the minimum quarterly distribution on our units in any quarter.

Our General Partner is currently entitled to 2% of all distributions that we make prior to our liquidation. Our General Partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its current general partner interest. Our General Partner's initial 2% interest in our distributions will be reduced if we issue additional limited partner units in the future and our General Partner does not contribute a proportionate amount of capital to us to maintain its 2% general partner interest.

The Partnership declared its first distribution of $0.24 per common and subordinated unit which was attributable to the quarter ended December 31, 2012, and represented a pro-rated cash distribution

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4. NET INCOME PER LIMITED PARTNER UNIT AND DISTRIBUTIONS (Continued)

for the portion of the quarter following the closing of the Partnership's IPO on November 7, 2012. The distribution corresponds to the minimum quarterly distribution of $0.40 per unit or $1.60 on an annualized basis.

The Partnership paid approximately $6 million on February 14, 2013 to unitholders of record on February 11, 2013 attributable to the quarter ended December 31, 2012 distribution.

Earnings Per Common Unit of Southcross Energy LLC

A reconciliation of basic and diluted earnings per unit related to the Southcross Energy LLC common units is included in our consolidated statements of operations.

Southcross Energy LLC calculated earnings per common unit by first deducting the amount of cumulative returns on both the Redeemable Preferred and Preferred units from net income (loss), and dividing this amount by the weighted average number of vested common units (including both the vested Class A common units and Class B units). For periods presented in which Southcross Energy LLC units were outstanding, no unvested common units were included in the computation of the diluted per unit amount because all would have been antidilutive to the net loss per common unit holder. The amount of unvested common units that were not included in the computation of diluted per unit amounts were 143,220 units, 274,762 units and 275,381 units for periods ended November 6, 2012, December 31, 2011 and 2010 respectively.

5. FINANCIAL INSTRUMENTS

Cash and Cash Equivalents, Accounts Receivable and Accounts Payable

As of December 31, 2012 and 2011, the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable represent fair values based on the short-term nature of these instruments.

Senior Secured Credit Facility ("Credit Facility")

The fair value of our Credit Facility executed in 2012 approximates its carrying amount as of December 31, 2012 due primarily to the variable nature of the interest rate of the instrument and given the limited changes in the interest rate environment since its origination on November 7, 2012, which is considered a Level 2 fair value measurement.

Southcross Energy LLC Amended and Restated Credit Agreement, dated June 10, 2011 ("Credit Agreement")

The fair value of our Credit Agreement approximates its carrying amount as of December 31, 2011 due primarily to the variable nature of the interest rate of the instrument, which is considered a Level 2 fair value measurement. In connection with the IPO, the Credit Agreement was assumed and repaid by the Partnership.

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5. FINANCIAL INSTRUMENTS (Continued)

Derivatives

Interest Rate Swaps

The Partnership manages its interest rate risk through interest rate swaps. The current portion of the interest rate swap liability of $0.3 million was included within other current liabilities, and the non-current portion of the interest rate swap liability of $0.3 million was included within other non-current liabilities as of December 31, 2012. The interest rate cap liability was included within other non-current liabilities as of December 31, 2011.

The fair value of the interest rate cap and interest rate swap liabilities were as follows (in thousands):

	Fair value measurement as of

	December 31, 2012		December 31, 2011
	Significant Other Observable Inputs (Level 2)
Interest rate cap liability	$	—	$	21
Interest rate swap liability	$	638	$	—

On February 17, 2011, the we entered into an interest rate cap contract with Wells Fargo, N.A., effective March 31, 2011, for $80.0 million in notional value. The contract effectively capped our LIBOR-based interest rate on that portion of debt on a sliding scale that started at 1.51% as of March 31, 2011 and increased to 4.57% at the end of the contract on June 30, 2014. The notional amount of debt specified in the cap contract declines over time so that the amount of debt covered equates to $65.0 million, $43.0 million and $23.0 million at December 31, 2011, 2012, and 2013, respectively. We did not designate the interest rate cap as a hedging instrument for accounting purposes and, thus, the realized and unrealized gains and losses were recognized in interest expense during the period. We defined this contract as a fair value hierarchy of Level 2.

In March 2012, we terminated the interest rate cap and entered into an interest rate swap contract with Wells Fargo, N.A. The interest rate swap has a notional value of $150.0 million, and a maturity date of June 30, 2014. We receive a floating rate based upon one-month LIBOR and pay a fixed rate under the interest rate swap of 0.54%. We designated the interest rate swap as a cash flow hedge for accounting purposes and, thus, to the extent the cash flow hedge was effective, unrealized gains and losses were recorded to accumulated other comprehensive income/(loss) and recognized in interest expense as the underlying hedged transactions (interest payments) were recorded. Any hedge ineffectiveness is recognized in interest expense immediately. We did not have any hedge ineffectiveness during the year ended December 31, 2012. We defined this contract as a fair value hierarchy of Level 2.

Based on current interest rates, the Partnership estimated that approximately $0.3 million of hedging losses related to the interest rate swap contract will be reclassified from accumulated other comprehensive income/(loss) into results of operations within the next 12 months.

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5. FINANCIAL INSTRUMENTS (Continued)

The amounts recognized in interest expense associated with derivatives that are not designated as hedging instruments were as follows (in thousands):

	Year ended December 31,

	2012			2011			2010
Unrealized loss on interest rate cap	$	(141	)	$	(21	)	$	—
Realized loss on interest rate cap	$	(82	)	$	(147	)		—

The amounts recognized in interest expense associated with derivatives that are designated as hedging instruments were as follows (in thousands):

	Year ended December 31,

	2012			2011		2010
(Loss) reclassified from accumulated other comprehensive loss	$	(268	)	$	—	$	—

The change in value recognized in other comprehensive income/(loss) on the interest rate swap (effective portion) was as follows (in thousands):

	Year ended December 31,

	2012			2011		2010
Change in value recognized in other comprehensive loss (effective portion)	$	(745	)	$	—	$	—

Commodity Swaps

In its normal course of business, the Partnership periodically enters into month-ahead swap contracts to hedge its exposure to certain intra-month natural gas index pricing risk economically. There were no outstanding month-ahead swap contracts as of December 31, 2012 and total volume of month-ahead swap contracts outstanding as of December 31, 2011 was 372,000 MMBtu. The Partnership defines the contracts as Level 2, as the index price associated with such contracts was observable and tied to similarly quoted first-of-the-month natural gas index price. The fair value of such contracts was immaterial as of December 31, 2011 and 2010.

The realized gains or losses on these derivatives, recognized in revenues in our statement of operations were as follows (in thousands):

	Year ended December 31,

	2012			2011		2010
Realized gain / (loss) on derivatives	$	(12	)	$	179	$	355

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6. LONG-TERM DEBT

Our long-term debt consisted of the following (in thousands):

	As of December 31,

	2012		2011
Credit Facility, due November 2017	$	191,000	$	—
Credit Agreement, due June 2014		—		208,280

Total		191,000		208,280
Less:
Current maturities of long-term debt		—		(17,490	)

Total long-term debt	$	191,000	$	190,790

All of the Partnership's assets are pledged as collateral under the Credit Facility and the Credit Agreement. The terms of the Credit Facility and the Credit Agreement contain customary covenants, including those that restrict the Partnership's ability to make or limit certain payments, distributions, acquisitions, loans, or investments, incur certain indebtedness or create certain liens on its assets, consolidate or enter into mergers, dispose of certain of the Partnership's assets, engage in certain types of transactions with its affiliates, enter into certain sale/leaseback transactions and modify certain material agreements.

Borrowings under the Credit Facility and the Credit Agreement bear interest at LIBOR plus an applicable margin or a base rate as defined in the respective credit agreements. Under the terms of the Credit Facility and the Credit Agreement, the applicable margin under LIBOR borrowings was 3.25% and 3.00% at December 31, 2012 and 2011, respectively. The weighted-average interest rate as of December 31, 2012 and 2011 was 3.95% and 3.58%, respectively.

Our borrowings under the Credit Facility and the Credit Agreement were $191.0 million and $208.3 million as of December 31, 2012 and 2011, respectively, and our remaining available capacity under the Credit Facility was $132.7 million as of December 31, 2012, which was subsequently reduced as described below under "Amended Credit Facility." For the year ended December 31, 2012 and 2011, our average outstanding borrowings were $230.4 million and $147.4 million, respectively, and our maximum outstanding borrowings were $270.0 million and $212.7 million.

Credit Facility

In connection with the closing of the IPO, the Partnership entered into a $350.0 million senior secured credit facility with Wells Fargo Bank, N.A., and a syndicate of lenders. The Partnership utilized the Credit Facility to fund fees and expenses incurred in connection with the IPO and for the repayment of a portion of the Southcross Energy LLC's debt under the Credit Agreement.

The Partnership may utilize the Credit Facility for working capital requirements and capital expenditures, the purchase of assets, the payment of distributions, repurchase of units and general purposes of the Partnership. The Credit Facility matures on November 7, 2017, the fifth anniversary of the IPO closing date.

Prior to amending our Credit Facility as discussed below, the Credit Facility included a sublimit of up to $75.0 million for letters of credit of which $26.3 million was outstanding as of December 31,

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2012. The Credit Facility also contained various covenants and restrictive provisions and required maintenance of certain financial and operational covenants including but not limited to the following:

•: prior to exercising a one-time covenant election (defined by the Credit Facility) in connection with the issuance of certain unsecured notes, a consolidated total leverage ratio (generally defined as debt to EBITDA, as adjusted) of not more than 5.25 to 1.00 with step downs as set forth in the Credit Facility, and a consolidated interest coverage ratio of not less than 2.75 to 1.00. The requirement to maintain a certain consolidated total leverage ratio is subject to a provision for increases to 5.00 to 1.00 in connection with certain future acquisitions; and
•: upon exercising a one-time covenant election (defined by the Credit Facility) in connection with the issuance of certain unsecured notes, a consolidated total leverage ratio of not more than 5.25 to 1.00, a consolidated senior secured leverage ratio of not more than 3.50 to 1.00 and a consolidated interest coverage ratio of not less than 2.75 to 1.00.

The Credit Facility also required the Partnership's Woodsboro gas processing plant and Bonnie View NGL fractionation facility to meet certain initial average daily processing volume requirements by December 31, 2012. Due to required operational ramp up time of the Bonnie View NGL fractionation facility, prior to December 31, 2012 the Partnership requested and received an extension of time to achieve the initial average daily processing volumes to January 31, 2013. The Partnership met the average daily processing volumes necessary to satisfy the Credit Facility's operational covenants in January 2013. The Partnership is not required to meet these average daily processing volumes on an ongoing basis to be in compliance with the Credit Facility.

As of December 31, 2012, the Partnership was in compliance with all of its financial loan covenants. As discussed in Note 1, we believed it was unlikely that we would be in compliance with our financial covenants calculated for the quarter ending March 31, 2013, such that we negotiated with our lenders and secured more favorable financial covenants associated with our Credit Facility as further discussed below.

Amended Credit Facility

On March 27, 2013, we entered into the First Amendment to the Credit Facility. As a result of the First Amendment, our letters of credit sublimit was reduced from $75.0 million to $31.5 million and our available credit was reduced from $350.0 million to $250.0 million, plus the sum of any amounts placed on deposit in the Collateral Account, plus letters of credit outstanding. As a condition to the First Amendment, our General Partner placed $10.0 million in the Collateral Account and that Collateral Account and the associated cash was pledged as collateral for the benefit of the lenders. Pursuant to the First Amendment, we are allowed to pay our quarterly cash distribution of available cash for the first quarter 2013 in an amount not to exceed $10 million on deposit in the Collateral Account.

On April 12, 2013, we entered into the Second Amendment to the Credit Facility which waived our defaults relating to financial covenants for the period ending March 31, 2013 and provided more favorable financial covenants until we give notice under the Amended Credit Facility that we have achieved a Target Leverage Ratio (as defined in the Second Amendment) of 4.25 to 1.00 for one quarter or 4.50 to 1.00 for two consecutive quarters. Our available credit continues to be subject to the availability limits described in the First Amendment.

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The Second Amendment provides for, among other things, the following:

•

the lenders waived defaults relating to financial covenants for the quarter ending March 31, 2013;

•

an increase in our letters of credit sublimit from $31.5 million to $50.0 million;

•

until we achieve the Target Leverage Ratio:

•: an increase in our interest rate to be LIBOR plus 4.50%. After achieving the Target Leverage Ratio our interest rate reverts to not more than LIBOR plus 3.25%;
•: a limit to our growth capital expenditures of $25.0 million for the remainder of 2013 and $25.0 million for the 18 months ended June 30, 2015 (provided that if additional cash, as required under the Second Amendment, is placed in the Collateral Account, such expenditures may be increased to $28.0 million each period);
•: distributions to our unitholders are effectively limited to our established minimum quarterly distribution of not more than $0.40 per unit;
•: our ability to make acquisitions is limited; and
•: proceeds from any new equity issuances or asset sales are to be applied to reduce the then outstanding debt.

As a condition to the Second Amendment, our General Partner deposited into the Collateral Account a total of $34.2 million, including the $10.0 million previously deposited under the First Amendment. Additionally Southcross Energy LLC and our General Partner agreed to deposit into the Collateral Account the proceeds they receive from cash distributions on units and that are attributable to the quarters ending March 31, 2013, June 30, 2013, September 30, 2013 and December 31, 2013.

During the second quarter 2013, Southcross Energy LLC and/or our General Partner are required to make an equity investment in us in an aggregate amount equal to $40.0 million in exchange for new equity securities, which are required to be non-cash pay until the Target Leverage Test has been satisfied. On April 12, 2013 we entered into the Purchase Agreement to issue Series A Preferred Units in exchange for the investment of $40.0 million, utilizing the funds on deposit in the Collateral Account, to satisfy this requirement (See Note 14).

After the application of the proceeds from the equity infusion on April 12, 2013, our available borrowing capacity was $27.2 million.

If we fail to meet the Target Leverage Test on June 30, 2014, all or a portion of the cash distributions we made to Southcross Energy LLC and our General Partner for the quarters ending June 30, 2013, September 30, 2013 and December 31, 2013 deposited into the Collateral Account must be invested in us as additional non-cash pay equity securities.

The Second Amendment requires us to have Consolidated EBITDA (as defined in the Credit Facility) of at least $9.0 million, for the quarter ending June 30, 2013, and we are not subject to a consolidated total leverage ratio for such quarter. The Second Amendment provides that until we satisfy the Target Leverage Ratio, we are allowed to calculate an adjusted consolidated total leverage ratio, which allows for the netting of total funded indebtedness with amounts on deposit in the

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Collateral Account, and we may not permit our adjusted consolidated total leverage ratio to exceed the ratio set forth below for the corresponding period (as provided in the Amended Credit Facility):

		Maximum Adjusted Consolidated Total Leverage Ratio

September 30, 2013		7.25 to 1.00
December 31, 2013		6.75 to 1.00
March 31, 2014		6.25 to 1.00
June 30, 2014		5.25 to 1.00
September 30, 2014		5.00 to 1.00
December 31, 2014		4.75 to 1.00
March 31, 2015 and thereafter		4.50 to 1.00

Upon satisfying the Target Leverage Ratio, beginning with the quarter ending September 30, 2013, the Second Amendment provides that we will not permit our maximum consolidated total leverage ratio to exceed the ratio set forth below for the corresponding period (as provided in the Amended Credit Facility):

		Maximum Consolidated Total Leverage Ratio

September 30, 2013		4.75 to 1.00
December 31, 2013 and thereafter		4.50 to 1.00

The minimum consolidated interest coverage ratio was changed to 2.25 to 1.00 for the quarters ending September 30, 2013 and December 31, 2013 and 2.50 to 1.00 for the quarters ending March 31, 2014 and thereafter.

Credit Agreement

On August 6, 2009, in conjunction with the acquisition of businesses from Crosstex Energy LP and Southwest Energy, LP, Southcross Energy LLC borrowed $125.0 million and arranged for a $30.0 million revolver under the terms of a credit agreement executed among Southcross Energy LLC and a syndicate of lenders led by Wells Fargo Bank, N.A.

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On December 30, 2010, Southcross Energy LLC entered into the first amendment of that credit agreement, which extended the maturities of its debt from August 6, 2012 to June 30, 2014 and lowered the applicable interest rate margins. The terms of the amended credit agreement increased the term loan borrowings limit by $14.2 million to $115.0 million and, as a result, we increased borrowings by an incremental $14.2 million. Per the terms of the amended credit agreement, quarterly scheduled principal payments were reduced to $2.9 million commencing on March 31, 2011 with the remaining balance maturing on June 30, 2014. In addition, the amended credit agreement increased the limit on the use of the revolver on letters of credit to no more than $30.0 million and provided for the ability to expand the revolver to $55.0 million upon request by us.

On June 10, 2011, Southcross Energy LLC entered into the Credit Agreement with a syndicate of lenders led by Wells Fargo Bank, N.A. with a maturity of June 10, 2016. Our term loan commitment increased from $115.0 million to $153.0 million in connection with the Credit Agreement, and we received net proceeds of $30.0 million. The Credit Agreement also gave us the right to draw down an additional term loan amount not to exceed $22.0 million by September 30, 2011. On August 30, 2011, Southcross Energy LLC borrowed an additional $21.9 million in the form of a LIBOR loan with an interest rate of 3.23% to fund the acquisition of EAI. The credit agreement also provided us with a current revolving loan capacity of $150.0 million which included a sub-limit of up to $50.0 million for letters of credit. This revolving loan capacity could be increased to $185.0 million by our request subject to certain conditions. Southcross Energy LLC used $120.7 million to pay off the existing loans, plus accrued interest, under the Credit Agreement. Per the terms of the Credit Agreement, we made a payment of $2.9 million on June 30, 2011 and thereafter quarterly scheduled principal payments of $4.4 million commencing on September 30, 2011, with the remaining balance maturing on June 10, 2016. For the year ended December 31, 2011, we made total principal repayments on the term loans of $16.4 million, including $1.9 million of principal repayments as a result of excess cash flow covenants.

On February 7, 2012, Southcross Energy LLC entered into the first amendment of the Credit Agreement. The amendment was accounted for as a modification of an existing debt agreement and was entered into in order to modify the covenants to reflect the Southcross Energy LLC's need for expansion capital to support its growth plans. This amendment did not change the term loan or revolver loan capacity, but eased financial covenant measures and modified loan pricing for when the Southcross Energy LLC's leverage ratio was greater than 5.0 times to 1.0.

On November 7, 2012, the Partnership, in connection with the IPO, assumed and repaid $270.0 million, representing all of the Southcross Energy LLC's outstanding debt under the Credit Agreement at that time.

In 2012, we incurred a loss on the extinguishment of debt of $1.8 million in connection with the repayment $270.0 million of Southcross Energy LLC's assumed debt balance of following our IPO consisting of the partial write-down of deferred financing costs. In 2011, we incurred a loss on the extinguishment of debt of $3.2 million relating to the partial write-down of deferred financing costs on a previous credit agreement which was amended in June 2011.

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7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following (in thousands):

			As of December 31,

	Estimated Useful Life		As of December 31,
	Estimated Useful Life		2012			2011
Pipelines		30	$	250,177		$	230,866
Gas processing, treating and other plants		15		221,594			36,990
Compressors		7		19,241			16,078
Rights of way and easements		15		20,729			20,249
Furniture, fixtures and equipment		5		3,087			2,814

Total property, plant and equipment				514,828			306,997
Accumulated depreciation and amortization				(46,466	)		(27,547	)

Total				468,362			279,450
Construction in progress				77,011			86,189
Land and other				5,230			4,222

Net property, plant and equipment			$	550,603		$	369,861

Depreciation is provided using the straight-line method based on the estimated useful life of each asset. Depreciation expense for the years ended December 31, 2012, 2011 and 2010 was $19.0 million, $12.3 million, and $11.0 million, respectively.

Costs related to projects during construction, including interest on funds borrowed to finance the construction of facilities, are capitalized as construction in progress. For the years ended December 31, 2012, 2011 and 2010, the Partnership capitalized interest of $6.3 million, $1.8 million and $0, respectively. The Partnership had no capital leases as of December 31, 2012 and 2011.

8. INTANGIBLE ASSETS

Intangible assets of $1.6 million and $1.7 million as of December 31, 2012 and 2011, respectively, represent the unamortized value assigned to the long-term supply and gathering contracts assumed by us in the EAI acquisition. The majority of assumed contracts are life of lease, and we determined that the useful economic lives of the underlying producing leases were at least as long as the expected life of the acquired pipelines. These intangible assets are amortized on a straight-line basis over the 30 year expected useful lives of the contracts. Amortization expense in the consolidated financial statements presented and over the next five years related to intangible assets for the periods presented is not material.

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9. OTHER ASSETS

Other assets consisted of the following (in thousands):

	As of December 31,

	2012		2011
Deferred financing costs	$	4,385	$	2,155
Prepaid expenses		551		2,040
Other		195		491

Total other assets	$	5,131	$	4,686

We incurred an additional $5.2 million in costs as a result of entering into amendments to the Credit Agreement and Credit Facility on February 7, 2012 and November 7, 2012, respectively. In addition, we incurred a loss on extinguishment related to a partial write-down of deferred financing costs of $1.8 million upon the settlement of the Credit Agreement in November 2012. These deferred financing costs are being amortized over the remaining life of the Credit Facility through the maturity date of November 2017. Amortization of deferred financing costs recorded in interest expense was $1.2 million, $0.9 million, and $2.2 million for the years ended December 31, 2012, 2011, and 2010, respectively.

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following (in thousands):

	As of December 31,

	2012		2011
Trade accounts payable	$	87,981	$	47,311
Accrued liabilities		8,820		3,128

Total accounts payable	$	96,801	$	50,439

Trade accounts payable as of December 31, 2012 and 2011 included $40.7 million and $10.9 million, respectively, related to capital expenditures.

11. COMMITMENTS AND CONTINGENT LIABILITIES

Legal Matters

From time to time, we are party to certain legal or administrative proceedings that arise in the ordinary course and are incidental to our business. There are currently no such pending proceedings to which we are a party that our management believes will have a material adverse effect on our results of operations, cash flows or financial condition. However, future events or circumstances, currently unknown to management, will determine whether the resolution of any litigation or claims will ultimately have a material effect on our results of operations, cash flows or financial condition in any future reporting periods. We have not been involved in any significant claims or litigation for the years ended December 31, 2012, 2011 and 2010, respectively, (See Note 19) and had no litigation accrual as of December 31, 2012 or December 31, 2011.

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Regulatory Compliance

In the ordinary course of our business, we are subject to various laws and regulations. In the opinion of our management, compliance with current laws and regulations will not have a material effect on our results of operations, cash flows or financial condition.

Commitments and Purchase Obligations

Operating Leases

We maintain operating leases in the ordinary course of our business activities. These leases include those for vehicles, office buildings and other operating facilities and equipment. The terms of the agreements vary from 2013 until 2016. Future minimum annual rental commitments under our operating leases at December 31, 2012 were as follows (in thousands):

Years Ending December 31,	Operating Leases

2013	$	846
2014		818
2015		552
2016		264
2017		—

Total	$	2,480

Expenses associated with operating leases were $2.2 million, $1.5 million, and $1.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Purchase Commitments

At December 31, 2012, we had commitments of approximately $8.2 million to purchase equipment related to our capital projects. We have other planned capital projects that are discretionary in nature, with no substantial contractual capital commitments made in advance of the actual expenditures.

12. INCOME TAXES

We are responsible for our portion of the Texas margin tax that is included in Southcross Energy LLC's consolidated Texas franchise tax return. Our current tax liability is assessed based on gross revenue, less certain costs, apportioned to Texas. The margin tax qualifies as an income tax under GAAP, which requires us to recognize the impact of this tax on the temporary differences between the financial statement assets and liabilities and their tax basis attributable to such tax. For the years ended December 31, 2012, 2011 and 2010, there were no temporary differences recognized in our consolidated statements of operations.

We believe that there are no uncertain tax positions that would impact our operations for the years ended December 31, 2012, 2011 and 2010 and that no provision for income tax is required for these consolidated financial statements. However, our conclusions regarding the evaluation are subject to review and may change based on factors including, but not limited to, ongoing analyses of tax laws, regulations and interpretations thereof.

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13. TRANSACTIONS WITH RELATED PARTIES

Charlesbank

Historically, Charlesbank provided certain management services to Southcross Energy LLC pursuant to a management services agreement ("Charlesbank Agreement") which specified an annual management fee of $0.6 million. Southcross Energy LLC received services under the Charlesbank Agreement up to the IPO. Subsequent to the IPO, the Partnership did not receive any further services under this agreement, as the Charlesbank Agreement terminated with the IPO.

For the years ended December 31, 2012, 2011 and 2010, Southcross Energy LLC incurred management fees of $0.5 million, $0.6 million and $0.6 million, respectively, for services received and incurred associated expenses of $68,000, $109,000 and $29,000, respectively under the Charlesbank Agreement. Services fees and expenses under the Charlesbank Agreement are recognized in general and administrative expenses in our consolidated statements of operations. After February 7, 2012 the payment of fees and expenses under the Charlesbank Agreement was not allowed under the Credit Agreement. Therefore, no payments for services provided, relating to 2012, were made under the Charlesbank Agreement.

Wells Fargo Bank, N.A.

The Partnership entered into the credit agreements with syndicates of financial institutions and other lenders. These syndicates included affiliates of Wells Fargo Bank, N.A., an affiliate of which is a member of the investor group (See Note 15). Affiliates of Wells Fargo Bank, N.A. have from time to time engaged in commercial banking and financial advisory transactions with the Company in the normal course of business. Total fees paid, excluding interest, to affiliates of Wells Fargo, N.A., and its affiliates were $5.9 million, $1.0 million and $0.4 million for 2012, 2011 and 2010, respectively.

14. PARTNERS' CAPITAL AND MEMBERS' EQUITY

Partners' Capital

On November 7, 2012, Southcross completed its IPO and after the completion of the IPO and full exercise of the underwriters' over-allotment option, Southcross Energy LLC's direct and indirect equity ownership in the Partnership was 58.5%. Through a series of transactions described below, Southcross Energy LLC contributed all of its operating subsidiaries (its net assets on a historical cost basis), excluding certain liabilities and all preferred units, and became the holding company of the Partnership. Southcross Energy LLC holds all of the equity interests in the General Partner, as well as all subordinated units and a portion of the common units of the Partnership. Subsequent to the IPO, the Partnership owns Southcross Energy LLCs' operating subsidiaries.

The following activities occurred in connection with the closing of the IPO:

Activity of Southcross Energy LLC

Southcross Energy LLC conveyed the following:

•: its direct and indirect ownership in its operating subsidiaries to Southcross Energy Operating, LLC, the Partnership's operating subsidiary ("Southcross Operating");
•: an interest in Southcross Operating to the General Partner as a capital contribution; and

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•

its remaining interest in Southcross Operating to the Partnership in exchange for:

•: 3,213,713 common units, representing a 12.9% limited partner interest in the Partnership;
•: 12,213,713 subordinated units, representing a 49.0% limited partner interest in the Partnership; and
•: the assumption by the Partnership of Southcross Energy LLC's existing debt under its credit agreement of $270.0 million.

Activity of the General Partner

The General Partner conveyed its interest in Southcross Operating to the Partnership in exchange for:

•: a continuation of its 2% general partner interest in the Partnership; and
•: the Partnership's incentive distribution rights ("IDRs").

Activity of the Partnership

The Partnership completed its IPO, receiving proceeds of approximately $168.0 million, net of underwriters' discounts and structuring fees, and:

•: issued 9,000,000 common units to the public, representing a 36.1% limited partner interest in the Partnership;
•: repaid $129.5 million of debt outstanding under Southcross Energy LLC's credit agreement which the Partnership assumed; and
•: made a $38.5 million distribution, including reimbursements for certain capital expenditures, to Southcross Energy LLC;
•: established a long-term incentive plan authorizing 1,750,000 common units and granted 146,000 phantom units with distribution equivalent rights to certain employees;
•: entered into a $350.0 million senior secured credit facility and borrowed $150.0 million. The Partnership used proceeds of $147.5 million (net of $2.5 million in lender fees and expenses) for repayment of $140.0 million of Southcross Energy LLC's debt assumed by the partnership and $7.5 million for distribution to Southcross Energy LLC; and
•: assumed responsibility for all of Southcross Energy LLC's $26.7 million of outstanding letters of credit.

In connection with the full exercise of the underwriter's over-allotment option, which closed on November 26, 2012, the following additional activity of the Partnership occurred:

•: The Partnership's underwriters purchased 1,350,000 additional common units in the Partnership for approximately $25.2 million in proceeds, net of underwriters' and structuring fees; and
•: The Partnership used the net proceeds of $25.2 million to reacquire 1,350,000 common units from Southcross Energy LLC; and retired the common units.

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Common units

Our common units represent limited partner interests in us. The holders of our common units are entitled to participate in partnership distributions and are entitled to exercise the rights and privileges available to limited partners under our partnership agreement. We have authorized 13,963,713 common units as of December 31, 2012.

Subordinated units

Subordinated units represent limited partner interest in us and convert to common units at the end of the subordination period (as defined in our partnership agreement). The principal difference between our common units and our subordinated units is that in any quarter during the subordination period, holders of the subordinated units are not entitled to receive any distribution of available cash until the common units have received the minimum quarterly distribution plus any arrearages in the payment of the minimum quarterly distribution from prior quarters. Subordinated units do not accrue arrearages.

General Partner interests

Our general partner interest consisted of 498,518 general partner units as of December 31, 2012 and as defined by the Partnership's partnership agreement are not considered to be units (Common or Subordinated) under the partnership agreement and are representative of the general partner's 2% interest in us. Subsequent to December 31, 2012 and in conjunction with the Private Placement discussed below, our General Partner made a capital contribution in the amount of $0.7 million on April 12, 2013 in order to maintain its 2% ownership interest in us.

Private Placement of Series A Convertible Preferred Units

On April 12, 2013 (the "Issue Date"), we entered into a Series A Preferred Unit Purchase Agreement (the "Purchase Agreement") with Southcross Energy LLC, pursuant to which we issued and sold 1,466,325 Series A Preferred Units to Southcross Energy LLC for a cash purchase price of $22.86 per Series A Preferred Unit in a privately negotiated transaction (the "Private Placement").

The Series A Preferred Units are a new class of voting equity security that ranks senior to all of our other classes or series of equity securities with respect to distribution rights and rights upon liquidation.

The Series A Preferred Units have voting rights identical to the voting rights of the common units and will vote with the common units as a single class, such that each Series A Preferred Unit (including each Series A Preferred Unit issued as an in-kind distribution, discussed below) is entitled to one vote for each common unit into which such Series A Preferred Unit is convertible on each matter with respect to which each common unit is entitled to vote.

The Private Placement resulted in proceeds to us of $33.5 million. We also received a $0.7 million capital contribution from our General Partner to maintain its 2.0% general partner interest in us. When we sell to Southcross Energy LLC the additional 248,675 Series A Preferred Units for $5.7 million, our General Partner will make an additional capital contribution to us of $0.1 million.

The total capital infusion to the Partnership of $40.0 million, from all sales of Series A Preferred Units and General Partner capital contributions, were and will be used to reduce borrowings under our amended Credit Facility (See Note 6).

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Series A Preferred Unit Distribution Rights

Holders of Series A Preferred Units are entitled to quarterly distributions of in-kind Series A Preferred Units for the first four full quarters following the Issue Date and continuing thereafter until the board of directors of our General Partner determines to begin paying quarterly distributions in cash, and thereafter in cash. The board of directors of our General Partner may not elect to begin paying quarterly distributions on the Series A Preferred Units in cash until we have exercised the Target Leverage Option (pursuant to the Second Amendment) under our Amended Credit Facility.

In-kind distributions will be made in the form of Series A Preferred Units at a rate of $0.40 per outstanding Series A Preferred Unit per quarter (or 7% per year of the per unit purchase price) or, beginning after four full quarters, such higher per unit rate as is paid in respect of our common units. Cash distributions will equal the greater of $0.40 per unit per quarter or the quarterly distribution paid with respect to each common unit.

Series A Preferred Units Conversion Rights

Beginning on the later of January 1, 2015 and the date we exercise the Target Leverage Option (pursuant to the Second Amendment), Series A Preferred Units (including Series A Preferred Units issued as in-kind distributions) will be convertible into common units on a one-for-one basis, except that conversion will be prohibited to the extent that it would cause (on a pro forma basis) our estimated quarterly distributions over any of the succeeding four quarters to exceed our total distributable cash flow in that quarter. In addition, the Series A Preferred Units will be convertible into common units having a collective value of 110% of the Series A Preferred Units if a third party acquires majority ownership control of our general partner or we sell substantially all of our assets, in either case prior to January 1, 2015.

Beginning on January 1, 2015, we will have the right at any time to convert all or some of the Series A Preferred Units (including Series A Preferred Units issued as in-kind distributions) then outstanding into common units if (i) the daily volume-weighted average trading price of the common units on the national securities exchange on which the common units are listed or admitted to trading is greater than 130% of the unit purchase price for the trailing 30-trading-day period prior to our notice of conversion, (ii) the average daily trading volume of common units on the securities exchange exceeds 40,000 common units for those 30 trading days and (iii) the conversion would not cause (on a pro forma basis) our estimated quarterly distributions over any of the succeeding four quarters to exceed our total distributable cash flow in that quarter.

Members' Equity of Southcross Energy LLC

On August 6, 2009, five members of the Southcross Energy LLC's management team purchased, directly or indirectly through Estrella Energy, LP, Class A common units and Class B units along with Charlesbank, for the same value as Charlesbank, ($1.00 per unit). Estrella Energy, LP was partially owned by a non-management third-party, and thus a portion of the time- and performance-based units ("Third-Party Units") owned by Estrella Energy, LP were owned indirectly by the non-management third-party.

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14. PARTNERS' CAPITAL AND MEMBERS' EQUITY (Continued)

As of December 31, 2011, Southcross Energy LLC's common equity was comprised of 1,415,729 Class A authorized and outstanding common units, of which 217,483 were unvested, and 57,279 authorized and outstanding Class B units, of which 34,367 were unvested. The Class B units have the same distribution and liquidation rights as the Class A common units; however, they do not have voting rights. All Class A common units and Class B units were sold for, and have a par value of, $1.00 per unit.

Certain of the Class A common units and all of the Class B units contain time- and performance-vesting conditions. Time-vesting units vest ratably over five years subject to certain accelerated vesting based primarily on change of control or certain termination causes. Performance-vesting units will vest, if at all, upon Charlesbank attaining certain investment multiples and internal rates of return in connection with a liquidity event. Both the time- and performance vesting units require continued employment through any vesting date. The change in structure and ownership as a result of the IPO did not create a change of control event under the terms of the time- and performance-vesting units.

On March 20, 2012, Estrella Energy, LP was dissolved and Southcross Energy LLC purchased and retired the Third-Party Units for $15.3 million. Management did not receive any consideration in connection with such repurchase.

15. SOUTHCROSS ENERGY LLC PREFERRED UNITS

In connection with the IPO and through a series of transactions described in Note 14, Southcross Energy LLC contributed all of its operating subsidiaries (its net assets on a historical cost basis), excluding certain liabilities, common units and all preferred units, and became the holding company of the Partnership. This note discloses Southcross Energy LLC's preferred units as of November 7, 2012 (the IPO date) and December 31, 2011, as well as the activity associated with the preferred units for the period from January 1, 2012 through the IPO and for the years ended 2011 and 2010.

None of the preferred units (Preferred, Redeemable Preferred and Series B Redeemable Preferred) were conveyed in the IPO, and remain the obligation of Southcross Energy LLC and not the Partnership.

Preferred Units

As of November 7, 2012 and December 31, 2011, Southcross Energy LLC's cumulative preferred units were comprised of 11,850,374 units with a par value of $10 per unit, which accrued value (in the form of additional preferential rights to receive distributions) at a rate of 10% per annum, compounded quarterly.

Except in the case of cash distributions made for the purpose of paying federal income taxes, which are made to both preferred and common equity owners in direct proportion to the owners' respective share of taxable income, owners of the preferred equity receive cash distributions before owners of common equity. The cumulative preferred units and their cumulative return are subordinated to all redeemable preferred units and their cumulative return as discussed below. With the exception of cash distributions for federal income tax purposes, the Credit Agreement included certain covenants that restricted Southcross Energy LLC's ability to pay cash dividends to its owners. Southcross Energy LLC adjusts the carrying value of the Preferred Units to reflect the cumulative right to receive distributions on a quarterly basis. As of November 7, 2012, and December 31, 2011, the preferred units'

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SOUTHCROSS ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. SOUTHCROSS ENERGY LLC PREFERRED UNITS (Continued)

cumulative right to receive future cash distributions was $43.3 million and $31.8 million, respectively, as a result of the cumulative preferred return on such units.

Redeemable Preferred Units

As mentioned above, none of the redeemable preferred units were conveyed in the IPO, and they remain the obligation of Southcross Energy LLC. On June 10, 2011, in connection with Southcross Energy LLC entering into the Credit Agreement, Charlesbank and certain of Southcross Energy LLC's existing investors contributed a total of $15.0 million in exchange for 1.5 million Redeemable Preferred Units. The Redeemable Preferred Units have a par value of $10 per unit and accrue value (in the form of an additional preferential right to receive distributions) at a rate of 18% per annum, compounded quarterly. These Redeemable Preferred Units could be redeemed in whole or in part at any time, or would be redeemed by Southcross Energy LLC promptly after the satisfaction of all obligations under the Credit Agreement, to the extent of available funds. Southcross Energy LLC adjusted the carrying value of the Redeemable Preferred Units to reflect the cumulative right to receive distributions on a quarterly basis. As of November 7, 2012 and December 31, 2011, the right of the Redeemable Preferred Units to receive future cash distributions included an additional $3.9 million and $1.6 million, respectively, as a result of the cumulative preferred return on such units.

Series B Redeemable Preferred Units

As mentioned above, none of the redeemable preferred units were conveyed in the IPO, and they remain the obligation of Southcross Energy LLC. On March 20, 2012, Charlesbank and certain of Southcross Energy LLC's existing investors contributed $25.3 million and an affiliate of Wells Fargo Securities, LLC contributed $10.0 million to Southcross Energy LLC in exchange for 2.53 million units and 1.0 million units, respectively, of a new, Series B class, of Redeemable Preferred Units ("Series B Units"). On June 26, 2012, Charlesbank and certain of Southcross Energy LLC's existing investors contributed $7.5 million to Southcross Energy LLC in exchange for 0.75 million Series B Units.

On November 7, 2012 and subsequent to the IPO, the Series B Units were comprised of 3.35 million units. On November 26, 2012 and subsequent to the Over-Allotment Option, Southcross Energy LLC redeemed 2.49 million units. The Series B Units have a par value of $10 per unit, which accrue value (in the form of an additional preferential right to receive distributions) at a rate of 18% per annum, compounded quarterly. The Series B Units could be redeemed by Southcross Energy LLC in whole or in part at any time, or would be redeemed by Southcross Energy LLC promptly after the satisfaction of all its obligations under the Credit Agreement, to the extent of available funds. Southcross Energy LLC adjusts the carrying value of the Series B Units to reflect the cumulative right to receive distributions on a quarterly basis. As of November 7, 2012 and November 26, 2012, the Series B Units' right to receive future cash distributions included $3.8 million and $4.4 million, respectively as a result of the cumulative preferred return.

Series C Redeemable Preferred Units

As mentioned above, none of the redeemable preferred units were conveyed in the IPO, and they remain the obligation of Southcross Energy LLC. On June 26, 2012, Charlesbank and certain of Southcross Energy LLC's existing investors and other institutional investors contributed $30.0 million to Southcross Energy LLC in exchange for 3.0 million units of a new, Series C class, of Redeemable

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SOUTHCROSS ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. SOUTHCROSS ENERGY LLC PREFERRED UNITS (Continued)

Preferred Units ("Series C Units"). As of November 7, 2012, the Series C Units were comprised of 3.0 million units with a par value of $10 per unit, which accrue value (in the form of an additional preferential right to receive distributions) at a rate of 18% per annum, compounded quarterly. The Series C Units and their cumulative preferred return of $1.4 million as of November 7, 2012 were fully redeemed in connection with the IPO (See Note 14).

16. UNIT BASED COMPENSATION

Long-Term Incentive Plan

On November 7, 2012, and in conjunction with the IPO, the Partnership established its 2012 Long-Term Incentive Plan ("Incentive Plan"), which provides incentive awards to eligible officers, employees and directors of our General Partner. Awards granted to employees under the Incentive Plan vest over a three year period in equal annual installments in either a common unit of the Partnership or an amount of cash equal to the fair market value of a common unit at the time of vesting, as determined by management at its discretion. These awards also include distribution equivalent rights which grants the holder the right to receive an amount equal to all or a portion of the cash distributions made on units during the period the unit remains outstanding.

The following table summarizes information regarding the Incentive Plan unit activity:

			Weighted-average grant date fair value

Unvested—December 31, 2011	—		$	—
Granted units	146,000			23.01
Forefeited units	(1,500	)		23.01
Vested units	—			—

Unvested—December 31, 2012	144,500		$	23.01

We granted awards under the Incentive Plan, which we have classified as equity awards, with a grant date fair value of approximately $3.4 million for the year ended December 31, 2012. As of December 31, 2012, we had total unamortized compensation expense of approximately $3.2 million related to these units, which we expect to be amortized over the three-year vesting period. We recognized compensation expense of approximately $0.2 million for the year ended December 31, 2012, included in general and administrative expense on our consolidated statements of operations. As of December 31, 2012, we had 1,605,500 units available for issuance under the Incentive Plan.

Southcross Energy LLC Phantom Units

Southcross Energy LLC provided certain key non-officer employees with equity incentive units ("Phantom Units") in Southcross Energy LLC. The Phantom Units vest upon the occurrence of a change in control where more than 50% of the voting power of Southcross Energy LLC changes hands, or upon the occurrence of a liquidity event where, through the sale of some portion of its ownership, the majority owner of Southcross Energy LLC achieves or exceeds a targeted rate of return on its original investment. The changes in structure and ownership as a result of the IPO did not create a change of control event under the vesting terms of the Phantom Units. The number of Phantom Units earned and eligible for vesting increases over a period of years or through the achievement of certain

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SOUTHCROSS ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. UNIT BASED COMPENSATION (Continued)

rates of return by the majority owner of the Southcross Energy LLC or a combination thereof. As of December 31, 2012 and 2011, no fair value was attributable to the Phantom Units. No compensation expense associated with these units was recorded during the year ended December 31, 2012 and 2011. As of December 31, 2012 and 2011 the number of authorized and issued Phantom Units was 10,832.

Southcross Energy LLC Executive Equity Equivalent Units

On April 1, 2012, Southcross Energy LLC granted 15,000 equity equivalent units ("EEUs") to a member of management. Each individual EEU is equivalent in economic value to one Class A Common Unit of Southcross Energy LLC on a fully diluted basis. The EEUs have time and performance vesting over a three year term. The Partnership recognized $0.4 million in compensation expense in 2012.

17. REVENUES

The Partnership had revenues consisting of the following categories (in thousands):

	Year ended December 31,

	2012		2011		2010
Sales of natural gas	$	325,421	$	385,513	$	379,476
Sales of NGLs and condensate		124,139		106,487		93,592
Transportation, gathering and processing fees		46,113		30,102		25,080
Other		456		1,047		599

Total revenues	$	496,129	$	523,149	$	498,747

18. CONCENTRATION OF CREDIT RISK AND TRADE ACCOUNTS RECEIVABLE

The Partnership's primary markets are in South Texas, Alabama and Mississippi. The Partnership has a concentration of revenues and trade accounts receivables due from customers engaged in the production, trading, distribution and marketing of natural gas and NGL products. These concentrations of customers may affect overall credit risk in that these customers may be similarly affected by changes in economic, regulatory or other factors. The Partnership analyzes the customers' historical financial and operational information prior to extending credit.

Formosa Hydrocarbons Company Inc. ("Formosa") and Sherwin Alumina Company ("Sherwin") were significant customers for the Partnership. Formosa and Sherwin contributed $120.4 million or 24.3% and $54.5 million or 11.0%, respectively, of revenues in 2012, $108.8 million or 20.8% and $81.2 million or 15.5%, respectively, of revenues in 2011, and $106.6 million or 21.4% and $65.4 million or 13.1%, respectively, of revenues in 2010. In January 2013, we signed an amendment with Formosa defining volumes subject to the gas processing contract between the parties which expires May 31, 2013 (See Note 19).

The Partnership's top ten customers represent 65.5%, 73.1% and 74.2% of consolidated revenue for the years ended December 31, 2012, 2011, and 2010, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. CONCENTRATION OF CREDIT RISK AND TRADE ACCOUNTS RECEIVABLE (Continued)

During the years ended December 31, 2012, 2011, and 2010 we experienced no significant non-payment for services. At December 31, 2012 and 2011, we have recorded no allowance for uncollectable accounts receivable.

19. SUBSEQUENT EVENTS

Formosa Amendment

On January 24, 2013 we signed an amendment with Formosa whereby the volumes of our natural gas that can be processed through Formosa gradually decreases between January 2013 and the agreement termination date of May 31, 2013, after which all of our rich gas will be routed to our Woodsboro processing plant, our Gregory processing plant, and, if necessary, to other third party processing plants.

Gregory Processing and NGL Fractionation Facility

Our Gregory facility includes 135 MMcf/d of gas processing capacity and an associated 4,800 Bbls/d NGL fractionation facility. We shut down this plant in January 2013 to perform extensive turnaround maintenance activities and connect additional equipment to enhance NGL recoveries. As the turnaround maintenance was nearing completion, on January 26, 2013, we experienced a fire at this facility. Damage was limited to a small portion of the facility and we completed repairs and resumed operations during April 2013.

Partnership Distribution

On February 1, 2013, we announced a pro-rated cash distribution of $0.24 per common and subordinated unit for the fourth quarter of 2012, which was paid on February 14, 2013 to unit holders of record on February 11, 2013. This distribution is the first declared by the Partnership and corresponds to the minimum quarterly distribution of $0.40 per unit, or $1.60 on an annualized basis, pro-rated for the portion of the quarter following the closing of the IPO on November 7, 2012.

Bonnie View NGL Fractionation Facility

In February 2013, we completed the expansion of our NGL capacity at our Bonnie View fractionation facility from 11,500 Bbls/d to 22,500 Bbls/d. The plant fractionates y-grade NGLs from our Woodsboro processing plant and produces NGL component products.

Bee Line Gas Pipeline Commences Operations

In February 2013, we completed construction of 57 miles of 20-inch pipeline to move rich gas to our Woodsboro processing plant. The Bee Line pipeline has capacity to bring of 320 MMcf/d.

Formosa Litigation

On March 5, 2013, a subsidiary of the Partnership filed suit against Formosa. The lawsuit seeks recoveries of losses which we believe our subsidiary experienced as a result of the failure of Formosa to perform certain of its obligations under the gas processing contract between the parties. We cannot predict the outcome of such litigation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. SUBSEQUENT EVENTS (Continued)

Credit Facility

As further discussed in Note 6, on March 27, 2013, we entered into the First Amendment to the Credit Facility. On April 12, 2013, we entered into the Second Amendment to the Credit Facility which waived our defaults relating to financial covenants for the period ending March 31, 2013 and provides us with more favorable financial covenants than were provided previously and we believe these more favorable terms will allow us to operate our business and continue to meet our commitments.

Series A Convertible Preferred Units

As further discussed in Note 14, on April 12, 2013, to satisfy our requirements under our Amended Credit Facility as discussed above, we entered into a Series A Convertible Preferred Unit Purchase Agreement with Southcross Energy LLC, pursuant to which we issued and sold 1,466,325 Series A Convertible Preferred Units (the "Series A Preferred Units") and agreed to sell, by June 30, 2013, an additional 248,675 Series A Preferred Units to Southcross Energy LLC for a cash purchase price of $22.86 per Series A Preferred Unit in a privately negotiated transaction (the "Private Placement").

The Private Placement resulted in proceeds to us of $33.5 million. We also received a $0.7 million capital contribution from our General Partner to maintain its 2.0% general partner interest in us. When we sell to Southcross Energy LLC the additional 248,675 Series A Preferred Units for $5.7 million, our General Partner will make an additional capital contribution to us of $0.1 million.

The total capital infusion to the partnership of $40.0 million from all sales of Series A Preferred Units and General Partner capital contributions were and will be used to reduce borrowings under our amended Credit Facility providing us with additional borrowing capacity (See Note 6).

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SUPPLEMENTAL SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following presents a summary of selected quarterly financial information (in thousands, except per unit data)

								Periods ended

	Quarters ended							Periods ended
	Quarters ended							October 1, 2012- November 6, 2012 ⁽¹⁾			November 7, 2012- December 31, 2012 ⁽¹⁾ ⁽²⁾
2012	March 31		June 30		September 30			October 1, 2012- November 6, 2012 ⁽¹⁾			November 7, 2012- December 31, 2012 ⁽¹⁾ ⁽²⁾			Total
Revenues	$	120,618	$	105,701	$	118,150		$	55,613		$	96,047		$	496,129
Gross operating margin		21,416		18,698		15,078			6,741			9,707			71,640
Operating income		14,219		10,317		6,187			2,290			3,095			36,108
Net income (loss)	$	6,236	$	1,939	$	(4,041	)	$	(4,394	)	$	(4,228	)	$	(4,488	)
General partner's interest in net loss											$	(85	)	$	(85	)
Limited partners' interest in net loss											$	(4,143	)	$	(4,143	)
General partners' net loss per unit—basic and diluted											$	(0.17	)	$	(0.17	)
Limited partners' net loss per unit—basic and diluted											$	(0.17	)	$	(0.17	)

	Quarters ended

2011	March 31		June 30			September 30		December 31		Total
Revenues	$	120,999	$	126,490		$	135,961	$	139,699	$	523,149
Gross operating margin		15,247		15,116			13,473		18,733		62,569
Operating income		10,413		9,658			7,001		10,790		37,862
Net income (loss)	$	4,205	$	(171	)	$	199	$	3,306	$	7,539

⁽¹⁾: See Note 1 for a description of decreases in results of operations during this period.
⁽²⁾: Represents results of Southcross Energy Partners, L.P. subsequent to our intial public offering on November 7, 2012.

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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

We maintain controls and procedures designed to ensure that information required to be disclosed in the reports we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our General Partner's Chief Executive Officer (our principal executive officer) and our General Partner's Chief Financial Officer (our principal financial officer), as appropriate, to allow for timely decisions regarding required disclosure. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Securities Exchange Act of 1934 was performed as of December 31, 2012. This evaluation was performed by our management, with the participation of our General Partner's Chief Executive Officer and Chief Financial Officer. Based on this evaluation, our General Partner's Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective to ensure that we are able to collect, process and disclose the information we are required to disclose in the reports we file with the SEC within the required time periods.

This annual report does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the Partnership's registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

Changes in Internal Control

No changes in our internal control over financial reporting occurred during the year ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Item 1.01 Entry into a Material Definitive Agreement.

Private Placement of Series A Convertible Preferred Units

On April 12, 2013 (the "Issue Date"), we entered into a Series A Convertible Preferred Unit Purchase Agreement (the "Purchase Agreement") with Southcross Energy LLC, an entity owned by investment funds and entities associated with Charlesbank Capital Partners, LLC, and certain members of our management team and that owns and controls Southcross Energy GP, LLC, our general partner ("General Partner") and an approximate 56.5% interest in us (the "Purchaser"), pursuant to which we issued and sold 1,466,325 Series A Convertible Preferred Units (the "Series A Preferred Units") to the Purchaser for a cash purchase price of $22.86 per Series A Preferred Unit (the "Unit Purchase Price") in a privately negotiated transaction (the "Private Placement").

The Private Placement resulted in proceeds to us of $33.5 million. We also received a $0.7 million capital contribution from our General Partner to maintain its 2.0% general partner interest in us. Under the Purchase Agreement, we will issue an additional 248,675 Series A Preferred Units at the same Unit Purchase Price to the Purchaser by June 30, 2013 for $5.7 million and our General Partner will make an additional capital contribution to us of $0.1 million. The total capital infusion to the Partnership of $40.0 million from all sales of Series A Preferred Units and General Partner capital contributions were and will be used to reduce borrowings under our Amended Credit Facility providing us with additional borrowing capacity.

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The Purchase Agreement contains customary terms for private placements by public companies, including customary representations, warranties, covenants and indemnities.

The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, a copy of which is filed as Exhibit 10.10 to this Annual Report on Form 10-K and is incorporated herein by reference.

Series A Preferred Units Generally

Distributions

Holders of the Series A Preferred Units are entitled to quarterly distributions of in-kind Series A Preferred Units for the first four full quarters following the Issue Date and continuing thereafter until the board of directors of our General Partner determines to begin paying quarterly distributions in cash, and thereafter in cash. The board of directors of our General Partner may not elect to begin paying quarterly distributions on the Series A Preferred Units in cash until we have exercised the Target Leverage Option (as defined below) under our amended credit facility.

In-kind distributions will be made in the form of Series A Preferred Units at a rate of $0.40 per outstanding Series A Preferred Unit per quarter (or 7% per year of the per-unit purchase price) or, beginning after four full quarters, such higher per unit rate as is paid in respect of our common units. Cash distributions will equal the greater of $0.40 per unit per quarter or the quarterly distribution paid with respect to each common unit.

Conversion

Beginning on the later of January 1, 2015 and the date we exercise the Target Leverage Option, Series A Preferred Units (including Series A Preferred Units issued as in-kind distributions) will be convertible into common units on a one-for-one basis, except that conversion will be prohibited to the extent that it would cause (on a pro forma basis) our estimated quarterly distributions over any of the succeeding four quarters to exceed its total distributable cash flow in that quarter. In addition, the Series A Preferred Units will be convertible into common units having a collective value of 110% of the Series A Preferred Units if a third party acquires majority ownership control of our General Partner or we sell substantially all of our assets, in either case prior to January 1, 2015.

Beginning on January 1, 2015, we will have the right at any time to convert all or some of the Series A Preferred Units (including Series A Preferred Units issued as in-kind distributions) then outstanding into common units if (i) the daily volume-weighted average trading price of the common units on the national securities exchange on which the common units are listed or admitted to trading is greater than 130% of the Unit Purchase Price for the trailing 30-trading-day period prior to our notice of conversion, (ii) the average daily trading volume of common units on the securities exchange exceeds 40,000 common units for those 30 trading days and (iii) the conversion would not cause (on a pro forma basis) our estimated quarterly distributions over any of the succeeding four quarters to exceed our total distributable cash flow in that quarter.

Voting

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unit into which such Series A Preferred Unit is convertible on each matter with respect to which each common unit is entitled to vote.

The foregoing description of the Series A Preferred Units does not purport to be complete and is qualified in its entirety by reference to our Second Amended and Restated Agreement of Limited Partnership, a copy of which is filed as Exhibit 3.2 to this Annual Report on Form 10-K and is incorporated herein by reference.

Registration Rights Agreement

On the Issue Date, we entered into a Registration Rights Agreement with the Purchaser. Pursuant to the Registration Rights Agreement, we have agreed, after we become eligible to use the Form S-3 registration statement to register resales of our common units, to file up to two shelf registration statements for the resale of the common units into which the Series A Preferred Units may convert following receipt of written notice from the Purchaser. In addition, we have agreed to use commercially reasonable efforts to cause each shelf registration statement to be declared effective by the Securities and Exchange Commission no later than 180 days after its filing. The Registration Rights Agreement also provides the Purchaser with rights that allow the Purchaser to include its common units in certain registered offerings that we conduct for our own account. The Registration Rights Agreement contains representations, warranties, covenants and indemnities that are customary for private placements by public companies.

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which is filed as Exhibit 4.1 to this Annual Report on Form 10-K and is incorporated herein by reference.

Relationships

The Purchaser is owned by investment funds and entities affiliated with Charlesbank Capital Partners, LLC, and certain members of our management team, and the Purchaser owns and controls our General Partner and an approximate 59.2% interest in us (giving effect to the issuance to the Purchaser of Series A Preferred Units as contemplated under the Purchase Agreement). Certain individuals, including officers and directors of our General Partner, are also members of the Purchaser.

The transactions contemplated by the Purchase Agreement and the Registration Rights Agreement were approved by the conflicts committee of the board of directors of our General Partner. The conflicts committee, which is comprised entirely of independent directors, retained independent legal and financial advisors to assist it in evaluating the transaction.

The Credit Facility Amendment

On April 12, 2013, we entered into the Limited Waiver and Second Amendment to the Senior Secured Credit Facility (the "Second Amendment") in order to provide more favorable financial covenants until we achieve a target leverage ratio (as defined in the Second Amendment).

As a condition to the Second Amendment, our General Partner agreed to place an additional $24.2 million in the Collateral Account and our General Partner and Southcross Energy LLC agreed to deposit the proceeds they receive from any distributions attributable to the quarters ending March 31, 2013, June 30, 2013, September 30, 2013 and December 31, 2013 into the Collateral Account.

Pursuant to the Second Amendment:

(a): the lenders party thereto waived certain of our defaults under the Senior Secured Credit Facility relating to financial covenants for the quarter ending March 31, 2013;

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(b)

we must have a minimum of $9 million in consolidated EBITDA for the quarter ending June 30, 2013;

(c)

the sublimit under the Senior Secured Credit Facility applicable to letters of credit was increased from $31.5 million to $50 million;

(d)

a Target Leverage Test was added to measure our target leverage ratio—which is defined in the Second Amendment as total funded indebtedness as of the measurement date less the amount on deposit in the Collateral Account on such date divided by our consolidated EBITDA. The Target Leverage Test will be satisfied after we have given notice to Wells Fargo (the "Target Leverage Option") that we have achieved either of the following conditions: (i) our target leverage ratio as of the relevant test date is not more than 4.25 to 1.00 or (ii) our target leverage ratio as of such test date and as of last day of the immediately preceding calendar quarter is not more than 4.50 to 1.00;

(e)

the financial covenants were amended as follows:

•: until we exercise the Target Leverage Option, the total consolidated leverage ratio cannot be more than 7.25 to 1.00 for the quarter ending September 30, 2013, such leverage ratio stepping down over time to 4.50 to 1.00 for the quarter ending March 31, 2015 and thereafter as set forth in the Second Amendment;
•: the consolidated interest ratio was changed to 2.25 to 1.00 for the quarters ending September 30, 2013 and December 31, 2013 and 2.50 to 1.00 for the quarters ending March 31, 2014 and thereafter; and
•: for the quarters ending on or before December 31, 2013, we have the right (which cannot be exercised more than two times) to cure defaults under our financial covenants by having our General Partner and/or Southcross Energy LLC add additional funds into the Collateral Account (such funds being the "Equity Cure Amount");

(f)

in addition, until we exercise the Target Leverage Option:

•: the availability limits instituted pursuant to the First Amendment will remain in effect;
•: we cannot increase our $0.40 per-unit distribution amount;
•: loans under the Senior Secured Credit Facility bear interest at one-month LIBOR plus a margin of 4.50%;
•: we must use any proceeds received from the issuance of any new equity securities or asset sales to reduce our outstanding indebtedness under the Senior Secured Credit Facility;
•: we are limited in the amount we may make or commit to make in growth capital expenditures (we can increase that limit if additional funds are added to the Collateral Account, such funds being the "Equity Funded Capital Expenditure Amount"); and
•: we are limited in our ability to make acquisitions;

(g)

prior to June 30, 2013, our General Partner and Southcross Energy LLC are required to make an equity investment in us in an aggregate amount equal to $40 million in exchange for new equity securities that cannot pay cash dividends until we exercise the Target Leverage Option;

(h)

if our total consolidated leverage ratio for the quarter ending June 30, 2014 is less than 4.50 to 1.00, then our General Partner and Southcross Energy LLC are required to make an additional equity investment in us in an amount equal to the aggregate amount, if any, of any Equity Cure Amounts plus any Equity Funded Capital Expenditure Amounts, in exchange for

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new equity securities that cannot pay cash dividends until we exercise the Target Leverage Option; and

(i): if our consolidated total leverage ratio for the quarter ending June 30, 2014 is greater than 4.50 to 1.00, then on or before August 31, 2014, the General Partner and/or Southcross Energy LLC shall be required to make an additional equity investment in us in an amount equal to the lesser of (1) all of the funds in the Collateral Account (excluding any Equity Cure Amounts and Equity Funded Capital Expenditure Amounts) and (2) an amount equal to the sum of (A) an amount equal to the difference of (i) the quotient of our consolidated total funded indebtedness as of June 30, 2014 divided by 4.50, minus (ii) our consolidated EBITDA for the quarter ending June 30, 2014, plus (B) the aggregate of any Equity Cure Amounts plus any Equity Funded Capital Expenditure Amounts, if any, in exchange for new equity securities that cannot pay cash dividends until we exercise the Target Leverage Option.

The foregoing description of the Second Amendment does not purport to be complete and is qualified in its entirety by reference to the Second Amendment, a copy of which is filed as Exhibit 10.5 to this Annual Report on Form 10-K and is incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosures under Item 1.01 of this Part 9B relating to our Second Amended and Restated Agreement of Limited Partnership are incorporated into this Item 2.03 by reference.

Item 3.02 Unregistered Sales of Equity Securities.

The disclosures under Item 1.01 above relating to our Private Placement are incorporated into this Item 3.02 by reference. The Series A Preferred Units were issued and sold pursuant to the Purchase Agreement in a transaction exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Item 3.03 Material Modification to Rights of Security Holders.

The disclosures under Item 1.01 above relating to our Private Placement, the execution of the Registration Rights Agreement and the effect of the Series A Preferred Units on certain rights of the holders of common units are incorporated into this Item 3.03 by reference.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The disclosures under Item 1.01 of this Part 9B relating to our Private Placement and the execution of the Second Amended and Restated Agreement of Limited Partnership are incorporated into this Item 5.03 by reference.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

Management of Southcross Energy Partners, L.P.

Southcross Energy Partners, L.P. (the "Partnership," "Southcross," the "Company," "we," "our," or "us") is managed by the directors and executive officers of our General Partner, Southcross Energy Partners GP, LLC ("General Partner"). Our General Partner is not elected by our unitholders and will not be subject to re-election by our unitholders in the future. Southcross Energy LLC owns all of the membership interests in our General Partner. Our General Partner has a board of directors, and our unitholders are not entitled to elect the directors or to directly or indirectly participate in our management or operations. Our General Partner will be liable, as General Partner, for all of our debts (to the extent not paid from our assets), except for indebtedness or other obligations that are made specifically nonrecourse to it. Whenever possible, we intend to incur indebtedness that is nonrecourse to our General Partner.

Director Independence

Although most companies listed on the New York Stock Exchange ("NYSE") are required to have a majority of independent directors serving on the board of directors of the listed company, the NYSE does not require a listed publicly traded master limited partnership like us to have a majority of independent directors on the board of directors of its general partner.

Committees of the Board of Directors

The board of directors of our General Partner has an Audit Committee, a Conflicts Committee and a Compensation Committee and may have any such other committee as the board of directors shall determine from time to time. Each of the standing committees of the board of directors of our General Partner has the composition and responsibilities described below.

Conflicts Committee

Jerry W. Pinkerton and Bruce A. Williamson serve as the members of our Conflicts Committee. Mr. Pinkerton serves as the chairman of the Conflicts Committee. Our partnership agreement provides that the Conflicts Committee, as delegated by the board of directors of our General Partner as circumstances warrant, will review conflicts of interest between us and our General Partner or between us and affiliates of our General Partner. If a matter is submitted to the Conflicts Committee for its review and approval, the Conflicts Committee will determine if the resolution of a conflict of interest that has been presented to it by the board of directors of our General Partner is fair and reasonable to us. The current members of the Conflicts Committee and any future members may not be executive officers or employees of our General Partner or directors, executive officers or employees of its affiliates and must comply with the independence and experience standards established by the NYSE and the Securities Exchange Act of 1934 ("Exchange Act") for service on an audit committee of a board of directors. Any matters approved by the Conflicts Committee will be conclusively deemed to have been approved in good faith, to be fair and reasonable to us, approved by all of our partners and not a breach by our General Partner of any duties it may owe us or our unitholders.

Audit Committee

Jerry W. Pinkerton, Ronald G. Steinhart and Bruce A. Williamson serve as the members of the Audit Committee. Mr. Pinkerton serves as the chairman of the Audit Committee and complies with the independence and experience standards established by the NYSE and Exchange Act for service on an audit committee of a board of directors. The Audit Committee oversees, reviews, acts on and reports

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on various auditing and accounting matters to the board of directors of our General Partner, including: (i) the selection of our independent accountants, (ii) the scope of our annual audits, (iii) fees to be paid to the independent accountants, (iv) the performance of our independent accountants and (v) our accounting practices. In addition, the Audit Committee oversees our compliance programs relating to legal and regulatory requirements. Our General Partner has relied on the phase-in rules of the SEC and the NYSE with respect to the independence of the Audit Committee. Those rules permit our General Partner to have an Audit Committee that has a majority of independent members within 90 days of the effectiveness of the registration statement filed in connection with our initial public offering on November 7, 2012 ("IPO") and all independent members within one year thereafter. In compliance with those rules, on January 16, 2013, Samuel P. Bartlett resigned from the Audit Committee, and Mr. Steinhart was elected to the board of directors of our General Partner and appointed to serve on the Audit Committee and Mr. Biotti resigned from the Audit Committee with the election of Mr. Williamson to the board of directors of our General Partner and appointment to the Audit Committee on April 1, 2013. Messrs. Steinhart and Williamson comply with the independence and experience standards established by the NYSE and the Exchange Act for service on an audit committee of a board of directors. Our General Partner is generally required to have at least three independent directors serving on its board at all times.

Compensation Committee

Jon M. Biotti, Ronald G. Steinhart and Bruce A. Williamson serve as the members of the Compensation Committee. Mr. Biotti serves as the chairman of the Compensation Committee. On January 16, 2013, Jerry W. Pinkerton resigned from the Compensation Committee, and Mr. Steinhart was elected to the board of directors of our General Partner and appointed to serve on the Compensation Committee. On April 1, 2013, Kim G. Davis resigned from the Compensation Committee, and Mr. Williamson was elected to the board of directors of our General Partner and appointed to serve on the Compensation Committee. The Compensation Committee establishes salaries, incentive compensation and other forms of compensation for officers, non-executive directors and other employees, as well as administers our incentive compensation and benefit plans.

Directors and Executive Officers

Directors are appointed for a term of one year and hold office until their successors have been elected or qualified or until the earlier of their death, resignation, removal or disqualification. Officers

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serve at the discretion of the board of directors. The following table shows information for the directors and executive officers of our General Partner.

Name		Position with Southcross Energy Partners GP, LLC

David W. Biegler	66	Chairman of the Board, President, and Chief Executive Officer
Michael T. Hunter	63	Vice Chairman and Chief Commercial Officer
J. Michael Anderson	50	Senior Vice President and Chief Financial Officer
David M. Mueller	55	Senior Vice President and Chief Accounting Officer
Albert B. Glasgow	61	Senior Vice President, Operations
Ronald J. Barcroft	68	Senior Vice President, Natural Gas Liquids
Samuel P. Bartlett	40	Director
Jon M. Biotti	44	Director
Kim G. Davis	56	Director
Jerry W. Pinkerton	72	Director
Ronald G. Steinhart	72	Director
Bruce A. Williamson	53	Director

David W. Biegler

David W. Biegler was elected Chairman of the board of directors and Chief Executive Officer of our General Partner in August 2011 and was elected President in October 2012. Since July 2009, Mr. Biegler served as chairman of the board of directors and chief executive officer of Southcross Energy LLC, our predecessor. Mr. Biegler has 46 years of experience in the energy industry, having held various management positions in upstream, midstream, downstream and oilfield services companies. From 2004 until 2012, Mr. Biegler served as chairman and chief executive officer of Estrella Energy LP, an entity formed for the purpose of acquiring midstream companies, which was a founding investor in our predecessor. From 2002 to 2004, Mr. Biegler was the chairman of the board of Regency Gas Services, a midstream company that he co-founded and that was ultimately sold to a private equity firm. Mr. Biegler retired as vice chairman of the board of TXU Corp. (now Energy Future Holdings Corp.) in 2001, a position he assumed earlier that year. From 1997 to 2001, he served as president and chief operating officer of TXU Corp., the result of a merger between Texas Utilities and ENSERCH Corporation. From 1966 to 1997, Mr. Biegler held various management positions at ENSERCH Corporation and its upstream, midstream, downstream and oilfield field services subsidiaries, including as ENSERCH's chairman, president and chief executive officer from 1994 to 1997.

Mr. Biegler serves as a director of Southwest Airlines Co. and Trinity Industries, Inc. He previously served as a director of Dynegy, Inc., Guaranty Financial Group, and Animal Health International, Inc. Mr. Biegler received a Bachelor of Science degree in physics from St. Mary's University and is a graduate of Harvard University's advanced management program. He has served as a member of the National Petroleum Council and as the chairman of the American Gas Association, the Southern Gas Association, the American Gas Foundation and the Texas Pipeline Association.

Michael T. Hunter

Michael T. Hunter was appointed Vice Chairman and Chief Commercial Officer of our General Partner in October 2012. From August 2011 to October 2012, Mr. Hunter served as President of our General Partner. Since July 2009, Mr. Hunter served as president and a member of the board of directors of Southcross Energy LLC, our predecessor. Mr. Hunter has 36 years of experience in the energy industry, having held various management and board positions in several energy companies.

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From 2004 until 2012, Mr. Hunter served as president of Estrella Energy LP, an entity formed for the purpose of acquiring midstream companies, which was a founding investor in our Southcross Energy LLC.

Mr. Hunter serves as the vice chairman of the Texas Energy Reliability Council and has served as a member of the board of directors or as a trustee for the Southern Gas Association, Texas Pipeline Association, Gas Research Institute and Institute of Gas Technology. He is also a member of the board of directors for the University of Idaho Foundation. Mr. Hunter received a Bachelor of Science degree in political science and a Master's degree in business administration from the University of Idaho.

J. Michael Anderson

J. Michael Anderson was appointed Senior Vice President and Chief Financial Officer of our General Partner in April 2012. Mr. Anderson was the Senior Vice President and Chief Financial Officer of Exterran GP LLC, the general partner of Exterran Partners, L.P., from November 2011 until he joined our General Partner. Prior to that, Mr. Anderson had served as Senior Vice President of Exterran GP LLC since June 2006 and as a director of Exterran GP LLC since October 2006. He also served as Senior Vice President and Chief Financial Officer of Exterran Holdings, Inc. from August 2007 to December 2011. Prior to the merger of Hanover Compressor Company and Universal Compression Holdings Inc. in August 2007, Mr. Anderson was Senior Vice President and Chief Financial Officer of Universal, a position he assumed in March 2003.

Mr. Anderson holds a BBA in finance from Texas Tech University and an MBA in finance from The Wharton School of the University of Pennsylvania.

David M. Mueller

David M. Mueller was appointed Senior Vice President and Chief Accounting Officer of our General Partner in April 2012. From August 2011 to April 2012, Mr. Mueller served as Senior Vice President, Finance and Administration of our General Partner. From July 2009 to August 2011, Mr. Mueller served as Senior Vice President, Finance and Administration of Southcross Energy LLC, our predecessor.

Mr. Mueller has 33 years of financial and operational experience in the energy industry. Prior to joining Southcross Energy LLC, Mr. Mueller served as vice president, finance and controller of PSEG Texas (f/k/a Texas Independent Energy), an independent power producer and subsidiary of Public Service Enterprise Group Incorporated, from July 1999 to December 2008. From December 2008 until joining Southcross Energy LLC in July 2009, Mr. Mueller consulted for PSEG Texas, assisting in the management and orderly retirement of the company's long-term debt.

Mr. Mueller received a BBA in accounting from Texas Tech University. He is a member of the American Institute of Certified Public Accountants and Financial Executives International.

Albert B. Glasgow

Albert B. Glasgow was appointed Senior Vice President, Operations of our General Partner in August 2011. Since 2009, Mr. Glasgow served as Senior Vice President, Operations of Southcross Energy LLC, our predecessor. Mr. Glasgow has 39 years of experience in the energy industry. Prior to joining Southcross Energy LLC, he served as vice president of operations for the western division of Duke Energy Field Services, LLC, a joint venture between Phillips Petroleum (now ConocoPhillips Company) and Duke Energy Corporation from April 2000 to March 2005.

Mr. Glasgow received a Bachelor of Mechanical Engineering degree from Texas A&M University in 1973 and is a registered professional engineer in the states of Oklahoma and Texas. Mr. Glasgow is active in the Gas Processors Association, having served as a regional program committee member,

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Permian Basin Chapter President for three terms, and co-chairman of the maintenance and operations section for the national organization.

Ronald J. Barcroft

Ronald J. Barcroft was appointed Senior Vice President, Natural Gas Liquids of our General Partner in October 2012. From August 2011 to October 2012, Mr. Barcroft served as Senior Vice President, Business Development of our General Partner. From July 2009 to August 2011, Mr. Barcroft served as Senior Vice President, Commercial of Southcross Energy LLC, our predecessor. Mr. Barcroft has 43 years of experience in the energy industry in the U.S. and Canada. From 2005 until 2012, Mr. Barcroft served as Senior Vice President of Estrella Energy LP, an entity formed for the purpose of acquiring midstream companies, which was a founding investor in our predecessor. In 2005, he retired as vice president of Duke Energy Field Services, LLC, where he was responsible for the Western Division's commercial and business development activities.

Mr. Barcroft received a Bachelor's of Applied Science in chemical engineering in 1969 from the University of Waterloo, Ontario. Prior to leaving Canada, Mr. Barcroft was a registered engineer in Quebec and Alberta. He has served on the board of the Gas Processors Association, Oklahoma region, and on various Gas Processors Association regional committees.

Samuel P. Bartlett

Mr. Bartlett has served as a director of our General Partner since April 2012 and was appointed to the board in connection with his affiliation with Charlesbank, which controls our General Partner. Mr. Bartlett is a Managing Director of Charlesbank, a private investment firm located in Boston, Massachusetts, with an office in New York. Prior to joining Charlesbank in 1999, he was employed by Bain & Company, where he worked in the private equity and general practice areas. Mr. Bartlett serves as a director of CIFC Corp. In addition, Mr. Bartlett serves on the board of directors of a privately held Charlesbank portfolio company. Mr. Bartlett received a BA, magna cum laude, from Amherst College. Mr. Bartlett was selected to serve as a director on the board due to his affiliation with Charlesbank, his knowledge of the energy industry and his financial and business expertise.

Jon M. Biotti

Mr. Biotti has served as a director of our General Partner since April 2012 and was appointed to the board in connection with his affiliation with Charlesbank, which controls our General Partner. In addition, Mr. Biotti serves as the Chairman of the Compensation Committee of the board of directors of our General Partner. Mr. Biotti is a Managing Director of Charlesbank, which he joined in 1998. Mr. Biotti serves as a director of Blueknight Energy Partners G.P., L.L.C., the General Partner of Blueknight Energy Partners, L.P., a publicly traded master limited partnership that provides integrated terminalling, storage, processing, gathering and transportation services for companies engaged in the production, distribution and marketing of crude oil and asphalt products. Mr. Biotti serves on the board of directors of several privately held Charlesbank portfolio companies. Mr. Biotti was also a board member of Regency Gas Services, representing Charlesbank which was Regency's founding equity investor. Educated at Harvard, Mr. Biotti received a Bachelor's degree in government and sociology, an MBA and an MA in public administration. Mr. Biotti was selected to serve as a director on the board due to his affiliation with Charlesbank, his knowledge of the energy industry and his financial and business expertise.

Kim G. Davis

Mr. Davis has served as a director of our General Partner since April 2012 and was appointed to the board in connection with his affiliation with Charlesbank, which controls our General Partner.

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Mr. Davis is a Managing Director and founding partner of Charlesbank. Prior to co-founding Charlesbank in July 1998, he was a Managing Director of its predecessor firm, Harvard Private Capital Group. Previously, Mr. Davis was at Kohlberg & Co. as General Partner, at Weiss, Peck & Greer as Partner, and at General Motors and Dyson-Kissner-Moran in various positions. Mr. Davis serves on the board of directors of several privately held Charlesbank portfolio companies. Mr. Davis was also a board member of Regency Gas Services, representing Charlesbank which was Regency's founding equity investor. He graduated from Harvard University with a BA in history and also holds an MBA from Harvard. Mr. Davis was selected to serve as a director on the board due to his affiliation with Charlesbank, his knowledge of the energy industry and his financial and business expertise.

Jerry W. Pinkerton

Jerry W. Pinkerton was appointed as an independent member of the board of directors of our General Partner in April 2012. In addition, Mr. Pinkerton serves as Chairman of the Audit Committee and Chairman of the Conflicts Committee of the board of directors of our General Partner. With respect to the Audit Committee, Mr. Pinkerton qualifies as an "audit committee financial expert." Mr. Pinkerton has over 50 years of management, finance and accounting experience and has held various positions in several publicly traded companies. Mr. Pinkerton has served on the board of directors and as chairman of the audit committee of Holly Energy Partners, L.P. since July 2004. From December 2000 to December 2003, Mr. Pinkerton served as a consultant to TXU Corp. (now Energy Future Holdings Corp.), and, from August 1997 to December 2000, he served as Controller of TXU Corp. and its U.S. subsidiaries. From August 1988 until its merger with TXU Corp. in August 1997, Mr. Pinkerton served as the Vice President and Chief Accounting Officer of ENSERCH Corporation. Prior to joining ENSERCH in August 1988, Mr. Pinkerton was employed for 26 years as an auditor by Deloitte Haskins & Sells, a predecessor firm of Deloitte & Touche, LLP, including 15 years as an audit partner. From May 2008 to June 2011, Mr. Pinkerton also served on the board of directors of Animal Health International, Inc., where he also served as chairman of its audit committee.

The members of our General Partner appointed Mr. Pinkerton to serve as a director due to his audit, accounting and financial reporting expertise and knowledge that qualifies him as a financial expert for his role as the chairman of the audit committee. Due to his executive managerial experience with public companies and public accounting firms and his prior board service, including audit committee experience, Mr. Pinkerton possesses business and management expertise and a broad range of expertise and knowledge of board committee functions. Mr. Pinkerton received his Bachelor of Business Administration degree in Accounting from The University of North Texas.

Ronald G. Steinhart

Ronald G. Steinhart was elected as an independent member of the board of directors of our General Partner in January 2013. In addition, Mr. Steinhart serves as a member of the Audit Committee and the Compensation Committee of the board of directors of our General Partner. With respect to the Audit Committee, Mr. Steinhart qualifies as an "audit committee financial expert." Mr. Steinhart retired in 2000 as Chairman and Chief Executive Officer of the Commercial Banking Group of Bank One Corporation (commercial banking), a position he had held since 1996. He has over 35 years of experience in the financial services industry. He led a group of investors that established Team Bank (commercial banking) in 1988 and served as its Chairman and Chief Executive Officer until it merged with Bank One Texas in 1992. He was President and Chief Operating Officer of Bank One Texas through 1996. He is also a former President and Chief Operating Officer of InterFirst Corporation (commercial bank holding company), prior to which he teamed with investors to charter or purchase six other banks. He is a current director of Texas Industries, Inc., Penske Automotive Group, Inc. and Susser Holdings Corporation. During the last five years, Mr. Steinhart has been a director of Animal Health International, Inc. and Penson Worldwide, Inc. and has been a trustee of the

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MFS/Compass Group of mutual funds. Mr. Steinhart is an Advisory Board Member of the McCombs School of Business at the University of Texas at Austin. Among the civic positions in which he has served are Chairman of the Board of Trustees of the Teacher Retirement System of Texas, Chairman of the Housing Authority of the City of Dallas, Chairman of the United Way of Metropolitan Dallas, President of the Federal Advisory Council of the Federal Reserve System, Chairman of the Dallas Citizens Council and Regent of the Lamar University System.

Mr. Steinhart was elected to the board of directors of our General Partner due to his management experience, accounting and financial expertise and knowledge. Due to his executive managerial experience and his prior board service, Mr. Steinhart possesses business and management expertise and a broad range of expertise and knowledge of board committee functions. Mr. Steinhart received his BBA in accounting and his MBA in Finance from the University of Texas in Austin.

Bruce A. Williamson

Bruce A. Williamson was elected as an independent member of the board of directors of our General Partner in April 2013. In addition, Mr. Williamson serves as a member of the audit, compensation and conflicts committee of the board of directors of our general partner. Mr. Williamson is currently the President and Chief Executive Officer of Cleco Corporation, an energy services company, and was the Chairman, President and Chief Executive Officer at Dynegy, Inc., from 2002 through 2011. Prior to his role at Dynegy, Inc., Mr. Williamson was the President and Chief Executive Officer at Duke Energy Global Markets. Prior to Duke, Mr Williamson was Senior Vice President Finance at PanEnergy and also worked for Shell Oil Company for 14 years in exploration & production in the US and internationally. Mr. Williamson currently serves on the Board of Questar Corporation, an integrated natural gas company.

Mr. Williamson was elected to the board of directors of our General Partner due to his extensive expertise in the energy industry. Mr. Williamson received his BS degree in finance from the University of Montana, and his MBA from the University of Houston.

Code of Ethics, Corporate Governance Guidelines and Board Committee Charters

Our General Partner has adopted a Code of Business Conduct and Ethics, which applies to our General Partner's directors, officers and employees. A waiver of the Code of Business Conduct and Ethics for any director or executive officer of our General Partner may be granted only by the Audit Committee, and such committee will report any such waiver to the board of directors of our General Partner. A waiver of the Code of Business Conduct and Ethics for other officers or employees may be granted only by our Chief Executive Officer, who will thereafter report any such waiver to the Audit Committee. The board of directors of our General Partner has also adopted Corporate Governance Guidelines, which outline the important policies and practices regarding our governance. Jerry W. Pinkerton serves as the lead director, as such term is used in the Corporate Governance Guidelines.

We make available free of charge, within the "Investors" section of our Internet website at www.southcrossenergy.com, and in print to any unitholder who so requests, the Code of Business Conduct and Ethics, the Corporate Governance Guidelines, the Audit Committee Charter and the Compensation Committee Charter. Requests for print copies may be directed to investorrelations@southcrossenergy.com or to: Investor Relations, Southcross Energy Partners, L.P., 1700 Pacific Avenue, Suite 2900, Dallas, Texas 75201, or telephone (214) 979-3720. We will post on our Internet website all waivers to or amendments of the Code of Business Conduct and Ethics, which are required to be disclosed by applicable law and the NYSE's Corporate Governance Listing Standards. The information contained on, or connected to, our Internet website is not incorporated by reference

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into this Form 10-K and should not be considered part of this or any other report that we file with or furnish to the US Securities and Exchange Commission (the "SEC").

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our General Partner's board of directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC, and any exchange or other system on which such securities are traded or quoted, initial reports of ownership and reports of changes in ownership of our common units and other equity securities. Officers, directors and greater than 10 percent unitholders are required by the SEC's regulations to furnish to us and any exchange or other system on which such securities are traded or quoted with copies of all Section 16(a) forms they file with the SEC.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, we believe that all reporting obligations of our General Partner's officers, directors and greater than 10% unitholders under Section 16(a) were satisfied during the year ended December 31, 2012.

Item 11. Executive Compensation

Executive Compensation Discussion

Overview of our Executive Compensation Program

This executive compensation discussion describes the compensation policies, programs, material components and decisions of the compensation committee of the board of directors of our General Partner (the "Compensation Committee") with respect to our General Partner's executive officers, including the following individuals who are referred to as the "Named Executive Officers":

•: David W. Biegler, Chairman, President and Chief Executive Officer;
•: Michael T. Hunter, Vice Chairman and Chief Commercial Officer; and
•: J. Michael Anderson, Senior Vice President and Chief Financial Officer.

Our compensation practices and programs generally are designed to attract, retain and motivate exceptional leaders and structured to align compensation with the Partnership's overall performance, including growth in distributions to unitholders. The compensation practices and programs have been implemented to promote achievement of short-term and long-term business objectives consistent with the Partnership's strategic plans and are applied to reward performance. To accomplish these objectives, our compensation program consists of the following components: (i) base salary, designed to compensate executive officers for work performed during the fiscal year; (ii) short-term incentive compensation, designed to reward executive officers for the Partnership's yearly performance and for performance specific to executive officers area of responsibility; and (iii) long-term incentive compensation in the form of equity awards, meant to align our Named Executive Officers' interests with the Partnership's long-term performance.

As a result of the IPO transactions and the conveyance of Southcross Energy LLC's subsidiaries, during the transition period from November 7, 2012 to December 31, 2012 we had 156 employees who provided direct, full-time support to our operations. On January 1, 2013, all employees were transferred to our General Partner. As a result, we do not directly employ any of the persons responsible for managing our business. Our General Partner, under the direction of its board of directors, is responsible for managing our operations and employs all of the employees that operate our business. For 2013, the compensation payable to the officers of our General Partner will be paid by our General Partner and such payments will be reimbursed by us on a dollar-for-dollar basis.

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References in this report to Named Executive Officers, executive officers, other officers, directors, and employees refer to the Named Executive Officers, executive officers, other officers, directors, and employees of our General Partner.

Role of the Compensation Committee and Management

Our General Partner is responsible for the management of the Partnership. The Compensation Committee is appointed by the board of directors of our General Partner to assist the board of directors in discharging the board of directors' responsibilities relating to overall compensation matters, including, without limitation, matters relating to compensation programs for our directors and executive officers. The Compensation Committee is directly responsible for the General Partner's compensation programs, which include programs that are designed specifically for our executive officers, including our Named Executive Officers.

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The Compensation Committee has overall responsibility for evaluating and approving the compensation plans, policies and programs of our General Partner. To that end, the Compensation Committee has the responsibility, power and authority to set the compensation of executive officers, determine grant awards under and administer the General Partner's equity compensation plans, and assume responsibility for all matters related to the foregoing. The Compensation Committee is charged, among other things, with the responsibility of reviewing the executive officer compensation policies and practices for (i) adherence to our compensation philosophy and (ii) ensuring that the total compensation paid to our executive officers is fair, reasonable and competitive. These compensation programs for executive officers consist of base salary, annual incentive bonus and Long-Term Incentive Plan ("LTIP") awards typically in the form of equity-based restricted units and phantom units, as well as other customary employment benefits. Total compensation of executive officers and the relative emphasis of the three main components of compensation are reviewed at least on an annual basis by the Compensation Committee, which then makes recommendations to the board of directors of our General Partner for its approval.

It is the practice of the Compensation Committee to meet in person or by conference call at least once a year for a number of purposes. These include (i) assessing the performance of the Chief Executive Officer and other executive officers with respect to the Partnership's results for the preceding year, (ii) establishing compensation levels for each executive officer for the ensuing year, (iii) determining the amount of the annual bonus pool approved by the board of directors of our General Partner to be paid to the executive officers after taking into account both the target bonus levels established for those executive officers at the outset of the preceding year and the foregoing performance factors. Our Chief Executive Officer participates in the process of allocating our bonus pool and makes recommendations to the Compensation Committee regarding the amount of bonuses and other compensation paid to executive officers, other than the Chief Executive Officer, and (iv) determining equity awards under the LTIP for executive officers and other key employees.

Compensation Philosophy and Objectives

The principal objective of our compensation program is to attract and retain, as executive officers and employees, individuals of demonstrated competence, experience and leadership in our industry and in those professions required by our business who share our business aspirations, values, ethics and culture.

In establishing our compensation programs, we consider the following compensation objectives:

•: to encourage creation of unitholder value through sustainable earnings and cash available for distribution;
•: to reward participants for value creation commensurate with competitive industry standards;
•: to provide a significant percentage of total compensation that is "at-risk" or variable;
•: to encourage significant equity ownership to align the interests of executive officers and key employees with those of unitholders;
•: to provide competitive, performance-based compensation programs that allow us to attract and retain superior talent; and
•: to develop a strong linkage between business performance, safety, environmental stewardship and employee pay.

We also strive to achieve a fair balance between the compensation rewards that we perceive necessary to remain competitive in the marketplace and fundamental fairness to our unitholders, taking into account the return on their investment.

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In measuring the contributions of our executive officers to the performance of the Partnership for 2012, the Compensation Committee considered and utilized the following financial and operating performance factors:

•: Adjusted EBITDA since formation of the Partnership, which we define as net income (loss) plus interest expense, provision for income taxes, depreciation and amortization expense;
•: the execution of an IPO by the Partnership;
•: costs and completion dates associated with the recently-completed Woodsboro processing plant and Bonnie View NGL fractionation plant;
•: the Partnership's capital expenditures and operating expenses; and
•: success in executing contracts that will result in increased gas volumes for the Partnership.

Compensation Methodology

The Compensation Committee intends to review annually our executive compensation program in total and each element of compensation specifically. The Compensation Committee intends to include the following in its periodic review of our executive compensation program: (i) an analysis of the compensation practices of other companies in our industry; (ii) the competitive market for executive talent; (iii) the evolving demands of our business; (iv) specific challenges that we may face; and (v) individual contributions to our Partnership. The Compensation Committee will recommend to the board of directors of our General Partner adjustments to the overall executive compensation program, and to its individual components, as the Compensation Committee determines necessary to achieve our goals and comply with the Compensation Committee's compensation philosophy. The Compensation Committee intends to retain compensation consultants periodically, and retained an executive compensation consultant in January 2013, to assist in its review and to provide input regarding our compensation program and each of its elements.

In addition, the Compensation Committee intends to review various relevant compensation surveys with respect to determining compensation for the Named Executive Officers. In determining the long-term incentive compensation of executive officers (including the Named Executive Officers), the Compensation Committee will consider individual performance, the relative value of the equity holder's beneficial ownership, the value of similar incentive awards to executive officers at comparable companies, prior equity awards made to the Partnership's executive officers in past years, the value of all unvested awards held by the executive and such other factors as the Compensation Committee deems relevant.

Market Analysis

In January 2013, to ensure that our executive compensation practices remain competitive, the Compensation Committee retained BDO Seidman, LLP, a compensation consulting firm, to provide a comparative compensation analysis for our executive officers and certain key employees. The Compensation Committee selected a peer group that includes the 13 publicly-traded limited partnerships listed below, which are in the midstream market segment of our industry. In selecting this peer group, we considered those of our competitors that are of a size similar to our own, measured by

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market capitalization. Our market capitalization falls in the median to lower range of the peer group, which consists of the following companies:


Atlas Pipeline Partners, L.P.		Magellan Midstream Partners, L.P.
Boardwalk Pipeline Partners, LP		MarkWest Energy Partners, L.P.
Copano Energy, L.L.C.		Martin Midstream Partners L.P.
Crestwood Midstream Partners, LP		Plains All American Pipeline, L.P.
Crosstex Energy, L.P.		Regency Energy Partners, LP
DCP Midstream Partners, LP		Targa Resources Partners LP
Eagle Rock Energy Partners, L.P.

In addition to our peer group, we also intend to rely on the expertise of BDO Seidman, LLP in order to obtain a more complete picture of the overall compensation environment. The Compensation Committee has determined that no conflicts of interest exist with respect to any work performed for us by BDO Seidman, LLP.

When considering comparative data, the Compensation Committee generally intends to position the total compensation of our Named Executive Officers at the median range by reference to persons with similar duties at our peer group companies. The Compensation Committee also seeks to reward our executive officers when the Partnership exceeds its performance goals by providing compensation that approximates the upper quartile of our peer group. However, actual compensation decisions for individual officers are the result of the Compensation Committee's subjective analysis of a number of factors, including the individual officer's experience, skills or tenure with us, changes to the individual's position, or trends in compensation practices within our peer group or industry. Each executive's current and prior compensation is considered in setting future compensation. The amount of each executive's current compensation is considered as a base-line against which the Compensation Committee makes determinations as to whether adjustments are necessary to retain the executive in light of competition or in order to provide continuing performance incentives. Thus, the Compensation Committee's determinations regarding compensation are the result of the exercise of judgment based on all reasonably available information and, to that extent, are discretionary. The Compensation Committee may use its discretion to adjust any of the components of compensation to achieve our goal of attracting and retaining individuals with the skills necessary to execute our business strategy and to develop and grow our business.

Elements of our Compensation Programs

Compensation for our Named Executive Officers consists primarily of the elements, and their corresponding objectives, identified in the following table:

Compensation Element	Characteristics	Primary Objectives

Base salary	Fixed annual cash compensation. Salaries may be increased periodically based on performance or other factors.	Recognize performance of job responsibilities and attract and retain individuals with superior talent.
Annual performance-based compensation	Performance-related annual cash incentives earned based on financial and other objectives.	Promote near-term performance objectives and reward individual contributions for the achievement of those objectives.

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Compensation Element	Characteristics	Primary Objectives

Long-term equity participation	Equity awards purchased or granted subject to time and/or performance based vesting restrictions intended to align indirect ownership interests of Named Executive Officers with unitholder interests.	Emphasize long-term performance objectives, encourage the maximization of unitholder value and retain key executives by providing an opportunity to participate in the ownership of Southcross Energy LLC. Vesting restrictions are designed to facilitate Named Executive Officer retention and to provide continuing performance incentives.
Severance and change in control benefits	Severance agreements provide for twelve or twenty-four months of base salary and benefit continuation in the event of certain involuntary terminations of employment. A portion of the Named Executive Officers' equity incentives are subject to accelerated change in control vesting.	Encourage the continued attention and dedication of our Named Executive Officers and focus the attention of them when considering strategic alternatives.
Retirement savings 401(k) plan	Qualified 401(k) retirement plan benefits are available for our Named Executive Officers, other executive officers, and all other regular full-time employees. For 2012, we matched employee contributions to 401(k) plan accounts up to a maximum employer contribution of 6% of the employee's eligible compensation.	Provide an opportunity for tax-efficient savings.
Health and welfare benefits	Health and welfare benefits (medical, dental, vision, disability insurance and life insurance) are available for our executive officers and all other regular full-time employees.	Provide benefits to meet the health and wellness needs of our executive officers and other employees and their families.

Compensation Components and Analysis

Base Salary. We believe that executive officer base salaries should be competitive with salaries for executive officers in similar positions with similar responsibilities in our marketplace. Base salaries for our Named Executive Officers were set at initially modest levels, due primarily to our limited operating history at the time such salaries were determined and in order to limit fixed administrative costs during our initial period of operations. We set those base salaries with the expectation that the base salaries would be increased over time to bring them closer to competitive levels of base salaries in our industry,

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as the complexity and scope of our business increased. Effective March 2012, Messrs. Biegler and Hunter each received base salary increases of 60.0% and 7.1%, respectively; these increases were made to reflect the increased scope of these Named Executive Officers' respective positions as the Partnership continues to grow and mature and, with respect to Mr. Biegler, to reflect an increase from 60% to 100% to correspond with the amount of time he devotes to the Partnership. Mr. Anderson, our Chief Financial Officer, joined the Partnership on April 2, 2012 at an annualized base salary reflected in the table below.

The annualized base salaries as of December 31, 2012 for our Named Executive Officers are set forth in the following table:

Name and principal position	Base salary

David W. Biegler	$	400,000
Chairman, President and Chief Executive Officer
Michael T. Hunter	$	300,000
Vice Chairman and Chief Commercial Officer
J. Michael Anderson	$	275,000
Senior Vice President and Chief Financial Officer

Going forward, base salaries for our Named Executive Officers will continue to be reviewed periodically by the Compensation Committee, with adjustments expected to be made generally in accordance with the considerations described above and to maintain base salaries at competitive levels.

Annual Performance-Based Compensation for 2012. Each of our Named Executive Officers participates in an incentive bonus compensation program under which incentive awards are determined annually, with target bonus levels historically having been set at 40% of annualized base salary for Messrs. Biegler and Hunter. Mr. Anderson, who joined the Partnership in 2012, has a target bonus level equal to 60% of his annualized base salary. Prior to 2012, annual incentive bonuses for our executive officers were determined based on the achievement of pre-established financial and operational performance criteria, including our level of achievement against a range of total EBITDA targets. In early 2012, due to the expected variability of income associated with our large expansion projects (including the construction of our new Woodsboro Processing Plant and Bonnie View NGL Fractionation Plant), we determined not to establish formal EBITDA targets or other financial and operational performance measures with respect to our 2012 annual incentive compensation program. Instead, we determined that 2012 annual incentive bonus awards for our Named Executive Officers would be determined by the board of directors of our General Partner in its discretion following the completion of the 2012 fiscal year, based upon factors such as the satisfactory execution of our recapitalization strategy and growth plans, completion of the construction of our new Woodsboro Processing Plant and Bonnie View NGL Fractionation Plant, capital expenditure and operating expense performance, increase in new gas supply contracts, and each individual's contributions to our overall success during the year. For 2012, the board of directors of our General Partner determined not to award a bonus to Messrs. Biegler and Hunter.

For Mr. Anderson's service in 2012, the board of directors of our General Partner awarded him a bonus equal to 100% of his target bonus amount (which is 60% of his 2012 pro-rated annualized base salary) per the terms of Mr. Anderson's employment offer. The actual bonus amount awarded to Mr. Anderson for 2012 is set forth below in the Summary Compensation Table. Effective for annual incentive bonus compensation that may be paid for performance in 2013 and thereafter, to reflect the increased scope of duties in relation to our operation as a publicly traded master limited partnership, the board of directors of our General Partner increased the target bonus amounts for Messrs. Biegler and Hunter to 100% of his 2013 annualized base salary and 60% of his annualized base salary, respectively.

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Benefit Plans and Perquisites. We provide our executive officers, including our Named Executive Officers, with a standard complement of health and retirement benefits under the same plans as all other employees, including medical, dental and vision benefits, disability and life insurance coverage, and a defined contribution plan that is tax-qualified under Section 401(k) of the Internal Revenue Code ("401(k) Plan"). We believe that our health benefits provide stability to our Named Executive Officers, thus enabling them to better focus on their work responsibilities, while our 401(k) Plan provides a vehicle for tax-preferred retirement savings with additional compensation in the form of an employer match that adds to the overall desirability of our executive compensation package. For 2012, we provided an employer match under the 401(k) plan equal to 100% of employee contributions up to 6% of base salary. In 2012, none of our executive officers, including our Named Executive Officers, received any personal benefits or perquisites that were not made generally available to all of our salaried employees on a non-discriminatory basis. In addition, none of our Named Executive Officers participated in any defined benefit pension plans or non-qualified deferred compensation plans.

Severance Agreements and Change in Control Provisions. We maintain severance and other compensatory agreements with some of our executive officers for a variety of reasons, including the fact that severance agreements can be an important recruiting tool in the market in which we compete for talent. Certain provisions in these agreements, such as confidentiality, non-solicitation, and non-compete clauses, protect the Partnership and its unitholders after the termination of the employment relationship. We believe that it is appropriate to compensate former executives for these post-termination agreements, and that compensation helps to enhance the enforceability of these arrangements. These agreements are described in more detail elsewhere in this report.

Recoupment Policy. Equity awards granted under the LTIP are subject to recovery, including modification and forfeiture, for certain "Acts of Misconduct" defined in the LTIP. We currently do not have a recovery policy applicable to annual cash incentive bonuses. The Compensation Committee will continue to evaluate the need to amend such a policy, in light of current legislative policies, economic and market conditions.

Compensation Committee Report

The Compensation Committee issued the following report:

We have reviewed and discussed with management certain compensation discussion provisions to be included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2012 to be filed pursuant to Section 13(a) of the Securities and Exchange Act of 1934 (the "Annual Report"). Based on those reviews and discussions, we recommend to the Board of Directors of the General Partner that the Executive Compensation Discussion be included in the Annual Report.

Compensation Committee

Jon M. Biotti, Chairman
Kim G. Davis
Ronald G. Steinhart

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Summary Compensation Table

The following table (the "Summary Compensation Table") sets forth certain information with respect to the compensation paid to our Named Executive Officers for the years ended December 31, 2011 and 2012:

Name and Principal Position

David W. Biegler	2012	360,577	—	—	—	16,615	377,192
Chairman, President and Chief	2011	232,500	—	60,000	—	—	292,500
Executive Officer
Michael T. Hunter	2012	290,000	—	—	—	17,000	307,000
Vice Chairman and Chief	2011	275,385	—	67,200	—	14,700	357,285
Commercial Officer
J. Michael Anderson	2012	200,962	1,755,000	—	120,577	35,164	2,111,703
Senior Vice President and Chief	2011	_	—	—	—	—	—
Financial Officer

⁽¹⁾: Represents the grant date fair value of Mr. Anderson's equity equivalent units, as determined in accordance with FASB ASC Topic 718, and is based on an estimate of the value of one common unit holdings of $117.00 as of such date.
⁽²⁾: Represents awards earned under our annual incentive bonus program. For a discussion of the determination of these amounts see "Annual Performance Based Compensation for 2012".
⁽³⁾: Represents employer contributions under the 401(k) Plan for Messrs. Biegler, Hunter and Anderson. Mr. Anderson's amount also includes $31,356 of reimbursement for 2012 interim living expenses.

A discussion of the material compensation information disclosed in the Summary Compensation Table is set forth in the "Compensation Components and Analysis" section above.

The following is a discussion of other material factors necessary to understanding total compensation afforded to our Named Executive Officers:

Long-Term Equity Incentive Units. In August 2009, in connection with the formation of Southcross Energy LLC, Messrs. Biegler and Hunter were allowed to purchase equity interests in Southcross Energy LLC, pursuant to subscription agreements entered into by such persons with Southcross Energy LLC. The purchase price paid for the units was the same price paid per unit by Charlesbank. A portion of the units purchased by Messrs. Biegler and Hunter, which portion we refer to as the incentive units, are subject to vesting restrictions and were intended as equity incentives to promote long-term compensation objectives and provide them with meaningful incentives to increase unitholder value over time. Twenty-two percent (22%) of these incentive units are tied to time-based vesting requirements and seventy-eight percent (78%) are tied to performance-based vesting conditions. The units subject to time-based vesting requirements vest in five cumulative annual installments, twenty percent (20%) of the relevant units on each anniversary of the grant date, and are subject to the requirement of continued employment through the applicable vesting date. Generally, the time vesting incentive units are designed to compensate, motivate and retain the recipients by subjecting such equity ownership to continued service requirements.

The performance-based vesting incentive units are intended to motivate Messrs. Biegler and Hunter and to reward the financial success of Southcross Energy LLC, which, following the consummation of our IPO, are tied directly to our financial success. The units held by them will vest, if at all, only upon the occurrence of a transaction that results in Charlesbank receiving cash or liquid securities in an amount that results in Charlesbank achieving certain investment multiples and internal rates of return with respect to its investment in Southcross Energy LLC. A portion of the

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performance-based vesting units vest upon the occurrence of such a transaction that results in Charlesbank achieving an investment multiple reflecting a return of 2.0 times invested capital and an internal rate of return of 20%, and the remainder of such units vest cumulatively based on the occurrence of a transaction that results in Charlesbank achieving investment multiples and internal rates of return over and above these threshold amounts. The units will be fully vested upon the occurrence of a transaction that results in Charlesbank achieving an investment multiple reflecting a return of 3.5 times invested capital and an internal rate of return of 35%. The performance-based vesting units are also subject to the requirement of continued employment through the applicable vesting date. The consummation of our IPO did not constitute a liquidity event for purposes of the performance-based incentive units. Upon a Named Executive Officer's termination of employment, any unvested incentive units are subject to repurchase rights by Southcross Energy LLC at the Named Executive Officer's initial acquisition cost of the units (or less in certain circumstances). See "Severance and Change in Control Benefits" below for a description of the circumstances under which vesting of the incentive units may be accelerated.

Messrs. Biegler and Hunter did not receive any equity incentive units in 2012. In connection with his commencement of employment on April 2, 2012, Mr. Anderson, our Chief Financial Officer, received 15,000 equity equivalent units, as described in more detail below. Going forward, we expect to use equity-based incentives more regularly and that equity-based awards will become more prominent in our annual compensation decision-making process. In connection with our IPO, we adopted the LTIP, which is discussed in more detail under "LTIP" below, and subsequently made awards under it.

Mr. Anderson's Equity Equivalent Units. In connection with his commencement of employment, the board of directors of our General Partner determined to grant an equity incentive award to Mr. Anderson to provide him with meaningful incentives to increase unitholder value over time. Mr. Anderson was granted 15,000 equity equivalent units, each of which is intended to be equivalent in value to one incentive unit of the type previously purchased by our Named Executive Officers. These units vest in three cumulative annual installments, one-third of the units on each anniversary of the grant date, subject to continued employment through the applicable vesting date. Upon Mr. Anderson's termination of employment without cause or for good reason or generally upon a change in control, any unvested units will vest in full. Generally, if Mr. Anderson's employment is terminated without cause or Mr. Anderson resigns for good reason or we incur or Southcross Energy LLC incurs a change in control, Mr. Anderson will be entitled to receive for each vested equity equivalent unit a cash payment equal to the value of one incentive unit in Southcross Energy LLC.

Long-Term Incentive Plan. In connection with our IPO, our General Partner adopted the Long-Term Incentive Plan (the "LTIP"), pursuant to which our eligible officers, employees and directors are eligible to receive awards with respect to our equity interests, thereby linking the recipients' compensation directly to our performance. The description of the LTIP set forth below is a summary of the material features of the LTIP. This summary does not purport to be a complete description of all of the provisions of the LTIP.

The LTIP provides for the grant, from time to time at the discretion of the board of directors of our General Partner or Compensation Committee, of restricted units, phantom units, unit options, distribution equivalent rights and other unit-based awards. Subject to adjustment in the event of certain transactions or changes in capitalization, an aggregate of 1,750,000 common units may be delivered pursuant to awards under the LTIP. Units that are cancelled or forfeited will be available for delivery pursuant to other awards. The LTIP is administered by the board of directors of our General Partner, though such administration function may be delegated to a committee (including the Compensation Committee) that may be appointed by the board of directors of our General Partner to administer the LTIP. The LTIP is designed to promote our interests, as well as the interests of our unitholders, by rewarding our directors, officers and employees for delivering desired performance results, as well as by

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strengthening our ability to attract, retain and motivate qualified individuals to serve as our directors, officers and employees.

Restricted Units and Phantom Units. A restricted unit is a common unit that is subject to forfeiture. Upon vesting, the forfeiture restrictions lapse and the recipient holds a common unit that is not subject to forfeiture. A phantom unit is a notional unit that entitles the grantee to receive a common unit upon the vesting of the phantom unit or on a deferred basis upon specified future dates or events or, in the discretion of the administrator, cash equal to the fair market value of a common unit. The administrator of the LTIP may make grants of restricted and phantom units under the LTIP that contain such terms, consistent with the LTIP, as the administrator may determine are appropriate, including the period over which restricted or phantom units will vest. The administrator of the LTIP may, in its discretion, base vesting on the grantee's completion of a period of service or upon the achievement of specified financial objectives or other criteria or upon a change of control (as defined in the LTIP) or as otherwise described in an award agreement.

Distributions made by us with respect to awards of restricted units may be subject to the same vesting requirements as the restricted units. The administrator of the LTIP, in its discretion, may also grant tandem distribution equivalent rights with respect to phantom units. Distribution equivalent rights are rights to receive an amount equal to all or a portion of the cash distributions made on units during the period a phantom unit remains outstanding.

Unit Options. The LTIP also permits the grant of options covering common units. Unit options represent the right to purchase a number of common units at a specified exercise price. Unit options may be granted to such eligible individuals and with such terms as the administrator of the LTIP may determine, consistent with the LTIP; however, a unit option must have an exercise price equal to at least the fair market value of a common unit on the date of grant.

Other Unit-Based Awards. The LTIP also permits the grant of "other unit-based awards," which are awards that, in whole or in part, are valued or based on or related to the value of a unit.

The vesting of an other unit-based award may be based on a participant's continued service, the achievement of performance criteria or other measures. On vesting or on a deferred basis upon specified future dates or events, an other unit-based award may be paid in cash and/or in units (including restricted units), as the administrator of the LTIP may determine.

Source of Common Units; Cost. Common units to be delivered with respect to awards may be newly-issued units, common units acquired by us or our General Partner in the open market, common units already owned by our General Partner or us, common units acquired by our General Partner directly from us or any other person or any combination of the foregoing. With respect to awards made to employees of our General Partner, our General Partner will be entitled to reimbursement by us for the cost incurred in acquiring such common units or, with respect to unit options, for the difference between the cost it incurs in acquiring these common units and the proceeds it receives from an optionee at the time of exercise of an option. Thus, we will bear the cost of all awards under the LTIP. If we issue new common units with respect to these awards, the total number of common units outstanding will increase, and our General Partner will remit the proceeds it receives from a participant, if any, upon exercise of an award to us. With respect to any awards settled in cash by our General Partner, our General Partner will be entitled to reimbursement by us for the amount of the cash settlement.

Amendment or Termination of LTIP. The administrator of the LTIP, at its discretion, may terminate the LTIP at any time with respect to the common units for which a grant has not previously been made. The LTIP will automatically terminate on the tenth anniversary of the date it was initially adopted by our General Partner. The administrator of the LTIP also will have the right to alter or amend the LTIP or any part of it from time to time or to amend any outstanding award made under

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the LTIP, provided that no change in any outstanding award may be made that would impair materially the vested rights of the participant without the consent of the affected participant, and/or result in taxation to the participant under the Internal Revenue Code Section 409A.

All Other Compensation. Please see the "Executive Compensation Discussion" above for a discussion of any perquisites paid to our Named Executive Officers, and the section below entitled "Potential Payments Upon a Termination or Change in Control" for a discussion of payments made upon resignation.

Outstanding Equity Awards at December 31, 2012

The following table provides information regarding incentive units held by our Named Executive Officers as of December 31, 2012 (in thousands).

	Southcross Energy LLC Incentive Units

Name	Number of time-vesting units that have not vested ⁽¹⁾		Fair value of time-vesting units that have not vested ⁽³⁾		Number of performance- vesting units that have not vested ⁽²⁾		Fair value of performance vesting units that have not vested ⁽³⁾
David W. Biegler		4,869	$	559.9		43,470	$	4,999.1
Michael T. Hunter		4,869	$	559.9		43,470	$	4,999.1
J. Michael Anderson		15,000	$	1,725.0		—	$	—

⁽¹⁾: Represents the number of unvested time vesting incentive units purchased on August 6, 2009 by Messrs. Biegler and Hunter. The remaining unvested units held by them vest in two equal annual installments on each of August 6, 2013 and 2014, subject to the recipient's continued employment through the applicable vesting date. With regards to Mr. Anderson, represents the number of unvested time vesting incentive units awarded on April 2, 2012. Units vest in three equal installments on each of April 2, 2013, 2014 and 2015, subject to the recipient's continued employment through the applicable vesting date.
⁽²⁾: Represents the number of unvested performance vesting incentive units purchased on August 6, 2009. The units will vest, if at all, upon Charlesbank attaining certain investment multiples and internal rates of return in connection with a liquidity event with respect to its investment in Southcross Energy LLC, subject to the recipient's continued employment through the applicable vesting date. For additional information relating to the performance vesting incentive units, see the discussion above under "Long-Term Equity Incentive Units".
⁽³⁾: Amounts shown were calculated based on an estimate of the fair market value of units in Southcross Energy LLC on December 31, 2012.

Potential Payments Upon a Termination or Change in Control

Severance and Change in Control Benefits. Our Named Executive Officers are entitled to severance payments and benefits upon certain terminations of employment and, in certain cases, upon a change in control of Southcross Energy LLC. In addition, Mr. Anderson is entitled to severance payments and benefits upon certain qualifying terminations of employment (including in connection with a change in control) and, in certain cases, upon a change in control.

Each of our Named Executive Officers has entered into a severance agreement with our General Partner that provides for severance benefits upon certain terminations of employment. As described below, these agreements are substantially similar for each of the Named Executive Officers. In addition, pursuant to the severance agreements for Messrs. Biegler and Hunter, described in more detail below, upon termination of employment due to death or disability, Messrs. Biegler and Hunter are entitled to

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accelerated vesting of any unvested time vesting incentive units that would have become vested within one year following the date of the Named Executive Officer's death or disability, as applicable. Mr. Anderson's severance agreement provides for severance payments and benefits upon certain qualifying terminations of employment, as described below.

Severance Benefits for Messrs. Biegler and Hunter. Under the severance agreement for Messrs. Biegler and Hunter, upon termination of such executives' employment by us without "cause" or by executive for "good reason" (provided that termination for "good reason" occurs no more than forty-five days following the last event constituting "good reason"), the executive is entitled to receive (i) twelve months of base salary continuation and (ii) company-subsidized group health plan benefits for up to twelve months. Additionally, severance payments are conditioned upon the execution of a general release of claims and continued compliance with certain confidentiality, non-competition and non-solicitation restrictions for six months following termination.

"Cause" is defined in the severance agreements for Messrs. Biegler and Hunter to mean (i) the executive's indictment for or conviction of, or entering a plea of nolo contendere, to any crime (whether or not a felony) involving dishonesty, fraud, embezzlement, breach of trust or other crime of moral turpitude, (ii) the executive's conviction of, entering a plea of nolo contendere to, a felony (other than a traffic violation), (iii) acts by the executive constituting fraud or willful misconduct in connection with the executive's employment or service relationship, including misappropriation or embezzlement in the performance of the executive's duties, (iv) the executive's failure or willful refusal to perform any of the executive's duties (other than a failure resulting from incapacity due to physical or mental illness) which is reasonably likely to result in material harm to Southcross Energy LLC or its subsidiaries, provided that such failure or refusal is not cured within thirty days of receiving written notice from Southcross Energy LLC, (v) the executive's violation or breach of the ethics provisions of the employee handbook applicable to all employees generally, or the executive's duty of loyalty to Southcross Energy LLC or its affiliates, (vi) the executive willfully or grossly negligently engaging in conduct materially injurious to Southcross Energy LLC or any of its subsidiaries, or (vii) the executive's failure or refusal to devote all of the executive's "business time" to the business and affairs of Southcross Energy LLC and its subsidiaries, provided that such failure or refusal is not cured within thirty days of receiving written notice from Southcross Energy LLC. Generally, "business time" excludes time spent serving on certain corporate, charitable or civic boards or committees, or delivering lectures, fulfilling speaking engagements or teaching at educational institutions.

"Good reason" is defined in the executives' severance agreements to mean (i) an involuntary reduction in the annual base salary, other than a reduction to which the executive consents or that similarly affects all or substantially all management employees, (ii) a relocation, without the executive's prior written consent, of the geographic location of the executive's principal place of employment by more than twenty-five miles from the executive's principal place of employment as of August 6, 2009, or (iii) the failure of Southcross Energy LLC to pay any cash compensation (such as base salary or bonuses) to the executive when due under the terms of any employment agreement or bonus plan in which the executive is entitled to participate, provided that Southcross Energy LLC has not cured such failure within thirty days of receiving written notice from the executive.

Change in Control Benefits for Messrs. Biegler and Hunter. Messrs. Biegler and Hunter are not entitled to any cash payments upon a change in control of us or Southcross Energy LLC. However, pursuant to the subscription agreements relating to the executives' incentive units, the executives' time vesting incentive units will vest in full upon a change in control of Southcross Energy LLC. In addition, upon the occurrence of a liquidity event with respect to Charlesbank's investment in Southcross Energy LLC, which event may also constitute a change in control, the executives' performance vesting incentive units may vest, depending upon the financial outcome of such transaction. For additional information regarding the vesting of the incentive units, see the discussion under "Long-Term Equity

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Incentive Units" above. The consummation of our IPO did not constitute a change in control or liquidity event for purposes of the executives' incentive units.

Mr. Anderson's Severance and Change in Control Benefits. Under Mr. Anderson's severance agreement, upon a termination of his employment by us without "cause" or by him for "good reason," in either case, within one year following certain transactions generally resulting in a change in control of Southcross Energy LLC, subject to his execution of a general release of claims, Mr. Anderson will also be entitled to receive (i) an amount equal to two times his annual base salary, (ii) an amount equal to two times his target annual bonus, which is 60% of his base salary, and (iii) reimbursement for the cost of group health plan benefits for eighteen months. In addition, pursuant to Mr. Anderson's offer of employment letter and the award agreement relating to his equity equivalent units, upon a termination of Mr. Anderson's employment without "cause" or for "good reason" or certain transactions generally resulting in a change in control of Southcross Energy LLC or us, any unvested equity equivalent units will vest in full. For additional information regarding the vesting of the equity equivalent units, see the discussion under "Long-term equity incentive units" above. The consummation of our IPO did not constitute a change in control for purposes of Mr. Anderson's equity equivalent units or severance benefits.

As used in Mr. Anderson's equity equivalent unit award agreement, "cause" and "good reason" have the meanings set forth in our Named Executive Officers' severance agreements, as described above. However, for purposes of Mr. Anderson's severance agreement, "cause" is defined to mean (i) his failure to satisfactorily perform his material duties or to devote his full time and effort to his position, (ii) his violation of any material General Partner policy (provided that such violation is not cured after receiving reasonable notice from our General Partner), (iii) his failure to follow lawful directives from our General Partner's Chief Executive Officer, President or Executive Vice President, the board of directors of our General Partner, or his direct supervisor, (iv) his negligence or material misconduct, (v) his dishonesty or fraud or (vi) his felony conviction.

In addition, "good reason" is defined in Mr. Anderson's severance agreement to mean (i) a material change in his job duties and responsibilities, (ii) a reduction in his compensation (unless the reduction similarly affects similarly situated employees) or (iii) a change in the location of his regular workplace by more than twenty-five miles.

Potential Payments Upon a Termination or Change in Control Table

The following table summarizes the change in control and/or severance payments and benefits that each of our Named Executive Officers would have received upon a termination of employment effective as of December 31, 2012 (i) by Southcross Energy LLC without cause, (ii) due to the executive's resignation for good reason or (iii) due to the executive's death or disability. The table also summarizes the value of the vesting acceleration of time vesting incentive units assuming a change in control or liquidity event occurring as of December 31, 2012 and the value of the vesting of performance vesting incentive units assuming a liquidity event occurring with respect to the units effective as of December 31, 2012 (based on the maximum potential amount of performance unit

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vesting), in each case, assuming a unit value as of such date of $115.00 and each Named Executive Officer's base salary in effect as of such date.

Name	Payment type

David W. Biegler	Salary ⁽¹⁾	400,000		—	—
	Benefit continuation	—	⁽³⁾	—	—
	Value of time vesting
	unit acceleration	—		279,956	559,935
	Value of performance
	unit vesting	—		—	4,999,050
	Total	400,000		279,956	5,558,985
Michael T. Hunter	Salary ⁽¹⁾	300,000		—	—
	Benefit continuation ⁽²⁾	17,995		—	—
	Value of time vesting
	unit acceleration	—		279,956	559,935
	Value of performance
	unit vesting	—		—	4,999,050
	Total	317,995		279,956	5,558,985
J. Michael Anderson	Salary ⁽¹⁾	880,000		—	—
	Benefit continuation ⁽²⁾	34,120		—	—
	Value of time vesting
	unit acceleration	1,725,000		—	1,725,000
	Value of performance
	unit vesting	—		—	—
	Total	2,639,120		—	1,725,000

⁽¹⁾: For Messrs. Biegler and Hunter, represents the executive's annual base salary, payable over the one-year period following termination. For Mr. Anderson, represents two times annual base salary plus target bonus, payable within sixty days following termination.
⁽²⁾: Consists of continuation of group health benefits. The value of the health benefits was calculated using an estimate of the cost of such health coverage based upon current COBRA plan premium rates.
⁽³⁾: Mr. Biegler did not participate in our group health benefit plans as of December 31, 2012.

Director Compensation

Officers, employees or paid consultants of our General Partner who also serve as directors will not receive additional compensation for their service as directors. On January 16, 2013, the board of directors of our General Partner and the Compensation Committee determined that directors who are not officers, employees or paid consultants of our General Partner will receive a combination of cash and common units to be granted pursuant to the LTIP as compensation for attending meetings of our board of directors of our General Partner and any committees thereof. Specifically, the board and the Compensation Committee approved the following compensation for such directors:

i.: An annual retainer of $50,000, to be paid quarterly in arrears;
ii.: An annual retainer of $10,000 for the Chairperson of the Audit Committee, to be paid quarterly in arrears;

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iii.: An annual retainer of $5,000 for the Chairperson of the Compensation Committee, to be paid quarterly in arrears;
iv.: An annual retainer of $2,500 for the Chairperson of the Conflicts Committee, to be paid quarterly in arrears;
v.: $1,500 for each board meeting attended (whether in person or telephonically);
vi.: $1,200 for each committee (Audit, Compensation or Conflicts) meeting attended (whether attended in person or telephonically); and
vii.: An annual equity grant of common units of the Partnership pursuant to the LTIP equivalent to $75,000 divided by the average of the closing daily sales price of the Partnership's common units for the ten (10) trading days immediately prior to April 1st of each year; or at the option of the Partnership, $75,000 in cash in lieu of such equity grant.

Such directors also will receive reimbursement for out-of-pocket expenses associated with attending such board or committee meetings.

We have adopted the Southcross Energy Partners, L.P. Non-Employee Director Deferred Compensation Plan, pursuant to which non-employee directors of our general partner may elect on an annual basis to defer all earned cash and/or equity compensation until the director is no longer a director of our general partner. All amounts deferred will be converted into phantom units of the Partnership, which will be entitled to receive quarterly distributions of the Partnership. These quarterly distributions will also be converted to phantom units. At the conclusion of the deferral period, the accrued phantom units will be valued at the fair market value of the Partnership's common units as of such date and paid to the director in the form of (i) cash for deferrals of cash compensation and (ii) common units for deferrals of equity compensation. For the calendar year 2013, only Mr. Williamson has elected to defer his non-employee director compensation.

Each of Messrs. Bartlett, Biotti and Davis have informed us that in accordance with the internal policies of Charlesbank and the terms of the limited partnership agreements for the Charlesbank funds that have invested in Southcross Energy LLC (the "Charlesbank Funds"), that all compensation otherwise payable to any of them as a result of being a director of our General Partner should be paid as follows (i) to the extent the compensation is cash, such compensation should be paid directly to Charlesbank and (ii) in lieu of equity compensation, any such additional compensation should be paid in cash directly to Charlesbank.

Director Compensation for 2012

The following table presents the cash, equity awards and other compensation earned, paid or awarded to each of our directors during the year ended December 31, 2012:

Name	Fees earned or paid in cash		Equity awards ⁽³⁾		Total

Samuel P. Bartlett ⁽¹⁾	$	8,673	$	—	$	8,673
Jon M. Biotti ⁽¹⁾	$	9,420	$	—	$	9,420
Kim G. Davis ⁽¹⁾	$	7,473	$	—	$	7,473
Jerry W. Pinkerton	$	10,541	$	—	$	10,541
Ronald G. Steinhart ⁽²⁾	$	—	$	—	$	—
Bruce A. Williamson ⁽²⁾	$	—	$	—	$	—

⁽¹⁾: Directors associated with Charlesbank. Refer to the section "Director Compensation" above for further information.
⁽²⁾: Messrs. Steinhart and Williamson were not directors until 2013.
⁽³⁾: Equity award for directors were approved in January 2013.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding the beneficial ownership of our units as of April 9, 2013 by:

•: each person known to us to beneficially own 5% or more of our outstanding units;
•: our General Partner;
•: each of the directors and named executive officers of our General Partner; and
•: all of the directors and executive officers of our General Partner as a group.

All information with respect to beneficial ownership has been furnished by the respective directors, officers or 5% or more unitholders, as the case may be.

Our General Partner is owned 100.0% by Southcross Energy LLC. Charlesbank Equity Fund VI, Limited Partnership and its affiliated investment funds hold 85.2% of the outstanding Class A Common Units, 93.5% of the outstanding Series A Preferred Units, 95.1% of the outstanding Redeemable Preferred Units and 73.8% of the outstanding Series B Redeemable Preferred Units of Southcross Energy LLC. In addition, members of management hold 10.6% of the outstanding Class A Common Units, 1.9% of the outstanding Series A Preferred Units, 0.3% of the outstanding Redeemable Preferred Units, 2.0% of the outstanding Series B Redeemable Preferred Units and 100% of the Special Class B Units of Southcross Energy LLC.

The amounts and percentage of units beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or to direct the voting of such security, or "investment power," which includes the power to dispose of or to direct the disposition of such security. In computing the number of common units beneficially owned by a person and the percentage ownership of that person, common units subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of April 9, 2013, if any, are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Except as indicated by footnote, the persons named in the table below have sole voting and investment power with respect to all units shown as beneficially owned by them, subject to community property laws where applicable.

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The percentages of units beneficially owned are based on a total of 12,219,699 common units and 12,213,713 subordinated units outstanding as of April 9, 2013.

Name and address of beneficial owner

Our General Partner:
Southcross Energy LLC ⁽¹⁾ ⁽²⁾	1,863,713	15.3	%	12,213,713	100.0	%	57.6	%
5% Owners Not Listed Above or Below:
Charlesbank Equity Fund VI, Limited Partnership ⁽²⁾ ⁽³⁾	1,863,713	15.3	%	12,213,713	100.0	%	57.6	%
FMR LLC ⁽⁴⁾	1,587,780	13.0	%	—	—		6.5	%
Tortoise Capital Advisors, L.L.C. ⁽⁵⁾	1,036,692	8.5	%	—	—		4.2	%
Neuberger Berman Group LLC ⁽⁶⁾	1,563,435	12.8	%	—	—		6.4	%
Goldman Sachs Asset Management, L.P. ⁽⁷⁾	915,321	7.5	%	—	—		3.7	%
Directors and Named Executive Officers of Our General Partner:
Samuel P. Bartlett ⁽³⁾	—	—		—	—		—
Jon M. Biotti ⁽³⁾	—	—		—	—		—
Kim G. Davis ⁽³⁾	—	—		—	—		—
David W. Biegler ⁽¹⁾	—	—		—	—		—
Michael T. Hunter ⁽¹⁾	—	—		—	—		—
J. Michael Anderson ⁽¹⁾	5,000	*		—	—		*
Jerry W. Pinkerton ⁽¹⁾	4,993	*		—	—		*
Ronald G. Steinhart ⁽¹⁾ ⁽⁸⁾	14,133	*		—	—		*
Bruce A. Williamson ⁽¹⁾⁽⁹⁾	2,993	*		—	—		*
All current directors and executive officers of our General Partner as a group (consisting of 11 persons) ⁽³⁾ ⁽¹⁰⁾	18,940	*		—	—		*

*: An asterisk indicates that the person or entity owns less than one percent.
⁽¹⁾: The address for this person or entity is 1700 Pacific Avenue, Suite 2900, Dallas, Texas 75201.
⁽²⁾: Southcross Energy LLC owns 100% of our General Partner, 15.3% of our outstanding common units and 100% of our outstanding subordinated units. The following table sets forth the beneficial ownership of equity interests in Southcross Energy LLC as of April 9, 2013:
⁽³⁾: The Charlesbank Funds are members of Southcross Energy LLC and may therefore be deemed to beneficially own our common units and subordinated units held by Southcross Energy LLC. Samuel Bartlett, Jon Biotti and Kim Davis, each a director of our General Partner, are managing directors of Charlesbank Capital Partners, LLC, the investment adviser to the Charlesbank Funds. They disclaim beneficial interest in our common units and subordinated units except to the extent of their pecuniary interest therein. The address for this person or entity is 200 Clarendon Street, 54th Floor, Boston, Massachusetts 02116.
⁽⁴⁾: Based on a Schedule 13G filed by FMR LLC with the SEC on December 10, 2012. The filing was made jointly by FMR LLC and Edward C. Johnson 3d and sets forth an address for the filers at 82 Devonshire Street, Boston, Massachusetts 02109.

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⁽⁵⁾: Based on a Schedule 13G filed by Tortoise Capital Advisors, L.L.C. ("TCA") with the SEC on February 12, 2013. The filing reflects that TCA shares voting power over 980,031 common units and shares dispositive power over 1,036,692 common units. The filing provides an address for TCA at 11550 Ash Street, Suite 300, Leawood, Kansas 66211.
⁽⁶⁾: Based on a Schedule 13G filed by Neuberger Berman Group LLC ("Neuberger Group") with the SEC on February 14, 2013. The statement was made jointly by Neuberger Group and Neuberger Berman LLC and reflects that the filers share voting power over 1,208,507 common units and share dispositive power over 1,563,435 common units. The filing provides an address for the filers at 605 Third Avenue, New York, New York 10158.
⁽⁷⁾: Based on a Schedule 13G filed by Goldman Sachs Asset Management, L.P. ("GS Asset Management") with the SEC on February 14, 2013. The filing was made jointly by GS Asset Management and GS Investment Strategies, LLC and reflects that the filers share voting power and share dispositive power over 915,321 common units. The filing provides an address for the filers at 200 West Street, New York, New York 10282.
⁽⁸⁾: Includes 2,500 common units owned by each of two of Mr. Steinhart's sons and 1,000 common units owned by each of two trusts established for the benefit of Mr. Steinhart's grandchildren. Mr. Steinhart shares voting and dispositive power over such common units. Mr. Steinhart has no pecuniary interest in, and disclaims any ownership of, such common units.
⁽⁹⁾: Represents phantom units per the non-employee director deferred compensation plan. Mr. Williamson has the right to acquire these units within 30 days on termination of his services.
⁽¹⁰⁾: Does not include unvested phantom units granted to such persons under our long-term incentive plan, none of which will vest within 60 days of April 9, 2013.

Name of beneficial owner								Percentage of Series A Preferred beneficially owned

Charlesbank Equity Fund VI, Limited Partnership ^(a)	1,118,717	85.2	%	—	—		11,075,303	93.5%	1,425,732	95.1	%	633,369	73.8	%
David W. Biegler ^(b)	54,858	4.2	%	12,172	42.5	%	112,733	1.0%	—	—		11,051	1.3	%
Michael T. Hunter ^(b)	49,858	3.8	%	12,172	42.5	%	63,233	*	—	—		6,528	0.8	%

*: Indicates the person or entity owns less than one percent.
^(a): Charlesbank Equity Fund VI, Limited Partnership and its affiliated investment funds (the "Charlesbank Funds") are members of Southcross Energy LLC and may therefore be deemed to beneficially own the common units and subordinated units held by Southcross Energy LLC. The address for the Charlesbank Funds is 200 Clarendon Street, 54th Floor, Boston, Massachusetts 02116.
^(b): The address for each individual is 1700 Pacific Avenue, Suite 2900, Dallas, Texas 75201.

Securities Authorized for Issuance Under Equity Compensation Plan ⁽¹⁾

We have one compensation plan under which our common units are authorized for issuance, the LTIP. This equity compensation plan was approved by our unitholders. The following table sets forth certain information relating to the LTIP as of December 31, 2012:

	(a)		(b)		(c)

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a))
Equity compensation plans approved by securities holders		144,500		—		1,605,500
Equity compensation plans not approved by security holders		—		n/a		n/a

Total		144,500	$	—		1,605,500

⁽¹⁾: See "Item 11—Executive Compensation—Long-Term Incentive Plan" for more information. No value is shown in column (b) of the table because the phantom units do not have an exercise price.

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Item 13. Certain Relationships and Related Transactions, and Director Independence

As of April 9, 2013, Southcross Energy LLC owns 1,863,713 common units and 12,213,713 subordinated units, representing a combined 56.5% limited partner interest in us. In addition, the Southcross Energy LLC owns and controls our General Partner, which owns a 2.0% General Partner interest in us and all of our incentive distribution rights.

The following table summarizes the distributions and payments to be made by us to our General Partner and its affiliates in connection with our formation, ongoing operations and liquidation. These distributions and payments were determined before our IPO by and among affiliated entities and, consequently, are not the result of arm's-length negotiations.



*Formation Stage*
The consideration received by our General Partner and its affiliates for the contribution of the assets and liabilities to us		• 1,863,713 common units;
		• 12,213,713 subordinated units;
		• all of our incentive distribution rights; and
		• 2.0% general partner interest.
*Operational Stage*
Distributions of available cash to our General Partner and its affiliates		We generally make cash distributions of 98.0% to our unitholders pro rata, including Southcross Energy LLC, as the holder of an aggregate of 1,863,713 common units and 12,213,713 subordinated units, and 2.0% to our General Partner, assuming it makes any capital contributions necessary to maintain its 2.0% general partner interest in us. In addition, if distributions exceed the minimum quarterly distribution and target distribution levels, our General Partner is entitled to increasing percentages of the distributions, up to 48.0% of the distributions above the highest target distribution level in connection with its incentive distribution rights.
Payments to our General Partner and its affiliates		Our General Partner does not receive a management fee or other compensation for its management of us. However, our General Partner and its affiliates are entitled to reimbursement for all expenses incurred on our behalf, including, among other items, compensation expense for all employees required to manage and operate our business. Our partnership agreement provides that our General Partner will determine the amount of these reimbursed expenses.
Withdrawal or removal of our General Partner		If our General Partner withdraws or is removed, its general partner interest and its incentive distribution rights will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests.

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*Liquidation Stage*
Liquidation		Upon our liquidation, our partners, including our General Partner, will be entitled to receive liquidating distributions according to their particular capital account balances.

Agreements with Southcross Energy LLC and Affiliates

We and other parties entered into various documents and agreements with certain of our affiliates, as described in more detail below, in connection with our IPO in November 2012 and the acquisition of our assets from Southcross Energy LLC. These agreements address the acquisition of assets and the assumption of liabilities by us and our subsidiaries. These agreements were negotiated among affiliated parties and, consequently, were not the result of arm's-length negotiations.

Contribution, Conveyance and Assumption Agreement

In connection with the closing of our IPO, we entered into a contribution, conveyance and assumption agreement effecting, among others, the following transactions:

•: Southcross Energy LLC conveyed its indirect ownership interest in our operating subsidiaries to Southcross Energy Operating, LLC, which became our operating subsidiary;
•: Southcross Energy LLC conveyed a 2% interest in Southcross Energy Operating, LLC to our General Partner as a capital contribution with a value equal to 2% of our equity value;
•: Our General Partner conveyed its interest in Southcross Energy Operating, LLC to us in exchange for (i) a continuation of its 2% general partner interest in us and (ii) our incentive distribution rights, ("IDRs");
•: Southcross Energy LLC conveyed its remaining interest in Southcross Energy Operating, LLC to us in exchange for (i) 1,863,713 common units (net of the impact of selling 1,350,000 common units to the public in connection with the exercise of the underwriters' option to purchase additional common units), representing a 7.5% limited partner interest in us, (ii) 12,213,713 subordinated units, representing a 49.0% limited partner interest in us, (iii) the assumption of Southcross Energy LLC's existing debt by us, (iv) $7.5 million sourced from new debt incurred by us and (v) $38.5 million in cash, a portion of which was used to reimburse Southcross Energy LLC for certain capital expenditures it incurred with respect to assets it contributed to us; and
•: We redeemed the initial limited partner interests of Southcross Energy LLC and refunded Southcross Energy LLC's initial $980 capital contribution to us.

Charlesbank and Management's Investments in Southcross Energy LLC

From time to time since its inception, Southcross Energy LLC has issued membership interests in connection with capital contributions from its members, including Charlesbank and certain members of management. For the year ended December 31, 2009, Charlesbank contributed $111.8 million to Southcross Energy LLC and Messrs. Biegler, Hunter, Barcroft, Glasgow and Mueller contributed $1.3 million, $0.8 million, $0.2 million, $0.2 million and $0.1 million, respectively, to Southcross Energy LLC. In conjunction with such capital contribution, a member of management borrowed $150,000 from Southcross Energy LLC to fund his acquisition of equity interests pursuant to a promissory note. The balance of such note was paid in full subsequent to December 31, 2011.

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There were no capital contributions for the year ended December 31, 2010. For the year ended December 31, 2011, Charlesbank contributed $14.3 million to Southcross Energy LLC in exchange for redeemable preferred units. During the same period, Messrs. Glasgow and Mueller contributed approximately $28,000 and $18,500, respectively, to Southcross Energy LLC in exchange for redeemable preferred units. For the year ended December 31, 2012, Charlesbank and certain other institutional investors contributed a total of $72.8 million to Southcross Energy LLC in exchange for Series B and C redeemable preferred units and Messrs Biegler and Hunter contributed approximately $954,000 and $325,000 for Series B and C redeemable preferred units. In connection with the IPO, and the over-allotment option, Southcross Energy LLC used $71.2 million to redeem all of the Series C redeemable preferred units and approximately 80% of the Series B redeemable preferred units.

Wells Fargo Bank, N.A.

Private Placement of Series A Convertible Preferred Units

On April 12, 2013, we entered into a Series A Convertible Preferred Unit Purchase Agreement (the "Purchase Agreement") with Southcross Energy LLC, an entity owned by Charlesbank Capital Partners, LLC, its affiliated investment funds and certain members of our management team and that owns and controls our general partner and an approximate 56.5% interest in us, pursuant to which we issued and sold 1,466,325 Series A Convertible Preferred Units (the "Series A Preferred Units") to Southcross Energy LLC for a cash purchase price of $22.86 per Series A Preferred Unit in a privately negotiated transaction (the "Private Placement"). For additional information with respect to the Private Placement, please read "Part II, Item 9B. Other Information—Item 1.01 Entry Into a Material Definitive Agreement.—Private Placement of Series A Convertible Preferred Units."

Procedures for Review, Approval and Ratification of Related-Person Transactions

The board of directors of our General Partner adopted the Code of Business Conduct and Ethics in connection with the closing of our initial public offering, which provides that the board of directors of our General Partner or its Conflicts Committee will periodically review all related-person transactions that are required to be disclosed under SEC rules and, when appropriate, initially authorize or ratify all such transactions. In the event that the board of directors of our General Partner or the Conflicts Committee considers ratification of a related-person transaction and determines not to so ratify, the Code of Business Conduct and Ethics provides that our management will make all reasonable efforts to cancel or annul the transaction.

The Code of Business Conduct and Ethics provides that, in determining whether to recommend the initial approval or ratification of a related-person transaction, the board of directors of our General Partner or the Conflicts Committee should consider all of the relevant facts and circumstances available, including (if applicable) but not limited to: (i) whether there is an appropriate business justification for the transaction, (ii) the benefits that accrue to us as a result of the transaction, (iii) the terms available to unrelated third parties entering into similar transactions, (iv) the impact of the transaction on director independence (in the event the related person is a director, an immediate family member of a director or an entity in which a director or an immediately family member of a director is a partner, shareholder, member or executive officer), (v) the availability of other sources for comparable products or services, (vi) whether it is a single transaction or a series of ongoing, related

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transactions, and (vii) whether entering into the transaction would be consistent with the Code of Business Conduct and Ethics.

Item 14. Principal Accountant Fees and Services

We have engaged Deloitte & Touche LLP as our independent registered public accounting firm. The following table summarizes fees we have paid Deloitte & Touche LLP for the audit of our annual financial statements and other services rendered for the years ended December 31, 2012 and 2011:

	Year ended December 31,

	2012		2011
Audit fees	$	877,000	$	745,000
Audit-related fees		—		—
Tax fees		33,804		87,147
All other fees		—		17,698

	$	910,804	$	849,845

Audit Committee Approval of Audit and Non-Audit Services

The Audit Committee of the board of directors of our General Partner has adopted a policy with respect to services which may be performed by Deloitte & Touche LLP. This policy lists specific audit-related and tax services as well as any other services that Deloitte & Touche LLP is authorized to perform and sets out specific dollar limits for each specific service, which may not be exceeded without additional Audit Committee authorization. The Audit Committee receives quarterly reports on the status of expenditures pursuant to that policy. The Audit Committee reviews the policy at least annually in order to approve services and limits for the current year. Any service that is not clearly enumerated in the policy must receive specific pre-approval by the Audit Committee or by its chairman, to whom such authority has been conditionally delegated, prior to engagement.

The Audit Committee has approved the appointment of Deloitte & Touche LLP as independent registered public accounting firm to conduct the audit of the Partnership's financial statements for the year ended December 31, 2012.

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PART IV

Item 15. Exhibits and Financial Schedules

(a) Financial Statements

(1) Included in Part II, Item 8, of this report.


Report of Independent Registered Public Accounting Firm		85
Consolidated Balance Sheets as of December 31, 2012 and 2011		86
Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011 and 2010		87
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2012, 2011 and 2010		88
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010		89
Consolidated Statements of Changes in Partners' Capital and Members' Equity for the Years Ended December 31, 2012, 2011 and 2010		90
Notes to Consolidated Financial Statements		91

(2) All schedules have been omitted because they are either not applicable, not required or the information called for therein appears in the consolidated financial statements or notes thereto.

(3) Exhibit Index.

An "Exhibit Index" has been filed as part of this report beginning in sub-item (b) below of this item and is incorporated herein by reference.

Schedules other than those listed above are omitted because they are not required, not material, not applicable or the required information is shown in the financial statements or notes thereto.

Agreements attached or incorporated herein as exhibits to this report are included to provide investors with information regarding the terms and conditions of such agreements and are not intended to provide any other factual or disclosure information about Southcross Energy Partners, L.P. or the other parties to the agreements.

Such agreements may contain representations and warranties by the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate, (ii) have been qualified by disclosures that were made to the other party or parties in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement, (iii) may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, the representations and warranties in such agreements may not describe the actual state of affairs as of the date they were made or at any other time.

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(b) Exhibits and Exhibit Index

	Exhibit Number		Description

	3.1		Certificate of Limited Partnership of Southcross Energy Partners, L.P. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (Commission File No. 333-180841)).
	3.2		First Amended and Restated Agreement of Limited Partnership of Southcross Energy Partners, L.P., dated as of November 7, 2012 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated November 7, 2012).
	3.3*		Second Amended and Restated Agreement of Limited Partnership of Southcross Energy Partners, L.P., dated as of April 12, 2013.
	3.4		Certificate of Formation of Southcross Energy Partners GP, LLC (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 (Commission File No. 333-180841)).
	3.5		Amended and Restated Limited Liability Company Agreement of Southcross Energy Partners GP, LLC, dated as of November 7, 2012 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K dated November 7, 2012).
	4.1*		Registration Rights Agreement, dated as of April 12, 2013, by and between Southcross Energy Partners, L.P. and Southcross Energy LLC.
	10.1		Contribution, Conveyance and Assumption Agreement, dated as of November 7, 2012, by and among Southcross Energy Partners GP, LLC, Southcross Energy Partners, L.P., Southcross Energy Operating, LLC and Southcross Energy LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated November 7, 2012).
	10.2		Second Amended and Restated Credit Agreement, dated as of November 7, 2012, among Southcross Energy Partners, L.P. as borrower, Wells Fargo Bank, N.A., as Administrative Agent, Citibank, N.A. and SunTrust Bank, as Co-Syndication Agents, Barclays Bank PLC, JPMorgan Chase Bank, N.A. and Compass Bank, as Co-Documentation Agents and the Lenders party thereto (filed as Exhibit 10.2 to the Current Report on Form 8-K dated November 7, 2012).
	10.3		Letter Agreement, dated as of December 31, 2012, by and among Southcross Energy Partners, L.P., Wells Fargo Bank, N.A., and certain other parties thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated December 31, 2012).
	10.4		First Amendment to Second Amended and Restated Credit Agreement, dated as of March 27, 2013, by and among Southcross Energy Partners, L.P., Wells Fargo Bank, N.A., as Administrative Agent, and each of the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated March 28, 2013).
	10.5*		Limited Waiver and Second Amendment to Second Amended and Restated Credit Agreement, dated as of April 12, 2013, by and among Southcross Energy Partners, L.P., Wells Fargo Bank, N.A., as Administrative Agent, and each of the Lenders party thereto.
	10.6 ^#		Southcross Energy Partners, L.P. 2012 Long-Term Incentive Plan (filed as Exhibit 10.3 to the Current Report on Form 8-K dated November 7, 2012).
	10.7 ^#		Form of Phantom Unit Award Agreement (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 (Commission File No. 333-180841)).

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	Exhibit Number		Description

	10.8 ^#		Severance Agreement, dated August 6, 2009, by and between Southcross Energy LLC and David W. Biegler (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1 (Commission File No. 333-180841)).
	10.9 ^#		Severance Agreement, dated August 6, 2009, by and between Southcross Energy LLC and Michael T. Hunter (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-1 (Commission File No. 333-180841)).
	10.10 ^#		Severance Agreement, dated August 6, 2009, by and between Southcross Energy LLC and Ronald J. Barcroft (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 (Commission File No. 333-180841)).
	10.11 ^#		Severance Agreement, dated April 2, 2012, by and between Southcross Energy LLC and J. Michael Anderson (incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-1 (Commission File No. 333-180841)).
	10.12 ^#		Southcross Energy Partners GP, LLC Non-Employee Director Compensation Arrangement.
	10.13 ^#		Southcross Energy Partners, L.P. Non-Employee Director Deferred Compensation Plan.
	10.14*		Series A Preferred Unit Purchase Agreement, dated as of April 12, 2013, by and between Southcross Energy Partners, L.P. and Southcross Energy LLC.
	21.1*		List of Subsidiaries of Southcross Energy Partners, L.P.
	23.1*		Consent of Deloitte & Touche LLP.
	31.1*		Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a).
	31.2*		Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a).
	32.1*		Certifications of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).
	101.INS* ^†		XBRL Instance Document
	101.SCH* ^†		XBRL Taxonomy Extension Schema
	101.CAL* ^†		XBRL Taxonomy Extension Calculation Linkbase
	101.DEF* ^†		XBRL Taxonomy Extension Definition Linkbase
	101.LAB* ^†		XBRL Taxonomy Extension Label Linkbase
	101.PRE* ^†		XBRL Extension Presentation Linkbase

*: Filed or furnished herewith.
^#: As required by Item 15(a)(3) of Form 10-K, this exhibit is identified as a compensatory plan or arrangement.
^†: Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. The financial information contained in the XBRL (eXtensible Business Reporting Language)-related documents is unaudited and unreviewed.

Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Southcross Energy Partners, L.P.
	By: Southcross Energy Partners GP, LLC, our General Partner
	By:	/s/ DAVID W. BIEGLER David W. Biegler President and Chief Executive Officer
Dated: April 15, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the registrant and in the capacities and on the dates indicated have signed this report below.

SIGNATURE	TITLE	DATE


/s/ DAVID W. BIEGLER David W. Biegler	Chairman of the Board, President, and Chief Executive Officer (Principal Executive Officer)	April 15, 2013
/s/ J. MICHAEL ANDERSON J. Michael Anderson	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	April 15, 2013
/s/ DAVID M. MUELLER David M. Mueller	Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)	April 15, 2013
/s/ SAMUEL P. BARTLETT Samuel P. Bartlett	Director	April 15, 2013
/s/ JON M. BIOTTI Jon M. Biotti	Director	April 15, 2013
/s/ KIM G. DAVIS Kim G. Davis	Director	April 15, 2013
/s/ JERRY W. PINKERTON Jerry W. Pinkerton	Director	April 15, 2013
/s/ RONALD G. STEINHART Ronald G. Steinhart	Director	April 15, 2013
/s/ BRUCE A. WILLIAMSON Bruce A. Williamson	Director	April 15, 2013

162

Exhibit 3.3

Execution Version

SECOND AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

SOUTHCROSS ENERGY PARTNERS, L.P.

A Delaware Limited Partnership

Dated as of

April 12, 2013

TABLE OF CONTENTS

		Page

Article I. Definitions		2

Section 1.1	Definitions	2
Section 1.2	Construction	30

Article II. ORGANIZATION		30

Section 2.1	Formation	30
Section 2.2	Name	30
Section 2.3	Registered Office; Registered Agent; Principal Office; Other Offices	30
Section 2.4	Purpose and Business	31
Section 2.5	Powers	31
Section 2.6	Term	31
Section 2.7	Title to Partnership Assets	31

Article III. RIGHTS OF LIMITED PARTNERS		32

Section 3.1	Limitation of Liability	32
Section 3.2	Management of Business	32
Section 3.3	Rights of Limited Partners	32

Article IV. CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS		33

Section 4.1	Certificates	33
Section 4.2	Mutilated, Destroyed, Lost or Stolen Certificates	34
Section 4.3	Record Holders	35
Section 4.4	Transfer Generally	35
Section 4.5	Registration and Transfer of Limited Partner Interests	36
Section 4.6	Transfer of the General Partner’s General Partner Interest	37
Section 4.7	Transfer of Incentive Distribution Rights	38
Section 4.8	Restrictions on Transfers	38
Section 4.9	Eligibility Certificates; Ineligible Holders	39
Section 4.10	Redemption of Partnership Interests of Ineligible Holders	40

Article V. CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS		41

Section 5.1	Organizational Contributions	41
Section 5.2	Contributions by the General Partner and its Affiliates	42
Section 5.3	Contributions by Limited Partners unaffiliated with the General Partner	42
Section 5.4	Interest and Withdrawal	43
Section 5.5	Capital Accounts	43

Section 5.6	Issuances of Additional Partnership Interests	48
Section 5.7	Conversion of Subordinated Units	49
Section 5.8	Limited Preemptive Right	49
Section 5.9	Splits and Combinations	49
Section 5.10	Fully Paid and Non-Assessable Nature of Limited Partner Interests	50
Section 5.11	Issuance of Common Units in Connection with Reset of Incentive Distribution Rights	50
Section 5.12	Establishment of Series A Preferred Units	52

Article VI. ALLOCATIONS AND DISTRIBUTIONS		66

Section 6.1	Allocations for Capital Account Purposes	66
Section 6.2	Allocations for Tax Purposes	76
Section 6.3	Requirement and Characterization of Distributions; Distributions to Record Holders	77
Section 6.4	Distributions of Available Cash from Operating Surplus	78
Section 6.5	Distributions of Available Cash from Capital Surplus	80
Section 6.6	Adjustment of Minimum Quarterly Distribution and Target Distribution Levels	80
Section 6.7	Special Provisions Relating to the Holders of Subordinated Units	81
Section 6.8	Special Provisions Relating to the Holders of Incentive Distribution Rights	81
Section 6.9	Entity-Level Taxation	82
Section 6.10	Special Provisions Relating to Series A Preferred Unitholders	83

Article VII. MANAGEMENT AND OPERATION OF BUSINESS		83

Section 7.1	Management	83
Section 7.2	Certificate of Limited Partnership	85
Section 7.3	Restrictions on the General Partner’s Authority to Sell Assets of the Partnership Group	86
Section 7.4	Reimbursement of the General Partner	86
Section 7.5	Outside Activities	87
Section 7.6	Loans from the General Partner; Loans or Contributions from the Partnership or Group Members	88
Section 7.7	Indemnification	89
Section 7.8	Liability of Indemnitees	91
Section 7.9	Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties	91
Section 7.10	Other Matters Concerning the General Partner	94
Section 7.11	Purchase or Sale of Partnership Interests	94
Section 7.12	Registration Rights of the General Partner and its Affiliates	94
Section 7.13	Reliance by Third Parties	99

Article VIII. BOOKS, RECORDS, ACCOUNTING AND REPORTS		99

Section 8.1	Records and Accounting	99
Section 8.2	Fiscal Year	100
Section 8.3	Reports	100

Article IX. TAX MATTERS		100

Section 9.1	Tax Returns and Information	100
Section 9.2	Tax Elections	101
Section 9.3	Tax Controversies	101
Section 9.4	Withholding	101

Article X. ADMISSION OF PARTNERS		101

Section 10.1	Admission of Limited Partners	101
Section 10.2	Admission of Successor General Partner	102
Section 10.3	Amendment of Agreement and Certificate of Limited Partnership	103

Article XI. WITHDRAWAL OR REMOVAL OF PARTNERS		103

Section 11.1	Withdrawal of the General Partner	103
Section 11.2	Removal of the General Partner	105
Section 11.3	Interest of Departing General Partner and Successor General Partner	105
Section 11.4	Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages	107
Section 11.5	Withdrawal of Limited Partners	107

Article XII. DISSOLUTION AND LIQUIDATION		107

Section 12.1	Dissolution	107
Section 12.2	Continuation of the Business of the Partnership After Dissolution	108
Section 12.3	Liquidator	108
Section 12.4	Liquidation	109
Section 12.5	Cancellation of Certificate of Limited Partnership	109
Section 12.6	Return of Contributions	110
Section 12.7	Waiver of Partition	110
Section 12.8	Capital Account Restoration	110
Section 12.9	Series A Liquidation Value	110

Article XIII. AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE		110

Section 13.1	Amendments to be Adopted Solely by the General Partner	110

iii

Section 13.2	Amendment Procedures	112
Section 13.3	Amendment Requirements	112
Section 13.4	Special Meetings	113
Section 13.5	Notice of a Meeting	113
Section 13.6	Record Date	113
Section 13.7	Postponement and Adjournment	114
Section 13.8	Waiver of Notice; Approval of Meeting	114
Section 13.9	Quorum and Voting	114
Section 13.10	Conduct of a Meeting	115
Section 13.11	Action Without a Meeting	115
Section 13.12	Right to Vote and Related Matters	116
Section 13.13	Voting of Incentive Distribution Rights	116

Article XIV. MERGER, CONSOLIDATION OR CONVERSION		116

Section 14.1	Authority	116
Section 14.2	Procedure for Merger, Consolidation or Conversion	116
Section 14.3	Approval by Limited Partners	118
Section 14.4	Certificate of Merger or Certificate of Conversion	120
Section 14.5	Effect of Merger, Consolidation or Conversion	120

Article XV. RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS		121

Section 15.1	Right to Acquire Limited Partner Interests	121

Article XVI. GENERAL PROVISIONS		122

Section 16.1	Addresses and Notices; Written Communications	122
Section 16.2	Further Action	123
Section 16.3	Binding Effect	123
Section 16.4	Integration	123
Section 16.5	Creditors	123
Section 16.6	Waiver	124
Section 16.7	Third-Party Beneficiaries	124
Section 16.8	Counterparts	124
Section 16.9	Applicable Law; Forum; Venue and Jurisdiction; Waiver of Trial by Jury	124
Section 16.10	Invalidity of Provisions	125
Section 16.11	Consent of Partners	125
Section 16.12	Facsimile and Email Signatures	125

SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF SOUTHCROSS ENERGY PARTNERS, L.P.

THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF SOUTHCROSS ENERGY PARTNERS, L.P. dated as of April 12, 2013, is entered into by and between Southcross Energy Partners GP, LLC, a Delaware limited liability company, as the General Partner, and the other Persons who become Partners in the Partnership or parties hereto as provided herein.

WHEREAS, the General Partner and the Limited Partners entered into that certain First Amended and Restated Agreement of Limited Partnership dated as of November 7, 2012 (the “First A/R Partnership Agreement”);

WHEREAS, Section 5.6(a) of the First A/R Partnership Agreement provides that the Partnership may, for any Partnership purpose, at any time and from time to time, issue additional Partnership Interests to such Persons for such consideration and on such terms and conditions as the General Partner shall determine, all without the approval of any Limited Partners;

WHEREAS, Section 13.1(g) of the First A/R Partnership Agreement provides that the General Partner, without the approval of any Partner, may amend any provision of the First A/R Partnership Agreement to reflect an amendment that the General Partner determines is necessary or appropriate in connection with the authorization or issuance of any class or series of Partnership Interests pursuant to Section 5.6 of the First A/R Partnership Agreement;

WHEREAS, the Partnership is concurrently entering into a Purchase and Sale Agreement, dated as of April 12, 2013 (the “Purchase Agreement”), between the Partnership and Southcross Energy LLC, a Delaware limited liability company (the “Purchaser”), pursuant to which the Purchaser will purchase from the Partnership, and the Partnership will issue to the Purchaser, 1,715,000 units of a new class of Partnership Interests to be designated as “Series A Convertible Preferred Units” with the rights, preferences and privileges and such other terms as are set forth in this Agreement;

WHEREAS, the General Partner has determined that the creation and issuance of the Series A Convertible Preferred Units (as defined below) are in the best interests of the Partnership and beneficial to the Limited Partners, including the holders of the Common Units;

WHEREAS, the creation and issuance of the Series A Convertible Preferred Units complies with the requirements of the First A/R Partnership Agreement; and

WHEREAS, the General Partner has determined, pursuant to Section 13.1(g) of the First A/R Partnership Agreement, that the amendments to the First A/R Partnership Agreement set forth herein are necessary or appropriate in connection with the authorization and issuance of the Series A Convertible Preferred Units.

NOW, THEREFORE, the General Partner does hereby amend and restate the First A/R Partnership Agreement to provide in its entirety as follows:

ARTICLE I.
DEFINITIONS

Section 1.1 Definitions . The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

“ Acquisition ” means any transaction in which any Group Member acquires (through an asset acquisition, stock acquisition, merger or other form of investment) control over all or a portion of the assets, properties or business of another Person for the purpose of increasing, over the long-term, the operating capacity or operating income of the Partnership Group from the operating capacity or operating income of the Partnership Group existing immediately prior to such transaction. For purposes of this definition, “long-term” generally refers to a period of not less than twelve months.

“ Additional Book Basis ” means the portion of any remaining Carrying Value of an Adjusted Property that is attributable to positive adjustments made to such Carrying Value as a result of Book-Up Events. For purposes of determining the extent that Carrying Value constitutes Additional Book Basis:

(a) Any negative adjustment made to the Carrying Value of an Adjusted Property as a result of either a Book-Down Event or a Book-Up Event shall first be deemed to offset or decrease that portion of the Carrying Value of such Adjusted Property that is attributable to any prior positive adjustments made thereto pursuant to a Book-Up Event or Book-Down Event; and

(b) If Carrying Value that constitutes Additional Book Basis is reduced as a result of a Book-Down Event and the Carrying Value of other property is increased as a result of such Book-Down Event, an allocable portion of any such increase in Carrying Value shall be treated as Additional Book Basis; provided, that the amount treated as Additional Book Basis pursuant hereto as a result of such Book-Down Event shall not exceed the amount by which the Aggregate Remaining Net Positive Adjustments after such Book-Down Event exceeds the remaining Additional Book Basis attributable to all of the Partnership’s Adjusted Property after such Book-Down Event (determined without regard to the application of this clause (b) to such Book-Down Event).

“ Additional Book Basis Derivative Items ” means any Book Basis Derivative Items that are computed with reference to Additional Book Basis. To the extent that the Additional Book Basis attributable to all of the Partnership’s Adjusted Property as of the beginning of any taxable period exceeds the Aggregate Remaining Net Positive Adjustments as of the beginning of such period (the “Excess Additional Book Basis”), the Additional Book Basis Derivative Items for such period shall be reduced by the amount that bears the same ratio to the amount of Additional Book Basis Derivative Items determined without regard to this sentence as the Excess Additional Book Basis bears to the Additional Book Basis as of the beginning of such period. With respect to a Disposed of Adjusted Property, the Additional Book Basis Derivative Items shall be the amount of Additional Book Basis taken into account in computing gain or loss from the disposition of such Disposed of Adjusted Property.

“ Adjusted Capital Account ” means the Capital Account maintained for each Partner as of the end of each taxable period of the Partnership, (a) increased by any amounts that such Partner is obligated to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b) decreased by (i) the amount of all losses and deductions that, as of the end of such taxable period, are reasonably expected to be allocated to such Partner in subsequent taxable periods under Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions that, as of the end of such taxable period, are reasonably expected to be made to such Partner in subsequent taxable periods in accordance with the terms of this Agreement or otherwise to the extent they exceed offsetting increases to such Partner’s Capital Account that are reasonably expected to occur during (or prior to) the taxable period in which such distributions are reasonably expected to be made (other than increases as a result of a minimum gain chargeback pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The “Adjusted Capital Account” of a Partner in respect of any Partnership Interest shall be the amount that such Adjusted Capital Account would be if such Partnership Interest were the only interest in the Partnership held by such Partner from and after the date on which such Partnership Interest was first issued.

“ Adjusted Operating Surplus ” means, with respect to any period, (a) Operating Surplus generated with respect to such period less (b) (i) the amount of any net increase in Working Capital Borrowings (or the Partnership’s proportionate share of any net increase in Working Capital Borrowings in the case of Subsidiaries that are not wholly owned) with respect to such period and (ii) the amount of any net decrease in cash reserves (or the Partnership’s proportionate share of any net decrease in cash reserves in the case of Subsidiaries that are not wholly owned) for Operating Expenditures with respect to such period not relating to an Operating Expenditure made with respect to such period, and plus (c) (i) the amount of any net decrease in Working Capital Borrowings (or the Partnership’s proportionate share of any net decrease in Working Capital Borrowings in the case of Subsidiaries that are not wholly owned) with respect to such period, (ii) the amount of any net decrease made in subsequent periods in cash reserves for Operating Expenditures initially established with respect to such period to the extent such decrease results in a reduction in Adjusted Operating Surplus in subsequent periods pursuant to clause (b)(ii) above and (iii) the amount of any net increase in cash reserves (or the Partnership’s proportionate share of any net increase in cash reserves in the case of Subsidiaries that are not wholly owned) for Operating Expenditures with respect to such period required by any debt instrument for the repayment of principal, interest or premium. Adjusted Operating Surplus does not include that portion of Operating Surplus included in clause (a)(i) of the definition of “Operating Surplus.”

“ Adjusted Property ” means any property the Carrying Value of which has been adjusted pursuant to Section 5.5(d).

“ Affiliate ” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or

indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“ Aggregate Quantity of IDR Reset Common Units ” has the meaning given such term in Section 5.11(a).

“ Aggregate Remaining Net Positive Adjustments ” means, as of the end of any taxable period, the sum of the Remaining Net Positive Adjustments of all the Partners.

“ Agreed Allocation ” means any allocation, other than a Required Allocation, of an item of income, gain, loss or deduction pursuant to the provisions of Section 6.1, including a Curative Allocation (if appropriate in the context in which the term “Agreed Allocation” is used).

“ Agreed Value ” of any Contributed Property means the fair market value of such property or other consideration at the time of contribution and in the case of an Adjusted Property, the fair market value of such Adjusted Property on the date of the revaluation event as described in Section 5.5(d), in both cases as determined by the General Partner. The General Partner shall use such method as it determines to be appropriate to allocate the aggregate Agreed Value of Contributed Properties contributed to the Partnership in a single or integrated transaction among each separate property on a basis proportional to the fair market value of each Contributed Property.

“ Agreement ” means this Second Amended and Restated Agreement of Limited Partnership of Southcross Energy Partners, L.P., as it may be amended, supplemented or restated from time to time.

“ Associate ” means, when used to indicate a relationship with any Person, (a) any corporation or organization of which such Person is a director, officer, manager, member, general partner or managing member or is, directly or indirectly, the owner of 20% or more of any class of voting stock or other voting interest, (b) any trust or other estate in which such Person has at least a 20% beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, and (c) any relative or spouse of such Person, or any relative of such spouse, who has the same principal residence as such Person.

“ Available Cash ” means, with respect to any Quarter ending prior to the Liquidation Date:

(a) the sum of:

(i) all cash and cash equivalents of the Partnership Group (or the Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries that are not wholly owned) on hand at the end of such Quarter; and

(ii) if the General Partner so determines, all or any portion of additional cash and cash equivalents of the Partnership Group (or the Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries that are not wholly owned) on hand on the date of determination of Available Cash with respect to such

Quarter resulting from Working Capital Borrowings made subsequent to the end of such Quarter, less;

(b) the amount of any cash reserves established by the General Partner (or the Partnership’s proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned) to:

(i) provide for the proper conduct of the business of the Partnership Group (including reserves for future capital expenditures and for anticipated future credit needs of the Partnership Group) subsequent to such Quarter;

(ii) comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which any Group Member is a party or by which it is bound or its assets are subject; or

(iii) provide funds for distributions under Section 6.4 or Section 6.5 in respect of any one or more of the next four Quarters;

provided, however, that the General Partner may not establish cash reserves pursuant to subclause (iii) above if the effect of such reserves would be that the Partnership is unable to distribute the Minimum Quarterly Distribution on all Common Units, plus any Cumulative Common Unit Arrearage on all Common Units, with respect to such Quarter; and, provided further, that disbursements made by a Group Member or cash reserves established, increased or reduced after the end of such Quarter but on or before the date of determination of Available Cash with respect to such Quarter shall be deemed to have been made, established, increased or reduced, for purposes of determining Available Cash, within such Quarter if the General Partner so determines.

Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero.

“ Board of Directors ” means, with respect to the General Partner, its board of directors or board of managers, if the General Partner is a corporation or limited liability company, or the board of directors or board of managers of the general partner of the General Partner, if the General Partner is a limited partnership, as applicable.

“ Book Basis Derivative Items ” means any item of income, deduction, gain or loss that is computed with reference to the Carrying Value of an Adjusted Property (e.g., depreciation, depletion, or gain or loss with respect to an Adjusted Property).

“ Book-Down Event ” means an event that triggers a negative adjustment to the Capital Accounts of the Partners pursuant to Section 5.5(d).

“ Book-Tax Disparity ” means with respect to any item of Contributed Property or Adjusted Property, as of the date of any determination, the difference between the Carrying Value of such Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in all of its Contributed Property and Adjusted Property will be reflected by the

difference between such Partner’s Capital Account balance as maintained pursuant to Section 5.5 and the hypothetical balance of such Partner’s Capital Account computed as if it had been maintained strictly in accordance with federal income tax accounting principles.

“ Book-Up Event ” means an event that triggers a positive adjustment to the Capital Accounts of the Partners pursuant to Section 5.5(d).

“ Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the United States of America or the State of Delaware shall not be regarded as a Business Day.

“ Capital Account ” means the capital account maintained for a Partner pursuant to Section 5.5. The “Capital Account” of a Partner in respect of any Partnership Interest shall be the amount that such Capital Account would be if such Partnership Interest were the only interest in the Partnership held by such Partner from and after the date on which such Partnership Interest was first issued.

“ Capital Contribution ” means (a) any cash, cash equivalents or the Net Agreed Value of Contributed Property that a Partner contributes to the Partnership or that is contributed or deemed contributed to the Partnership on behalf of a Partner (including, in the case of an underwritten offering of Units, the amount of any underwriting discounts or commissions) or (b) current distributions that a Partner is entitled to receive but otherwise waives.

“ Capital Improvement ” means (a) the construction of new capital assets by a Group Member, (b) the replacement, improvement or expansion of existing capital assets by a Group Member or (c) a capital contribution by a Group Member to a Person that is not a Subsidiary in which a Group Member has, or after such capital contribution will have, directly or indirectly, an equity interest, to fund such Group Member’s pro rata share of the cost of the construction of new, or the replacement, improvement or expansion of existing, capital assets by such Person, in each case if and to the extent such construction, replacement, improvement or expansion is made to increase, over the long-term, the operating capacity or operating income of the Partnership Group, in the case of clauses (a) and (b), or such Person, in the case of clause (c), from the operating capacity or operating income of the Partnership Group or such Person, as the case may be, existing immediately prior to such construction, replacement, improvement, expansion or capital contribution. For purposes of this definition, “long-term” generally refers to a period of not less than twelve months.

“ Capital Surplus ” means Available Cash distributed by the Partnership in excess of Operating Surplus, as described in Section 6.3(a).

“ Carrying Value ” means (a) with respect to a Contributed Property or Adjusted Property, the Agreed Value of such property reduced (but not below zero) by all depreciation, amortization and cost recovery deductions charged to the Partners’ Capital Accounts in respect of such property and (b) with respect to any other Partnership property, the adjusted basis of such property for federal income tax purposes, all as of the time of determination; provided that the Carrying Value of any property shall be adjusted from time to time in accordance with Section 5.5(d)(i) and to reflect changes, additions or other adjustments to the Carrying Value for

dispositions and acquisitions of Partnership properties, as deemed appropriate by the General Partner.

“ Cause ” means a court of competent jurisdiction has entered a final, non-appealable judgment finding the General Partner liable to the Partnership or any Limited Partner for actual fraud or willful misconduct in its capacity as a general partner of the Partnership.

“ Certificate ” means (a) a certificate (i) substantially in the form of Exhibit A to the First A/R Partnership Agreement (if such certificate was issued on or after November 7, 2012 but prior to the date hereof) or substantially in the form of Exhibit A to this Agreement (if such certificate is issued on or after the date hereof), (ii) issued in global form in accordance with the rules and regulations of The Depository Trust Company and its permitted successors and assigns or (iii) in such other form as may be adopted by the General Partner, in each case issued by the Partnership evidencing ownership of one or more Common Units or (b) a certificate, in such form as may be adopted by the General Partner, issued by the Partnership evidencing ownership of one or more classes or series of Partnership Interests.

“ Certificate of Limited Partnership ” means the Certificate of Limited Partnership of the Partnership filed with the Secretary of State of the State of Delaware as referenced in Section 7.2, as such Certificate of Limited Partnership may be amended, supplemented or restated from time to time.

“ Citizenship Eligible Holder ” means a Limited Partner whose nationality, citizenship or other related status the General Partner determines, upon receipt of an Eligibility Certificate or other requested information, does not or would not create under any federal, state or local law or regulation to which a Group Member is subject, a substantial risk of cancellation or forfeiture of any property, including any governmental permit, endorsement or other authorization, in which a Group Member has an interest.

“ claim ” (as used in Section 7.12(g)) has the meaning given such term in Section 7.12(g).

“ Closing Date ” means the first date on which Common Units are sold by the Partnership to the IPO Underwriters pursuant to the provisions of the Underwriting Agreement.

“ Closing Price ” for any day, means, in respect of any class of Limited Partner Interest, the last sale price on such day, regular way, or in case no such sale takes place on such day, the average of the last closing bid and ask prices on such day, regular way, in either case as reported on the principal National Securities Exchange on which such Limited Partner Interests are listed or admitted to trading or, if such Limited Partner Interests are not listed or admitted to trading on any National Securities Exchange, the average of the high bid and low ask prices on such day in the over-the-counter market, as reported by such other system then in use, or, if on any such day such Limited Partner Interests are not quoted by any such organization, the average of the closing bid and ask prices on such day as furnished by a professional market maker making a market in such Limited Partner Interests selected by the General Partner, or if on any such day no market maker is making a market in such Limited Partner Interests, the fair value of such Limited Partner Interests on such day as determined by the General Partner.

“ Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of any successor law.

“ Combined Interest ” has the meaning given such term in Section 11.3(a).

“ Commences Commercial Service ” means the date upon which a Capital Improvement is first put into commercial service by a Group Member following completion of construction, acquisition, replacement, improvement or expansion and testing, as applicable.

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

“ Common Unit ” means a Limited Partner Interest having the rights and obligations specified with respect to Common Units in this Agreement. The term “Common Unit” does not include a Subordinated Unit prior to its conversion into a Common Unit pursuant to the terms hereof. The term “Common Unit” does not refer to a Series A Preferred Unit prior to the conversion of such Series A Preferred Unit into a Common Unit pursuant to the terms hereof.

“ Common Unit Arrearage ” means, with respect to any Common Unit, whenever issued, as to any Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all Available Cash distributed with respect to a Common Unit in respect of such Quarter pursuant to Section 6.4(a)(i).

“ Conflicts Committee ” means a committee of the Board of Directors of the General Partner composed of one or more directors, each of whom (a) is not an officer or employee of the General Partner, (b) is not an officer, director or employee of any Affiliate of the General Partner (other than Group Members), (c) is not a holder of any ownership interest in the General Partner or its Affiliates or the Partnership Group other than (i) Common Units and (ii) awards that are granted to such director in his capacity as a director under any long-term incentive plan, equity compensation plan or similar plan implemented by the General Partner or the Partnership and (d) is determined by the Board of Directors of the General Partner to be independent under the independence standards for directors who serve on an audit committee of a board of directors established by the Exchange Act and the rules and regulations of the Commission thereunder and by the National Securities Exchange on which the Common Units are listed or admitted to trading (or if no such National Securities Exchange, the New York Stock Exchange).

“ Construction Debt ” means debt incurred to fund (a) all or a portion of a Capital Improvement, (b) interest payments (including periodic net payments under related interest rate swap agreements) and related fees on other Construction Debt or (c) distributions (including incremental Incentive Distributions) on Construction Equity.

“ Construction Equity ” means equity issued to fund (a) all or a portion of a Capital Improvement, (b) interest payments (including periodic net payments under related interest rate swap agreements) and related fees on Construction Debt or (c) distributions (including incremental Incentive Distributions) on other Construction Equity. Construction Equity does not include equity issued in the Initial Public Offering.

“ Construction Period ” means the period beginning on the date that a Group Member enters into a binding obligation to commence a Capital Improvement and ending on the earlier to occur of the date that such Capital Improvement Commences Commercial Service and the date that the Group Member abandons or disposes of such Capital Improvement.

“ Contributed Property ” means each property or other asset, in such form as may be permitted by the Delaware Act, but excluding cash, contributed to the Partnership. Once the Carrying Value of a Contributed Property is adjusted pursuant to Section 5.5(d), such property or other asset shall no longer constitute a Contributed Property, but shall be deemed an Adjusted Property.

“ Contribution Agreement ” means that certain Contribution, Conveyance and Assumption Agreement, dated as of November 7, 2012, among the Partnership, the General Partner, Holdings and the Operating Company, together with the additional conveyance documents and instruments contemplated or referenced thereunder, as such may be amended, supplemented or restated from time to time.

“ Conversion Unit ” means the Common Unit(s) issued upon conversion of a Series A Preferred Unit pursuant to Section 5.12.

“ Convertible Securities ” has the meaning assigned to such term in Section 5.12(b)(viii)(D).

“ Converting Unitholder ” means a Person entitled to receive Common Units upon conversion of any Series A Preferred Units.

“ Coupon Conversion Quarter ” means the Quarter beginning on or after July 1, 2014 in respect of which the Board of Directors of the General Partner determines, in its sole discretion, to begin paying Series A Quarterly Distributions in cash rather than through the issuance of Series A PIK Preferred Units; provided, however , that the Board of Directors of the General Partner shall not elect to begin paying Series A Quarterly Distributions in cash until the Partnership has exercised the Target Leverage Option (as defined in and pursuant to the Limited Waiver and Second Amendment to Second Amended and Restated Credit Agreement, effective as of April 12, 2013, among the Partnership, Wells Fargo Bank, N.A., as administrative agent, and the lenders party thereto) or the restrictions in such credit agreement relating to the Target Leverage Option are no longer applicable.

“ Cumulative Common Unit Arrearage ” means, with respect to any Common Unit, whenever issued, and as of the end of any Quarter, the excess, if any, of (a) the sum of the Common Unit Arrearages as to an Initial Common Unit for each of the Quarters within the Subordination Period ending on or before the last day of such Quarter over (b) the sum of any distributions theretofore made pursuant to Section 6.4(a)(ii) and the second sentence of Section 6.5 with respect to an Initial Common Unit (including any distributions to be made in respect of the last of such Quarters).

“ Curative Allocation ” means any allocation of an item of income, gain, deduction, loss or credit pursuant to the provisions of Section 6.1(d)(xi).

“ Current Market Price ” as of any date for any class of Limited Partner Interests, means the average of the daily Closing Prices per Limited Partner Interest of such class for the 20 consecutive Trading Days immediately prior to such date.

“ Delaware Act ” means the Delaware Revised Uniform Limited Partnership Act, 6 Del C. Section 17-101, et seq., as amended, supplemented or restated from time to time, and any successor to such statute.

“ Departing General Partner ” means a former general partner from and after the effective date of any withdrawal or removal of such former general partner pursuant to Section 11.1 or Section 11.2.

“ Derivative Partnership Interests ” means any options, rights, warrants, appreciation rights, tracking, profit and phantom interests and other derivative securities relating to, convertible into or exchangeable for Partnership Interests.

“ Disposed of Adjusted Property ” has the meaning given such term in Section 6.1(d)(xii)(B).

“ Distributable Cash Flow ” means, with respect to any Quarter, net income, as determined in accordance with generally accepted accounting principles, of the Partnership plus: (i) depreciation, amortization and impairment expense; (ii) provision for deferred income taxes; (iii) the subtraction of Maintenance Capital Expenditures; and (iv) the addition of losses or subtraction of gains relating to other miscellaneous non-cash amounts affecting net income for the period, such as equity-based compensation and mark-to-market changes in derivative instruments.

“ Economic Risk of Loss ” has the meaning set forth in Treasury Regulation Section 1.752-2(a).

“ Eligibility Certificate ” means a certificate the General Partner may request a Limited Partner to execute as to such Limited Partner’s (or such Limited Partner’s beneficial owners’) federal income tax status or nationality, citizenship or other related status for the purpose of determining whether such Limited Partner is an Ineligible Holder.

“ Estimated Incremental Quarterly Tax Amount ” has the meaning given to such term in Section 6.9.

“ Event of Withdrawal ” has the meaning given such term in Section 11.1(a).

“ Excess Additional Book Basis ” has the meaning given such term in the definition of “Additional Book Basis Derivative Items.”

“ Excess Distribution ” has the meaning given such term in Section 6.1(d)(iii)(A).

“ Excess Distribution Unit ” has the meaning given such term in Section 6.1(d)(iii)(A).

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time, and any successor to such statute.

“ Expansion Capital Expenditures ” means cash expenditures for Acquisitions or Capital Improvements. Expansion Capital Expenditures shall include interest (including periodic net payments under related interest rate swap agreements) and related fees paid during the Construction Period on Construction Debt. Where cash expenditures are made in part for Expansion Capital Expenditures and in part for other purposes, the General Partner shall determine the allocation between the amounts paid for each.

“ FERC ” means the U.S. Federal Energy Regulatory Commission.

“ Final Subordinated Units ” has the meaning given such term in Section 6.1(d)(x)(A).

“ First A/R Partnership Agreement ” has the meaning given such term in the recitals.

“ First Liquidation Target Amount ” has the meaning given such term in Section 6.1(c)(i)(D).

“ First Target Distribution ” means $0.46 per Unit per Quarter (or, with respect to the period commencing on the Closing Date and ending on December 31, 2012, it means the product of $0.46 multiplied by a fraction of which the numerator is the number of days in such period, and of which the denominator is the total number of days in such quarter), subject to adjustment in accordance with Sections 5.11, 6.6 and 6.9.

“ Fully Diluted Weighted Average Basis ” means, when calculating the number of Outstanding Units for any period, a basis that includes (a) the weighted average number of Outstanding Units during such period plus (b) all Partnership Interests and Derivative Partnership Interests (i) that are convertible into or exercisable or exchangeable for Units or for which Units are issuable, in each case that are senior to or pari passu with the Subordinated Units, (ii) whose conversion, exercise or exchange price, if any, is less than the Current Market Price on the date of such calculation, (iii) that may be converted into or exercised or exchanged for such Units prior to or during the Quarter immediately following the end of the period for which the calculation is being made without the satisfaction of any contingency beyond the control of the holder other than the payment of consideration and the compliance with administrative mechanics applicable to such conversion, exercise or exchange and (iv) that were not converted into or exercised or exchanged for such Units during the period for which the calculation is being made; provided, however, that for purposes of determining the number of Outstanding Units on a Fully Diluted Weighted Average Basis when calculating whether the Subordination Period has ended or Subordinated Units are entitled to convert into Common Units pursuant to Section 5.7, such Partnership Interests and Derivative Partnership Interests shall be deemed to have been Outstanding Units only for the four Quarters that comprise the last four Quarters of the measurement period; provided, further, that if consideration will be paid to any Group Member in connection with such conversion, exercise or exchange, the number of Units to be included in such calculation shall be that number equal to the difference between (x) the number of Units issuable upon such conversion, exercise or exchange and (y) the number of Units that such consideration would purchase at the Current Market Price.

“ General Partner ” means Southcross Energy Partners GP, LLC, a Delaware limited liability company, and its successors and permitted assigns that are admitted to the Partnership as general partner of the Partnership, in its capacity as general partner of the Partnership (except as the context otherwise requires).

“ General Partner Interest ” means the interest of the General Partner in the Partnership (in its capacity as a general partner without reference to any Limited Partner Interest held by it), which is evidenced by General Partner Units, and includes any and all rights, powers and benefits to which the General Partner is entitled as provided in this Agreement, together with all obligations of the General Partner to comply with the terms and provisions of this Agreement.

“ General Partner Unit ” means a fractional part of the General Partner Interest having the rights and obligations specified with respect to the General Partner Interest. A General Partner Unit shall not constitute a “Unit” for any purpose under this Agreement.

“ Gross Liability Value ” means, with respect to any Liability of the Partnership described in Treasury Regulation Section 1.752-7(b)(3)(i), the amount of cash that a willing assignor would pay to a willing assignee to assume such Liability in an arm’s-length transaction.

“ Group ” means two or more Persons that with or through any of their respective Affiliates or Associates have any contract, arrangement, understanding or relationship for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent given to such Person in response to a proxy or consent solicitation made to 10 or more Persons), exercising investment power over or disposing of any Partnership Interests with any other Person that beneficially owns, or whose Affiliates or Associates beneficially own, directly or indirectly, Partnership Interests.

“ Group Member ” means a member of the Partnership Group.

“ Group Member Agreement ” means the partnership agreement of any Group Member, other than the Partnership, that is a limited or general partnership, the limited liability company agreement of any Group Member that is a limited liability company, the certificate of incorporation and bylaws or similar organizational documents of any Group Member that is a corporation, the joint venture agreement or similar governing document of any Group Member that is a joint venture and the governing or organizational or similar documents of any other Group Member that is a Person other than a limited or general partnership, limited liability company, corporation or joint venture, in each case as such may be amended, supplemented or restated from time to time.

“ Hedge Contract ” means any exchange, swap, forward, cap, floor, collar, option or other similar agreement or arrangement entered into for the purpose of reducing the exposure of a Group Member to fluctuations in interest rates, the price of hydrocarbons, basis differentials or currency exchange rates in their operations or financing activities and not for speculative purposes.

“ Holder ” means any of the following:

(a) the General Partner who is the Record Holder of Registrable Securities;

(b) any Affiliate of the General Partner who is the Record Holder of Registrable Securities (other than natural persons who are Affiliates of the General Partner by virtue of being officers, directors or employees of the General Partner or any of its Affiliates);

(c) any Person that has been the General Partner within the prior two years and who is the Record Holder of Registrable Securities;

(d) any Person that has been an Affiliate of the General Partner within the prior two years and who is the Record Holder of Registrable Securities (other than natural persons who were Affiliates of the General Partner by virtue of being officers, directors or employees of the General Partner or any of its Affiliates); and

(e) a transferee and current Record Holder of Registrable Securities to whom the transferor of such Registrable Securities, who was a Holder at the time of such transfer, assigns its rights and obligations under this Agreement; provided such transferee agrees in writing to comply with all applicable requirements and obligations in connection with the registration and disposition of such Registrable Securities pursuant to Section 7.12.

“ Holdings ” means Southcross Energy LLC, a Delaware limited liability company.

“ IDR Reset Common Units ” has the meaning given such term in Section 5.11(a).

“ IDR Reset Election ” has the meaning given such term in Section 5.11(a).

“ Incentive Distribution Right ” means a non-voting Limited Partner Interest issued to the General Partner, which Limited Partner Interest will confer upon the holder thereof only the rights and obligations specifically provided in this Agreement with respect to Incentive Distribution Rights (and no other rights otherwise available to or other obligations of a holder of a Partnership Interest).

“ Incentive Distributions ” means any amount of cash distributed to the holders of the Incentive Distribution Rights pursuant to Sections 6.4(a)(v), (vi) and (vii) and 6.4(b)(iii), (iv) and (v).

“ Incremental Income Taxes ” has the meaning given such term in Section 6.9.

“ Indemnified Persons ” has the meaning given such term in Section 7.12(g).

“ Indemnitee ” means (a) the General Partner, (b) any Departing General Partner, (c) any Person who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person who is or was a manager, managing member, general partner, director, officer, employee, agent, fiduciary or trustee of (i) any Group Member, the General Partner or any Departing General Partner or (ii) any Affiliate of any Group Member, the General Partner or any Departing General Partner, (e) any Person who is or was serving at the request of the General Partner or any Departing General Partner or any Affiliate of the General Partner or any Departing General Partner as a manager, managing member, general partner, director, officer, employee, agent, fiduciary or trustee of another Person owing a fiduciary duty to any Group Member; provided that a Person shall not be an Indemnitee by reason of providing, on a fee-for-

services basis, trustee, fiduciary or custodial services, and (f) any Person the General Partner designates as an “Indemnitee” for purposes of this Agreement because such Person’s status, service or relationship exposes such Person to potential claims, demands, suits or proceedings relating to the Partnership Group’s business and affairs.

“ Ineligible Holder ” means a Limited Partner who is not a Citizenship Eligible Holder or a Rate Eligible Holder.

“ Initial Common Units ” means the Common Units sold in the Initial Public Offering.

“ Initial Limited Partners ” means the Organizational Limited Partner, the General Partner (with respect to the Incentive Distribution Rights received by it pursuant to Section 5.2) and the IPO Underwriters upon the issuance by the Partnership of Common Units as described in Section 5.3(a) in connection with the Initial Public Offering.

“ Initial Public Offering ” means the initial offering and sale of Common Units to the public (including the offer and sale of Common Units pursuant to the Over-Allotment Option), as described in the IPO Registration Statement.

“ Initial Unit Price ” means (a) with respect to the Common Units and the Subordinated Units, the initial public offering price per Common Unit at which the Common Units were first offered to the public for sale as set forth on the cover page of the IPO Prospectus or (b) with respect to any other class or series of Units, the price per Unit at which such class or series of Units is initially sold by the Partnership, as determined by the General Partner, in each case adjusted as the General Partner determines to be appropriate to give effect to any distribution, subdivision or combination of Units.

“ Interim Capital Transactions ” means the following transactions if they occur prior to the Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than Working Capital Borrowings and other than for items purchased on open account in the ordinary course of business) by any Group Member and sales of debt securities of any Group Member; (b) issuances of equity interests of any Group Member (including the Common Units sold to the IPO Underwriters in the Initial Public Offering); and (c) sales or other voluntary or involuntary dispositions of any assets of any Group Member other than (i) sales or other dispositions of inventory, accounts receivable and other assets in the ordinary course of business and (ii) sales or other dispositions of assets as part of normal retirements or replacements, (d) capital contributions received by a Group Member and (e) corporate reorganizations or restructurings.

“ IPO Prospectus ” means the final prospectus relating to the Initial Public Offering dated November 1, 2012 and filed by the Partnership with the Commission pursuant to Rule 424 under the Securities Act on November 2, 2012.

“ IPO Registration Statement ” means the Registration Statement on Form S-1 (File No. 333-180841) as it has been or as it may be amended or supplemented from time to time, filed by the Partnership with the Commission under the Securities Act to register the offering and sale of the Common Units in the Initial Public Offering.

“ IPO Underwriter ” means each Person named as an underwriter in Schedule I to the Underwriting Agreement who purchases Common Units pursuant thereto.

“ Junior Interests ” means any class or series of Partnership Interests that, with respect to distributions on such Partnership Interests and distributions upon liquidation of the Partnership, ranks junior to the Series A Preferred Units, including but not limited to Common Units, Subordinated Units and Incentive Distribution Rights.

“ Liability ” means any liability or obligation of any nature, whether accrued, contingent or otherwise.

“ Limited Partner ” means, unless the context otherwise requires, each Initial Limited Partner, each additional Person that becomes a Limited Partner pursuant to the terms of this Agreement and any Departing General Partner upon the change of its status from General Partner to Limited Partner pursuant to Section 11.3, in each case, in such Person’s capacity as a limited partner of the Partnership; provided , however , that when the term “Limited Partner” is used herein in the context of any vote or other approval, including Articles XIII and XIV, such term shall not, solely for such purpose, include any holder of an Incentive Distribution Right (solely with respect to its Incentive Distribution Rights and not with respect to any other Limited Partner Interest held by such Person) except as may otherwise be required by law.

“ Limited Partner Interest ” means an interest of a Limited Partner in the Partnership, which may be evidenced by Common Units, Subordinated Units, Series A Preferred Units, Incentive Distribution Rights or other Partnership Interests or a combination thereof (but excluding Derivative Partnership Interests), and includes any and all benefits to which such Limited Partner is entitled as provided in this Agreement, together with all obligations of such Limited Partner pursuant to the terms and provisions of this Agreement; provided , however , that when the term “Limited Partner Interest” is used herein in the context of any vote or other approval, including Articles XIII and XIV, such term shall not, solely for such purpose, include any Incentive Distribution Right except as may otherwise be required by law.

“ Liquidation Date ” means (a) in the case of an event giving rise to the dissolution of the Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the date on which the applicable time period during which the holders of Outstanding Units have the right to elect to continue the business of the Partnership has expired without such an election being made and (b) in the case of any other event giving rise to the dissolution of the Partnership, the date on which such event occurs.

“ Liquidator ” means the General Partner or one or more Persons selected by the General Partner to perform the functions described in Section 12.4 as liquidating trustee of the Partnership within the meaning of the Delaware Act.

“ Maintenance Capital Expenditures ” means cash expenditures (including expenditures for the addition or improvement to, or the replacement of, capital assets or for the acquisition of existing, or the construction or development of new capital assets) made to maintain long-term operating income or operating capacity of the Partnership Group. For purposes of this definition, “long term” generally refers to a period of not less than twelve months. Maintenance Capital

Expenditures shall include expenditures for routine equipment and pipeline maintenance or replacement due to obsolescence.

“ Merger Agreement ” has the meaning given such term in Section 14.1.

“ Minimum Quarterly Distribution ” means $0.40 per Unit per Quarter (or with respect to the period commencing on the Closing Date and ending on December 31, 2012, it means the product of $0.40 multiplied by a fraction of which the numerator is the number of days in such period, and of which the denominator is the total number of days in such quarter), subject to adjustment in accordance with Sections 5.11, 6.6 and 6.9.

“ National Securities Exchange ” means an exchange registered with the Commission under Section 6(a) of the Exchange Act (or any successor to such Section).

“ Net Agreed Value ” means, (a) in the case of any Contributed Property, the Agreed Value of such property or other consideration reduced by any Liabilities either assumed by the Partnership upon such contribution or to which such property or other consideration is subject when contributed and (b) in the case of any property distributed to a Partner by the Partnership, the Partnership’s Carrying Value of such property (as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is distributed, reduced by any Liabilities either assumed by such Partner upon such distribution or to which such property is subject at the time of distribution, in either case as determined and required by the Treasury Regulations promulgated under Section 704(b) of the Code.

“ Net Income ” means, for any taxable period, the excess, if any, of the Partnership’s items of income and gain (other than those items taken into account in the computation of Net Termination Gain or Net Termination Loss) for such taxable period over the Partnership’s items of loss and deduction (other than those items taken into account in the computation of Net Termination Gain or Net Termination Loss) for such taxable period. The items included in the calculation of Net Income shall be determined in accordance with Section 5.5(b) and shall not include any items specially allocated under Section 6.1(d); provided, that the determination of the items that have been specially allocated under Section 6.1(d) shall be made without regard to any reversal of such items under Section 6.1(d)(xii).

“ Net Loss ” means, for any taxable period, the excess, if any, of the Partnership’s items of loss and deduction (other than those items taken into account in the computation of Net Termination Gain or Net Termination Loss) for such taxable period over the Partnership’s items of income and gain (other than those items taken into account in the computation of Net Termination Gain or Net Termination Loss) for such taxable period. The items included in the calculation of Net Loss shall be determined in accordance with Section 5.5(b) and shall not include any items specially allocated under Section 6.1(d); provided, that the determination of the items that have been specially allocated under Section 6.1(d) shall be made without regard to any reversal of such items under Section 6.1(d)(xii).

“ Net Positive Adjustments ” means, with respect to any Partner, the excess, if any, of the total positive adjustments over the total negative adjustments made to the Capital Account of such Partner pursuant to Book-Up Events and Book-Down Events.

“ Net Termination Gain ” means, for any taxable period, the sum, if positive, of all items of income, gain, loss or deduction (determined in accordance with Section 5.5(b)) that are (a) recognized by the Partnership (i) after the Liquidation Date or (ii) upon the sale, exchange or other disposition of all or substantially all of the assets of the Partnership Group, taken as a whole, in a single transaction or a series of related transactions (excluding any disposition to a member of the Partnership Group), or (b) deemed recognized by the Partnership pursuant to Section 5.5(b); provided, however, the items included in the determination of Net Termination Gain shall not include any items of income, gain or loss specially allocated under Section 6.1(d) or under the second and third sentences of Section 5.12(b)(iv).

“ Net Termination Loss ” means, for any taxable period, the sum, if negative, of all items of income, gain, loss or deduction (determined in accordance with Section 5.5(b)) that are (a) recognized by the Partnership (i) after the Liquidation Date or (ii) upon the sale, exchange or other disposition of all or substantially all of the assets of the Partnership Group, taken as a whole, in a single transaction or a series of related transactions (excluding any disposition to a member of the Partnership Group), or (b) deemed recognized by the Partnership pursuant to Section 5.5(b); provided, however, items included in the determination of Net Termination Loss shall not include any items of income, gain or loss specially allocated under Section 6.1(d) or under the second and third sentences of Section 5.12(b)(iv).

“ Nonrecourse Built-in Gain ” means with respect to any Contributed Properties or Adjusted Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the amount of any taxable gain that would be allocated to the Partners pursuant to Section 6.2(b) if such properties were disposed of in a taxable transaction in full satisfaction of such liabilities and for no other consideration.

“ Nonrecourse Deductions ” means any and all items of loss, deduction or expenditure (including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse Liability.

“ Nonrecourse Liability ” has the meaning set forth in Treasury Regulation Section 1.752-1(a)(2).

“ Notice ” means a written request from a Holder pursuant to Section 7.12 which shall (i) specify the Registrable Securities intended to be registered, offered and sold by such Holder, (ii) describe the nature or method of the proposed offer and sale of Registrable Securities, and (iii) contain the undertaking of such Holder to provide all such information and materials and take all action as may be required or appropriate in order to permit the Partnership to comply with all applicable requirements and obligations in connection with the registration and disposition of such Registrable Securities pursuant to Section 7.12.

“ Notice of Election to Purchase ” has the meaning given such term in Section 15.1(b).

“ Operating Company ” means Southcross Energy Operating, LLC, a Delaware limited liability company, and any successors thereto.

“ Operating Expenditures ” means all Partnership Group cash expenditures (or the Partnership’s proportionate share of expenditures in the case of Subsidiaries that are not wholly owned), including, but not limited to, taxes, reimbursements of expenses to the General Partner, Maintenance Capital Expenditures, interest payments, payments made in the ordinary course of business under Hedge Contracts (provided that (i) with respect to amounts paid in connection with the initial purchase of a Hedge Contract, such amounts will be amortized over the life of the applicable Hedge Contract and (ii) payments made in connection with the termination of any Hedge Contract prior to the expiration of its stipulated settlement or termination date will be included in Operating Expenditures in equal quarterly installments over the remaining scheduled life of such Hedge Contract), director, officer and employee compensation, repayment of Working Capital Borrowings and non-pro rata repurchases of Units, subject to the following:

(a) repayments of Working Capital Borrowings deducted from Operating Surplus pursuant to clause (b)(iii) of the definition of Operating Surplus shall not constitute Operating Expenditures when actually repaid;

(b) payments (including prepayments and prepayment penalties) of principal of and premium on indebtedness other than Working Capital Borrowings shall not constitute Operating Expenditures; and

(c) Operating Expenditures shall not include: (i) Expansion Capital Expenditures, (ii) payment of transaction expenses (including taxes) relating to Interim Capital Transactions, (iii) distributions to Partners, (iv) repurchases of Partnership Interests, other than repurchases of Partnership Interests by the Partnership to satisfy obligations under employee benefit plans or reimbursement of expenses of the General Partner for purchases of Partnership Interests by the General Partner to satisfy obligations under employee benefit plans, or (v) any other expenditures or payments using the proceeds of the Initial Public Offering as described under “Use of Proceeds” in the IPO Registration Statement.

Where capital expenditures are made in part for Maintenance Capital Expenditures and in part for other purposes, the General Partner shall determine the allocation of such capital expenditures between Maintenance Capital Expenditures and capital expenditures made for other purposes.

“ Operating Surplus ” means, with respect to any period ending prior to the Liquidation Date, on a cumulative basis and without duplication,

(a) the sum of:

(i) $35.0 million;

(ii) all cash receipts of the Partnership Group (or the Partnership’s proportionate share of cash receipts in the case of Subsidiaries that are not wholly owned) for the period beginning on the Closing Date and ending on the last day of such period, but excluding cash receipts from Interim Capital Transactions and the termination of Hedge Contracts (provided that cash receipts from the termination of a Hedge Contract prior to its scheduled settlement or termination date shall be included in

Operating Surplus in equal quarterly installments over the remaining scheduled life of such Hedge Contract); and

(iii) all cash receipts of the Partnership Group (or the Partnership’s proportionate share of cash receipts in the case of Subsidiaries that are not wholly owned) after the end of such period but on or before the date of determination of Operating Surplus with respect to such period resulting from Working Capital Borrowings; and

(iv) the amount of cash distributions paid during the Construction Period (including incremental Incentive Distributions on Construction Equity), less

(b) the sum of:

(i) Operating Expenditures for the period beginning on the Closing Date and ending on the last day of such period;

(ii) the amount of cash reserves (or the Partnership’s proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned) established by the General Partner to provide funds for future Operating Expenditures; and

(iii) all Working Capital Borrowings not repaid within twelve months after having been incurred, or repaid within such 12-month period with the proceeds of additional Working Capital Borrowings;

provided, however, that disbursements made (including contributions to a Group Member or disbursements on behalf of a Group Member) or cash reserves established, increased or reduced after the end of such period but on or before the date of determination of Available Cash with respect to such period shall be deemed to have been made, established, increased or reduced, for purposes of determining Operating Surplus, within such period if the General Partner so determines.

Notwithstanding the foregoing, “Operating Surplus” with respect to the Quarter in which the Liquidation Date occurs and any subsequent Quarter shall equal zero.

“ Opinion of Counsel ” means a written opinion of counsel (who may be regular counsel to, or the general counsel or other inside counsel of, the Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner or to such other person selecting such counsel or obtaining such opinion.

“ Option Closing Date ” means the date or dates on which any Common Units are sold by the Partnership to the IPO Underwriters upon exercise of the Over-Allotment Option.

“ Organizational Limited Partner ” means Holdings in its capacity as the organizational limited partner of the Partnership pursuant to this Agreement.

“ Outstanding ” means, with respect to Partnership Interests, all Partnership Interests that are issued by the Partnership and reflected as outstanding on the Partnership’s books and records as of the date of determination; provided, however, that if at any time any Person or Group (other

than the General Partner or its Affiliates) beneficially owns 20% or more of the Outstanding Partnership Interests of any class or series, all Partnership Interests owned by or for the benefit of such Person or Group shall not be entitled to be voted on any matter and shall not be considered to be Outstanding when sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise required by law), calculating required votes, determining the presence of a quorum or for other similar purposes under this Agreement, except that Partnership Interests so owned shall be considered to be Outstanding for purposes of Section 11.1(b)(iv) (such Partnership Interests shall not, however, be treated as a separate class of Partnership Interests for purposes of this Agreement or the Delaware Act); provided, further, that the foregoing limitation shall not apply to (i) any Person or Group who acquired 20% or more of the Outstanding Partnership Interests of any class or series then Outstanding directly from the General Partner or its Affiliates (other than the Partnership), (ii) any Person or Group who acquired 20% or more of the Outstanding Partnership Interests of any class or series then Outstanding directly or indirectly from a Person or Group described in clause (i) provided that, upon or prior to such acquisition, the General Partner shall have notified such Person or Group in writing that such limitation shall not apply, or (iii) any Person or Group who acquired 20% or more of any Partnership Interests issued by the Partnership with the prior approval of the Board of Directors of the General Partner. For the avoidance of doubt, the Board of Directors of the General Partners has approved the issuance of the Series A Preferred Units to the Purchaser pursuant to the Purchase Agreement in accordance with clause (iii) of the immediately preceding sentence, and any Series A PIK Preferred Units and Conversion Units issued to the Purchaser shall be deemed to be approved by the Board of Directors in accordance with clause (iii) of the immediately preceding sentence, and the foregoing limitations of the immediately preceding sentence shall not apply to the Purchaser with respect to its ownership (beneficially or of record) of the Series A Preferred Units, Series A PIK Preferred Units and Conversion Units.

“ Over-Allotment Option ” means the over-allotment option granted to the IPO Underwriters by the Partnership pursuant to the Underwriting Agreement.

“ Partner Nonrecourse Debt ” has the meaning set forth in Treasury Regulation Section 1.704-2(b)(4).

“ Partner Nonrecourse Debt Minimum Gain ” has the meaning set forth in Treasury Regulation Section 1.704-2(i)(2).

“ Partner Nonrecourse Deductions ” means any and all items of loss, deduction or expenditure (including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the principles of Treasury Regulation Section 1.704-2(i), are attributable to a Partner Nonrecourse Debt.

“ Partners ” means the General Partner and the Limited Partners.

“ Partnership ” means Southcross Energy Partners, L.P., a Delaware limited partnership.

“ Partnership Group ” means, collectively, the Partnership and its Subsidiaries.

“ Partnership Interest ” means any equity interest, including any class or series of any equity interest, in the Partnership, which shall include any Limited Partner Interests and the General Partner Interest but shall exclude any Derivative Partnership Interests.

“ Partnership Minimum Gain ” means that amount determined in accordance with the principles of Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).

“ Partnership Register ” means a register maintained on behalf of the Partnership by the General Partner, or, if the General Partner so determines, by the Transfer Agent as part of the Transfer Agent’s books and transfer records, with respect to each class of Partnership Interests in which all Record Holders and transfers of such class of Partnership Interests are registered or otherwise recorded.

“ Per Unit Capital Amount ” means, as of any date of determination, the Capital Account, stated on a per Unit basis, underlying any Unit held by a Person other than the General Partner or any Affiliate of the General Partner who holds Units.

“ Percentage Interest ” means as of any date of determination (a) as to the General Partner with respect to General Partner Units and as to any Unitholder with respect to Units, as the case may be, the product obtained by multiplying (i) 100% less the percentage applicable to clause (b) below by (ii) the quotient obtained by dividing (A) the number of General Partner Units held by the General Partner or the number of Units held by such Unitholder (or, in the case of Series A Preferred Units, the number of Conversion Units issuable upon conversion of such Series A Preferred Units held by such Unitholder or Assignee if such Series A Preferred Units were then converted in accordance with Section 5.12(b)(viii)), as the case may be, by (B) the total number of Outstanding Units and General Partner Units, and (b) as to the holders of other Partnership Interests issued by the Partnership in accordance with Section 5.6, the percentage established as a part of such issuance. The Percentage Interest with respect to an Incentive Distribution Right shall at all times be zero.

“ Person ” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other entity.

“ Plan of Conversion ” has the meaning given such term in Section 14.1.

“ Pro Rata ” means (a) when used with respect to Units or any class thereof, apportioned among all designated Units in accordance with their relative Percentage Interests, (b) when used with respect to Partners or Record Holders, apportioned among all Partners or Record Holders in accordance with their relative Percentage Interests, (c) when used with respect to holders of Incentive Distribution Rights, apportioned among all holders of Incentive Distribution Rights in accordance with the relative number or percentage of Incentive Distribution Rights held by each such holder, and (d) when used with respect to Holders who have requested to include Registrable Securities in a Registration Statement pursuant to Section 7.12(a) or 7.12(b), apportioned among all such Holders in accordance with the relative number of Registrable Securities held by each such holder and included in the Notice relating to such request.

“ Purchase Date ” means the date determined by the General Partner as the date for purchase of all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests owned by the General Partner and its Affiliates) pursuant to Article XV.

“ Purchase Agreement ” has the meaning given such term in the recitals.

“ Purchaser ” has the meaning given such term in the recitals.

“ Quarter ” means, unless the context requires otherwise, a fiscal quarter of the Partnership, or, with respect to the fiscal quarter of the Partnership which includes the Closing Date, the portion of such fiscal quarter after the Closing Date.

“ Rate Eligible Holder ” means a Limited Partner subject to United States federal income taxation on the income generated by the Partnership. A Limited Partner that is an entity not subject to United States federal income taxation on the income generated by the Partnership shall be deemed a Rate Eligible Holder so long as all of the entity’s beneficial owners are subject to such taxation.

“ Recapture Income ” means any gain recognized by the Partnership (computed without regard to any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any property or asset of the Partnership, which gain is characterized as ordinary income because it represents the recapture of deductions previously taken with respect to such property or asset.

“ Record Date ” means the date established by the General Partner or otherwise in accordance with this Agreement for determining (a) the identity of the Record Holders entitled to receive notice of, or entitled to exercise rights in respect of, any lawful action of Limited Partners (including voting), (b) the identity of Record Holders entitled to receive any report or distribution or to participate in any offer or (c) the identity of the Record Holders of Series A Preferred Units entitled to convert such Units.

“ Record Holder ” means (a) with respect to any class of Partnership Interests for which a Transfer Agent has been appointed, the Person in whose name a Partnership Interest of such class is registered on the books of the Transfer Agent as of the Partnership’s close of business on a particular Business Day or (b) with respect to other classes of Partnership Interests, the Person in whose name any such other Partnership Interest is registered on the books that the General Partner has caused to be kept as of the Partnership’s close of business on a particular Business Day.

“ Redeemable Interests ” means any Partnership Interests for which a redemption notice has been given, and has not been withdrawn, pursuant to Section 4.10.

“ Registrable Security ” means any Partnership Interests other than the General Partner Interest and General Partner Units; provided that any Registrable Security shall cease to be a Registrable Security (a) at the time a Registration Statement covering such Registrable Security is declared effective by the Commission or otherwise becomes effective under the Securities Act, and such Registrable Security has been sold or disposed of pursuant to such Registration Statement; (b) at the time such Registrable Security has been disposed of pursuant to Rule 144

(or any successor or similar rule or regulation under the Securities Act); (c) when such Registrable Security is held by a Group Member; and (d) at the time such Registrable Security has been sold in a private transaction in which the transferor’s rights under Section 7.12 of this Agreement have not been assigned to the transferee of such securities.

“ Registration Statement ” has the meaning given such term in Section 7.12(a).

“ Remaining Net Positive Adjustments ” means as of the end of any taxable period, (i) with respect to the Unitholders holding Common Units, Series A Preferred Units or Subordinated Units, the excess of (a) the Net Positive Adjustments of the Unitholders holding Common Units, Series A Preferred Units or Subordinated Units as of the end of such period over (b) the sum of those Partners’ Share of Additional Book Basis Derivative Items for each prior taxable period, (ii) with respect to the General Partner (as holder of the General Partner Units), the excess of (a) the Net Positive Adjustments of the General Partner as of the end of such period over (b) the sum of the General Partner’s Share of Additional Book Basis Derivative Items with respect to the General Partner Units for each prior taxable period, and (iii) with respect to the holders of Incentive Distribution Rights, the excess of (a) the Net Positive Adjustments of the holders of Incentive Distribution Rights as of the end of such period over (b) the sum of the Share of Additional Book Basis Derivative Items of the holders of the Incentive Distribution Rights for each prior taxable period.

“ Required Allocations ” means any allocation of an item of income, gain, loss or deduction pursuant to Section 6.1(d)(i), Section 6.1(d)(ii), Section 6.1(d)(iv), Section 6.1(d)(v), Section 6.1(d)(vi), Section 6.1(d)(vii) or Section 6.1(d)(ix).

“ Reset MQD ” has the meaning given such term in Section 5.11(e).

“ Reset Notice ” has the meaning given such term in Section 5.11(b).

“ Retained Converted Subordinated Unit ” has the meaning given such term in Section 5.5(c)(ii).

“ Second Liquidation Target Amount ” has the meaning given such term in Section 6.1(c)(i)(E).

“ Second Target Distribution ” means $0.50 per Unit per Quarter (or, with respect to the period commencing on the Closing Date and ending on December 31, 2012, it means the product of $0.50 multiplied by a fraction of which the numerator is equal to the number of days in such period, and of which the denominator is the total number of days in such quarter), subject to adjustment in accordance with Section 5.11, Section 6.6 and Section 6.9.

“ Securities Act ” means the Securities Act of 1933, as amended, supplemented or restated from time to time, and any successor to such statute.

“ Selling Holder ” means a Holder who is selling Registrable Securities pursuant to the procedures in Section 7.12.

“ Series A Adjusted Issue Price ” means (i) the Series A Issue Price divided by (ii) the Series A Conversion Rate.

“ Series A Change of Control ” means the occurrence of any of the following:

(a) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger, consolidation or business combination), in one or a series of related transactions, of all or substantially all of the properties or assets of the Partnership and its Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act);

(b) (i) the adoption of a plan for the liquidation or dissolution of the Partnership or (ii) the removal of the General Partner by the Limited Partners of the Partnership;

(c) the consummation of any transaction (including, without limitation, any merger, consolidation or business combination), the result of which is that any Person (excluding the Series A Preferred Unit Partner), other than the owners of the General Partner immediately following the closing of the transactions contemplated by the Purchase Agreement, becomes the beneficial owner, directly or indirectly, of more than fifty percent (50%) of the equity of the General Partner or of the Outstanding Common Units of the Partnership, in each case measured by voting power rather than number of units;

(d) notwithstanding anything provided in clauses (a) through (c) above, (i) any direct or indirect sale, conveyance, assignment, transfer, merger, consolidation or business combination that would result in the owners of the General Partner immediately following the closing of the transactions contemplated by the Purchase Agreement owning, directly or indirectly, less than fifty percent (50%) of the equity of the General Partner, or (ii) any assignment or transfer of all or substantially all of the assets of the General Partner; or

(e) consummation of a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act with respect to the Partnership.

“ Series A Change of Control Offer ” has the meaning assigned to such term in Section 5.12(b)(viii)(E)(i).

“ Series A Conversion Date ” has the meaning assigned to such term in Section 5.12(b)(viii)(C).

“ Series A Conversion Notice ” has the meaning assigned to such term in Section 5.12(b)(viii)(B).

“ Series A Conversion Notice Date ” has the meaning assigned to such term in Section 5.12(b)(viii)(B).

“ Series A Conversion Rate ” means the number of Common Units issuable upon the conversion of each Series A Preferred Unit, which shall be 1.0 until such rate is adjusted as set forth in Sections 5.12(b)(viii)(D) and 5.12(b)(viii)(E).

“ Series A Forced Conversion Notice ” has the meaning assigned to such term in Section 5.12(b)(viii)(B).

“ Series A Forced Conversion Notice Date ” has the meaning assigned to such term in Section 5.12(b)(viii)(B).

“ Series A Distribution Payment Date ” has the meaning assigned to such term in Section 5.12(b)(ii)(A).

“ Series A Distribution Rate ” means an amount per Quarter per Series A Preferred Unit payable in arrears equal to the greater of (i) $0.40 and (ii) the amount of distributions in cash for such Quarter that would have been payable with respect to a Series A Preferred Unit if such Series A Preferred Unit had converted at the beginning of the Quarter in respect of which such distributions are being paid into the number of Common Unit(s) into which such Series A Preferred Unit is convertible pursuant to Section 5.12(b)(viii) as of the date of such determination.

“ Series A Issuance Date ” means April 12, 2013 or such later date on which Series A Preferred Units are issued pursuant to the Purchase Agreement.

“ Series A Issue Price ” means $22.8571 per Series A Preferred Unit.

“ Series A Liquidation Value ” means, with respect to each Series A Preferred Unit Outstanding as of the date of such determination, an amount equal to the sum of (i) the Series A Issue Price, plus (ii) all Series A Unpaid Cash Distributions plus, (iii) all accrued but unpaid distributions on such Series A Preferred Unit (including distributions payable in Series A PIK Preferred Units) with respect to the Quarter in which the liquidation occurs.

“ Series A Parity Securities ” means any class or series of Partnership Interests that, with respect to distributions on such Partnership Interests or distributions upon liquidation of the Partnership, ranks pari passu with the Series A Preferred Units.

“ Series A PIK Payment Amount ” means (i) for the Quarter in which the Series A Issuance Date occurs with respect to a Series A Preferred Unit, a number of Series A PIK Preferred Units equal to 0.0175 times a fraction, of which the numerator is the number of days from and including the Series A Issuance Date with respect to such Series A Preferred Units to but excluding the date of such Quarter’s end and the denominator is 91, (ii) for each of the four Quarters beginning with the quarter ending September 30, 2013, 0.0175 Series A PIK Preferred Units and (iii) for any Quarter beginning with the quarter ending September 30, 2014, the greater of the number of Series A PIK Preferred Units set forth in clause (ii) above and the number of Series A PIK Preferred Units equal to (a) the amount of distributions in cash for such Quarter that would have been payable with respect to a Series A Preferred Unit if such Series A Preferred Unit had converted at the beginning of the Quarter in respect of which such distributions are being paid into the number of Common Unit(s) into which such Series A Preferred Unit is convertible pursuant to Section 5.12(b)(viii) as of the date of such determination, divided by the Series A Issue Price; plus, in the case of each of clauses (i), (ii) and (iii) above, cash in lieu of any fractional Series A PIK Preferred Units that would be issuable pursuant to this definition.

“ Series A PIK Preferred Payment Date ” has the meaning assigned to such term in Section 5.12(b)(ii)(B).

“ Series A PIK Preferred Units ” has the meaning assigned to such term in Section 5.12(a).

“ Series A Preferred Units ” has the meaning assigned to such term in Section 5.12(a).

“ Series A Preferred Unit Partner ” means, collectively, Purchaser in its capacity as the holder of Units and any Affiliate of Purchaser that holds any Series A Preferred Units or Common Units issued upon conversion of Series A Preferred Units, including, but not limited to, any such Affiliate that (i) acquired Units by transfer from Purchaser or (ii) holds Common Units converted from Series A Preferred Units pursuant to this Agreement.

“ Series A Quarterly Distribution ” has the meaning assigned to such term in Section 5.12(b)(ii)(A).

“ Series A Senior Securities ” means any class or series of Partnership Interests that, with respect to distributions on such Partnership Interests or distributions upon liquidation of the Partnership, ranks senior to the Series A Preferred Units.

“ Series A Unitholder ” means a Record Holder of Series A Preferred Units.

“ Series A Unpaid Cash Distributions ” has the meaning assigned to such term in Section 5.12(b)(ii)(C).

“ Share of Additional Book Basis Derivative Items ” means in connection with any allocation of Additional Book Basis Derivative Items for any taxable period, (i) with respect to the Unitholders holding Common Units, Series A Preferred Units or Subordinated Units, the amount that bears the same ratio to such Additional Book Basis Derivative Items as the Unitholders’ Remaining Net Positive Adjustments as of the end of such taxable period bear to the Aggregate Remaining Net Positive Adjustments as of that time, (ii) with respect to the General Partner (as holder of the General Partner Units), the amount that bears the same ratio to such Additional Book Basis Derivative Items as the General Partner’s Remaining Net Positive Adjustments as of the end of such taxable period bear to the Aggregate Remaining Net Positive Adjustment as of that time, and (iii) with respect to the Partners holding Incentive Distribution Rights, the amount that bears the same ratio to such Additional Book Basis Derivative Items as the Remaining Net Positive Adjustments of the Partners holding the Incentive Distribution Rights as of the end of such taxable period bear to the Aggregate Remaining Net Positive Adjustments as of that time.

“ Special Approval ” means approval by a majority of the members of the Conflicts Committee acting in good faith.

“ Subordinated Unit ” means a Limited Partner Interest having the rights and obligations specified with respect to Subordinated Units in this Agreement. The term “Subordinated Unit” does not include a Common Unit. A Subordinated Unit that is convertible into a Common Unit shall not constitute a Common Unit until such conversion occurs.

“ Subordination Period ” means the period commencing on the Closing Date and ending on the first to occur of the following dates:

(a) the first Business Day following the distribution of Available Cash to Partners pursuant to Section 6.3(a) in respect of any Quarter beginning with the Quarter ending December 31, 2015 in respect of which (i) (A) distributions of Available Cash from Operating Surplus on each of the Outstanding Common Units, Subordinated Units and General Partner Units and any other Outstanding Units that are senior or equal in right of distribution to the Subordinated Units, in each case with respect to each of the three consecutive, non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the sum of the Minimum Quarterly Distribution on all Outstanding Common Units, Subordinated Units and General Partner Units and any other Outstanding Units that are senior or equal in right of distribution to the Subordinated Units, in each case in respect of such periods and (B) the Adjusted Operating Surplus for each of the three consecutive, non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the sum of the Minimum Quarterly Distribution on all of the Common Units, Subordinated Units and General Partner Units and any other Units that are senior or equal in right of distribution to the Subordinated Units, in each case that were Outstanding during such periods on a Fully Diluted Weighted Average Basis, and (ii) there are no Cumulative Common Unit Arrearages.

(b) the first Business Day following the distribution of Available Cash to Partners pursuant to Section 6.3(a) in respect of any Quarter beginning with the Quarter ending December 31, 2013 in respect of which (i) (A) distributions of Available Cash from Operating Surplus on each of the Outstanding Common Units, Subordinated Units and General Partner Units and any other Outstanding Units that are senior or equal in right of distribution to the Subordinated Units, in each case with respect to the four-Quarter period immediately preceding such date equaled or exceeded 150% of the Minimum Quarterly Distribution on all of the Outstanding Common Units, Subordinated Units and General Partner Units and any other Outstanding Units that are senior or equal in right of distribution to the Subordinated Units, in each case in respect of such period, and (B) the Adjusted Operating Surplus for the four-Quarter period immediately preceding such date equaled or exceeded 150% of the sum of the Minimum Quarterly Distribution on all of the Common Units, Subordinated Units and General Partner Units and any other Units that are senior or equal in right of distribution to the Subordinated Units, in each case that were Outstanding during such period on a Fully Diluted Weighted Average Basis, plus the corresponding Incentive Distributions and (ii) there are no Cumulative Common Unit Arrearages.

“ Subsidiary ” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner

of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person, or a combination thereof; or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.

“ Surviving Business Entity ” has the meaning given such term in Section 14.2(b)(ii).

“ Target Distributions ” means, collectively, the First Target Distribution, Second Target Distribution and Third Target Distribution.

“ Third Target Distribution ” means $0.60 per Unit per Quarter (or, with respect to the period commencing on the Closing Date and ending on December 31, 2012, it means the product of $0.60 multiplied by a fraction of which the numerator is equal to the number of days in such period, and of which the denominator is the total number of days in such quarter), subject to adjustment in accordance with Sections 5.11, 6.6 and 6.9.

“ Trading Day ” means a day on which the principal National Securities Exchange on which the referenced Partnership Interests of any class or series are listed or admitted for trading is open for the transaction of business or, if such Partnership Interests are not listed or admitted for trading on any National Securities Exchange, a day on which banking institutions in New York City are not legally required to be closed.

“ Transaction Documents ” has the meaning given such term in Section 7.1(b).

“ transfer ” has the meaning given such term in Section 4.4(a).

“ Transfer Agent ” means such bank, trust company or other Person (including the General Partner or one of its Affiliates) as may be appointed from time to time by the General Partner to act as registrar and transfer agent for any class of Partnership Interests in accordance with the Exchange Act and the rules of the National Securities Exchange on which such Partnership Interests are listed (if any); provided that, if no such Person is appointed as registrar and transfer agent for any class of Partnership Interests, the General Partner shall act as registrar and transfer agent for such class of Partnership Interests.

“ Treasury Regulation ” means the United States Treasury regulations promulgated under the Code.

“ Underwriting Agreement ” means that certain Underwriting Agreement dated as of November 1, 2012 among the IPO Underwriters, the Partnership, the General Partner and the Operating Company providing for the purchase of Common Units by the IPO Underwriters.

“ Underwritten Offering ” means (a) an offering pursuant to a Registration Statement in which Partnership Interests are sold to an underwriter on a firm commitment basis for reoffering to the public (other than the Initial Public Offering), (b) an offering of Partnership Interests

pursuant to a Registration Statement that is a “bought deal” with one or more investment banks, and (c) an “at-the-market” offering pursuant to a Registration Statement in which Partnership Interests are sold to the public through one or more investment banks or managers on a best efforts basis.

“ Unit ” means a Partnership Interest that is designated by the General Partner as a “Unit” and shall include Common Units, Series A Preferred Units and Subordinated Units but shall not include (i) General Partner Units (or the General Partner Interest represented thereby) or (ii) Incentive Distribution Rights.

“ Unit Majority ” means, except as provided in Section 5.12(b)(v), (i) during the Subordination Period, at least a majority of the Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates), voting as a class, and at least a majority of the Outstanding Subordinated Units, voting as a class, and (ii) after the end of the Subordination Period, at least a majority of the Outstanding Common Units.

“ Unitholders ” means the Record Holders of Units.

“ Unpaid MQD ” has the meaning given such term in Section 6.1(c)(i)(B).

“ Unrealized Gain ” attributable to any item of Partnership property means, as of any date of determination, the excess, if any, of (a) the fair market value of such property as of such date (as determined under Section 5.5(d)) over (b) the Carrying Value of such property as of such date (prior to any adjustment to be made pursuant to Section 5.5(d) as of such date).

“ Unrealized Loss ” attributable to any item of Partnership property means, as of any date of determination, the excess, if any, of (a) the Carrying Value of such property as of such date (prior to any adjustment to be made pursuant to Section 5.5(d) as of such date) over (b) the fair market value of such property as of such date (as determined under Section 5.5(d)).

“ Unrecovered Initial Unit Price ” means at any time, with respect to a Unit, the Initial Unit Price less the sum of all distributions constituting Capital Surplus theretofore made in respect of an Initial Common Unit and any distributions of cash (or the Net Agreed Value of any distributions in kind) in connection with the dissolution and liquidation of the Partnership theretofore made in respect of an Initial Common Unit, adjusted as the General Partner determines to be appropriate to give effect to any distribution, subdivision or combination of such Units.

“ Unrestricted Person ” means (a) each Indemnitee, (b) each Partner, (c) each Person who is or was a member, partner, director, officer, employee or agent of any Group Member, a General Partner or any Departing General Partner or any Affiliate of any Group Member, a General Partner or any Departing General Partner and (d) any Person the General Partner designates as an “Unrestricted Person” for purposes of this Agreement from time to time.

“ U.S. GAAP ” means United States generally accepted accounting principles, as in effect from time to time, consistently applied.

“ Withdrawal Opinion of Counsel ” has the meaning given such term in Section 11.1(b).

“ Working Capital Borrowings ” means borrowings incurred pursuant to a credit facility, commercial paper facility or similar financing arrangement that are used solely for working capital purposes or to pay distributions to the Partners; provided that when such borrowings are incurred it is the intent of the borrower to repay such borrowings within 12 months from the date of such borrowings other than from additional Working Capital Borrowings.

Section 1.2 Construction . Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to Articles and Sections of this Agreement; (c) the terms “include,” “includes,” “including” or words of like import shall be deemed to be followed by the words “without limitation”; and (d) the terms “hereof,” “herein” or “hereunder” refer to this Agreement as a whole and not to any particular provision of this Agreement. The table of contents and headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement. The General Partner has the power to construe and interpret this Agreement and to act upon any such construction or interpretation. To the fullest extent permitted by law, any construction or interpretation of this Agreement by the General Partner and any action taken pursuant thereto and any determination made by the General Partner in good faith shall, in each case, be conclusive and binding on all Partners, each other Person or Group who acquires an interest in a Partnership Interest and all other Persons for all purposes.

ARTICLE II.
ORGANIZATION

Section 2.1 Formation . The General Partner and the Organizational Limited Partner have previously formed the Partnership as a limited partnership pursuant to the provisions of the Delaware Act and hereby amend and restate the original Agreement of Limited Partnership of Southcross Energy Partners, L.P. in its entirety. This amendment and restatement shall become effective on the date of this Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties, liabilities and obligations of the Partners and the administration, dissolution and termination of the Partnership shall be governed by the Delaware Act. All Partnership Interests shall constitute personal property of the owner thereof for all purposes.

Section 2.2 Name . The name of the Partnership shall be “Southcross Energy Partners, L.P.”. Subject to applicable law, the Partnership’s business may be conducted under any other name or names as determined by the General Partner, including the name of the General Partner. The words “Limited Partnership,” “L.P.,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purpose of complying with the laws of any jurisdiction that so requires. The General Partner may change the name of the Partnership at any time and from time to time and shall notify the Limited Partners of such change in the next regular communication to the Limited Partners.

Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices . Unless and until changed by the General Partner, the registered office of the Partnership in the State of Delaware shall be located at 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, and the registered agent for service of process on the Partnership in the State of

Delaware at such registered office shall be The Corporation Trust Company. The principal office of the Partnership shall be located at 1700 Pacific Avenue, Suite 2900, Dallas, Texas 75201, or such other place as the General Partner may from time to time designate by notice to the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner determines to be necessary or appropriate. The address of the General Partner shall be 1700 Pacific Avenue, Suite 2900, Dallas, Texas 75201, or such other place as the General Partner may from time to time designate by notice to the Limited Partners.

Section 2.4 Purpose and Business . The purpose and nature of the business to be conducted by the Partnership shall be to (a) engage directly in, or enter into or form, hold and dispose of any corporation, partnership, joint venture, limited liability company or other arrangement to engage indirectly in, any business activity that is approved by the General Partner and that lawfully may be conducted by a limited partnership organized pursuant to the Delaware Act and, in connection therewith, to exercise all of the rights and powers conferred upon the Partnership pursuant to the agreements relating to such business activity, and (b) do anything necessary or appropriate to the foregoing, including the making of capital contributions or loans to a Group Member; provided, however, that the General Partner shall not cause the Partnership to engage, directly or indirectly, in any business activity that the General Partner determines would be reasonably likely to cause the Partnership to be treated as an association taxable as a corporation or otherwise taxable as an entity for federal income tax purposes. To the fullest extent permitted by law, the General Partner shall have no duty or obligation to propose or approve the conduct by the Partnership of any business and may decline to do so free of any fiduciary duty or obligation whatsoever to the Partnership or any Limited Partner and, in declining to so propose or approve, shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity and the General Partner in determining whether to propose or approve the conduct by the Partnership of any business shall be permitted to do so in its sole and absolute discretion.

Section 2.5 Powers . The Partnership shall be empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described in Section 2.4 and for the protection and benefit of the Partnership.

Section 2.6 Term . The term of the Partnership commenced upon the filing of the Certificate of Limited Partnership in accordance with the Delaware Act and shall continue in existence until the dissolution of the Partnership in accordance with the provisions of Article XII. The existence of the Partnership as a separate legal entity shall continue until the cancellation of the Certificate of Limited Partnership as provided in the Delaware Act.

Section 2.7 Title to Partnership Assets . Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner, one or more of its Affiliates or one or more nominees of the General Partner or its Affiliates, as the General Partner

may determine. The General Partner hereby declares and warrants that any Partnership assets for which record title is held in the name of the General Partner or one or more of its Affiliates or one or more nominees of the General Partner or its Affiliates shall be held by the General Partner or such Affiliate or nominee for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however, that the General Partner shall use reasonable efforts to cause record title to such assets (other than those assets in respect of which the General Partner determines that the expense and difficulty of conveyancing makes transfer of record title to the Partnership impracticable) to be vested in the Partnership or one or more of the Partnership’s designated Affiliates as soon as reasonably practicable; provided, further, that, prior to the withdrawal or removal of the General Partner or as soon thereafter as practicable, the General Partner shall use reasonable efforts to effect the transfer of record title to the Partnership and, prior to any such transfer, will provide for the use of such assets in a manner satisfactory to any successor General Partner. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which record title to such Partnership assets is held.

ARTICLE III.
RIGHTS OF LIMITED PARTNERS

Section 3.1 Limitation of Liability . The Limited Partners shall have no liability under this Agreement except as expressly provided in this Agreement or the Delaware Act.

Section 3.2 Management of Business . No Limited Partner, in its capacity as such, shall participate in the operation, management or control (within the meaning of the Delaware Act) of the Partnership’s business, transact any business in the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership. No action taken by any Affiliate of the General Partner or any officer, director, employee, manager, member, general partner, agent or trustee of the General Partner or any of its Affiliates, or any officer, director, employee, manager, member, general partner, agent or trustee of a Group Member, in its capacity as such, shall be deemed to be participating in the control of the business of the Partnership by a limited partner of the Partnership (within the meaning of Section 17-303(a) of the Delaware Act) nor shall any such action affect, impair or eliminate the limitations on the liability of the Limited Partners under this Agreement.

Section 3.3 Rights of Limited Partners .

(a) Each Limited Partner shall have the right, for a purpose reasonably related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable written demand stating the purpose of such demand, and at such Limited Partner’s own expense:

(i) to obtain from the General Partner either (A) the Partnership’s most recent filings with the Commission on Form 10-K and any subsequent filings on Form 10-Q and 8-K or (B) if the Partnership is no longer subject to the reporting requirements of the Exchange Act, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act (provided that the foregoing materials shall be deemed to be available to a Limited Partner in satisfaction of the requirements of this

Section 3.3(a)(i) if posted on or accessible through the Partnership’s or the Commission’s website);

(ii) promptly after its becoming available, to obtain a copy of the Partnership’s federal, state and local income tax returns for each year;

(iii) to obtain a current list of the name and last known business, residence or mailing address of each Record Holder; and

(iv) to obtain a copy of this Agreement and the Certificate of Limited Partnership and all amendments thereto.

(b) To the fullest extent permitted by law, the rights to information granted to the Limited Partners pursuant to Section 3.3(a) replace in their entirety any rights to information provided for in Section 17-305(a) of the Delaware Act and each of the Partners and each other Person or Group who acquires an interest in the Partnership hereby agrees to the fullest extent permitted by law that they do not have any rights as Partners or interest holders to receive any information either pursuant to Sections 17-305(a) of the Delaware Act or otherwise except for the information identified in Section 3.3(a).

(c) The General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner deems reasonable, (i) any information that the General Partner reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure of which the General Partner in good faith believes (A) is not in the best interests of the Partnership Group, (B) could damage the Partnership Group or its business or (C) that any Group Member is required by law or by agreement with any third party to keep confidential (other than agreements with Affiliates of the Partnership the primary purpose of which is to circumvent the obligations set forth in this Section 3.3).

(d) Notwithstanding any other provision of this Agreement or Section 17-305 of the Delaware Act, each of the Partners, each other Person or Group who acquires an interest in a Partnership Interest and each other Person bound by this Agreement hereby agrees to the fullest extent permitted by law that they do not have rights to receive information from the Partnership or any Indemnitee for the purpose of determining whether to pursue litigation or assist in pending litigation against the Partnership or any Indemnitee relating to the affairs of the Partnership except pursuant to the applicable rules of discovery relating to litigation commenced by such Person or Group.

ARTICLE IV.
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP
INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS

Section 4.1 Certificates . Record Holders of Partnership Interests and, where appropriate, Derivative Partnership Interests, shall be recorded in the Partnership Register and ownership of such interests shall be evidenced by a physical certificate or book entry notation in the Partnership Register. Notwithstanding anything to the contrary in this Agreement, unless the General Partner shall determine otherwise in respect of some or all of any or all classes of Partnership Interests, Partnership Interests shall not be evidenced by physical certificates;

certificates; provided, however, with respect to the issuance of any Series A Preferred Units, the Partnership shall issue such Certificates in accordance with Section 5.12(b)(vii). Certificates, if any, shall be executed on behalf of the Partnership by the Chief Executive Officer, President, Chief Financial Officer or any Senior Vice President or Vice President and the Secretary, any Assistant Secretary, or other authorized officer of the General Partner, and shall bear the legend set forth in Section 4.8(e). The signatures of such officers upon a certificate may, to the extent permitted by law, be facsimiles. In case any officer who has signed or whose signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Partnership with the same effect as if he were such officer at the date of its issuance. If a Transfer Agent has been appointed for a class of Partnership Interests, no Certificate for such class of Partnership Interests shall be valid for any purpose until it has been countersigned by the Transfer Agent; provided, however, that, if the General Partner elects to cause the Partnership to issue Partnership Interests of such class in global form, the Certificate shall be valid upon receipt of a certificate from the Transfer Agent certifying that the Partnership Interests have been duly registered in accordance with the directions of the Partnership. Subject to the requirements of Section 6.7(b) and Section 6.7(c), if Common Units are evidenced by Certificates, on or after the date on which Subordinated Units are converted into Common Units pursuant to the terms of Section 5.7, the Record Holders of such Subordinated Units (i) if the Subordinated Units are evidenced by Certificates, may exchange such Certificates for Certificates evidencing the Common Units into which such Record Holder’s Subordinated Units converted, or (ii) if the Subordinated Units are not evidenced by Certificates, shall be issued Certificates evidencing the Common Units into which such Record Holders’ Subordinated Units converted. With respect to any Partnership Interests that are represented by physical certificates, the General Partner may determine that such Partnership Interests will no longer be represented by physical certificates and may, upon written notice to the holders of such Partnership Interests and subject to applicable law, take whatever actions it deems necessary or appropriate to cause such Partnership Interests to be registered in book entry or global form and may cause such physical certificates to be cancelled or deemed cancelled.

Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates .

(a) If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate officers of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number and type of Partnership Interests as the Certificate so surrendered.

(b) The appropriate officers of the General Partner on behalf of the Partnership shall execute and deliver, and the Transfer Agent shall countersign, a new Certificate in place of any Certificate previously issued, if the Record Holder of the Certificate:

(i) makes proof by affidavit, in form and substance satisfactory to the General Partner, that a previously issued Certificate has been lost, destroyed or stolen;

(ii) requests the issuance of a new Certificate before the General Partner has notice that the Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;

(iii) if requested by the General Partner, delivers to the General Partner a bond, in form and substance satisfactory to the General Partner, with surety or sureties and with fixed or open penalty as the General Partner may direct to indemnify the Partnership, the Partners, the General Partner and the Transfer Agent against any claim that may be made on account of the alleged loss, destruction or theft of the Certificate; and

(iv) satisfies any other reasonable requirements imposed by the General Partner or the Transfer Agent.

If a Limited Partner fails to notify the General Partner within a reasonable period of time after such Limited Partner has notice of the loss, destruction or theft of a Certificate, and a transfer of the Limited Partner Interests represented by the Certificate is registered before the Partnership, the General Partner or the Transfer Agent receives such notification, to the fullest extent permitted by law, the Limited Partner shall be precluded from making any claim against the Partnership, the General Partner or the Transfer Agent for such transfer or for a new Certificate.

(c) As a condition to the issuance of any new Certificate under this Section 4.2, the General Partner may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Transfer Agent) reasonably connected therewith.

Section 4.3 Record Holders .

The names and addresses of Unitholders as they appear in the Partnership Register, as applicable, shall be the official list of Record Holders of the Partnership Interests for all purposes. The Partnership and the General Partner shall be entitled to recognize the Record Holder as the Partner with respect to any Partnership Interest and, accordingly, shall not be bound to recognize any equitable or other claim to, or interest in, such Partnership Interest on the part of any other Person or Group, regardless of whether the Partnership or the General Partner shall have actual or other notice thereof, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which such Partnership Interests are listed or admitted to trading. Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other representative capacity for another Person or Group in acquiring and/or holding Partnership Interests, as between the Partnership on the one hand, and such other Person on the other, such representative Person shall be the Limited Partner with respect to such Partnership Interest upon becoming the Record Holder in accordance with Section 10.1(b) and have the rights and obligations of a Partner hereunder as, and to the extent, provided herein, including Section 10.1(c).

Section 4.4 Transfer Generally .

(a) The term “transfer,” when used in this Agreement with respect to a Partnership Interest, shall be deemed to refer to a transaction (i) by which the General Partner assigns all or any part of its General Partner Interest (represented by General Partner Units) to another Person and includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange

or any other disposition by law or otherwise or (ii) by which the holder of a Limited Partner Interest assigns all or any part of such Limited Partner Interest to another Person who is or becomes a Limited Partner as a result thereof, and includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, excluding a pledge, encumbrance, hypothecation or mortgage but including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.

(b) No Partnership Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article IV. Any transfer or purported transfer of a Partnership Interest not made in accordance with this Article IV shall be null and void, and the Partnership shall have no obligation to effect any such transfer or purported transfer.

(c) Nothing contained in this Agreement shall be construed to prevent or limit a disposition by any stockholder, member, partner or other owner of the General Partner or any Limited Partner of any or all of such Person’s shares of stock, membership interests, partnership interests or other ownership interests in the General Partner or such Limited Partner and the term “transfer” shall not include any such disposition.

Section 4.5 Registration and Transfer of Limited Partner Interests .

(a) The General Partner shall maintain, or cause to be maintained, by the Transfer Agent in whole or in part, the Partnership Register on behalf of the Partnership.

(b) The General Partner shall not recognize any transfer of Limited Partner Interests evidenced by Certificates until endorsed Certificates evidencing such Limited Partner Interests are surrendered for registration of transfer. No charge shall be imposed by the General Partner for such transfer; provided, that as a condition to the issuance of any new Certificate under this Section 4.5, the General Partner may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed with respect thereto. Upon surrender of a Certificate for registration of transfer of any Limited Partner Interests evidenced by a Certificate, and subject to the provisions of this Section 4.5(b), the appropriate officers of the General Partner on behalf of the Partnership shall execute and deliver, and in the case of Certificates evidencing Limited Partner Interests for which a Transfer Agent has been appointed, the Transfer Agent shall countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the holder’s instructions, one or more new Certificates evidencing the same aggregate number and type of Limited Partner Interests as was evidenced by the Certificate so surrendered. Upon the proper surrender of a Certificate, such transfer shall be recorded in the Partnership Register.

(c) Upon the receipt of proper transfer instructions from the Record Holder of uncertificated Partnership Interests, such transfer shall be recorded in the Partnership Register.

(d) Except as provided in Section 4.9, by acceptance of any Limited Partner Interests pursuant to a transfer in accordance with this Article IV, each transferee of a Limited Partner Interest (including any nominee, or agent or representative acquiring such Limited Partner Interests for the account of another Person or Group) (i) shall be admitted to the Partnership as a

Limited Partner with respect to the Limited Partner Interests so transferred to such Person when any such transfer or admission is reflected in the Partnership Register and such Person becomes the Record Holder of the Limited Partner Interests so transferred, (ii) shall become bound, and shall be deemed to have agreed to be bound, by the terms of this Agreement, (iii) represents that the transferee has the capacity, power and authority to enter into this Agreement and (iv) makes the consents, acknowledgements and waivers contained in this Agreement, all with or without execution of this Agreement by such Person. The transfer of any Limited Partner Interests and the admission of any new Limited Partner shall not constitute an amendment to this Agreement.

(e) Subject to (i) the foregoing provisions of this Section 4.5, (ii) Section 4.3, (iii) Section 4.8, (iv) with respect to any class or series of Limited Partner Interests, the provisions of any statement of designations or an amendment to this Agreement establishing such class or series, (v) any contractual provisions binding on any Limited Partner and (vi) provisions of applicable law including the Securities Act, Limited Partner Interests shall be freely transferable.

(f) The General Partner and its Affiliates shall have the right at any time to transfer their Subordinated Units and Common Units (whether issued upon conversion of the Subordinated Units or otherwise) to one or more Persons.

Section 4.6 Transfer of the General Partner’s General Partner Interest .

(a) Subject to Section 4.6(c) below, prior to December 31, 2022 the General Partner shall not transfer all or any part of its General Partner Interest (represented by General Partner Units) to a Person unless such transfer (i) has been approved by the prior written consent or vote of the holders of at least a majority of the Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates) or (ii) is of all, but not less than all, of its General Partner Interest to (A) an Affiliate of the General Partner (other than an individual) or (B) another Person (other than an individual) in connection with the merger or consolidation of the General Partner with or into such other Person or the transfer by the General Partner of all or substantially all of its assets to such other Person.

(b) Subject to Section 4.6(c) below, on or after December 31, 2022 the General Partner may transfer all or any part of its General Partner Interest without the approval of any Person.

(c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all or any part of its General Partner Interest to another Person shall be permitted unless (i) the transferee agrees to assume the rights and duties of the General Partner under this Agreement and to be bound by the provisions of this Agreement, (ii) the Partnership receives an Opinion of Counsel that such transfer would not result in the loss of limited liability of any Limited Partner under the Delaware Act or cause the Partnership to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed) and (iii) such transferee also agrees to purchase all (or the appropriate portion thereof, if applicable) of the partnership or membership interest owned by the General Partner as the general partner or managing member, if any, of each other Group Member. In the case of a transfer pursuant to and in compliance with this Section 4.6, the transferee or successor (as the case may be) shall, subject to compliance with the terms of

Section 10.2, be admitted to the Partnership as the General Partner effective immediately prior to the transfer of the General Partner Interest, and the business of the Partnership shall continue without dissolution.

Section 4.7 Transfer of Incentive Distribution Rights . The General Partner or any other holder of Incentive Distribution Rights may transfer any or all of its Incentive Distribution Rights without the approval of any Person.

Section 4.8 Restrictions on Transfers .

(a) Except as provided in Section 4.8(d), notwithstanding the other provisions of this Article IV, no transfer of any Partnership Interests shall be made if such transfer would (i) violate the then applicable federal or state securities laws or rules and regulations of the Commission, any state securities commission or any other governmental authority with jurisdiction over such transfer, (ii) terminate the existence or qualification of the Partnership under the laws of the jurisdiction of its formation, or (iii) cause the Partnership to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed). The Partnership may issue stop transfer instructions to any Transfer Agent in order to implement any restriction on transfer contemplated by this Agreement.

(b) The General Partner may impose restrictions on the transfer of Partnership Interests if it receives an Opinion of Counsel that such restrictions are necessary to (i) avoid a significant risk of the Partnership becoming taxable as a corporation or otherwise becoming taxable as an entity for federal income tax purposes (to the extent not already so treated or taxed) or (ii) preserve the uniformity of the Limited Partner Interests (or any class or classes thereof). The General Partner may impose such restrictions by amending this Agreement; provided, however, that any amendment that would result in the delisting or suspension of trading of any class or series of Limited Partner Interests on the principal National Securities Exchange on which such class of Limited Partner Interests is then listed or admitted to trading must be approved, prior to such amendment being effected, by the holders of at least a majority of the Outstanding Limited Partner Interests of such class.

(c) The transfer of a Subordinated Unit or a Common Unit issued upon conversion of a Subordinated Unit shall be subject to the restrictions imposed by Section 6.7(b) and Section 6.7(c).

(d) Except for Section 4.9, nothing in this Agreement shall preclude the settlement of any transactions involving Partnership Interests entered into through the facilities of any National Securities Exchange on which such Partnership Interests are listed or admitted to trading.

(e) Each certificate or book entry evidencing Partnership Interests shall bear a conspicuous legend in substantially the following form:

SECURITIES LAWS OR RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF SOUTHCROSS ENERGY PARTNERS, L.P. UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE SOUTHCROSS ENERGY PARTNERS, L.P. TO BE TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). THE GENERAL PARTNER OF SOUTHCROSS ENERGY PARTNERS, L.P. MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF SOUTHCROSS ENERGY PARTNERS, L.P. BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THIS SECURITY MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS ON ITS TRANSFER PROVIDED IN THE PARTNERSHIP AGREEMENT. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS SECURITY TO THE SECRETARY OF THE GENERAL PARTNER AT THE PRINCIPAL EXECUTIVE OFFICES OF THE PARTNERSHIP. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.

(f) Any Transfer of a Conversion Unit shall be subject to the restrictions imposed by Section 6.10.

Section 4.9 Eligibility Certificates; Ineligible Holders .

(a) The General Partner may upon demand or on a regular basis require Limited Partners, and transferees of Limited Partner Interests in connection with a transfer, to execute an Eligibility Certificate or provide other information as is necessary for the General Partner to determine if any such Limited Partners or transferees are Ineligible Holders.

(b) If any Limited Partner (or its beneficial owners) fails to furnish to the General Partner within 30 days of its request an Eligibility Certificate and other information related thereto, or if upon receipt of such Eligibility Certificate or other requested information the General Partner determines that a Limited Partner or a transferee of a Limited Partner is an Ineligible Holder, the Limited Partner Interests owned by such Limited Partner shall be subject to redemption in accordance with the provisions of Section 4.10 or the General Partner may refuse to effect the transfer of the Limited Partner Interests to such transferee. In addition, the General Partner shall be substituted for any Limited Partner that is an Ineligible Holder as the Limited Partner in respect of the Ineligible Holder’s Limited Partner Interests.

(c) The General Partner shall, in exercising voting rights in respect of Limited Partner Interests held by it on behalf of Ineligible Holders, distribute the votes in the same ratios as the votes of Limited Partners (including the General Partner and its Affiliates) in respect of Limited

Partner Interests other than those of Ineligible Holders are cast, either for, against or abstaining as to the matter.

(d) Upon dissolution of the Partnership, an Ineligible Holder shall have no right to receive a distribution in kind pursuant to Section 12.4 but shall be entitled to the cash equivalent thereof, and the Partnership shall provide cash in exchange for an assignment of the Ineligible Holder’s share of any distribution in kind. Such payment and assignment shall be treated for Partnership purposes as a purchase by the Partnership from the Ineligible Holder of its Limited Partner Interest (representing the right to receive its share of such distribution in kind).

(e) At any time after an Ineligible Holder can and does certify that it no longer is an Ineligible Holder, it may, upon application to the General Partner, request that with respect to any Limited Partner Interests of such Ineligible Holder not redeemed pursuant to Section 4.10, such Ineligible Holder upon approval of the General Partner, shall no longer constitute an Ineligible Holder and the General Partner shall cease to be deemed to be the Limited Partner in respect of such Limited Partner Interests.

(f) If at any time a transferee of a Limited Partner Interest fails to furnish an Eligibility Certificate or any other information requested by the General Partner pursuant to Section 4.9 within 30 days of such request, or if upon receipt of such Eligibility Certificate or other information the General Partner determines, with the advice of counsel, that such transferee is an Ineligible Holder, the Partnership may, unless the transferee establishes to the satisfaction of the General Partner that such transferee is not an Ineligible Holder, prohibit and void the transfer, including by placing a stop order with the Transfer Agent.

Section 4.10 Redemption of Partnership Interests of Ineligible Holders .

(a) If at any time a Limited Partner fails to furnish an Eligibility Certificate or any other information requested within the period of time specified in Section 4.9, or if upon receipt of such Eligibility Certificate or other information the General Partner determines, with the advice of counsel, that a Limited Partner is an Ineligible Holder, the Partnership may, unless the Limited Partner establishes to the satisfaction of the General Partner that such Limited Partner is not an Ineligible Holder or has transferred his Limited Partner Interests to a Person who is not an Ineligible Holder and who furnishes an Eligibility Certificate to the General Partner prior to the date fixed for redemption as provided below, redeem the Limited Partner Interest of such Limited Partner as follows:

(i) The General Partner shall, not later than the 30th day before the date fixed for redemption, give notice of redemption to the Limited Partner, at such Limited Partner’s last address designated on the records of the Partnership or the Transfer Agent, by registered or certified mail, postage prepaid. The notice shall be deemed to have been given when so mailed. The notice shall specify the Redeemable Interests, the date fixed for redemption, the place of payment, that payment of the redemption price will be made upon redemption of the Redeemable Interests (or, if later in the case of Redeemable Interests evidenced by Certificates, upon surrender of the Certificate evidencing the Redeemable Interests) and that on and after the date fixed for redemption no further

allocations or distributions to which such Limited Partner would otherwise be entitled in respect of the Redeemable Interests will accrue or be made.

(ii) The aggregate redemption price for Redeemable Interests shall be an amount equal to the Current Market Price (the date of determination of which shall be the date fixed for redemption) of Limited Partner Interests of the class to be so redeemed multiplied by the number of Limited Partner Interests of each such class included among the Redeemable Interests. The redemption price shall be paid, as determined by the General Partner, in cash or by delivery of a promissory note of the Partnership in the principal amount of the redemption price, bearing interest at the rate of 5% annually and payable in three equal annual installments of principal together with accrued interest, commencing one year after the redemption date.

(iii) The Limited Partner or such Limited Partner’s duly authorized representative shall be entitled to receive the payment for the Redeemable Interests at the place of payment specified in the notice of redemption on the redemption date (or, if later in the case of Redeemable Interests evidenced by Certificates, upon surrender by or on behalf of the Limited Partner or Transferee at the place specified in the notice of redemption, of the Certificate evidencing the Redeemable Interests, duly endorsed in blank or accompanied by an assignment duly executed in blank).

(iv) After the redemption date, Redeemable Interests shall no longer constitute issued and Outstanding Limited Partner Interests.

(b) The provisions of this Section 4.10 shall also be applicable to Limited Partner Interests held by a Limited Partner as nominee, agent or representative of a Person determined to be an Ineligible Holder.

(c) Nothing in this Section 4.10 shall prevent the recipient of a notice of redemption from transferring his Limited Partner Interest before the redemption date if such transfer is otherwise permitted under this Agreement and the transferor provides notice of such transfer to the General Partner. Upon receipt of notice of such a transfer, the General Partner shall withdraw the notice of redemption, provided the transferee of such Limited Partner Interest certifies to the satisfaction of the General Partner that such transferee is not an Ineligible Holder. If the transferee fails to make such certification within 30 days after the request and, in any event, before the redemption date, such redemption shall be effected from the transferee on the original redemption date.

ARTICLE V.
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1 Organizational Contributions . In connection with the formation of the Partnership under the Delaware Act, the General Partner made an initial Capital Contribution to the Partnership in the amount of $20.00 for a 2% General Partner Interest in the Partnership and has been admitted as the General Partner of the Partnership, and the Organizational Limited Partner made an initial Capital Contribution to the Partnership in the amount of $980.00 for a 98% Limited Partner Interest in the Partnership and has been admitted as a Limited Partner of the

Partnership. As of the Closing Date, a portion of the limited partner interests of the Organizational Limited Partner issued in connection with the Partnership’s formation shall be partially redeemed as provided in the Contribution Agreement and the Organizational Limited Partner shall continue as a Limited Partner of the Partnership and the initial Capital Contributions of the Organizational Limited Partner shall be refunded, and all interest or other profit that may have resulted from the investment or other use of such initial Capital Contributions shall be allocated and distributed to the Organizational Limited Partner. The Organizational Limited Partner hereby continues as a limited partner of the Partnership with respect to the portion of its interest that is not partially redeemed.

Section 5.2 Contributions by the General Partner and its Affiliates .

(a) On the Closing Date and pursuant to the Contribution Agreement, the General Partner contributed to the Partnership, as a Capital Contribution, a 2.0% interest in the Operating Company, in exchange for (i) 498,518 General Partner Units representing a continuation of its 2% General Partner Interest (after giving effect to any exercise of the Over-Allotment Option), subject to all of the rights, privileges and duties of the General Partner under this Agreement and (ii) the Incentive Distribution Rights. On the Closing Date and pursuant to the Contribution Agreement, the Organizational Limited Partner contributed to the Partnership, as a Capital Contribution, a 98.0% interest in the Operating Company, in exchange for (i) 3,213,713 Common Units, representing a 12.9% Limited Partner Interest in the Partnership, (ii) 12,213,713 Subordinated Units, representing a 49.0% Limited Partner Interest in the Partnership, (iii) the Partnership’s assumption of $265.0 million of the Organizational Limited Partner’s existing debt, (iv) the right to receive $7.5 million sourced from new debt incurred by the Partnership and (v) the right to receive $38.5 million in cash, a portion of which will be used to reimburse the Organizational Limited Partner for certain capital expenditures incurred with respect to the assets it contributed to the Partnership pursuant to Treasury Regulation Section 1.707-4(d).

(b) Upon the issuance of any additional Limited Partner Interests by the Partnership (other than (i) the Common Units issued in the Initial Public Offering, (ii) the Common Units, Subordinated Units and Incentive Distribution Rights issued pursuant to Section 5.2(a), (iii) any Common Units issued pursuant to Section 5.11 and (iv) any Common Units issued upon the conversion of any Partnership Interests), the General Partner may, in order to maintain the Percentage Interest with respect to its General Partner Interest, make additional Capital Contributions in an amount equal to the product obtained by multiplying (A) the quotient determined by dividing (x) the Percentage Interest with respect to the General Partner Interests immediately prior to the issuance of such additional Limited Partner Interests by the Partnership by (y) 100% less the Percentage Interest with respect to the General Partner Interest immediately prior to the issuance of such additional Limited Partner Interests by the Partnership times (B) the gross amount contributed to the Partnership by the Limited Partners (before deduction of underwriters’ discounts and commissions) in exchange for such additional Limited Partner Interests. Any Capital Contribution pursuant to this Section 5.2(b) shall be evidenced by the issuance to the General Partner of a proportionate number of additional General Partner Units.

Section 5.3 Contributions by Limited Partners unaffiliated with the General Partner.

(a) On the Closing Date and pursuant to the Underwriting Agreement, each IPO Underwriter

contributed cash to the Partnership in exchange for the issuance by the Partnership of Common Units to each IPO Underwriter, all as set forth in the Underwriting Agreement.

(b) Upon the exercise, if any, of the Over-Allotment Option, each IPO Underwriter shall contribute cash to the Partnership on the Option Closing Date in exchange for the issuance by the Partnership of Common Units to each IPO Underwriter, all as set forth in the Underwriting Agreement. Upon receipt by the Partnership of the Capital Contributions from the Underwriters as provided in this Section 5.3(b), the Partnership shall use such cash to redeem from the Organizational Limited Partner that number of Common Units held by the Organizational Limited Partner equal to the number of Common Units issued to the Underwriters as provided in this Section 5.3(b).

(c) No Limited Partner Interests will be issued or issuable as of or at the Closing Date other than (i) the Common Units and Subordinated Units issued to Holdings, pursuant to subparagraph (a) of Section 5.2, (ii) the Common Units issued to the IPO Underwriters as described in subparagraphs (a) and (b) of this Section 5.3 and (iii) the Incentive Distribution Rights issued to the General Partner.

(d) No Limited Partner will be required to make any additional Capital Contribution to the Partnership pursuant to this Agreement.

Section 5.4 Interest and Withdrawal.

No interest shall be paid by the Partnership on Capital Contributions. No Partner shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent, if any, that distributions made pursuant to this Agreement or upon termination of the Partnership may be considered as such by law and then only to the extent provided for in this Agreement. Except to the extent expressly provided in this Agreement, no Partner shall have priority over any other Partner either as to the return of Capital Contributions or as to profits, losses or distributions. Any such return shall be a compromise to which all Partners agree within the meaning of Section 17-502(b) of the Delaware Act.

Section 5.5 Capital Accounts .

(a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership Interests held by a nominee, agent or representative in any case in which such nominee, agent or representative has furnished the identity of such owner to the Partnership in accordance with Section 6031(c) of the Code or any other method acceptable to the General Partner) owning a Partnership Interest a separate Capital Account with respect to such Partnership Interest in accordance with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). The initial Capital Account balance attributable to the General Partner Units issued to the General Partner pursuant to Section 5.2(a) shall equal the Net Agreed Value of the Capital Contribution specified in Section 5.2(a), which shall be deemed to equal the product of the number of General Partner Units issued to the General Partner pursuant to Section 5.2(a) and the Initial Unit Price for each Common Unit (and the initial Capital Account balance attributable to each General Partner Unit shall equal the Initial Unit Price for each Common Unit). The initial Capital Account balance attributable to the Common Units and Subordinated Units issued to

Holdings pursuant to Section 5.2(a) shall equal the respective Net Agreed Value of the Capital Contributions specified in Section 5.2(a), which shall be deemed to equal the product of the number of Common Units and Subordinated Units issued to Holdings pursuant to Section 5.2(a) and the Initial Unit Price for each such Common Unit and Subordinated Unit (and the initial Capital Account balance attributable to each such Common Unit and Subordinated Unit shall equal its Initial Unit Price). The initial Capital Account balance attributable to the Common Units issued to the IPO Underwriters pursuant to Section 5.3(a) shall equal the product of the number of Common Units so issued to the IPO Underwriters and the Initial Unit Price for each Common Unit (and the initial Capital Account balance attributable to each such Common Unit shall equal its Initial Unit Price). The initial Capital Account attributable to the Incentive Distribution Rights shall be zero. Thereafter, the Capital Account shall in respect of each such Partnership Interest be increased by (i) the amount of all Capital Contributions made to the Partnership with respect to such Partnership Interest and (ii) all items of Partnership income and gain (including income and gain exempt from tax) computed in accordance with Section 5.5(b) and allocated with respect to such Partnership Interest pursuant to Section 6.1, and decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed distributions of cash or property (other than Series A PIK Preferred Units) made with respect to such Partnership Interest and (y) all items of Partnership deduction and loss computed in accordance with Section 5.5(b) and allocated with respect to such Partnership Interest pursuant to Section 6.1. For the avoidance of doubt, the Series A Preferred Units will be treated as a partnership interest in the Partnership that is “convertible equity” within the meaning of Treasury Regulation Section 1.721-2(g)(3), and, therefore, each holder of a Series A Preferred Unit will be treated as a partner in the Partnership. The initial Capital Account balance in respect of each Series A Preferred Unit issued on the Series A Issuance Date shall be the Series A Issue Price, and the initial Capital Account balance in respect of each Series A PIK Preferred Unit shall be zero. The Capital Account balance of each holder of Series A Preferred Units in respect of its Series A Preferred Units shall not be increased or decreased as a result of the accrual and accumulation of an unpaid distribution pursuant to Section 5.12(b)(ii)(A) or Section 5.12(b)(ii)(B) in respect of such Series A Preferred Units except as otherwise provided in this Agreement.

(b) For purposes of computing the amount of any item of income, gain, loss or deduction that is to be allocated pursuant to Article VI and is to be reflected in the Partners’ Capital Accounts, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for federal income tax purposes (including any method of depreciation, cost recovery or amortization used for that purpose), provided, that:

(i) Solely for purposes of this Section 5.5, the Partnership shall be treated as owning directly its proportionate share (as determined by the General Partner based upon the provisions of the applicable Group Member Agreement or governing, organizational or similar documents) of all property owned by (x) any other Group Member that is classified as a partnership or disregarded entity for federal income tax purposes and (y) any other partnership, limited liability company, unincorporated business or other entity classified as a partnership or disregarded entity for federal income tax purposes of which a Group Member is, directly or indirectly, a partner, member or other equity holder.

(ii) All fees and other expenses incurred by the Partnership to promote the sale of (or to sell) a Partnership Interest that can neither be deducted nor amortized under Section 709 of the Code, if any, shall, for purposes of Capital Account maintenance, be treated as an item of deduction at the time such fees and other expenses are incurred and shall be allocated among the Partners pursuant to Section 6.1.

(iii) Except as otherwise provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and deduction shall be made without regard to any election under Section 754 of the Code that may be made by the Partnership. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment in the Capital Accounts shall be treated as an item of gain or loss.

(iv) Any income, gain or loss attributable to the taxable disposition of any Partnership property shall be determined as if the adjusted basis of such property as of such date of disposition were equal in amount to the Partnership’s Carrying Value with respect to such property as of such date.

(v) An item of income of the Partnership that is described in Section 705(a)(1)(B) of the Code (with respect to items of income that are exempt from tax) shall be treated as an item of income for the purpose of this Section 5.5(b), and an item of expense of the Partnership that is described in Section 705(a)(2)(B) of the Code (with respect to expenditures that are not deductible and not chargeable to capital accounts), shall be treated as an item of deduction for the purpose of this Section 5.5(b).

(vi) In accordance with the requirements of Section 704(b) of the Code, any deductions for depreciation, cost recovery or amortization attributable to any Contributed Property shall be determined as if the adjusted basis of such property on the date it was acquired by the Partnership were equal to the Agreed Value of such property. Upon an adjustment pursuant to Section 5.5(d) to the Carrying Value of any Partnership property subject to depreciation, cost recovery or amortization, any further deductions for such depreciation, cost recovery or amortization attributable to such property shall be determined under the rules prescribed by Treasury Regulation Section 1.704-3(d)(2) as if the adjusted basis of such property were equal to the Carrying Value of such property immediately following such adjustment.

(vii) The Gross Liability Value of each Liability of the Partnership described in Treasury Regulation Section 1.752-7(b)(3)(i) shall be adjusted at such times as provided in this Agreement for an adjustment to Carrying Values. The amount of any such adjustment shall be treated for purposes hereof as an item of loss (if the adjustment increases the Carrying Value of such Liability of the Partnership) or an item of gain (if the adjustment decreases the Carrying Value of such Liability of the Partnership).

(c) (i) The transferee of a Partnership Interest shall succeed to a Pro Rata portion of the Capital Account of the transferor relating to the Partnership Interest so transferred.

(ii) Subject to Section 6.7(c), immediately prior to the transfer of a Subordinated Unit or of a Subordinated Unit that has converted into a Common Unit pursuant to Section 5.7 by a holder thereof (other than a transfer to an Affiliate unless the General Partner elects to have this subparagraph 5.5(c)(ii) apply), the Capital Account maintained for such Person with respect to its Subordinated Units or converted Subordinated Units will (A) first, be allocated to the Subordinated Units or converted Subordinated Units to be transferred in an amount equal to the product of (x) the number of such Subordinated Units or converted Subordinated Units to be transferred and (y) the Per Unit Capital Amount for a Common Unit, and (B) second, any remaining balance in such Capital Account will be retained by the transferor, regardless of whether it has retained any converted Subordinated Units (“Retained Converted Subordinated Units”) or Subordinated Units. Following any such allocation, the transferor’s Capital Account, if any, maintained with respect to the retained Subordinated Units or Retained Converted Subordinated Units, if any, will have a balance equal to the amount allocated under clause (B) hereinabove, and the transferee’s Capital Account established with respect to the transferred Subordinated Units or converted Subordinated Units will have a balance equal to the amount allocated under clause (A) hereinabove.

(d) (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on (A) an issuance of additional Partnership Interests for cash or other property, (B) the issuance of additional Partnership Interests for the provision of services, (C) the issuance by the Partnership of a “noncompensatory option” within the meaning of Treasury Regulations Sections 1.721-2(f) and 1.761-3(b)(2) which is not treated as a partnership interest pursuant to Treasury Regulations Section 1.761-3(a) (other than an issuance of Series A PIK Preferred Units pursuant to Section 5.12(b)(ii)), or (D) the conversion of a General Partner’s Combined Interest to Common Units pursuant to Section 11.3(b) , the Capital Account of each Partner and the Carrying Value of each Partnership property shall be adjusted immediately prior to such event to reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each such property for an amount equal to its fair market value immediately prior to such event and had been allocated pursuant to Section 6.1(c) and Section 6.1(d) in the same manner as any item of gain or loss actually recognized following an event giving rise to the dissolution of the Partnership would have been allocated; provided , however , that in the event of an issuance of Partnership Interests for a de minimis amount of cash or Contributed Property, or in the event of an issuance of a de minimis amount of Partnership Interests as consideration for the provision of services, the General Partner may determine that such adjustments are unnecessary for the proper administration of the Partnership. The General Partner shall adjust such Carrying Values in respect of the contributions that are made on the Closing Date. In determining such Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair market value of all Partnership assets immediately prior to such event shall be determined by the General Partner using such reasonable method of valuation as it may adopt (taking into account Section 7701(g) of the Code); provided , however , that the General Partner, in arriving at such valuation, must take fully into account the fair market value of the Partnership Interests of all Partners at such time and must make such adjustments to such valuation as required by Treasury Regulation Section 1.704-1(b)(2)(iv)(h)(2). The General Partner shall allocate such aggregate value among the assets of the Partnership in such manner as it determines in its discretion to be reasonable.

(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed distribution to a Partner of any Partnership property (other than a distribution of cash that is not in redemption or retirement of a Partnership Interest), the Capital Accounts of all Partners and the Carrying Value of all Partnership property shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized in a sale of such property immediately prior to such distribution for an amount equal to its fair market value, and had been allocated to the Partners, at such time, pursuant to Section 6.1(c) and Section 6.1(d) in the same manner as any item of gain or loss actually recognized following an event giving rise to the dissolution of the Partnership would have been allocated. In determining such Unrealized Gain or Unrealized Loss the aggregate fair market value of all Partnership assets (including cash or cash equivalents) immediately prior to a distribution shall (A) in the case of an actual distribution that is not made pursuant to Section 12.4 or in the case of a deemed distribution, be determined and allocated in the same manner as that provided in Section 5.5(d)(i) or (B) in the case of a liquidating distribution pursuant to Section 12.4 , be determined and allocated by the Liquidator using such method of valuation as it may adopt.

(iii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(s), immediately after the conversion of a Series A Preferred Unit into Common Units in accordance with Section 5.12(b)(viii) , the Capital Account of each Partner and the Carrying Value of each Partnership property shall be adjusted to reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each such property for an amount equal to its fair market value immediately after such conversion and (A) first, all Unrealized Gain (if the Capital Account of each such Conversion Unit is less than the Per Unit Capital Account for a then Outstanding Initial Common Unit) or Unrealized Loss (if the Capital Account of each such Conversion Unit is greater than the Per Unit Capital Account for a then Outstanding Initial Common Unit) had been allocated Pro Rata to each Partner holding Conversion Units received upon such conversion until the Capital Account of each such Conversion Unit is equal to the Per Unit Capital Amount for a then Outstanding Initial Common Unit; and (B) second, any remaining Unrealized Gain or Unrealized Loss had been allocated to the Partners at such time pursuant to Section 6.1(c) and Section 6.1(d) . In determining such Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair market value of all Partnership assets immediately after the conversion of a Series A Preferred Unit shall be determined by the General Partner using such reasonable method of valuation as it may adopt (taking into account Section 7701(g) of the Code); provided , however , that the General Partner, in arriving at such valuation, must take fully into account the fair market value of the Partnership Interests of all Partners at such time and must make such adjustments to such valuation as required by Treasury Regulation Section 1.704-1(b)(2)(iv)(h)(2). The General Partner shall allocate such aggregate value among the assets of the Partnership in such manner as it determines in its discretion to be reasonable. If, after making the allocations of Unrealized Gain and Unrealized Loss as set forth above in this Section 5.5(d)(iii) , the Capital Account of each Partner with respect to each Conversion Unit received upon such conversion of the Series A Preferred Unit is less than the Per

Unit Capital Amount for a then Outstanding Initial Common Unit, then Capital Account balances shall be reallocated between the Partners holding Common Units (other than Conversion Units) and Partners holding Conversion Units so as to cause the Capital Account of each Partner holding a Conversion Unit to equal, on a per Unit basis with respect to each such Conversion Unit, the Per Unit Capital Amount for a then Outstanding Initial Common Unit.

Section 5.6 Issuances of Additional Partnership Interests .

(a) The Partnership may issue additional Partnership Interests (other than General Partner Interests issued pursuant to Section 5.2(b)) and Derivative Partnership Interests for any Partnership purpose at any time and from time to time to such Persons for such consideration and on such terms and conditions as the General Partner shall determine, all without the approval of any Limited Partners.

(b) Each additional Partnership Interest authorized to be issued by the Partnership pursuant to Section 5.6(a) may be issued in one or more classes, or one or more series of any such classes, with such designations, preferences, rights, powers and duties (which may be senior to existing classes and series of Partnership Interests), as shall be fixed by the General Partner, including (i) the right to share in Partnership profits and losses or items thereof; (ii) the right to share in Partnership distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the Partnership may or shall be required to redeem the Partnership Interest; (v) whether such Partnership Interest is issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi) the terms and conditions upon which each Partnership Interest will be issued, evidenced by Certificates and assigned or transferred; (vii) the method for determining the Percentage Interest as to such Partnership Interest; and (viii) the right, if any, of each such Partnership Interest to vote on Partnership matters, including matters relating to the relative rights, preferences and privileges of such Partnership Interest.

(c) The General Partner shall take all actions that it determines to be necessary or appropriate in connection with (i) each issuance of Partnership Interests and Derivative Partnership Interests pursuant to this Section 5.6, (ii) the conversion of the Combined Interest into Units pursuant to the terms of this Agreement, (iii) the issuance of Common Units pursuant to Section 5.11, (iv) reflecting admission of such additional Limited Partners in the Partnership Register as the Record Holders of such Limited Partner Interests and (v) all additional issuances of Partnership Interests and Derivative Partnership Interests. The General Partner shall determine the relative rights, powers and duties of the holders of the Units or other Partnership Interests or Derivative Partnership Interests being so issued. The General Partner shall do all things necessary to comply with the Delaware Act and is authorized and directed to do all things that it determines to be necessary or appropriate in connection with any future issuance of Partnership Interests or Derivative Partnership Interests or in connection with the conversion of the Combined Interest into Units pursuant to the terms of this Agreement, including compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency or any National Securities Exchange on which the Units or other Partnership Interests are listed or admitted to trading.

(d) No fractional Units shall be issued by the Partnership.

Section 5.7 Conversion of Subordinated Units .

(a) All of the Subordinated Units shall convert into Common Units on a one-for-one basis on the expiration of the Subordination Period.

(b) A Subordinated Unit that has converted into a Common Unit shall be subject to the provisions of Section 6.7.

Section 5.8 Limited Preemptive Right . Except as provided in this Section 5.8 and in Section 5.2 and Section 5.11 or as otherwise provided in a separate agreement by the Partnership, no Person shall have any preemptive, preferential or other similar right with respect to the issuance of any Partnership Interest, whether unissued, held in the treasury or hereafter created. The General Partner shall have the right, which it may from time to time assign in whole or in part to any of its Affiliates, to purchase Partnership Interests from the Partnership whenever, and on the same terms that, the Partnership issues Partnership Interests to Persons other than the General Partner and its Affiliates, to the extent necessary to maintain the Percentage Interests of the General Partner and its Affiliates equal to that which existed immediately prior to the issuance of such Partnership Interests.

Section 5.9 Splits and Combinations .

(a) Subject to Section 5.9(e), Section 6.6 and Section 6.9 (dealing with adjustments of distribution levels), the Partnership may make a Pro Rata distribution of Partnership Interests to all Record Holders or may effect a subdivision or combination of Partnership Interests so long as, after any such event, each Partner shall have the same Percentage Interest in the Partnership as before such event, and any amounts calculated on a per Unit basis (including any Common Unit Arrearage or Cumulative Common Unit Arrearage) or stated as a number of Units (including the number of Subordinated Units that may convert prior to the end of the Subordination Period and including the number of Common Units into which Series A Preferred Units may convert) are proportionately adjusted.

(b) Whenever such a distribution, subdivision or combination of Partnership Interests is declared, the General Partner shall select a Record Date as of which the distribution, subdivision or combination shall be effective and shall send notice thereof at least 20 days prior to such Record Date to each Record Holder as of a date not less than 10 days prior to the date of such notice (or such shorter periods as required by applicable law). The General Partner also may cause a firm of independent public accountants selected by it to calculate the number of Partnership Interests to be held by each Record Holder after giving effect to such distribution, subdivision or combination. The General Partner shall be entitled to rely on any certificate provided by such firm as conclusive evidence of the accuracy of such calculation.

(c) If a Pro Rata distribution of Partnership Interests, or a subdivision or combination of Partnership Interests, is made as contemplated in this Section 5.9, the number of General Partner Units constituting the Percentage Interest of the General Partner (as determined immediately prior to the Record Date for such distribution, subdivision or combination) shall be

appropriately adjusted as of the date of payment of such distribution, or the effective date of such subdivision or combination, to maintain such Percentage Interest of the General Partner.

(d) Promptly following any such distribution, subdivision or combination, the Partnership may issue Certificates or uncertificated Partnership Interests to the Record Holders of Partnership Interests as of the applicable Record Date representing the new number of Partnership Interests held by such Record Holders, or the General Partner may adopt such other procedures that it determines to be necessary or appropriate to reflect such changes. If any such combination results in a smaller total number of Partnership Interests Outstanding, the Partnership shall require, as a condition to the delivery to a Record Holder of Partnership Interests represented by Certificates, the surrender of any Certificate held by such Record Holder immediately prior to such Record Date.

(e) The Partnership shall not issue fractional Units or fractional General Partner Units upon any distribution, subdivision or combination of Units. If a distribution, subdivision or combination of Units would result in the issuance of fractional Units and General Partner Units but for the provisions of Section 5.6(d) and this Section 5.9(e), each fractional Unit and General Partner Unit shall be rounded to the nearest whole Unit or General Partner Unit (with fractional Units or General Partner Units equal to or greater than a 0.5 Unit or General Partner Unit being rounded to the next higher Unit or General Partner Unit).

Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests . All Limited Partner Interests issued pursuant to, and in accordance with the requirements of, this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership, except as such non-assessability may be affected by Sections 17-303, 17-607 or 17-804 of the Delaware Act.

Section 5.11 Issuance of Common Units in Connection with Reset of Incentive Distribution Rights .

(a) Subject to the provisions of this Section 5.11, the holder of the Incentive Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a majority in interest of the Incentive Distribution Rights) shall have the right, at any time when there are no Subordinated Units Outstanding and the Partnership has made a distribution pursuant to Section 6.4(b)(v) for each of the four most recently completed Quarters and the amount of each such distribution did not exceed Adjusted Operating Surplus for such Quarter, to make an election (the “IDR Reset Election”) to cause the Minimum Quarterly Distribution and the Target Distributions to be reset in accordance with the provisions of Section 5.11(e) and, in connection therewith, the holder or holders of the Incentive Distribution Rights will become entitled to receive their respective proportionate share of a number of Common Units (the “IDR Reset Common Units”) derived by dividing (i) the average amount of the aggregate cash distributions made by the Partnership for the two full Quarters immediately preceding the giving of the Reset Notice (as defined in Section 5.11(b)) in respect of the Incentive Distribution Rights by (ii) the average of the amount of cash distributions made by the Partnership in respect of each Common Unit for the two full Quarters immediately preceding the giving of the Reset Notice (the number of Common Units determined by such quotient is referred to herein as the “Aggregate Quantity of IDR Reset Common Units”). If at the time of

any IDR Reset Election the General Partner and its Affiliates are not the holders of a majority interest of the Incentive Distribution Rights, then the IDR Reset Election shall be subject to the prior written concurrence of the General Partner that the conditions described in the immediately preceding sentence have been satisfied. Upon the issuance of such IDR Reset Common Units, the Partnership will issue to the General Partner that number of additional General Partner Units equal to the product of (x) the quotient obtained by dividing (A) the Percentage Interest of the General Partner immediately prior to such issuance by (B) a percentage equal to 100% less such Percentage Interest by (y) the number of such IDR Reset Common Units, and the General Partner shall not be obligated to make any additional Capital Contribution to the Partnership in exchange for such issuance. The making of the IDR Reset Election in the manner specified in this Section 5.11 shall cause the Minimum Quarterly Distribution and the Target Distributions to be reset in accordance with the provisions of Section 5.11(e) and, in connection therewith, the holder or holders of the Incentive Distribution Rights will become entitled to receive IDR Reset Common Units and the General Partner will become entitled to receive General Partner Units on the basis specified above, without any further approval required by the General Partner or the Unitholders other than as set forth in this Section 5.11(a), at the time specified in Section 5.11(c) unless the IDR Reset Election is rescinded pursuant to Section 5.11(d).

(b) To exercise the right specified in Section 5.11(a), the holder of the Incentive Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a majority in interest of the Incentive Distribution Rights) shall deliver a written notice (the “Reset Notice”) to the Partnership. Within 10 Business Days after the receipt by the Partnership of such Reset Notice, the Partnership shall deliver a written notice to the holder or holders of the Incentive Distribution Rights of the Partnership’s determination of the Aggregate Quantity of IDR Reset Common Units that each holder of Incentive Distribution Rights will be entitled to receive.

(c) The holder or holders of the Incentive Distribution Rights will be entitled to receive the Aggregate Quantity of IDR Reset Common Units and the General Partner will be entitled to receive the related additional General Partner Units on the fifteenth Business Day after receipt by the Partnership of the Reset Notice; provided, however, that the issuance of IDR Reset Common Units to the holder or holders of the Incentive Distribution Rights shall not occur prior to the approval of the listing or admission for trading of such IDR Reset Common Units by the principal National Securities Exchange upon which the Common Units are then listed or admitted for trading if any such approval is required pursuant to the rules and regulations of such National Securities Exchange.

(d) If the principal National Securities Exchange upon which the Common Units are then traded has not approved the listing or admission for trading of the IDR Reset Common Units to be issued pursuant to this Section 5.11 on or before the 30th calendar day following the Partnership’s receipt of the Reset Notice and such approval is required by the rules and regulations of such National Securities Exchange, then the holder of the Incentive Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a majority in interest of the Incentive Distribution Rights) shall have the right to either rescind the IDR Reset Election or elect to receive other Partnership Interests having such terms as the General Partner may approve, with the approval of the Conflicts Committee, that will provide (i) the same economic value, in the aggregate, as the Aggregate Quantity of IDR Reset Common

Units would have had at the time of the Partnership’s receipt of the Reset Notice, as determined by the General Partner, and (ii) for the subsequent conversion of such Partnership Interests into Common Units within not more than 12 months following the Partnership’s receipt of the Reset Notice upon the satisfaction of one or more conditions that are reasonably acceptable to the holder of the Incentive Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a majority in interest of the Incentive Distribution Rights).

(e) The Minimum Quarterly Distribution and the Target Distributions, shall be adjusted at the time of the issuance of IDR Reset Common Units or other Partnership Interests pursuant to this Section 5.11 such that (i) the Minimum Quarterly Distribution shall be reset to equal the average cash distribution amount per Common Unit for the two Quarters immediately prior to the Partnership’s receipt of the Reset Notice (the “Reset MQD”), (ii) the First Target Distribution shall be reset to equal 115% of the Reset MQD, (iii) the Second Target Distribution shall be reset to equal 125% of the Reset MQD and (iv) the Third Target Distribution shall be reset to equal 150% of the Reset MQD.

(f) Upon the issuance of IDR Reset Common Units pursuant to Section 5.11(a), the Capital Account maintained with respect to the Incentive Distribution Rights will (i) first, be allocated to IDR Reset Common Units in an amount equal to the product of (A) the Aggregate Quantity of IDR Reset Common Units and (B) the Per Unit Capital Amount for an Initial Common Unit, and (ii) second, as to any remaining balance in such Capital Account, will be retained by the holder of the Incentive Distribution Rights. If there is not sufficient capital associated with the Incentive Distribution Rights to allocate the full Per Unit Capital Amount for an Initial Common Unit to the IDR Reset Common Units in accordance with clause (i) of this Section 5.11(f), the IDR Reset Common Units shall be subject to Sections 6.1(d)(x)(B) and (C).

(g) Upon the issuance of any Series A PIK Preferred Units to a Series A Unitholder pursuant to Section 5.12(b)(ii)(B), the Capital Account attributable to all Series A Preferred Units held by such Series A Unitholder shall be divided equally among all Series A Preferred Units held by such Series A Unitholder immediately prior to such issuance and the Series A PIK Preferred Units received by such Series A Unitholder in such issuance.

Section 5.12 Establishment of Series A Preferred Units.

(a) General . The Partnership hereby designates and creates a series of Units to be designated as “Series A Convertible Preferred Units” and consisting of a total of 1,715,000 Series A Preferred Units, plus any additional Series A Preferred Units issued under the Purchase Agreement or issued in kind as a distribution pursuant to Section 5.12(b)(ii) (“Series A PIK Preferred Units,” and, together with such Series A Preferred Units issued on a Series A Issuance Date, the “Series A Preferred Units”), having the same rights, preferences and privileges, and subject to the same duties and obligations, as the Common Units, except as set forth in this Section 5.12 and in Sections 5.5, 6.10 and 12.9. Other than with respect to Series A PIK Preferred Units, immediately following the Series A Issuance Dates and thereafter no additional Series A Preferred Units shall be designated, created or issued without the prior written approval of the General Partner and the holders of a majority of the Outstanding Series A Preferred Units.

(b) Rights of Series A Preferred Units . The Series A Preferred Units shall have the following rights, preferences and privileges and shall be subject to the following duties and obligations:

(i) Allocations .

(A) Notwithstanding anything to the contrary in Section 6.1(a), (x) following any allocation made pursuant to Section 6.1(a)(i) and prior to any allocation made pursuant to Section 6.1(a)(ii), any Net Income shall be allocated to all Unitholders holding Series A Preferred Units, Pro Rata, until the aggregate of the Net Income allocated to such Unitholders pursuant to this Section 5.12(b)(i)(A) for the current and all previous taxable periods since issuance of the Series A Preferred Units is equal to the sum of (I) the aggregate amount of cash (but, for the avoidance of doubt, not Series A PIK Preferred Units) distributed with respect to such Series A Preferred Units for the current and previous taxable periods and (II) the aggregate Net Loss allocated to the Unitholders holding Series A Preferred Units pursuant to Section 5.12(b)(i)(B) for the current and previous taxable periods and (y) in no event shall any Net Income be allocated pursuant to Section 6.1(a)(ii) in respect of Series A Preferred Units.

(B) Notwithstanding anything to the contrary in Section 6.1(b), (x) Unitholders holding Series A Preferred Units shall not receive any allocation pursuant to Section 6.1(b)(i) with respect to their Series A Preferred Units and (y) following any allocation made pursuant to Section 6.1(b)(i) and prior to any allocation made pursuant to Section 6.1(b)(ii), Net Losses shall be allocated to all Unitholders holding Series A Preferred Units, Pro Rata, until the Adjusted Capital Account of each such Unitholder in respect of each Outstanding Series A Preferred Unit has been reduced to zero.

(C) Notwithstanding anything to the contrary in Section 6.1(c)(i), (x) Unitholders holding Series A Preferred Units shall be allocated Net Termination Gain in accordance with Section 6.1(c)(i)(A) but shall not receive any allocation pursuant to Section 6.1(c)(i)(B) and shall receive only those allocations pursuant to Sections 6.1(c)(i)(C)—(G) with respect to their Series A Preferred Units as provided in Section 5.12(b)(v) and (y) following any allocation made pursuant to Section 6.1(c)(i)(A) and prior to any allocation made pursuant to Section 6.1(c)(i)(B), any remaining Net Termination Gain shall be allocated to all Unitholders holding Series A Preferred Units, Pro Rata, until the Capital Account in respect of each Outstanding Series A Preferred Unit is equal to the Series A Liquidation Value or, if greater, the product of the Per Unit Capital Amount for a then Outstanding Initial Common Unit and the Series A Conversion Rate.

(D) Notwithstanding anything to the contrary in Section 6.1(c)(ii), (x) prior to any allocation made pursuant to Section 6.1(c)(ii)(C), Net Termination Loss shall be allocated to all Unitholders holding Series A Preferred Units, Pro Rata, until the Capital Account per Series A Preferred Unit then Outstanding is reduced to an amount equal to the greater of (I) the product of the Per Unit Capital

Amount for a then Outstanding Initial Common Unit and the Series A Conversion Rate at such time and (II) the Series A Liquidation Value and (y) following the allocations made pursuant to Section 6.1(c)(ii)(C), and prior to any allocation made pursuant to Section 6.1(c)(ii)(D), any remaining Net Termination Loss shall be allocated to all Unitholders holding Series A Preferred Units, Pro Rata, until the Capital Account in respect of each Outstanding Series A Preferred Unit has been reduced to zero.

(ii) Distributions .

(A) Commencing with the Quarter ending on June 30, 2013, the holders of the Series A Preferred Units as of an applicable Record Date shall be entitled to receive cumulative distributions (each, a “Series A Quarterly Distribution”), prior to any other distributions made in respect of any other Partnership Interests pursuant to Section 6.4 or Section 6.5, in the amount set forth in this Section 5.12(b)(ii)(A) in respect of each Outstanding Series A Preferred Unit. All such distributions shall be paid Quarterly within forty-five (45) days after the end of each Quarter (each such payment date, a “Series A Distribution Payment Date”). For the Quarter ending June 30, 2013, and for each Quarter thereafter through and including the Quarter ending immediately prior to the Coupon Conversion Quarter, the Series A Quarterly Distribution on each Outstanding Series A Preferred Unit shall be equal to the Series A PIK Payment Amount. With respect to the Coupon Conversion Quarter and all Quarters thereafter, the Series A Quarterly Distributions shall be paid entirely in cash at the Series A Distribution Rate. If the Partnership establishes a Record Date for any distribution to be made by the Partnership on other Partnership Interests pursuant to Sections 6.4 or Section 6.5, then the Record Date established pursuant to this Section 5.12(b)(ii) for a Series A Quarterly Distribution in respect of any Quarter shall be the same Record Date established for any distribution to be made by the Partnership in respect of distributions on other Partnership Interests pursuant to Sections 6.4 or Section 6.5 for such Quarter. Unless otherwise expressly provided, references in this Agreement to Series A Preferred Units shall include all Series A PIK Preferred Units Outstanding as of the date of such determination. Notwithstanding anything to the contrary contained herein, prior to any distributions pursuant to Section 6.4, on each Series A Distribution Payment Date the General Partner shall be entitled to (I) a cash distribution equal to the quotient of (a) the General Partner’s Percentage Interest times the aggregate cash distribution made on such Series A Distribution Payment Date in respect of the Series A Preferred Units divided by (b) the difference between 100% and the General Partner’s Percentage Interest, to the extent the Series A Distribution is paid in cash, and (II) a distribution of additional General Partner Units equal to the quotient of (a) the General Partner’s Percentage Interest times the aggregate number of Series A PIK Preferred Units issued in respect of the Outstanding Series A Preferred Units on such Series A Distribution Payment Date divided by (b) the difference between 100% and the General Partner’s Percentage Interest, to the extent the Series A Distribution is paid in Series A PIK Preferred Units, in each case plus cash in lieu of any fractional General Partner Unit.

(B) When any Series A PIK Preferred Units are payable to a Record Holder of Series A Preferred Units pursuant to this Section 5.12, the Partnership shall issue the Series A PIK Preferred Units to such Record Holder no later than the Series A Distribution Payment Date (the date of issuance of such Series A PIK Preferred Units, the “Series A PIK Preferred Payment Date”). On the Series A PIK Preferred Payment Date, the Partnership shall issue to such Series A Unitholder a Certificate or Certificates for the number of Series A PIK Preferred Units to which such Series A Unitholder shall be entitled. The issuance of the Series A PIK Preferred Units pursuant to this Section 5.12(b)(ii) shall be deemed to have been made on the first day of the Quarter following the Quarter in respect of which such payment of Series A PIK Preferred Units was due. If, in violation of this Agreement, the Partnership fails to pay in full any Series A Quarterly Distribution in kind when due, then the holders entitled to the unpaid Series A PIK Preferred Units shall be entitled (I) to Series A Quarterly Distributions in subsequent Quarters on such unpaid Series A PIK Preferred Units, (II) to receive the Series A Liquidation Value in accordance with Section 5.12(b)(iv) in respect of such unpaid Series A PIK Preferred Units, and (III) to all other rights under this Agreement as if such unpaid Series A PIK Preferred Units had in fact been distributed on the date due. Nothing in this Section 5.12(b)(ii)(B) shall alter the obligation of the Partnership to pay any unpaid Series A PIK Preferred Units or the right of the holders of Series A Preferred Units to enforce this Agreement to compel the Partnership to distribute any unpaid Series A PIK Preferred Units. Fractional Series A PIK Preferred Units shall not be issued to any person (each fractional Series A PIK Preferred Unit shall be rounded down to the nearest whole Series A PIK Preferred Unit, with cash paid in lieu of any fractional PIK Preferred Unit).

(C) Beginning with the Coupon Conversion Quarter, if, in violation of this Agreement, the Partnership fails to pay in full any Series A Quarterly Distribution when due, then, without limiting any rights of the holders of the Series A Preferred Units to compel the Partnership to make such distribution, from and after the first date of such failure and continuing until such failure is cured by payment in full in cash of all arrearages with respect to any Series A Quarterly Distribution, (y) the amount of such unpaid distributions (“Series A Unpaid Cash Distributions”) will accrue and accumulate from and including the first day of the Quarter immediately following the Quarter in respect of which such payment is due until paid in full and (z) the Partnership shall not be permitted to, and shall not, declare or make any distributions in respect of any Junior Interests or any distributions in respect of any Series A Parity Securities.

(D) If all or any portion of a Series A Quarterly Distribution is to be paid in cash, then the aggregate amount of such cash to be so distributed in respect of the Series A Preferred Units Outstanding as of the Record Date for such Series A Quarterly Distribution shall be paid out of Available Cash prior to making any distribution pursuant to Sections 6.4 or 6.5. To the extent that any portion of a Series A Quarterly Distribution to be paid in cash with respect to any Quarter exceeds the amount of Available Cash for such Quarter, an amount of

cash equal to the Available Cash for such Quarter will be paid to the Series A Unitholders Pro Rata and the balance of such Series A Quarterly Distribution shall be unpaid and shall constitute an arrearage and shall accrue and accumulate as set forth in Section 5.12(b)(ii)(C). The Partnership shall provide written notice to the Series A Unitholders, not later than the last Business Day of the month immediately following the end of such Quarter, describing in reasonable detail the Partnership’s calculation of Available Cash for such Quarter and the portion, if any, of the Series A Quarterly Distribution the Partnership will be unable to pay on the applicable Series A Distribution Payment Date.

(E) Notwithstanding anything in this Section 5.12(b)(ii) to the contrary, with respect to Series A Preferred Units that are converted into Common Units, the holder thereof shall not be entitled to a Series A Preferred Unit distribution and a Common Unit distribution with respect to the same period, but shall be entitled only to the distribution to be paid based upon the class of Units held as of the close of business on the applicable Record Date. For the avoidance of doubt, if a Series A Conversion Notice Date occurs prior to the close of business on a Record Date for payment of a distribution on the Common Units, the applicable holder of Series A Preferred Units shall receive only the Common Unit distribution with respect to such period.

(F) Notwithstanding anything in Article VI to the contrary, the holders of Incentive Distribution Rights shall not be entitled to receive distributions or allocations of income or gain that correspond or relate to amounts distributed or allocated to Unitholders in respect of Series A Preferred Units, regardless of whether the amounts so distributed or allocated in respect of the Series A Preferred Units were determined under clause (ii) of the definition of “Series A Distribution Rate” or were otherwise determined on an “as converted” basis.

(iii) Issuance of the Series A Preferred Units . The Series A Preferred Units (excluding Series A PIK Preferred Units) shall be issued by the Partnership pursuant to the terms and conditions of the Purchase Agreement.

(iv) Liquidation Value . In the event of any liquidation, dissolution and winding up of the Partnership under Section 12.4 or a sale, exchange or other disposition of all or substantially all of the assets of the Partnership, either voluntary or involuntary, the Record Holders of the Series A Preferred Units shall be entitled to receive, out of the assets of the Partnership available for distribution to the Partners or any Assignees, prior and in preference to any distribution of any assets of the Partnership to the Record Holders of any other class or series of Partnership Interests, the positive value in each such holder’s Capital Account in respect of such Series A Preferred Units. If in the year of such liquidation and winding up, or sale, exchange or other disposition of all or substantially all of the assets of the Partnership, any such Record Holder’s Capital Account in respect of such Series A Preferred Units is less than the aggregate Series A Liquidation Value of such Series A Preferred Units, then notwithstanding anything to the contrary contained in this Agreement, and prior to any other allocation pursuant to this Agreement for such year and prior to any distribution pursuant to the preceding sentence,

items of gross income and gain shall be allocated to all Unitholders then holding Series A Preferred Units, Pro Rata, until the Capital Account in respect of each Outstanding Series A Preferred Unit is equal to the Series A Liquidation Value (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). If in the year of such liquidation, dissolution or winding up any such Record Holder’s Capital Account in respect of such Series A Preferred Units is less than the aggregate Series A Liquidation Value of such Series A Preferred Units after the application of the preceding sentence, then to the extent permitted by applicable law and notwithstanding anything to the contrary contained in this Agreement, items of gross income and gain for any preceding taxable period(s) with respect to which IRS Form 1065 Schedules K-1 have not been filed by the Partnership shall be reallocated to all Unitholders then holding Series A Preferred Units, Pro Rata, until the Capital Account in respect of each such Outstanding Series A Preferred Unit after making allocations pursuant to this and the immediately preceding sentence is equal to the Series A Liquidation Value (and no other allocation pursuant to this Agreement shall reverse the effect of such allocation). At such time as such allocations have been made to the Outstanding Series A Preferred Units, any remaining Net Termination Gain or Net Termination Loss shall be allocated to the Partners pursuant to Section 6.1(c) or Section 6.1(d), as the case may be. At the time of the dissolution of the Partnership, subject to Section 17-804 of the Delaware Act, the Record Holders of the Series A Preferred Units shall become entitled to receive any distributions in respect of the Series A Preferred Units that are accrued and unpaid as of the date of such distribution, and shall have the status of, and shall be entitled to all remedies available to, a creditor of the Partnership, and such entitlement of the Record Holders of the Series A Preferred Units to such accrued and unpaid distributions shall have priority over any entitlement of any other Partners or Assignees with respect to any distributions by the Partnership to such other Partners or Assignees; provided, however, that the General Partner, as such, will have no liability for any obligations with respect to such distributions to any Record Holder(s) of Series A Preferred Units.

(v) Voting Rights .

(A) Except as provided in Section 5.12(b)(v)(B) below, the Outstanding Series A Preferred Units shall have voting rights that are identical to the voting rights of the Common Units and shall vote with the Common Units as a single class, so that each Outstanding Series A Preferred Unit will be entitled to one vote for each Common Unit into which such Series A Preferred Unit is then convertible on each matter with respect to which each Common Unit is entitled to vote. Each reference in this Agreement to a vote of Record Holders of Common Units shall be deemed to be a reference to the holders of Common Units and Series A Preferred Units on an “as if” converted basis, and the definition of “Unit Majority” shall correspondingly be construed to mean at least a majority of the Common Units and the Series A Preferred Units, on an “as if” converted basis, voting together as a single class during any period in which any Series A Preferred Units are Outstanding.

(B) Notwithstanding any other provision of this Agreement, in addition to all other requirements imposed by Delaware law, and all other voting rights

granted under this Agreement, the affirmative vote of the Record Holders of a majority of the Outstanding Series A Preferred Units, voting separately as a class based upon one vote per Series A Preferred Unit, shall be necessary on any matter (including a merger, consolidation or business combination) that adversely affects any of the rights, preferences and privileges of the Series A Preferred Units or amends or modifies any of the terms of the Series A Preferred Units; provided that the Partnership shall be able to amend this Section 5.12 without the approval by the Record Holders of Outstanding Series A Preferred Units so long as the amendment does not adversely affect the holders of the Series A Preferred Units in any material respect and does not affect the holders of the Series A Preferred Units disproportionately in relation to the holders of Common Units; provided, however, that the Partnership may, without the consent or approval of the Record Holders of Outstanding Series A Preferred Units, (1) create (by reclassification or otherwise) and issue Junior Interests (including by amending the provisions of any existing class of Partnership Interests to make such class of Partnership Interests a class of Junior Interests) in an unlimited amount and (2) issue additional Series A Preferred Units in accordance with the Purchase Agreement. Without limiting the generality of the preceding sentence, any action shall be deemed to adversely affect the holders of the Series A Preferred Units in a material respect if such action would:

(I) reduce the Series A Distribution Rate, change the form of payment of distributions on the Series A Preferred Units, defer the date from which distributions on the Series A Preferred Units will accrue, cancel accrued and unpaid distributions on the Series A Preferred Units or any interest accrued thereon, or change the seniority rights of the Series A Unitholders as to the payment of distributions in relation to the Unitholders of any other class or series of Units or, except as determined to be appropriate in connection with the issuance of Junior Interests, amend this Section 5.12;

(II) reduce the amount payable or change the form of payment to the holders of the Series A Preferred Units upon the voluntary or involuntary liquidation, dissolution or winding up, or sale of all or substantially all of the assets, of the Partnership, or change the seniority of the liquidation preferences of the holders of the Series A Preferred Units in relation to the rights upon liquidation of the holders of any other class or series of Units;

(III) make the Series A Preferred Units redeemable or convertible at the option of the Partnership other than as set forth herein; or

(IV) declare and pay any distribution from Capital Surplus or, except as provided in Section 5.12(b)(ii), any distribution in respect of Partnership Interests in a form other than cash.

(vi) No Series A Parity Securities or Series A Senior Securities . Other than Series A PIK Preferred Units issued in connection with the Series A Quarterly Distribution, the Partnership shall not, without the affirmative vote of the holders of a

majority of the Outstanding Series A Preferred Units, issue any Series A Parity Securities or Series A Senior Securities.

(vii) Certificates .

(A) The Series A Preferred Units shall be evidenced by Certificates in such form as the General Partner may approve and, subject to the satisfaction of any applicable legal, regulatory and contractual requirements, may be assigned or transferred in a manner identical to the assignment and transfer of other Units; unless and until the General Partner determines to assign the responsibility to another Person, the Partnership will act as the registrar and transfer agent for the Series A Preferred Units. The Certificates evidencing Series A Preferred Units shall be separately identified and shall not bear the same CUSIP number as the Certificates evidencing Common Units.

(B) The certificate(s) representing the Series A Preferred Units may be imprinted with a legend in substantially the following form:

“NEITHER THE OFFER NOR SALE OF THESE SECURITIES HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND, IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT OR THE PARTNERSHIP HAS RECEIVED DOCUMENTATION REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER SUCH ACT. THIS SECURITY IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN THE SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF THE PARTNERSHIP, DATED AS OF APRIL 12, 2013, A COPY OF WHICH MAY BE OBTAINED FROM THE PARTNERSHIP AT ITS PRINCIPAL EXECUTIVE OFFICES.”

(viii) Conversion .

(A) (I) At the Option of the Series A Unitholder . Beginning on the later of (i) January 1, 2015 and (ii) the date on which the Partnership exercises the Target Leverage Option (as defined in and pursuant to the Limited Waiver and Second Amendment to Second Amended and Restated Credit Agreement, effective as of April 12, 2013, among the Partnership, Wells Fargo Bank, N.A., as administrative agent, and the lenders party thereto), the Series A Preferred Units owned by any Series A Unitholder shall be convertible, in whole or in part, at any time and from time to time upon the request of the Series A Unitholder into a number of Common Units determined by multiplying the number of Series A

Preferred Units to be converted by the Series A Conversion Rate. Immediately upon any conversion of Series A Preferred Units, all rights of the Converting Unitholder in respect thereof shall cease, including, without limitation, any accrual of distributions, and such Converting Unitholder shall be treated for all purposes as the owner of Common Units. Fractional Common Units shall not be issued to any person pursuant to this Section 5.12(b)(viii)(A) (each fractional Common Unit shall be rounded down to the nearest whole Common Unit, with cash paid in lieu of any fractional Common Units).

(II) At the Option of the Partnership . Beginning on the later of (i) January 1, 2015 and (ii) the date on which the Partnership exercises the Target Leverage Option (as defined in and pursuant to the Limited Waiver and Second Amendment to Second Amended and Restated Credit Agreement, effective as of April 12, 2013, among the Partnership, Wells Fargo Bank, N.A., as administrative agent, and the lenders party thereto), the Partnership shall have the option at any time to convert all or part of the Series A Preferred Units then Outstanding into a number of Common Units determined by multiplying the number of Series A Preferred Units to be converted by the Series A Conversion Rate (provided, that each fractional Common Unit shall be rounded down to the nearest whole Common Unit, with cash paid in lieu of any fractional Common Units); provided, that in order for the Company to exercise such option, on the Series A Forced Conversion Notice Date, (A) the daily volume-weighted average trading price of the Common Units on the National Securities Exchange on which the Common Units are listed or admitted to trading must be greater than one hundred thirty percent (130%) of the Series A Issue Price for the trailing thirty (30) Trading Days ending two (2) Trading Days before the date the Company furnishes the Series A Forced Conversion Notice and (B) the average daily trading volume of Common Units on the National Securities Exchange upon which such Common Units are listed or admitted to trading must have exceeded 40,000 Common Units for each of the trailing thirty (30) Trading Days ending two (2) Trading Days before the date the Company furnishes the Series A Forced Conversion Notice.

(III) Limitation on Conversions . Notwithstanding any other provision of this Agreement, prior to the Coupon Conversion Quarter with respect to any conversion contemplated by Section 5.12(b)(viii)(A)(i) and at all times with respect to any conversion pursuant to Section 5.12(b)(viii)(A)(ii), the number of Common Units that may be issued upon conversion of any Series A Preferred Units pursuant to this Section 5.12(b)(viii) shall not exceed a number of Common Units that (assuming (i) such Series A Preferred Units had been converted to such number of Common Units, (ii) all such Common Units were Outstanding, (iii) such Outstanding converted Common Units received the distribution per Common Unit as declared by the Board, and (iv) the Board will declare the same amount of distributions per Common Unit in the next succeeding

four Quarters as in the immediately preceding quarter) would cause the aggregate distributions of the Company for any Quarter during the next succeeding four Quarters to exceed the estimated Distributable Cash Flow for such Quarter.

(B) Conversion Notice . To convert Series A Preferred Units into Common Units pursuant to Section 5.12(b)(viii)(A)(i), the Converting Unitholder shall give written notice (a “Series A Conversion Notice”) to the Partnership stating that such Series A Unitholder elects to so convert Series A Preferred Units and shall state therein with respect to Series A Preferred Units to be converted pursuant to Section 5.12(b)(viii)(A)(i) the following: (a) the number of Series A Preferred Units to be converted, (b) the Certificate(s) evidencing the Series A Preferred Units to be converted and duly endorsed, (c) the name or names in which such Series A Unitholder wishes the Certificate or Certificates for Conversion Units to be issued, and (d) such Series A Unitholder’s computation of the number of Conversion Units to be received by such Series A Unitholder (or designated recipient(s)) upon the Series A Conversion Date. The date any Series A Conversion Notice is received by the Partnership shall be hereinafter be referred to as a “Series A Conversion Notice Date.” To convert Series A Preferred Units into Common Units pursuant to Section 5.12(b)(viii)(A)(ii), the Partnership shall give written notice (a “Series A Forced Conversion Notice,” and the date such notice is received, a “Series A Forced Conversion Notice Date”) to each holder of Series A Preferred Units stating that the Partnership elects to force conversion of such Series A Preferred Units pursuant to Section 5.12(b)(viii)(A)(ii) and shall state therein the number of Series A Preferred Units to be converted.

(C) Timing; Certificates . If a Series A Conversion Notice is delivered by a Series A Unitholder to the Partnership in accordance with Section 5.12(b)(viii)(B) or a Series A Forced Conversion Notice is delivered by the Partnership to a Series A Unitholder pursuant to Section 5.12(b)(viii)(A)(ii), the Partnership shall issue the Conversion Units no later than seven (7) days after the Series A Conversion Notice Date or the Series A Forced Conversion Notice Date, as the case may be (any date of issuance of such Common Units, a “Series A Conversion Date”). On the Series A Conversion Date, the Partnership shall issue to such Series A Unitholder (or designated recipient(s)) a Certificate or Certificates for the number of Conversion Units to which such holder shall be entitled. In lieu of delivering physical Certificates representing the Conversion Units issuable upon conversion of Series A Preferred Units, provided the Transfer Agent is participating in the Depository’s Fast Automated Securities Transfer program, upon request of the Series A Unitholder, the Partnership shall use its commercially reasonable efforts to cause its Transfer Agent to electronically transmit the Conversion Units issuable upon conversion or distribution payment to such Series A Unitholder (or designated recipient(s)), by crediting the account of the Series A Unitholder (or designated recipient(s)) prime broker with the Depository through its Deposit Withdrawal Agent Commission system. The parties agree to coordinate with the Depository to accomplish this objective. Upon

issuance of Conversion Units to the Converting Unitholder, all rights under the converted Series A Preferred Units shall cease, and such Converting Unitholder shall be treated for all purposes as the Record Holder of such Conversion Units.

(D) Distributions, Combinations, Subdivisions and Reclassifications by the Partnership . If the Partnership (i) makes a distribution on its Common Units in Common Units, (ii) subdivides or splits its outstanding Common Units into a greater number of Common Units, (iii) combines or reclassifies its Common Units into a smaller number of Common Units or (iv) issues by reclassification of its Common Units any Partnership Interests (including any reclassification in connection with a merger, consolidation or business combination in which the Partnership is the surviving Person), in each case other than in connection with a Series A Change of Control (which shall be governed by Section 5.12(b)(viii)(E)), then the Series A Conversion Rate in effect at the time of the Record Date for such distribution or the effective date of such subdivision, split, combination, or reclassification shall be proportionately adjusted so that the conversion of the Series A Preferred Units after such time shall entitle each Series A Unitholder to receive the aggregate number of Common Units (or any Partnership Interests into which such Common Units would have been combined, consolidated, merged or reclassified pursuant to clauses (iii) and (iv) above) that such Series A Unitholder would have been entitled to receive if the Series A Preferred Units had been converted into Common Units immediately prior to such Record Date or effective date, as the case may be, and in the case of a merger, consolidation or business combination in which the Partnership is the surviving Person, the Partnership shall provide effective provisions to ensure that the provisions in this Section 5.12 relating to the Series A Preferred Units shall not be abridged or amended and that the Series A Preferred Units shall thereafter retain the same powers, preferences and relative participating, optional and other special rights, and the qualifications, limitations and restrictions thereon, that the Series A Preferred Units had immediately prior to such transaction or event. An adjustment made pursuant to this Section 5.12(b)(viii)(D) shall become effective immediately after the Record Date in the case of a distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, reclassification (including any reclassification in connection with a merger, consolidation or business combination in which the Partnership is the surviving Person) or split. Such adjustment shall be made successively whenever any event described above shall occur.

If, in the future, the Partnership issues any options, warrants, or other rights to purchase Common Units, or Partnership Interests exercisable or convertible into or exchangeable for Common Units (or options, warrants, or other rights to purchase any such Partnership Interests that are exercisable or convertible into or exchangeable for Common Units) other than Series A PIK Preferred Units or any such options, warrants or other rights issued pursuant to any Long Term Incentive Plan (herein collectively, “Convertible Securities”), the General Partner shall, at the direction and at the option of the holders of a majority of the Outstanding Series A Preferred Units in their sole discretion, either (i) amend the provisions of

this Agreement relating to antidilution protection to (A) revise any such provision that is less favorable than the corresponding provision offered in the terms of such Convertible Securities (or any related purchase agreement) so that such provision is the same as such provision offered in the terms of such Convertible Securities (or any related purchase agreement) and (B) incorporate any provision(s) offered in the terms of such Convertible Securities (or any related purchase agreement) that is not currently provided for in this Agreement and which would make the antidilution protection provisions of this Agreement more favorable to the holders of Series A Preferred Units, which amendment shall be effective concurrently with the issuance and/or execution of documentation relating to such Convertible Securities, or (ii) retain the antidilution language applicable to the Series A Preferred Units at such time. The Partnership agrees to provide as much prior notice of the proposed issuance of any such Convertible Securities and/or execution of documentation relating to such issuance of Convertible Securities as is reasonably practicable (and in any event, such notice shall be provided at least ten (10) Business Days prior to such issuance and/or execution).

(E) Series A Change of Control .

(I) In connection with a Series A Change of Control occurring prior to the time all Series A Units are convertible into Common Units pursuant to Section 5.12(b)(viii)(A)(I), the Partnership shall make an irrevocable written offer, subject to consummation of the Series A Change of Control, (a “Series A Change of Control Offer”) to each holder of Series A Preferred Units to convert all (but not less than all) of such holder’s Series A Preferred Units into Common Units, subject to the conditions set forth in this Section 5.12(b)(viii)(E). The number of Conversion Units deliverable upon conversion of each Series A Preferred Unit pursuant to this Section 5.12(b)(viii)(E) shall be equal to the quotient of (x) 110% of the Series A Adjusted Issue Price, together with all accrued but unpaid distributions on such Series A Preferred Unit (including distributions payable in Series A PIK Preferred Units), divided by (y) the Series A Adjusted Issue Price.

(II) Not later than five (5) Business Days following the execution of any definitive agreement for which the consummation of the transactions contemplated therein would result in a Series A Change of Control, the Partnership shall mail a notice to each Series A Unitholder describing the transaction or transactions that constitute the Series A Change of Control and stating:

A. that the Series A Change of Control Offer is being made pursuant to this Section 5.12(b)(viii)(E) and that the Partnership is making an offer to convert all Series A Preferred Units of such Unitholder to Common Units (subject to the consummation of the Series A Change of Control);

B. the Partnership’s computation of the number of Conversion Units to be received by the holder upon the Series A Conversion Date

pursuant to such Series A Change of Control Offer and the anticipated Series A Conversion Date; and

C. that each holder electing to have all of its Series A Preferred Units converted to Conversion Units pursuant to a Series A Change of Control Offer must notify the Partnership in writing the earlier of (a) a date ten (10) days from the date such notice of a Series A Change of Control Offer is mailed or (b) by the close of business on the third (3rd) Business Day preceding the closing date for the Series A Change of Control transaction of such holder’s election to have all of its Series A Preferred Units converted to Conversion Units in connection with the Series A Change of Control Offer.

(III) No later than the time of occurrence of the Series A Change of Control, the Partnership (or its successor) shall issue to each Unitholder of Series A Preferred Units that has accepted the Series A Change of Control Offer the certificate or certificates for Conversion Units in respect of such Converting Holder’s Series A Preferred Units designated for conversion pursuant to the written notice described in Section 5.12(b)(viii)(E)(ii)(C) above, and thereafter all of such holder’s rights and privileges with respect to the converted Series A Preferred Units shall cease, and such Converting Unitholder shall be treated for all purposes as the Record Holder of such Conversion Units.

(F) No Adjustments for Certain Items . Notwithstanding any of the other provisions of this Section 5.12(b)(viii), no adjustment shall be made to the Series A Conversion Rate pursuant to Section 5.12(b)(viii)(D) or Section 5.12(b)(viii)(E) as a result of any of the following:

(I) The issuance of Series A PIK Preferred Units;

(II) the grant of Common Units or options, warrants or rights to purchase Common Units or the issuance of Common Units upon the exercise of any such options, warrants or rights to employees, officers or directors of the General Partner or the Partnership and its Subsidiaries in respect of services provided to or for the benefit of the Partnership or its Subsidiaries, under compensation plans and agreements approved in good faith by the General Partner (including any Long Term Incentive Plan); provided that, in the case of options, warrants or rights to purchase Common Units, the exercise price per Common Unit shall not be less than the Closing Price on the date such option, warrant or other right is issued;

(III) the issuance of any Common Units as all or part of the consideration to effect (i) the closing of any acquisition by the Partnership of assets of an unrelated third party in an arm’s-length transaction or (ii) the consummation of a merger, consolidation or other business combination of the Partnership with or into another entity to the extent such transaction(s) is or are validly approved by the vote or consent of the General Partner; or

(IV) the issuance of Partnership Interests for which an adjustment is made under another provision of this Section 5.12(b)(viii).

(G) Notice of Record Date . In the event of any establishment by the Partnership of a Record Date of the holders of any class or series of Partnership Interests for the purpose of determining the holders thereof who are entitled to receive any distribution thereon, any security or right convertible into or entitling the holder thereof to receive additional Common Units, or any right to subscribe for, purchase or otherwise acquire any Partnership Interests or any other securities or property of the Partnership, or to receive any other right, the Partnership shall notify each holder of Series A Preferred Units at least fifteen (15) days prior to the Record Date, of which any such Record Date is to be taken for the purpose of such distribution, security or right and the amount and character of such distribution, security or right; provided, however, that the foregoing requirement shall be deemed satisfied with respect to any holder of Series A Preferred Units if at least fifteen (15) days prior to the Record Date, the Partnership shall have issued a press release which shall be posted on the Partnership’s website and carried by one or more wire services, containing the required information.

(H) Certain Taxes . The Partnership shall pay any and all issue, documentary, stamp and other taxes, excluding any income, franchise, property or similar taxes, that may be payable in respect of any issue or delivery of Conversion Units on conversion of, or payment of distributions on, Series A Preferred Units pursuant hereto. However, the holder of any Series A Preferred Units shall pay any tax that is due because the Conversion Units issuable upon conversion thereof or distribution payment thereon are issued in a name other than such Series A Unitholder’s name.

(I) Good Faith . The Partnership agrees that it will act in good faith to make any adjustment(s) required by this Section 5.12(b)(viii) equitably and in such a manner as to afford the Series A Unitholders the benefits of the provisions hereof, and will not take any action that could reasonably be expected to deprive such Series A Unitholders of the benefit hereof.

(ix) Tax Estimates . Upon receipt of a written request from any Series A Unitholder stating the number of Series A Preferred Units owned by such holder (which requests shall be made no more than two (2) times per calendar year and the first such request per calendar year shall be at the Partnership’s expense, and the second at the expense of such requesting holder), the Partnership shall, within ten (10) days, provide such Series A Unitholder with a good faith estimate (and reasonable supporting calculations) of whether there is sufficient Unrealized Gain attributable to the Partnership property such that, if such Series A Unitholder converted its Series A Preferred Units pursuant to Section 5.12(b)(viii)(A) or (B) and such Unrealized Gain was allocated to such holder pursuant to Section 5.5(d)(iii), such holder’s Capital Account in respect of its converted Series A Preferred Units would be equal to the Per Unit Capital Amount for a then Outstanding Common Unit (other than a Conversion Unit received in connection with such conversion of a Series A Preferred Unit).

(x) Fully Paid and Nonassessable . Any Conversion Unit(s) delivered pursuant to this Section 5.12 shall be validly issued, fully paid and nonassessable (except as such nonassessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware Act), free and clear of any liens, claims, rights or encumbrances other than those arising under the Delaware Act or this Agreement or created by the holders thereof.

(xi) Listing of Common Units . The Partnership will procure, at its sole expense, the listing of the Conversion Units issuable upon conversion of the Series A Preferred Units, subject to issuance or notice of issuance on any National Securities Exchange on which the Common Units are listed or admitted to trading.

ARTICLE VI.
ALLOCATIONS AND DISTRIBUTIONS

Section 6.1 Allocations for Capital Account Purposes .

Except as otherwise required pursuant to Sections 5.12(b)(i) and (iv) , for purposes of maintaining Capital Accounts and in determining the rights of the Partners among themselves, the Partnership’s items of income, gain, loss and deduction (computed in accordance with Section 5.5(b) shall be allocated among the Partners in each taxable period as provided herein below:

(a) Net Income . After giving effect to the special allocations set forth in Section 6.1(d) , Net Income for each taxable period and all items of income, gain, loss and deduction taken into account in computing Net Income for such taxable period shall be allocated as follows:

(i) First , to the General Partner until the aggregate of the Net Income allocated to the General Partner pursuant to this Section 6.1(a)(i) and the Net Termination Gain allocated to the General Partner pursuant to Section 6.1(c)(i)(A) or Section 6.1(c)(iv)(A) for the current and all previous taxable periods is equal to the aggregate of the Net Loss allocated to the General Partner pursuant to Section 6.1(b)(ii) for all previous taxable periods and the Net Termination Loss allocated to the General Partner pursuant to Section 6.1(c)(ii)(D) or Section 6.1(c)(iii)(B) for the current and all previous taxable periods; and

(ii) The balance, if any, (x) to the General Partner in accordance with its Percentage Interest, and (y) to all Unitholders, Pro Rata, a percentage equal to 100% less the percentage applicable to subclause (x).

(b) Net Loss . After giving effect to the special allocations set forth in Section 6.1(d) , Net Loss for each taxable period and all items of income, gain, loss and deduction taken into account in computing Net Loss for such taxable period shall be allocated as follows:

(i) First , to the General Partner and the Unitholders, Pro Rata; provided , that Net Losses shall not be allocated pursuant to this Section 6.1(b)(i) to the extent that such allocation would cause any Unitholder to have a deficit balance in its Adjusted Capital Account

at the end of such taxable period (or increase any existing deficit balance in its Adjusted Capital Account); and

(ii) The balance, if any, 100% to the General Partner.

(c) Net Termination Gains and Losses . After giving effect to the special allocations set forth in Section 6.1(d) , Net Termination Gain or Net Termination Loss (including a pro rata part of each item of income, gain, loss and deduction taken into account in computing Net Termination Gain or Net Termination Loss) for such taxable period shall be allocated in the manner set forth in this Section 6.1(c) . All allocations under this Section 6.1(c) shall be made after Capital Account balances have been adjusted by all other allocations provided under this Section 6.1 and after all distributions of Available Cash provided under Section 6.4 and Section 6.5 have been made; provided, however, that solely for purposes of this Section 6.1(c) , Capital Accounts shall not be adjusted for distributions made pursuant to Section 12.4 .

(i) Except as provided in Section 6.1(c)(iv) , Net Termination Gain (including a pro rata part of each item of income, gain, loss, and deduction taken into account in computing Net Termination Gain) shall be allocated:

(A) First , to the General Partner until the aggregate of the Net Termination Gain allocated to the General Partner pursuant to this Section 6.1(c)(i)(A) or Section 6.1(c)(iv)(A) and the Net Income allocated to the General Partner pursuant to Section 6.1(a)(i) for the current and all previous taxable periods is equal to the aggregate of the Net Loss allocated to the General Partner pursuant to Section 6.1(b)(ii) for all previous taxable periods and the Net Termination Loss allocated to the General Partner pursuant to Section 6.1(c)(ii)(D) or Section 6.1(c)(iii)(B) for all previous taxable periods;

(B) Second, (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partner’s Percentage Interest, until the Capital Account in respect of each Common Unit then Outstanding is equal to the sum of (1) its Unrecovered Initial Unit Price, (2) the Minimum Quarterly Distribution for the Quarter during which the Liquidation Date occurs, reduced by any distribution pursuant to Section 6.4(a)(i) or Section 6.4(b)(i) with respect to such Common Unit for such Quarter (the amount determined pursuant to this clause (2) is hereinafter defined as the “Unpaid MQD”) and (3) any then-existing Cumulative Common Unit Arrearage;

(C) Third , if such Net Termination Gain is recognized (or is deemed to be recognized) prior to the conversion of the last Outstanding Subordinated Unit, (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the General Partner’s Percentage Interest, until the Capital Account in respect of each Subordinated Unit then Outstanding equals the sum of (1) its Unrecovered Initial Unit Price, determined for the taxable period (or portion thereof) to which this allocation of gain relates, and (2) the Minimum Quarterly Distribution for the

Quarter during which the Liquidation Date occurs, reduced by any distribution pursuant to Section 6.4(b)(iii) with respect to such Subordinated Unit for such Quarter;

(D) Fourth , to the General Partner and all Unitholders, Pro Rata, until the Capital Account in respect of each Common Unit then Outstanding is equal to the sum of (1) its Unrecovered Initial Unit Price, (2) the Unpaid MQD, (3) any then-existing Cumulative Common Unit Arrearage, and (4) the excess of (aa) the First Target Distribution less the Minimum Quarterly Distribution for each Quarter of the Partnership’s existence over (bb) the cumulative per Unit amount of any distributions of Available Cash that is deemed to be Operating Surplus made pursuant to Section 6.4(a)(iv) and Section 6.4(b)(ii) (the sum of (1), (2), (3) and (4) is hereinafter defined as the “First Liquidation Target Amount”);

(E) Fifth , (x) to the General Partner in accordance with its Percentage Interest, (y) 13% to the holders of the Incentive Distribution Rights, Pro Rata, and (z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (x) and (y) of this clause (E), until the Capital Account in respect of each Common Unit then Outstanding is equal to the sum of (1) the First Liquidation Target Amount, and (2) the excess of (aa) the Second Target Distribution less the First Target Distribution for each Quarter of the Partnership’s existence over (bb) the cumulative per Unit amount of any distributions of Available Cash that is deemed to be Operating Surplus made pursuant to Section 6.4(a)(v) and Section 6.4(b)(iii) (the sum of (1) and (2) is hereinafter defined as the “Second Liquidation Target Amount”);

(F) Sixth, (x) to the General Partner in accordance with its Percentage Interest, (y) 23% to the holders of the Incentive Distribution Rights, Pro Rata, and (z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (x) and (y) of this clause (F), until the Capital Account in respect of each Common Unit then Outstanding is equal to the sum of (1) the Second Liquidation Target Amount, and (2) the excess of (aa) the Third Target Distribution less the Second Target Distribution for each Quarter of the Partnership’s existence over (bb) the cumulative per Unit amount of any distributions of Available Cash that is deemed to be Operating Surplus made pursuant to Section 6.4(a)(vi) and Section 6.4(b)(iv) (the sum of (1) and (2) is hereinafter defined as the “Third Liquidation Target Amount”); and

(G) Finally , (x) to the General Partner in accordance with its Percentage Interest, (y) 48% to the holders of the Incentive Distribution Rights, Pro Rata, and (z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (x) and (y) of this clause (G).

(ii) Except as otherwise provided by Section 6.1(c)(iii) , Net Termination Loss (including a pro rata part of each item of income, gain, loss, and deduction taken into account in computing Net Termination Loss) shall be allocated:

(A) First , if Subordinated Units remain Outstanding, (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the General Partner’s Percentage Interest, until the Capital Account in respect of each Subordinated Unit then Outstanding has been reduced to zero;

(B) Second , (x) to the General Partner in accordance with its Percentage Interest and (y) to all Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partner’s Percentage Interest, until the Capital Account in respect of each Common Unit then Outstanding has been reduced to zero;

(C) Third , to the General Partner and the Unitholders, Pro Rata; provided that Net Termination Loss shall not be allocated pursuant to this Section 6.1(c)(ii)(C) to the extent such allocation would cause any Unitholder to have a deficit balance in its Adjusted Capital Account (or increase any existing deficit in its Adjusted Capital Account); and

(D) Fourth , the balance, if any, 100% to the General Partner.

(iii) Any Net Termination Loss deemed recognized pursuant to Section 5.5(d) prior to the Liquidation Date shall be allocated:

(A) First , to the General Partner and the Unitholders, Pro Rata; provided that Net Termination Loss shall not be allocated pursuant to this Section 6.1(c)(iii)(A) to the extent such allocation would cause any Unitholder to have a deficit balance in its Adjusted Capital Account at the end of such taxable period (or increase any existing deficit in its Adjusted Capital Account); and

(B) The balance, if any, to the General Partner.

(iv) If a Net Termination Loss has been allocated pursuant to Section 6.1(c)(iii) , subsequent Net Termination Gain deemed recognized pursuant to Section 5.5(d) prior to the Liquidation Date shall be allocated:

(A) First , to the General Partner until the aggregate Net Termination Gain allocated to the General Partner pursuant to this Section 6.1(c)(iv)(A) is equal to the aggregate Net Termination Loss previously allocated pursuant to Section 6.1(c)(iii)(B) ;

(B) Second , to the General Partner and the Unitholders, Pro Rata, until the aggregate Net Termination Gain allocated pursuant to this Section 6.1(c)(iv)(B) is equal to the aggregate Net Termination Loss previously allocated pursuant to Section 6.1(c)(iii)(A) ; and

(d) Special Allocations . Notwithstanding any other provision of this Section 6.1 , the following special allocations shall be made for such taxable period:

(i) Partnership Minimum Gain Chargeback . Notwithstanding any other provision of this Section 6.1 , if there is a net decrease in Partnership Minimum Gain during any Partnership taxable period, each Partner shall be allocated items of Partnership income and gain for such period (and, if necessary, subsequent periods) in the manner and amounts provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provision. For purposes of this Section 6.1(d) , each Partner’s Adjusted Capital Account balance shall be determined, and the allocation of income or gain required hereunder shall be effected, prior to the application of any other allocations pursuant to this Section 6.1(d) with respect to such taxable period (other than an allocation pursuant to Section 6.1(d)(vi) and Section 6.1(d)(vii) ). This Section 6.1(d)(i) is intended to comply with the Partnership Minimum Gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently therewith.

(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain . Notwithstanding the other provisions of this Section 6.1 (other than Section 6.1(d)(i) ), except as provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt Minimum Gain during any Partnership taxable period, any Partner with a share of Partner Nonrecourse Debt Minimum Gain at the beginning of such taxable period shall be allocated items of Partnership income and gain for such period (and, if necessary, subsequent periods) in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. For purposes of this Section 6.1(d) , each Partner’s Adjusted Capital Account balance shall be determined, and the allocation of income or gain required hereunder shall be effected, prior to the application of any other allocations pursuant to this Section 6.1(d) , other than Section 6.1(d)(i) and other than an allocation pursuant to Section 6.1(d)(vi) and Section 6.1(d)(vii) , with respect to such taxable period. This Section 6.1(d)(ii) is intended to comply with the chargeback of items of income and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(iii) Priority Allocations .

(A) If the amount of cash or the Net Agreed Value of any property distributed (except cash or property distributed pursuant to Section 12.4 ) with respect to a Unit (other than a Series A Preferred Unit) exceeds the amount of cash or the Net Agreed Value of property distributed with respect to another Unit (other than a Series A Preferred Unit) (the amount of the excess, an “ Excess Distribution ” and the Unit with respect to which the greater distribution is paid, an “ Excess Distribution Unit ”), then (1) there shall be allocated gross income and gain to each Unitholder receiving an Excess Distribution with respect to the Excess Distribution Unit until the aggregate amount of such items allocated with respect to such Excess Distribution Unit pursuant to this Section 6.1(d)(iii)(A) for the current taxable period and all previous taxable periods is equal to the amount of the Excess Distribution; and (2) the General Partner shall be allocated gross income and gain with respect to each such Excess Distribution in an amount equal

to the product obtained by multiplying (aa) the quotient determined by dividing (x) the General Partner’s Percentage Interest at the time when the Excess Distribution occurs by (y) a percentage equal to 100% less the General Partner’s Percentage Interest at the time when the Excess Distribution occurs, times (bb) the total amount allocated in clause (1) above with respect to such Excess Distribution.

(B) After the application of Section 6.1(d)(iii)(A) , the remaining items of Partnership income or gain for the taxable period, if any, shall be allocated (1) to the holders of Incentive Distribution Rights, Pro Rata, until the aggregate amount of such items allocated to the holders of Incentive Distribution Rights pursuant to this Section 6.1(d)(iii)(B) for the current taxable period and all previous taxable periods is equal to the cumulative amount of all Incentive Distributions made to the holders of Incentive Distribution Rights from the IPO Closing Date to a date 45 days after the end of the current taxable period; and (2) to the General Partner an amount equal to the product of (aa) an amount equal to the quotient determined by dividing (x) the General Partner’s Percentage Interest by (y) the sum of 100 less the General Partner’s Percentage Interest times (bb) the sum of the amounts allocated in clause (1) above.

(iv) Qualified Income Offset . In the event any Partner unexpectedly receives any adjustments, allocations or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership gross income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations promulgated under Section 704(b) of the Code, the deficit balance, if any, in its Adjusted Capital Account created by such adjustments, allocations or distributions as quickly as possible; provided , that an allocation pursuant to this Section 6.1(d)(iv) shall be made only if and to the extent that such Partner would have a deficit balance in its Adjusted Capital Account as adjusted after all other allocations provided for in this Section 6.1 have been tentatively made as if this Section 6.1(d)(iv) were not in this Agreement.

(v) Gross Income Allocations . In the event any Partner has a deficit balance in its Capital Account at the end of any taxable period in excess of the sum of (A) the amount such Partner is required to restore pursuant to the provisions of this Agreement and (B) the amount such Partner is deemed obligated to restore pursuant to Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially allocated items of Partnership gross income and gain in the amount of such excess as quickly as possible; provided, that an allocation pursuant to this Section 6.1(d)(v) shall be made only if and to the extent that such Partner would have a deficit balance in its Capital Account as adjusted after all other allocations provided for in this Section 6.1 have been tentatively made as if Section 6.1(d)(iv) and this Section 6.1(d)(v) were not in this Agreement.

(vi) Nonrecourse Deductions . Nonrecourse Deductions for any taxable period shall be allocated to the Partners Pro Rata. If the General Partner determines that the Partnership’s Nonrecourse Deductions should be allocated in a different ratio to satisfy the safe harbor requirements of the Treasury Regulations promulgated under Section 704(b) of the Code,

the General Partner is authorized, upon notice to the other Partners, to revise the prescribed ratio to the numerically closest ratio that does satisfy such requirements.

(vii) Partner Nonrecourse Deductions . Partner Nonrecourse Deductions for any taxable period shall be allocated 100% to the Partner that bears the Economic Risk of Loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i). If more than one Partner bears the Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse Deductions attributable thereto shall be allocated between or among such Partners in accordance with the ratios in which they share such Economic Risk of Loss.

(viii) Nonrecourse Liabilities . For purposes of Treasury Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the Partnership in excess of the sum of (A) the amount of Partnership Minimum Gain and (B) the total amount of Nonrecourse Built-in Gain shall be allocated among the Partners Pro Rata.

(ix) Code Section 754 Adjustments . To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such item of gain or loss shall be specially allocated to the Partners in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.

(x) Economic Uniformity; Changes in Law .

(A) At the election of the General Partner with respect to any taxable period ending upon, or after, the termination of the Subordination Period, all or a portion of the remaining items of Partnership gross income or gain for such taxable period, after taking into account allocations pursuant to Section 6.1(d)(iii), shall be allocated 100% to each Partner holding Subordinated Units that are Outstanding as of the termination of the Subordination Period (“Final Subordinated Units”) in the proportion of the number of Final Subordinated Units held by such Partner to the total number of Final Subordinated Units then Outstanding, until each such Partner has been allocated an amount of gross income or gain that increases the Capital Account maintained with respect to such Final Subordinated Units to an amount that after taking into account the other allocations of income, gain, loss and deduction to be made with respect to such taxable period will equal the product of (A) the number of Final Subordinated Units held by such Partner and (B) the Per Unit Capital Amount for a Common Unit. The purpose of this allocation is to establish uniformity between the Capital Accounts underlying Final Subordinated Units and the Capital Accounts underlying Common Units held by Persons other than the General Partner and its Affiliates immediately prior to the conversion of such Final Subordinated Units into Common Units. This allocation method for establishing such economic uniformity will be available to the General Partner only if the method for

allocating the Capital Account maintained with respect to the Subordinated Units between the transferred and retained Subordinated Units pursuant to Section 5.5(c)(ii) does not otherwise provide such economic uniformity to the Final Subordinated Units.

(B) With respect to an event triggering an adjustment to the Carrying Value of Partnership property pursuant to Section 5.5(d) during any taxable period of the Partnership ending upon, or after, the issuance of IDR Reset Common Units pursuant to Section 5.11, after the application of Section 6.1(d)(x)(A), any Unrealized Gains and Unrealized Losses shall be allocated among the Partners in a manner that to the nearest extent possible results in the Capital Accounts maintained with respect to such IDR Reset Common Units issued pursuant to Section 5.11 equaling the product of (a) the Aggregate Quantity of IDR Reset Common Units and (B) the Per Unit Capital Amount for an Initial Common Unit.

(C) With respect to any taxable period during which an IDR Reset Common Unit is transferred to any Person who is not an Affiliate of the transferor, all or a portion of the remaining items of Partnership gross income or gain for such taxable period shall be allocated 100% to the transferor Partner of such transferred IDR Reset Common Unit until such transferor Partner has been allocated an amount of gross income or gain that increases the Capital Account maintained with respect to such transferred IDR Reset Common Unit to an amount equal to the Per Unit Capital Amount for an Initial Common Unit.

(D) For the proper administration of the Partnership and for the preservation of uniformity of the Limited Partner Interests (or any class or classes thereof), the General Partner shall (i) adopt such conventions as it deems appropriate in determining the amount of depreciation, amortization and cost recovery deductions; (ii) make special allocations of income, gain, loss, deduction, Unrealized Gain or Unrealized Loss; and (iii) amend the provisions of this Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of the Limited Partner Interests (or any class or classes thereof). The General Partner may adopt such conventions, make such allocations and make such amendments to this Agreement as provided in this Section 6.1(d)(x)(D) only if such conventions, allocations or amendments would not have a material adverse effect on the Partners, the holders of any class or classes of Limited Partner Interests issued and Outstanding or the Partnership, and if such allocations are consistent with the principles of Section 704 of the Code.

(xi) Curative Allocation .

(A) Notwithstanding any other provision of this Section 6.1, other than the Required Allocations, the Required Allocations shall be taken into account in making the Agreed Allocations so that, to the extent possible, the net amount of

items of gross income, gain, loss and deduction allocated to each Partner pursuant to the Required Allocations and the Agreed Allocations, together, shall be equal to the net amount of such items that would have been allocated to each such Partner under the Agreed Allocations had the Required Allocations and the related Curative Allocation not otherwise been provided in this Section 6.1. Notwithstanding the preceding sentence, Required Allocations relating to (1) Nonrecourse Deductions shall not be taken into account except to the extent that there has been a decrease in Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall not be taken into account except to the extent that there has been a decrease in Partner Nonrecourse Debt Minimum Gain. In exercising its discretion under this Section 6.1(d)(xi)(A), the General Partner may take into account future Required Allocations that, although not yet made, are likely to offset other Required Allocations previously made. Allocations pursuant to this Section 6.1(d)(xi)(A) shall only be made with respect to Required Allocations to the extent the General Partner determines that such allocations will otherwise be inconsistent with the economic agreement among the Partners. Further, allocations pursuant to this Section 6.1(d)(xi)(A) shall be deferred with respect to allocations pursuant to clauses (1) and (2) hereof to the extent the General Partner determines that such allocations are likely to be offset by subsequent Required Allocations.

(B) The General Partner shall, with respect to each taxable period, (1) apply the provisions of Section 6.1(d)(xi)(A) in whatever order is most likely to minimize the economic distortions that might otherwise result from the Required Allocations, and (2) divide all allocations pursuant to Section 6.1(d)(xi)(A) among the Partners in a manner that is likely to minimize such economic distortions.

(xii) Corrective and other Allocations . In the event of any allocation of Additional Book Basis Derivative Items or any Book-Down Event or any recognition of a Net Termination Loss, the following rules shall apply:

(A) Except as provided in Section 6.1(d)(xii)(B), in the case of any allocation of Additional Book Basis Derivative Items (other than an allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d)), the General Partner shall allocate such Additional Book Basis Derivative Items (1) to the holders of Incentive Distribution Rights and the General Partner to the same extent that the Unrealized Gain or Unrealized Loss giving rise to such Additional Book Basis Derivative Items was allocated to them pursuant to Section 5.5(d) and (2) to all Unitholders, Pro Rata, to the extent that the Unrealized Gain or Unrealized Loss giving rise to such Additional Book Basis Derivative Items was allocated to any Unitholders pursuant to Section 5.5(d).

(B) In the case of any allocation of Additional Book Basis Derivative Items (other than an allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d) or an allocation of Net Termination Gain or Net Termination Loss pursuant to Section 6.1(c)) as a result of a sale or other taxable disposition of any

Partnership asset that is an Adjusted Property (“Disposed of Adjusted Property”), the General Partner shall allocate (1) additional items of gross income and gain (aa) away from the holders of Incentive Distribution Rights and (bb) to the Unitholders, or (2) additional items of deduction and loss (aa) away from the Unitholders and (bb) to the holders of Incentive Distribution Rights, to the extent that the Additional Book Basis Derivative Items allocated to the Unitholders exceed their Share of Additional Book Basis Derivative Items with respect to such Disposed of Adjusted Property. Any allocation made pursuant to this Section 6.1(d)(xii)(B) shall be made after all of the other Agreed Allocations have been made as if this Section 6.1(d)(xii) were not in this Agreement and, to the extent necessary, shall require the reallocation of items that have been allocated pursuant to such other Agreed Allocations.

(C) In the case of any negative adjustments to the Capital Accounts of the Partners resulting from a Book-Down Event or from the recognition of a Net Termination Loss, such negative adjustment (1) shall first be allocated, to the extent of the Aggregate Remaining Net Positive Adjustments, in such a manner, as determined by the General Partner, that to the extent possible the aggregate Capital Accounts of the Partners will equal the amount that would have been the Capital Account balances of the Partners if no prior Book-Up Events had occurred, and (2) any negative adjustment in excess of the Aggregate Remaining Net Positive Adjustments shall be allocated pursuant to Section 6.1(c) hereof.

(D) For purposes of this Section 6.1(d)(xii), the Unitholders shall be treated as being allocated Additional Book Basis Derivative Items to the extent that such Additional Book Basis Derivative Items have reduced the amount of income that would otherwise have been allocated to the Unitholders under this Agreement. In making the allocations required under this Section 6.1(d)(xii), the General Partner may apply whatever conventions or other methodology it determines will satisfy the purpose of this Section 6.1(d)(xii). Without limiting the foregoing, if an Adjusted Property is contributed by the Partnership to another entity classified as a partnership for federal income tax purposes (the “lower tier partnership”), the General Partner may make allocations similar to those described in Sections 6.1(d)(xii)(A)-(C) to the extent the General Partner determines such allocations are necessary to account for the Partnership’s allocable share of income, gain, loss and deduction of the lower tier partnership that relate to the contributed Adjusted Property in a manner that is consistent with the purpose of this Section 6.1(d)(xii).

(xiii) Special Curative Allocation in Event of Liquidation Prior to End of Subordination Period . Notwithstanding any other provision of this Section 6.1 (other than the Required Allocations), if the Liquidation Date occurs prior to the conversion of the last Outstanding Subordinated Unit, then items of income, gain, loss and deduction for the taxable period that includes the Liquidation Date (and, if necessary, items arising in previous taxable periods to the extent the General Partner determines such items may be so allocated), shall be specially allocated among the Partners in the manner determined appropriate by the General Partner so as to cause, to the maximum extent possible, the Capital Account in respect of each

Common Unit to equal the amount such Capital Account would have been if all prior allocations of Net Termination Gain and Net Termination Loss had been made pursuant to Section 6.1(c)(i) or Section 6.1(c)(ii), as applicable.

Section 6.2 Allocations for Tax Purposes .

(a) Except as otherwise provided herein, for federal income tax purposes, each item of income, gain, loss and deduction shall be allocated among the Partners in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to Section 6.1.

(b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or Adjusted Property, items of income, gain, loss, depreciation, amortization and cost recovery deductions shall be allocated for federal income tax purposes among the Partners in the manner provided under Section 704(c) of the Code, and the Treasury Regulations promulgated under Sections 704(b) and 704(c) of the Code, as determined to be appropriate by the General Partner (taking into account the General Partner’s discretion under Section 6.1(d)(x)(D)); provided, that the General Partner shall apply the principles of Treasury Regulation Section 1.704-3(d) in all events.

(c) The General Partner may determine to depreciate or amortize the portion of an adjustment under Section 743(b) of the Code attributable to unrealized appreciation in any Adjusted Property (to the extent of the unamortized Book-Tax Disparity) using a predetermined rate derived from the depreciation or amortization method and useful life applied to the unamortized Book-Tax Disparity of such property, despite any inconsistency of such approach with Treasury Regulation Section 1.167(c)-l(a)(6) or any successor regulations thereto. If the General Partner determines that such reporting position cannot reasonably be taken, the General Partner may adopt depreciation and amortization conventions under which all purchasers acquiring Limited Partner Interests in the same month would receive depreciation and amortization deductions, based upon the same applicable rate as if they had purchased a direct interest in the Partnership’s property. If the General Partner chooses not to utilize such aggregate method, the General Partner may use any other depreciation and amortization conventions to preserve the uniformity of the intrinsic tax characteristics of any Limited Partner Interests, so long as such conventions would not have a material adverse effect on the Limited Partners or the Record Holders of any class or classes of Limited Partner Interests.

(d) In accordance with Treasury Regulation Sections 1.1245-1(e) and 1.1250-1(f), any gain allocated to the Partners upon the sale or other taxable disposition of any Partnership asset shall, to the extent possible, after taking into account other required allocations of gain pursuant to this Section 6.2, be characterized as Recapture Income in the same proportions and to the same extent as such Partners (or their predecessors in interest) have been allocated any deductions directly or indirectly giving rise to the treatment of such gains as Recapture Income.

(e) In accordance with Treasury Regulation Sections 1.704-1(b)(2)(iv)(s) and 1.704-1(b)(4)(x), if Capital Account balances are reallocated among Partners in accordance with Section 5.5(d)(iii), beginning with the year of reallocation and continuing until the allocations required are fully taken into account, the Partnership will make corrective allocations to take into account the Capital Account reallocation.

(f) All items of income, gain, loss, deduction and credit recognized by the Partnership for federal income tax purposes and allocated to the Partners in accordance with the provisions hereof shall be determined without regard to any election under Section 754 of the Code that may be made by the Partnership; provided, however, that such allocations, once made, shall be adjusted (in the manner determined by the General Partner) to take into account those adjustments permitted or required by Sections 734 and 743 of the Code.

(g) Each item of Partnership income, gain, loss and deduction, for federal income tax purposes, shall be determined for each taxable period and prorated on a monthly basis and shall be allocated to the Partners as of the opening of the National Securities Exchange on which the Partnership Interests are listed or admitted to trading on the first Business Day of each month; provided, however, that such items for the period beginning on the Closing Date and ending on the last day of the month in which the last Option Closing Date or the expiration of the Over-Allotment Option occurs shall be allocated to the Partners as of the opening of the National Securities Exchange on which the Partnership Interests are listed or admitted to trading on the first Business Day of the next succeeding month; and provided, further, that gain or loss on a sale or other disposition of any assets of the Partnership or any other extraordinary item of income or loss realized and recognized other than in the ordinary course of business, as determined by the General Partner, shall be allocated to the Partners as of the opening of the National Securities Exchange on which the Partnership Interests are listed or admitted to trading on the first Business Day of the month in which such gain or loss is recognized for federal income tax purposes. The General Partner may revise, alter or otherwise modify such methods of allocation to the extent permitted or required by Section 706 of the Code and the regulations or rulings promulgated thereunder.

(h) Allocations that would otherwise be made to a Limited Partner under the provisions of this Article VI shall instead be made to the beneficial owner of Limited Partner Interests held by a nominee, agent or representative in any case in which such nominee, agent or representative has furnished the identity of such owner to the Partnership in accordance with Section 6031(c) of the Code or any other method determined by the General Partner.

Section 6.3 Requirement and Characterization of Distributions; Distributions to Record Holders .

(a) Within 45 days following the end of each Quarter commencing with the Quarter ending on December 31, 2012, an amount equal to 100% of Available Cash with respect to such Quarter shall be distributed in accordance with this Article VI by the Partnership to the Partners as of the Record Date selected by the General Partner. The Record Date for the first distribution of Available Cash shall not be prior to the final closing of the Over-Allotment Option. All amounts of Available Cash distributed by the Partnership on any date from any source shall be deemed to be Operating Surplus until the sum of all amounts of Available Cash theretofore distributed by the Partnership to the Partners pursuant to Section 6.4 equals the Operating Surplus from the Closing Date through the close of the immediately preceding Quarter. Any remaining amounts of Available Cash distributed by the Partnership on such date shall, except as otherwise provided in Section 6.5, be deemed to be “Capital Surplus.” All distributions required to be made under this Agreement shall be made subject to Sections 17-607 and 17-804 of the Delaware Act and other applicable law, notwithstanding any other provision of this Agreement.

(b) Notwithstanding Section 6.3(a) (but subject to the last sentence of Section 6.3(a)), in the event of the dissolution and liquidation of the Partnership, all cash received during or after the Quarter in which the Liquidation Date occurs shall be applied and distributed solely in accordance with, and subject to the terms and conditions of, Section 12.4.

(c) The General Partner may treat taxes paid by the Partnership on behalf of, or amounts withheld with respect to, all or less than all of the Partners, as a distribution of Available Cash to such Partners, as determined appropriate under the circumstances by the General Partner.

(d) Each distribution in respect of a Partnership Interest shall be paid by the Partnership, directly or through the Transfer Agent or through any other Person or agent, only to the Record Holder of such Partnership Interest as of the Record Date set for such distribution. Such payment shall constitute full payment and satisfaction of the Partnership’s liability in respect of such payment, regardless of any claim of any Person who may have an interest in such payment by reason of an assignment or otherwise.

Section 6.4 Distributions of Available Cash from Operating Surplus .

(a) During the Subordination Period. Available Cash with respect to any Quarter within the Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section 6.3 or 6.5 shall be distributed as follows, except as otherwise required pursuant to Section 5.12(b)(ii) or in respect of additional Partnership Interests or Derivative Partnership Interests issued pursuant to Section 5.6(b):

(i) First, (x) to the General Partner in accordance with its Percentage Interest and (y) to the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partner’s Percentage Interest, until there has been distributed in respect of each Common Unit then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;

(ii) Second, (x) to the General Partner in accordance with its Percentage Interest and (y) to the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partner’s Percentage Interest, until there has been distributed in respect of each Common Unit then Outstanding an amount equal to the Cumulative Common Unit Arrearage existing with respect to such Common Unit;

(iii) Third, (x) to the General Partner in accordance with its Percentage Interest and (y) to the Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the General Partner’s Percentage Interest, until there has been distributed in respect of each Subordinated Unit then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;

(iv) Fourth, to the General Partner and all Unitholders, Pro Rata, until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the First Target Distribution over the Minimum Quarterly Distribution for such Quarter;

(v) Fifth, (A) to the General Partner in accordance with its Percentage Interest, (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata, and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B) of this clause (v), until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the Second Target Distribution over the First Target Distribution for such Quarter;

(vi) Sixth, (A) to the General Partner in accordance with its Percentage Interest, (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata, and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B) of this clause (vi), until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the Third Target Distribution over the Second Target Distribution for such Quarter; and

(vii) Thereafter, (A) to the General Partner in accordance with its Percentage Interest, (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata, and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B) of this clause (vii);

provided, however, if the Minimum Quarterly Distribution, the First Target Distribution, the Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be Operating Surplus with respect to any Quarter will be made solely in accordance with Section 6.4(a)(vii).

(b) After the Subordination Period. Available Cash with respect to any Quarter after the Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section 6.3 or Section 6.5 shall be distributed as follows, except as otherwise required pursuant to Section 5.12(b)(ii) or in respect of additional Partnership Interests issued pursuant to Section 5.6(b):

(i) First, to the General Partner and all Unitholders, Pro Rata, until there has been distributed in respect of each Unit then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;

(ii) Second, to the General Partner and all Unitholders, Pro Rata, until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the First Target Distribution over the Minimum Quarterly Distribution for such Quarter;

(iii) Third, (A) to the General Partner in accordance with its Percentage Interest, (B) 13% to the holders of the Incentive Distribution Rights, Pro Rata, and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B) of this clause (iii), until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the Second Target Distribution over the First Target Distribution for such Quarter;

(iv) Fourth, (A) to the General Partner in accordance with its Percentage Interest, (B) 23% to the holders of the Incentive Distribution Rights, Pro Rata, and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B) of this clause (iv), until there has been distributed in respect of each Unit then Outstanding an amount equal to the excess of the Third Target Distribution over the Second Target Distribution for such Quarter; and

(v) Thereafter, (A) to the General Partner in accordance with its Percentage Interest, (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata, and (C) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B) of this clause (v);

provided, however, that if the Minimum Quarterly Distribution, the First Target Distribution, the Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be Operating Surplus with respect to any Quarter will be made solely in accordance with Section 6.4(b)(v).

Section 6.5 Distributions of Available Cash from Capital Surplus . Available Cash that is deemed to be Capital Surplus pursuant to the provisions of Section 6.3(a) shall be distributed, unless the provisions of Section 6.3 require otherwise, to the General Partner and the Unitholders, Pro Rata, until a hypothetical holder of a Common Unit acquired on the Closing Date has received with respect to such Common Unit, during the period since the Closing Date through such date, distributions of Available Cash that are deemed to be Capital Surplus in an aggregate amount equal to the Initial Unit Price. Available Cash that is deemed to be Capital Surplus shall then be distributed (A) to the General Partner in accordance with its Percentage Interest and (B) to all Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General Partner’s Percentage Interest, until there has been distributed in respect of each Common Unit then Outstanding an amount equal to the Cumulative Common Unit Arrearage. Thereafter, all Available Cash shall be distributed as if it were Operating Surplus and shall be distributed in accordance with Section 6.4.

Section 6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels .

(a) The Minimum Quarterly Distribution, Target Distributions, Common Unit Arrearages and Cumulative Common Unit Arrearages shall be proportionately adjusted in the event of any distribution, combination or subdivision (whether effected by a distribution payable in Units or otherwise) of Units or other Partnership Interests in accordance with Section 5.9. In the event of a distribution of Available Cash that is deemed to be from Capital Surplus, the then applicable Minimum Quarterly Distribution and Target Distributions shall be adjusted proportionately downward to equal the product obtained by multiplying the otherwise applicable Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third Target Distribution, as the case may be, by a fraction of which the numerator is the Unrecovered Initial Unit Price of the Common Units immediately after giving effect to such distribution and of which the denominator is the Unrecovered Initial Unit Price of the Common Units immediately prior to giving effect to such distribution.

(b) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third Target Distribution, shall also be subject to adjustment pursuant to Section 5.11 and Section 6.9.

Section 6.7 Special Provisions Relating to the Holders of Subordinated Units .

(a) Except with respect to the right to vote on or approve matters requiring the vote or approval of a percentage of the holders of Outstanding Common Units and the right to participate in allocations of income, gain, loss and deduction and distributions made with respect to Common Units, the holder of a Subordinated Unit shall have all of the rights and obligations of a Unitholder holding Common Units hereunder; provided, however, that immediately upon the conversion of Subordinated Units into Common Units pursuant to Section 5.7, the Unitholder holding a Subordinated Unit shall possess all of the rights and obligations of a Unitholder holding Common Units hereunder with respect to such converted Subordinated Units, including the right to vote as a Common Unitholder and the right to participate in allocations of income, gain, loss and deduction and distributions made with respect to Common Units; provided, however, that such converted Subordinated Units shall remain subject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x)(A), 6.7(b) and 6.7(c).

(b) A Unitholder shall not be permitted to transfer a Subordinated Unit or a Subordinated Unit that has converted into a Common Unit pursuant to Section 5.7 (other than a transfer to an Affiliate) if the remaining balance in the transferring Unitholder’s Capital Account with respect to the retained Subordinated Units or Retained Converted Subordinated Units would be negative after giving effect to the allocation under Section 5.5(c)(ii)(B).

(c) The holder of a Common Unit that has resulted from the conversion of a Subordinated Unit pursuant to Section 5.7 or Section 11.4 shall not be issued a Common Unit Certificate pursuant to Section 4.1 (if the Common Units are represented by Certificates) and shall not be permitted to transfer such Common Unit to a Person that is not an Affiliate of the holder until such time as the General Partner determines, based on advice of counsel, that each such Common Unit should have, as a substantive matter, like intrinsic economic and federal income tax characteristics, in all material respects, to the intrinsic economic and federal income tax characteristics of an Initial Common Unit. In connection with the condition imposed by this Section 6.7(c), the General Partner may take whatever steps are required to provide economic uniformity to such Common Units in preparation for a transfer of such Common Units, including the application of Sections 5.5(c)(ii), 6.1(d)(x) and 6.7(b); provided, however, that no such steps may be taken that would have a material adverse effect on the Unitholders holding Common Units.

Section 6.8 Special Provisions Relating to the Holders of Incentive Distribution Rights .

(a) Notwithstanding anything to the contrary set forth in this Agreement, the holders of the Incentive Distribution Rights (i) shall (A) possess the rights and obligations provided in this Agreement with respect to a Limited Partner pursuant to Article III and Article VII and (B) have a Capital Account as a Partner pursuant to Section 5.5 and all other provisions related thereto and (ii) shall not (A) be entitled to vote on any matters requiring the approval or vote of

the holders of Outstanding Units, except as provided by law, (B) be entitled to any distributions other than as provided in Sections 6.4(a)(v), (vi) and (vii), Sections 6.4(b)(iii), (iv) and (v), and Section 12.4 or (C) be allocated items of income, gain, loss or deduction other than as specified in this Article VI; provided, however, that, for the avoidance of doubt, the foregoing shall not preclude the Partnership from making any other payments or distributions in connection with other actions permitted by this Agreement.

(b) A holder of an IDR Reset Common Unit that was issued in connection with an IDR Reset Election pursuant to Section 5.11 shall not be issued a Common Unit Certificate pursuant to Section 4.1 (if the Common Units are evidenced by Certificates) or evidence of the issuance of uncertificated Common Units, and shall not be permitted to transfer such Common Unit to a Person that is not an Affiliate of such holder, until such time as the General Partner determines, based on advice of counsel, that each such IDR Reset Common Unit should have, as a substantive matter, like intrinsic economic and federal income tax characteristics, in all material respects, to the intrinsic economic and federal income tax characteristics of an Initial Common Unit. In connection with the condition imposed by this Section 6.8(b), the General Partner may take whatever steps are required to provide economic uniformity to such IDR Reset Common Units in preparation for a transfer of such IDR Reset Common Units, including the application of Section 6.1(d)(x)(B), or Section 6.1(d)(x)(C); provided, however, that no such steps may be taken that would have a material adverse effect on the Unitholders holding Common Units.

Section 6.9 Entity-Level Taxation . If legislation is enacted or the official interpretation of existing legislation is modified by a governmental authority, which after giving effect to such enactment or modification, results in a Group Member becoming subject to federal, state or local or non-U.S. income or withholding taxes in excess of the amount of such taxes due from the Group Member prior to such enactment or modification (including, for the avoidance of doubt, any increase in the rate of such taxation applicable to the Group Member), then the General Partner may, at its option, reduce the Minimum Quarterly Distribution and the Target Distributions by the amount of income or withholding taxes that are payable by reason of any such new legislation or interpretation (the “Incremental Income Taxes”), or any portion thereof selected by the General Partner, in the manner provided in this Section 6.9. If the General Partner elects to reduce the Minimum Quarterly Distribution and the Target Distributions for any Quarter with respect to all or a portion of any Incremental Income Taxes, the General Partner shall estimate for such Quarter the Partnership Group’s aggregate liability (the “Estimated Incremental Quarterly Tax Amount”) for all (or the relevant portion of) such Incremental Income Taxes; provided that any difference between such estimate and the actual liability for Incremental Income Taxes (or the relevant portion thereof) for such Quarter may, to the extent determined by the General Partner, be taken into account in determining the Estimated Incremental Quarterly Tax Amount with respect to each Quarter in which any such difference can be determined. For each such Quarter, the Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third Target Distribution, shall be the product obtained by multiplying (a) the amounts therefor that are set out herein prior to the application of this Section 6.9 times (b) the quotient obtained by dividing (i) Available Cash with respect to such Quarter by (ii) the sum of Available Cash with respect to such Quarter and the Estimated Incremental Quarterly Tax Amount for such Quarter, as determined by the General Partner. For

purposes of the foregoing, Available Cash with respect to a Quarter will be deemed reduced by the Estimated Incremental Quarterly Tax Amount for that Quarter.

Section 6.10 Special Provisions Relating to Series A Preferred Unitholders.

(a) Subject to transfer restrictions in Section 4.8 of this Agreement, a Unitholder holding a Conversion Unit shall provide notice to the Partnership of any Transfer of the Conversion Unit by the earlier of (i) thirty (30) days following such Transfer and (ii) the last Business Day of the calendar year during which such transfer occurred, unless (x) the transfer is to an Affiliate of such Unitholder or (y) by virtue of the application of Section 5.5(d)(iii), the Partnership has previously determined, based on the advice of counsel, that the Conversion Unit should have, as a substantive matter, like intrinsic economic and federal income tax characteristics of an Initial Common Unit. In connection with the condition imposed by this Section 6.10, the Partnership shall take whatever steps are required to provide economic uniformity to the Conversion Unit in preparation for a Transfer of such Unit; provided, however, that no such steps may be taken that would have a material adverse effect on the Unitholders holding Common Units (for this purpose the allocations of income, gain, loss and deductions, and the making of any guaranteed payments or any reallocation of Capital Account balances among the Partners in accordance with Section 5.5(d)(iii) hereof and Treasury Regulation Section 1.704-1(b)(2)(iv)(s)(4) with respect to Series A Preferred Units or Conversion Units will be deemed not to have a material adverse effect on the Unitholders holding Common Units).

(b) Notwithstanding anything to the contrary set forth in this Agreement, the holders of the Series A Preferred Units (i) shall (A) possess the rights and obligations provided in this Agreement with respect to a Limited Partner pursuant to Article III and Article VII and (B) have a Capital Account as a Partner pursuant to Section 5.5 and all other provisions related thereto and (ii) shall not (A) be entitled to vote on any matters requiring the approval or vote of the holders of Outstanding Units, except as provided in Section 5.12 or (B) be entitled to any distributions other than as provided in Section 5.12 and Article VI.

ARTICLE VII.
MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1 Management .

(a) The General Partner shall conduct, direct and manage all activities of the Partnership. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited Partner shall have any management power over the business and affairs of the Partnership. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do all things and on such terms as it determines to be necessary or appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the following:

(i) the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into or exchangeable for Partnership Interests, and the incurring of any other obligations;

(ii) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership;

(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Partnership or the merger or other combination of the Partnership with or into another Person (the matters described in this clause (iii) being subject, however, to any prior approval that may be required by Section 7.3 and Article XIV);

(iv) the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other Persons (including other Group Members); the repayment or guarantee of obligations of any Group Member; and the making of capital contributions to any Group Member;

(v) the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Partnership under contractual arrangements to all or particular assets of the Partnership, with the other party to the contract to have no recourse against the General Partner or its assets other than its interest in the Partnership, even if the same results in the terms of the transaction being less favorable to the Partnership than would otherwise be the case);

(vi) the distribution of Partnership cash;

(vii) the selection and dismissal of officers, employees, agents, internal and outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring;

(viii) the maintenance of insurance for the benefit of the Partnership Group, the Partners and Indemnitees;

(ix) the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any further limited or general partnerships, joint ventures, corporations, limited liability companies or other Persons (including the acquisition of interests in, and the contributions of property to, any Group Member from time to time) subject to the restrictions set forth in Section 2.4;

(x) the control of any matters affecting the rights and obligations of the Partnership, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation;

(xi) the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

(xii) the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Limited Partner Interests from, or requesting that trading be suspended on, any such exchange (subject to any prior approval that may be required under Section 4.8);

(xiii) the purchase, sale or other acquisition or disposition of Partnership Interests, or the issuance of Derivative Partnership Interests;

(xiv) the undertaking of any action in connection with the Partnership’s participation in the management of any Group Member; and

(xv) the entering into of agreements with any of its Affiliates to render services to a Group Member or to itself in the discharge of its duties as General Partner of the Partnership.

(b) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the Delaware Act or any applicable law, rule or regulation, each of the Partners and each other Person who may acquire an interest in Partnership Interests or that is otherwise bound by this Agreement hereby (i) approves, ratifies and confirms the execution, delivery and performance by the parties thereto of this Agreement and the Group Member Agreement of each other Group Member, the Underwriting Agreement, the Contribution Agreement, the Purchase Agreement and the other agreements described in or filed as exhibits to the IPO Registration Statement that are related to the transactions contemplated by the IPO Registration Statement (collectively, the “Transaction Documents”) (in each case other than this Agreement, without giving effect to any amendments, supplements or restatements thereof entered into after the date such Person becomes bound by the provisions of this Agreement); (ii) agrees that the General Partner (on its own or on behalf of the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters described in or contemplated by the IPO Registration Statement on behalf of the Partnership without any further act, approval or vote of the Partners or the other Persons who may acquire an interest in Partnership Interests or are otherwise bound by this Agreement; and (iii) agrees that the execution, delivery or performance by the General Partner, any Group Member or any Affiliate of any of them of this Agreement or any agreement authorized or permitted under this Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV) shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement (or any other agreements) or of any duty existing at law, in equity or otherwise.

Section 7.2 Certificate of Limited Partnership . The General Partner has caused the Certificate of Limited Partnership to be filed with the Secretary of State of the State of Delaware as required by the Delaware Act. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents that the General Partner determines to be necessary or appropriate for the formation, continuation, qualification and operation of a limited

partnership (or a partnership in which the limited partners have limited liability) in the State of Delaware or any other state in which the Partnership may elect to do business or own property. To the extent the General Partner determines such action to be necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate of Limited Partnership and do all things to maintain the Partnership as a limited partnership (or a partnership or other entity in which the limited partners have limited liability) under the laws of the State of Delaware or of any other state in which the Partnership may elect to do business or own property. Subject to the terms of Section 3.3(a), the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate of Limited Partnership, any qualification document or any amendment thereto to any Limited Partner.

Section 7.3 Restrictions on the General Partner’s Authority to Sell Assets of the Partnership Group .

Except as provided in Article XII and Article XIV, the General Partner may not sell, exchange or otherwise dispose of all or substantially all of the assets of the Partnership Group, taken as a whole, in a single transaction or a series of related transactions (including by way of merger, consolidation, other combination or sale of ownership interests of the Partnership’s Subsidiaries) without the approval of holders of a Unit Majority; provided, however, that this provision shall not preclude or limit the General Partner’s ability to mortgage, pledge, hypothecate or grant a security interest in all or substantially all of the assets of the Partnership Group and shall not apply to any forced sale of any or all of the assets of the Partnership Group pursuant to the foreclosure of, or other realization upon, any such encumbrance.

Section 7.4 Reimbursement of the General Partner .

(a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General Partner shall not be compensated for its services as a general partner or managing member of any Group Member.

(b) The General Partner shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine, for (i) all direct and indirect expenses it incurs or payments it makes on behalf of the Partnership Group (including salary, bonus, incentive compensation and other amounts paid to any Person, including Affiliates of the General Partner, to perform services for the Partnership Group or for the General Partner in the discharge of its duties to the Partnership Group), and (ii) all other expenses allocable to the Partnership Group or otherwise incurred by the General Partner or its Affiliates in connection with managing and operating the Partnership Group’s business and affairs (including expenses allocated to the General Partner by its Affiliates). The General Partner shall determine the expenses that are allocable to the Partnership Group. Reimbursements pursuant to this Section 7.4 shall be in addition to any reimbursement to the General Partner as a result of indemnification pursuant to Section 7.7. Any allocation of expenses to the Partnership by Affiliates of the General Partner in a manner consistent with past business practices and, in the case of assets regulated by FERC, then-applicable accounting and allocation methodologies generally permitted by FERC for rate-making purposes (or in the absence of then-applicable methodologies permitted by FERC, consistent with the most-recently-applicable methodologies), shall be deemed to have been made in good faith. This provision does not affect the ability of the General Partner and its Affiliates

to enter into an agreement to provide services to any Group Member for a fee or otherwise than for cost.

(c) The General Partner, without the approval of the Limited Partners (who shall have no right to vote in respect thereof), may propose and adopt on behalf of the Partnership benefit plans, programs and practices (including plans, programs and practices involving the issuance of Partnership Interests or Derivative Partnership Interests), or cause the Partnership to issue Partnership Interests in connection with, or pursuant to, any benefit plan, program or practice maintained or sponsored by the General Partner or any of its Affiliates in each case for the benefit of officers, employees, consultants, managers and directors of the General Partner or any of its Affiliates, in respect of services performed, directly or indirectly, for the benefit of the Partnership Group. The Partnership agrees to issue and sell to the General Partner or any of its Affiliates any Partnership Interests that the General Partner or such Affiliates are obligated to provide to any officers, employees, consultants and directors pursuant to any such employee benefit plans, employee programs or employee practices. Expenses incurred by the General Partner in connection with any such plans, programs and practices (including the net cost to the General Partner or such Affiliates of Partnership Interests purchased by the General Partner or such Affiliates from the Partnership to fulfill options or awards under such plans, programs and practices) shall be reimbursed in accordance with Section 7.4(b). Any and all obligations of the General Partner under any benefit plans, programs or practices adopted by the General Partner as permitted by this Section 7.4(c) shall constitute obligations of the General Partner hereunder and shall be assumed by any successor General Partner approved pursuant to Section 11.1 or Section 11.2 or the transferee of or successor to all of the General Partner’s General Partner Interest (represented by General Partner Units) pursuant to Section 4.6.

(d) The General Partner and its Affiliates may charge any member of the Partnership Group a management fee to the extent necessary to allow the Partnership Group to reduce the amount of any state franchise or income tax or any tax based upon the revenues or gross margin of any member of the Partnership Group if the tax benefit produced by the payment of such management fee or fees exceeds the amount of such fee or fees.

Section 7.5 Outside Activities .

(a) The General Partner, for so long as it is the General Partner of the Partnership (i) agrees that its sole business will be to act as a general partner or managing member, as the case may be, of the Partnership and any other partnership or limited liability company of which the Partnership is, directly or indirectly, a partner or member and to undertake activities that are ancillary or related thereto (including being a Limited Partner in the Partnership) and (ii) shall not engage in any business or activity or incur any debts or liabilities except in connection with or incidental to (A) its performance as general partner or managing member, if any, of one or more Group Members or as described in or contemplated by the IPO Registration Statement or (B) the acquiring, owning or disposing of debt securities or equity interests in any Group Member.

(b) Subject to the terms of Section 7.5(c), each Unrestricted Person (other than the General Partner) shall have the right to engage in businesses of every type and description and other activities for profit and to engage in and possess an interest in other business ventures of

any and every type or description, whether in businesses engaged in or anticipated to be engaged in by any Group Member, independently or with others, including business interests and activities in direct competition with the business and activities of any Group Member, and none of the same shall constitute a breach of this Agreement or any duty otherwise existing at law, in equity or otherwise, to any Group Member or any Partner. None of any Group Member, any Limited Partner or any other Person shall have any rights by virtue of this Agreement, any Group Member Agreement, or the partnership relationship established hereby in any business ventures of any Unrestricted Person.

(c) Subject to the terms of Sections 7.5(a) and (b), but otherwise notwithstanding anything to the contrary in this Agreement, (i) the engaging in competitive activities by any Unrestricted Person (other than the General Partner) in accordance with the provisions of this Section 7.5 is hereby approved by the Partnership and all Partners, (ii) it shall be deemed not to be a breach of any duty or any other obligation of any type whatsoever of the General Partner or any other Unrestricted Person for the Unrestricted Persons (other than the General Partner) to engage in such business interests and activities in preference to or to the exclusion of the Partnership and (iii) the Unrestricted Persons shall have no obligation hereunder or as a result of any duty otherwise existing at law, in equity or otherwise, to present business opportunities to the Partnership. Notwithstanding anything to the contrary in this Agreement or any duty, otherwise existing at law or in equity, the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to any Unrestricted Person (including the General Partner). No Unrestricted Person (including the General Partner) who acquires knowledge of a potential transaction, agreement, arrangement or other matter that may be an opportunity for the Partnership, shall have any duty to communicate or offer such opportunity to the Partnership, and such Unrestricted Person (including the General Partner) shall not be liable to the Partnership, to any Limited Partner or any other Person bound by this Agreement for breach of any duty by reason of the fact that such Unrestricted Person (including the General Partner) pursues or acquires for itself, directs such opportunity to another Person or does not communicate such opportunity or information to the Partnership; provided that such Unrestricted Person does not engage in such business or activity using confidential or proprietary information provided by or on behalf of the Partnership to such Unrestricted Person.

(d) The General Partner and each of its Affiliates may acquire Units or other Partnership Interests in addition to those acquired on the Closing Date and, except as otherwise provided in this Agreement, shall be entitled to exercise, at their option, all rights relating to all Units and/or other Partnership Interests acquired by them. The term “Affiliates” when used in this Section 7.5(d) with respect to the General Partner shall not include any Group Member.

Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or Group Members .

(a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the Group Member for such periods of time and in such amounts as the General Partner may determine; provided, however, that in any such case the lending party may not charge the borrowing party interest at a rate greater than the rate that would be charged the borrowing party or impose terms less favorable to the borrowing party than would be charged or

imposed on the borrowing party by unrelated lenders on comparable loans made on an arm’s-length basis (without reference to the lending party’s financial abilities or guarantees), all as determined by the General Partner. The borrowing party shall reimburse the lending party for any costs (other than any additional interest costs) incurred by the lending party in connection with the borrowing of such funds. For purposes of this Section 7.6(a) and Section 7.6(b), the term “Group Member” shall include any Affiliate of a Group Member that is controlled by the Group Member.

(b) The Partnership may lend or contribute to any Group Member, and any Group Member may borrow from the Partnership, funds on terms and conditions determined by the General Partner. No Group Member may lend funds to the General Partner or any of its Affiliates (other than another Group Member).

(c) No borrowing by any Group Member or the approval thereof by the General Partner shall be deemed to constitute a breach of any duty, expressed or implied, of the General Partner or its Affiliates to the Partnership or the Limited Partners existing hereunder, or existing at law, in equity or otherwise by reason of the fact that the purpose or effect of such borrowing is directly or indirectly to (i) enable distributions to the General Partner or its Affiliates (including in their capacities as Limited Partners) to exceed the General Partner’s Percentage Interest of the total amount distributed to all Partners or (ii) hasten the expiration of the Subordination Period or the conversion of any Subordinated Units into Common Units.

Section 7.7 Indemnification .

(a) To the fullest extent permitted by law but subject to the limitations expressly provided in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all threatened, pending or completed claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, and whether formal or informal and including appeals, in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, by reason of its status as an Indemnitee and acting (or refraining to act) in such capacity on behalf of or for the benefit of the Partnership; provided, that the Indemnitee shall not be indemnified and held harmless pursuant to this Agreement if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Agreement, the Indemnitee acted in bad faith or engaged in intentional fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful; provided, further, no indemnification pursuant to this Section 7.7 shall be available to any Affiliate of the General Partner (other than a Group Member), or to any other Indemnitee, with respect to any such Affiliate’s obligations pursuant to the Transaction Documents. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, it being agreed that the General Partner shall not be personally liable for such indemnification and shall have no obligation to contribute or loan any monies or property to the Partnership to enable it to effectuate such indemnification.

(b) To the fullest extent permitted by law, expenses (including legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior to a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Section 7.7, the Indemnitee is not entitled to be indemnified upon receipt by the Partnership of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall be ultimately determined that the Indemnitee is not entitled to be indemnified as authorized by this Section 7.7.

(c) The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of Outstanding Limited Partner Interests, as a matter of law, in equity or otherwise, both as to actions in the Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity (including any capacity under the Underwriting Agreement), and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.

(d) The Partnership may purchase and maintain (or reimburse the General Partner or its Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and such other Persons as the General Partner shall determine, against any liability that may be asserted against, or expense that may be incurred by, such Person in connection with the Partnership’s activities or such Person’s activities on behalf of the Partnership, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

(e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute “fines” within the meaning of Section 7.7(a); and action taken or omitted by it with respect to any employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the best interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose that is in the best interests of the Partnership.

(f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.

(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

(h) The provisions of this Section 7.7 are for the benefit of the Indemnitees and their heirs, successors, assigns, executors and administrators and shall not be deemed to create any rights for the benefit of any other Persons.

(i) No amendment, modification or repeal of this Section 7.7 or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such Indemnitee under and in accordance with the provisions of this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

Section 7.8 Liability of Indemnitees .

(a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall be liable for monetary damages to the Partnership, the Limited Partners, or any other Persons who are bound by this Agreement, for losses sustained or liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, the Indemnitee acted in bad faith or engaged in intentional fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was criminal.

(b) The General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents, and the General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by the General Partner in good faith.

(c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner and any other Indemnitee acting in connection with the Partnership’s business or affairs shall not be liable to the Partnership or to any Partner or to any other Persons who are bound by this Agreement for its good faith reliance on the provisions of this Agreement.

(d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of the Indemnitees under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties .

(a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement, whenever a potential conflict of interest exists or arises between the General Partner or any of its Affiliates, on the one hand, and the Partnership, any Group Member or any Partner, on the other, any resolution or course of action by the General Partner or its Affiliates in respect of such conflict of interest shall be permitted and deemed approved by all Partners, and shall not constitute a breach of this Agreement, of any Group Member Agreement, of any agreement contemplated herein or therein, or of any duty stated or implied by law or equity, if the resolution

or course of action in respect of such conflict of interest is (i) approved by Special Approval, (ii) approved by the vote of a majority of the Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates), (iii) on terms no less favorable to the Partnership than those generally being provided to or available from unrelated third parties or (iv) fair and reasonable to the Partnership, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Partnership). The General Partner shall be authorized but not required in connection with its resolution of such conflict of interest to seek Special Approval or Unitholder approval of such resolution, and the General Partner may also adopt a resolution or course of action that has not received Special Approval or Unitholder approval. Whenever the General Partner makes a determination to refer any potential conflict of interest to the Conflicts Committee for Special Approval, seek Unitholder approval or adopt a resolution or course of action that has not received Special Approval or Unitholder approval, then the General Partner shall be entitled, to the fullest extent permitted by law, to make such determination or to take or decline to take such other action free of any duty or obligation whatsoever to the Partnership or any Limited Partner, and the General Partner shall not, to the fullest extent permitted by law, be required to act in good faith or pursuant to any other standard or duty imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity, and the General Partner in making such determination or taking or declining to take such other action shall be permitted to do so in its sole and absolute discretion. If Special Approval is sought, then it shall be presumed that, in making its decision, the Conflicts Committee acted in good faith, and if the Board of Directors of the General Partner determines that the resolution or course of action taken with respect to a conflict of interest satisfies either of the standards set forth in clauses (iii) or (iv) above or that a director satisfies the eligibility requirements to be a member of the Conflicts Committee, then it shall be presumed that, in making its decision, the Board of Directors of the General Partner acted in good faith. In any proceeding brought by any Limited Partner or by or on behalf of such Limited Partner or any other Limited Partner or the Partnership challenging any action by the Conflicts Committee with respect to any matter referred to the Conflicts Committee for Special Approval by the General Partner, any determination by the Board of Directors of the General Partner that the resolution or course of action taken with respect to a conflict of interest satisfies either of the standards set forth in clauses (iii) or (iv) above or any determination by the Board of Directors of the General Partner that a director satisfies the eligibility requirements to be a member of the Conflicts Committee, the Person bringing or prosecuting such proceeding shall have the burden of overcoming the presumption that the Conflicts Committee or the Board of Directors of the General Partner, as applicable, acted in good faith. Notwithstanding anything to the contrary in this Agreement or any duty otherwise existing at law or equity, the existence of the conflicts of interest described in the IPO Registration Statement are hereby approved by all Partners and shall not constitute a breach of this Agreement or any such duty.

(b) Whenever the General Partner or the Board of Directors, or any committee thereof (including the Conflicts Committee), makes a determination or takes or declines to take any other action, or any Affiliate of the General Partner causes the General Partner to do so, in its capacity as the general partner of the Partnership as opposed to in its individual capacity, whether under this Agreement, any Group Member Agreement or any other agreement contemplated hereby or otherwise, then, unless another express standard is provided for in this

Agreement, the General Partner, the Board of Directors or such committee or such Affiliates causing the General Partner to do so, shall make such determination or take or decline to take such other action in good faith and shall not be subject to any other or different standards (including fiduciary standards) imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity. A determination or other action or inaction will conclusively be deemed to be in “good faith” for all purposes of this Agreement, if the Person or Persons making such determination or taking or declining to take such other action subjectively believe that the determination or other action or inaction is in the best interests of the Partnership Group.

(c) Whenever the General Partner makes a determination or takes or declines to take any other action, or any of its Affiliates causes it to do so, in its individual capacity as opposed to in its capacity as the general partner of the Partnership, whether under this Agreement, any Group Member Agreement or any other agreement contemplated hereby or otherwise, then the General Partner, or such Affiliates causing it to do so, are entitled, to the fullest extent permitted by law, to make such determination or to take or decline to take such other action free of any duty or obligation whatsoever to the Partnership or any Limited Partner, and the General Partner, or such Affiliates causing it to do so, shall not, to the fullest extent permitted by law, be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity, and the Person or Persons making such determination or taking or declining to take such other action shall be permitted to do so in their sole and absolute discretion. By way of illustration and not of limitation, whenever the phrase, “the General Partner at its option,” or some variation of that phrase, is used in this Agreement, it indicates that the General Partner is acting in its individual capacity. For the avoidance of doubt, whenever the General Partner votes or transfers its Partnership Interests, or refrains from voting or transferring its Partnership Interests, it shall be acting in its individual capacity.

(d) The General Partner’s organizational documents may provide that determinations to take or decline to take any action in its individual, rather than representative, capacity may or shall be determined by its members, if the General Partner is a limited liability company, stockholders, if the General Partner is a corporation, or the members or stockholders of the General Partner’s general partner, if the General Partner is a partnership.

(e) Notwithstanding anything to the contrary in this Agreement, the General Partner and its Affiliates shall have no duty or obligation, express or implied, to (i) sell or otherwise dispose of any asset of the Partnership Group other than in the ordinary course of business or (ii) permit any Group Member to use any facilities or assets of the General Partner and its Affiliates, except as may be provided in contracts entered into from time to time specifically dealing with such use. Any determination by the General Partner or any of its Affiliates to enter into such contracts shall be at its option.

(f) Except as expressly set forth in this Agreement or required by the Delaware Act, neither the General Partner nor any other Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Partnership or any Limited Partner and the provisions of this Agreement, to the extent that they restrict, eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of the General Partner or any other Indemnitee otherwise

existing at law or in equity, are agreed by the Partners to replace such other duties and liabilities of the General Partner or such other Indemnitee.

(g) The Unitholders hereby authorize the General Partner, on behalf of the Partnership as a partner or member of a Group Member, to approve actions by the general partner or managing member of such Group Member similar to those actions permitted to be taken by the General Partner pursuant to this Section 7.9.

Section 7.10 Other Matters Concerning the General Partner .

(a) The General Partner and any other Indemnitee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

(b) The General Partner and any other Indemnitee may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the advice or opinion (including an Opinion of Counsel) of such Persons as to matters that the General Partner or such Indemnitee, respectively, reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

(c) The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers, a duly appointed attorney or attorneys-in-fact or the duly authorized officers of the Partnership or any other Group Member.

Section 7.11 Purchase or Sale of Partnership Interests . The General Partner may cause the Partnership to purchase or otherwise acquire Partnership Interests or Derivative Partnership Interests; provided that, except as permitted pursuant to Section 4.10 or with the approval of the Conflicts Committee, the General Partner may not cause any Group Member to purchase Subordinated Units during the Subordination Period. As long as Partnership Interests are held by any Group Member, such Partnership Interests shall not be considered Outstanding for any purpose, except as otherwise provided herein. The General Partner or any Affiliate of the General Partner may also purchase or otherwise acquire and sell or otherwise dispose of Partnership Interests for its own account, subject to the provisions of Articles IV and X.

Section 7.12 Registration Rights of the General Partner and its Affiliates .

(a) Demand Registration . Upon receipt of a Notice from any Holder at any time after the 180th day after the Closing Date, the Partnership shall file with the Commission as promptly as reasonably practicable a registration statement under the Securities Act (each, a “Registration Statement”) providing for the resale of the Registrable Securities, which may, at the option of the Holder giving such Notice, be a Registration Statement that provides for the resale of the Registrable Securities from time to time pursuant to Rule 415 under the Securities Act. The Partnership shall not be required pursuant to this Section 7.12(a) to file more than one Registration Statement in any twelve-month period nor to file more than three Registration

Statements in the aggregate. The Partnership shall use commercially reasonable efforts to cause such Registration Statement to become effective as soon as reasonably practicable after the initial filing of the Registration Statement and to remain effective and available for the resale of the Registrable Securities by the Selling Holders named therein until the earlier of (i) six months following such Registration Statement’s effective date and (ii) the date on which all Registrable Securities covered by such Registration Statement have been sold. In the event one or more Holders request in a Notice to dispose of an aggregate of at least $20.0 million of Registrable Securities pursuant to a Registration Statement in an Underwritten Offering, the Partnership shall retain underwriters that are reasonably acceptable to such Selling Holders in order to permit such Selling Holders to effect such disposition through an Underwritten Offering; provided, however, that the Partnership shall have the exclusive right to select the bookrunning managers. The Partnership and such Selling Holders shall enter into an underwriting agreement in customary form that is reasonably acceptable to the Partnership and take all reasonable actions as are requested by the managing underwriters to facilitate the Underwritten Offering and sale of Registrable Securities therein. No Holder may participate in the Underwritten Offering unless it agrees to sell its Registrable Securities covered by the Registration Statement on the terms and conditions of the underwriting agreement and completes and delivers all necessary documents and information reasonably required under the terms of such underwriting agreement. In the event that the managing underwriter of such Underwritten Offering advises the Partnership and the Holder in writing that in its opinion the inclusion of all or some Registrable Securities would adversely and materially affect the timing or success of the Underwritten Offering, the amount of Registrable Securities that each Selling Holder requested be included in such Underwritten Offering shall be reduced on a Pro Rata basis to the aggregate amount that the managing underwriter deems will not have such material and adverse effect. Any Holder may withdraw from such Underwritten Offering by notice to the Partnership and the managing underwriter; provided such notice is delivered prior to the launch of such Underwritten Offering.

(b) Piggyback Registration . At any time after the 180th day after the Closing Date, if the Partnership shall propose to file a Registration Statement (other than pursuant to a demand made pursuant to Section 7.12(a)) for an offering of Partnership Interests for cash (other than an offering relating solely to an employee benefit plan, an offering relating to a transaction on Form S-4 or an offering on any registration statement that does not permit secondary sales), the Partnership shall notify all Holders of such proposal at least five Business Days before the proposed filing date. The Partnership shall use commercially reasonable efforts to include such number of Registrable Securities held by any Holder in such Registration Statement as each Holder shall request in a Notice received by the Partnership within two business days of such Holder’s receipt of the notice from the Partnership. If the Registration Statement about which the Partnership gives notice under this Section 7.12(b) is for an Underwritten Offering, then any Holder’s ability to include its desired amount of Registrable Securities in such Registration Statement shall be conditioned on such Holder’s inclusion of all such Registrable Securities in the Underwritten Offering; provided that, in the event that the managing underwriter of such Underwritten Offering advises the Partnership and the Holder in writing that in its opinion the inclusion of all or some Registrable Securities would adversely and materially affect the timing or success of the Underwritten Offering, the amount of Registrable Securities that each Selling Holder requested be included in such Underwritten Offering shall be reduced on a Pro Rata basis to the aggregate amount that the managing underwriter deems will not have such material and adverse effect. In connection with any such Underwritten Offering, the Partnership and the

Selling Holders involved shall enter into an underwriting agreement in customary form that is reasonably acceptable to the Partnership and take all reasonable actions as are requested by the managing underwriters to facilitate the Underwritten Offering and sale of Registrable Securities therein. No Holder may participate in the Underwritten Offering unless it agrees to sells its Registrable Securities covered by the Registration Statement on the terms and conditions of the underwriting agreement and completes and delivers all necessary documents and information reasonably required under the terms of such underwriting agreement. Any Holder may withdraw from such Underwritten Offering by notice to the Partnership and the managing underwriter; provided such notice is delivered prior to the launch of such Underwritten Offering. The Partnership shall have the right to terminate or withdraw any Registration Statement or Underwritten Offering initiated by it under this Section 7.12(b) prior to the effective date of the Registration Statement or the pricing date of the Underwritten Offering, as applicable.

(i) furnish to each Selling Holder (A) as far in advance as reasonably practicable before filing a Registration Statement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing a Registration Statement or supplement or amendment thereto, and (B) such number of copies of such Registration Statement and the prospectus included therein and any supplements and amendments thereto as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement; provided that the Partnership will not have any obligation to provide any document pursuant to clause (B) hereof that is available on the Commission’s website;

(ii) if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by a Registration Statement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the managing underwriter, shall reasonably request; provided, however, that the Partnership will not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action that would subject it to general service of process in any jurisdiction where it is not then so subject;

(iii) promptly notify each Selling Holder and each underwriter, at any time when a prospectus is required to be delivered under the Securities Act, of (A) the filing of a Registration Statement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Registration Statement or any post-effective amendment thereto, when the same has become effective; and (B) any written comments from the Commission with respect to

any Registration Statement or any document incorporated by reference therein and any written request by the Commission for amendments or supplements to a Registration Statement or any prospectus or prospectus supplement thereto;

(iv) immediately notify each Selling Holder and each underwriter, at any time when a prospectus is required to be delivered under the Securities Act, of (A) the occurrence of any event or existence of any fact (but not a description of such event or fact) as a result of which the prospectus or prospectus supplement contained in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the prospectus contained therein, in the light of the circumstances under which a statement is made); (B) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement, or the initiation of any proceedings for that purpose; or (C) the receipt by the Partnership of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, subject to Section 7.12(f), the Partnership agrees to, as promptly as practicable, amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include 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 in the light of the circumstances then existing and to take such other reasonable action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto; and

(v) enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of the Registrable Securities, including the provision of comfort letters and legal opinions as are customary in such securities offerings.

(d) Suspension . Each Selling Holder, upon receipt of notice from the Partnership of the happening of any event of the kind described in Section 7.12(c)(iv), shall forthwith discontinue disposition of the Registrable Securities by means of a prospectus or prospectus supplement until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by such subsection or until it is advised in writing by the Partnership that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings incorporated by reference in the prospectus.

(e) Expenses . Except as set forth in an underwriting agreement for the applicable Underwritten Offering or as otherwise agreed between a Selling Holder and the Partnership, all costs and expenses of a Registration Statement filed or an Underwritten Offering that includes Registrable Securities pursuant to this Section 7.12 (other than underwriting discounts and commissions on Registrable Securities and fees and expenses of counsel and advisors to Selling Holders) shall be paid by the Partnership.

(f) Delay Right . Notwithstanding anything to the contrary herein, if the General Partner determines that the Partnership’s compliance with its obligations in this Section 7.12

would be detrimental to the Partnership because such registration would (x) materially interfere with a significant acquisition, reorganization or other similar transaction involving the Partnership, (y) require premature disclosure of material information that the Partnership has a bona fide business purpose for preserving as confidential or (z) render the Partnership unable to comply with requirements under applicable securities laws, then the Partnership shall have the right to postpone compliance with such obligations for a period of not more than six months; provided that such right may not be exercised more than twice in any 24-month period.

(g) Indemnification .

(i) In addition to and not in limitation of the Partnership’s obligation under Section 7.7, the Partnership shall, to the fullest extent permitted by law, indemnify and hold harmless each Selling Holder, its officers, directors and each Person who controls the Holder (within the meaning of the Securities Act) and any agent thereof (collectively, “Indemnified Persons”) from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which any Indemnified Person may be involved, or is threatened to be involved, as a party or otherwise, under the Securities Act or otherwise (hereinafter referred to in this Section 7.12(g) as a “claim” and in the plural as “claims”) based upon, arising out of or resulting from any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, preliminary prospectus, final prospectus or issuer free writing prospectus under which any Registrable Securities were registered or sold under the Securities Act, or arising out of, based upon or resulting from 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; provided, however, that the Partnership shall not be liable to any Indemnified Person to the extent that any such claim arises out of, is based upon or results from an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus or issuer free writing prospectus in reliance upon and in conformity with written information furnished to the Partnership by or on behalf of such Indemnified Person specifically for use in the preparation thereof.

(ii) Each Selling Holder shall, to the fullest extent permitted by law, indemnify and hold harmless the Partnership, the General Partner, the General Partner’s officers and directors and each Person who controls the Partnership or the General Partner (within the meaning of the Securities Act) and any agent thereof to the same extent as the foregoing indemnity from the Partnership to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in a Registration Statement, prospectus or free writing prospectus relating to the Registrable Securities held by such Selling Holder.

(iii) The provisions of this Section 7.12(g) shall be in addition to any other rights to indemnification or contribution that a Person entitled to indemnification under this Section 7.12(g) may have pursuant to law, equity, contract or otherwise.

(h) Specific Performance . Damages in the event of breach of Section 7.12 by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each party, in addition to and without limiting any other remedy or right it may have, will have the right to seek an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives, to the fullest extent permitted by law, any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right will not preclude any such party from pursuing any other rights and remedies at law or in equity that such party may have.

Section 7.13 Reliance by Third Parties . Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner and any officer of the General Partner authorized by the General Partner to act on behalf of and in the name of the Partnership has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner or any such officer as if it were the Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby waives, to the fullest extent permitted by law, any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the General Partner or any such officer in connection with any such dealing. In no event shall any Person dealing with the General Partner or any such officer or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the General Partner or any such officer or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (c) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

ARTICLE VIII.
BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1 Records and Accounting . The General Partner shall keep or cause to be kept at the principal office of the Partnership appropriate books and records with respect to the Partnership’s business, including all books and records necessary to provide to the Limited Partners any information required to be provided pursuant to Section 3.3(a). Any books and records maintained by or on behalf of the Partnership in the regular course of its business, including the register of the Record Holders of Units or other Partnership Interests, books of account and records of Partnership proceedings, may be kept on, or be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs, micrographics or any other information storage device; provided, that the books and records so maintained are convertible into clearly legible written form within a reasonable period of time. The books of the Partnership shall be maintained, for financial reporting purposes, on an accrual basis in accordance with U.S. GAAP. The Partnership shall not be required to keep books maintained on

a cash basis and the General Partner shall be permitted to calculate cash-based measures, including Operating Surplus and Adjusted Operating Surplus, by making such adjustments to its accrual basis books to account for non-cash items and other adjustments as the General Partner determines to be necessary or appropriate.

Section 8.2 Fiscal Year . The fiscal year of the Partnership shall be a fiscal year ending December 31.

Section 8.3 Reports .

(a) Whether or not the Partnership is subject to the requirement to file reports with the Commission, as soon as practicable, but in no event later than 90 days after the close of each fiscal year of the Partnership (or such shorter period as required by the Commission), the General Partner shall cause to be mailed or made available, by any reasonable means (including posting on or accessible through the Partnership’s or the Commission’s website) to each Record Holder of a Unit as of a date selected by the General Partner, an annual report containing financial statements of the Partnership for such fiscal year of the Partnership, presented in accordance with U.S. GAAP, including a balance sheet and statements of operations, Partnership equity and cash flows, such statements to be audited by a firm of independent public accountants selected by the General Partner, and such other information as may be required by applicable law, regulation or rule of the Commission or any National Securities Exchange on which the Units are listed or admitted to trading, or as the General Partner determines to be necessary or appropriate.

(b) Whether or not the Partnership is subject to the requirement to file reports with the Commission, as soon as practicable, but in no event later than 45 days after the close of each Quarter (or such shorter period as required by the Commission) except the last Quarter of each fiscal year, the General Partner shall cause to be mailed or made available, by any reasonable means (including posting on or accessible through the Partnership’s or the Commission’s website) to each Record Holder of a Unit, as of a date selected by the General Partner, a report containing unaudited financial statements of the Partnership and such other information as may be required by applicable law, regulation or rule of the Commission or any National Securities Exchange on which the Units are listed or admitted to trading, or as the General Partner determines to be necessary or appropriate.

ARTICLE IX.
TAX MATTERS

Section 9.1 Tax Returns and Information . The Partnership shall timely file all returns of the Partnership that are required for federal, state and local income tax purposes on the basis of the accrual method and the taxable period or year that it is required by law to adopt, from time to time, as determined by the General Partner. In the event the Partnership is required to use a taxable period other than a year ending on December 31, the General Partner shall use reasonable efforts to change the taxable period of the Partnership to a year ending on December 31. The tax information reasonably required by Record Holders for federal, state and local income tax reporting purposes with respect to a taxable period shall be furnished to them within 90 days of the close of the calendar year in which the Partnership’s taxable period ends. The classification,

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realization and recognition of income, gain, losses and deductions and other items shall be on the accrual method of accounting for federal income tax purposes.

Section 9.2 Tax Elections .

(a) The Partnership shall make the election under Section 754 of the Code in accordance with applicable regulations thereunder, subject to the reservation of the right to seek to revoke any such election upon the General Partner’s determination that such revocation is in the best interests of the Limited Partners. Notwithstanding any other provision herein contained, for the purposes of computing the adjustments under Section 743(b) of the Code, the General Partner shall be authorized (but not required) to adopt a convention whereby the price paid by a transferee of a Limited Partner Interest will be deemed to be the lowest quoted closing price of the Limited Partner Interests on any National Securities Exchange on which such Limited Partner Interests are listed or admitted to trading during the calendar month in which such transfer is deemed to occur pursuant to Section 6.2(f) without regard to the actual price paid by such transferee.

(b) Except as otherwise provided herein, the General Partner shall determine whether the Partnership should make any other elections permitted by the Code.

Section 9.3 Tax Controversies . Subject to the provisions hereof, the General Partner is designated as the “tax matters partner” (as defined in Section 6231(a)(7) of the Code) and is authorized and required to represent the Partnership (at the Partnership’s expense) in connection with all examinations of the Partnership’s affairs by tax authorities, including resulting administrative and judicial proceedings, and to expend Partnership funds for professional services and costs associated therewith. Each Partner agrees to cooperate with the General Partner and to do or refrain from doing any or all things reasonably required by the General Partner to conduct such proceedings.

Section 9.4 Withholding . Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that may be required to cause the Partnership and other Group Members to comply with any withholding requirements established under the Code or any other federal, state or local law including pursuant to Sections 1441, 1442, 1445 and 1446 of the Code, or established under any foreign law. To the extent that the Partnership is required or elects to withhold and pay over to any taxing authority any amount resulting from the allocation or distribution of income to any Partner (including by reason of Section 1446 of the Code), the General Partner may treat the amount withheld as a distribution of cash pursuant to Section 6.3 or Section 12.4(c) in the amount of such withholding from such Partner.

ARTICLE X.
ADMISSION OF PARTNERS

Section 10.1 Admission of Limited Partners .

(a) Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive Distribution Rights to the General Partner, Holdings and the IPO Underwriters in connection with the Initial Public Offering as described in Article V, such Persons shall, by acceptance of such Partnership Interests, and upon becoming the Record Holders of such

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Partnership Interests, be admitted to the Partnership as Initial Limited Partners in respect of the Common Units, Subordinated Units or Incentive Distribution Rights issued to them and be bound by this Agreement, all with or without execution of this Agreement by such Persons.

(b) By acceptance of any Limited Partner Interests transferred in accordance with Article IV or the acceptance of any Limited Partner Interests issued pursuant to Article V or pursuant to a merger, consolidation or conversion pursuant to Article XIV, and except as provided in Section 4.9, each transferee of, or other such Person acquiring, a Limited Partner Interest (including any nominee, agent or representative acquiring such Limited Partner Interests for the account of another Person or Group, who shall be subject to Section 10.1(c) below) (i) shall be admitted to the Partnership as a Limited Partner with respect to the Limited Partner Interests so transferred or issued to such Person when such Person becomes the Record Holder of the Limited Partner Interests so transferred or acquired, (ii) shall become bound, and shall be deemed to have agreed to be bound, by the terms of this Agreement, (iii) shall be deemed to represent that the transferee or acquirer has the capacity, power and authority to enter into this Agreement and (iv) shall be deemed to make any consents, acknowledgements or waivers contained in this Agreement, all with or without execution of this Agreement by such Person. The transfer of any Limited Partner Interests and the admission of any new Limited Partner shall not constitute an amendment to this Agreement. A Person may become a Limited Partner without the consent or approval of any of the Partners. A Person may not become a Limited Partner without acquiring a Limited Partner Interest and becoming the Record Holder of such Limited Partner Interest. The rights and obligations of a Person who is an Ineligible Holder shall be determined in accordance with Section 4.9.

(c) With respect to any Limited Partner that holds Units representing Limited Partner Interests for another Person’s account (such as a broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing), in whose name such Units are registered, such Limited Partner shall, in exercising the rights of a Limited Partner in respect of such Units on any matter, and unless the arrangement between such Persons provides otherwise, take all action as a Limited Partner by virtue of being the Record Holder of such Units at the direction of the Person who is the beneficial owner, and the Partnership shall be entitled to assume such Limited Partner is so acting without further inquiry.

(d) The name and mailing address of each Record Holder shall be listed on the books of the Partnership maintained for such purpose by the Partnership or the Transfer Agent. The General Partner shall update the books of the Partnership from time to time as necessary to reflect accurately the information therein (or shall cause the Transfer Agent to do so, as applicable).

(e) Any transfer of a Limited Partner Interest shall not entitle the transferee to share in the profits and losses, to receive distributions, to receive allocations of income, gain, loss, deduction or credit or any similar item or to any other rights to which the transferor was entitled until the transferee becomes a Limited Partner pursuant to Section 10.1(b).

Section 10.2 Admission of Successor General Partner . A successor General Partner approved pursuant to Section 11.1 or Section 11.2 or the transferee of or successor to all of the General Partner Interest pursuant to Section 4.6 who is proposed to be admitted as a successor

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General Partner shall be admitted to the Partnership as the General Partner, effective immediately prior to the withdrawal or removal of the predecessor or transferring General Partner, pursuant to Section 11.1 or 11.2 or the transfer of the General Partner Interest pursuant to Section 4.6, provided, however, that no such successor shall be admitted to the Partnership until compliance with the terms of Section 4.6 has occurred and such successor has executed and delivered such other documents or instruments as may be required to effect such admission. Any such successor is hereby authorized to and shall, subject to the terms hereof, carry on the business of the members of the Partnership Group without dissolution.

Section 10.3 Amendment of Agreement and Certificate of Limited Partnership . To effect the admission to the Partnership of any Partner, the General Partner shall take all steps necessary or appropriate under the Delaware Act to amend the records of the Partnership to reflect such admission and, if necessary, to prepare as soon as practicable an amendment to this Agreement and, if required by law, the General Partner shall prepare and file an amendment to the Certificate of Limited Partnership.

ARTICLE XI.
WITHDRAWAL OR REMOVAL OF PARTNERS

Section 11.1 Withdrawal of the General Partner .

(a) The General Partner shall be deemed to have withdrawn from the Partnership upon the occurrence of any one of the following events (each such event herein referred to as an “Event of Withdrawal”);

(i) The General Partner voluntarily withdraws from the Partnership by giving written notice to the other Partners;

(ii) The General Partner transfers all of its General Partner Interest pursuant to Section 4.6;

(iii) The General Partner is removed pursuant to Section 11.2;

(iv) The General Partner (A) makes a general assignment for the benefit of creditors; (B) files a voluntary bankruptcy petition for relief under Chapter 7 of the United States Bankruptcy Code; (C) files a petition or answer seeking for itself a liquidation, dissolution or similar relief (but not a reorganization) under any law; (D) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the General Partner in a proceeding of the type described in clauses (A) through (C) of this Section 11.1(a)(iv); or (E) seeks, consents to or acquiesces in the appointment of a trustee (but not a debtor-in-possession), receiver or liquidator of the General Partner or of all or any substantial part of its properties;

(v) A final and non-appealable order of relief under Chapter 7 of the United States Bankruptcy Code is entered by a court with appropriate jurisdiction pursuant to a voluntary or involuntary petition by or against the General Partner; or

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(vi) (A) if the General Partner is a corporation, a certificate of dissolution or its equivalent is filed for the General Partner, or 90 days expire after the date of notice to the General Partner of revocation of its charter without a reinstatement of its charter, under the laws of its state of incorporation; (B) if the General Partner is a partnership or a limited liability company, the dissolution and commencement of winding up of the General Partner; (C) if the General Partner is acting in such capacity by virtue of being a trustee of a trust, the termination of the trust; (D) if the General Partner is a natural person, his death or adjudication of incompetency; and (E) otherwise upon the termination of the General Partner.

If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E) occurs, the withdrawing General Partner shall give notice to the Limited Partners within 30 days after such occurrence. The Partners hereby agree that only the Events of Withdrawal described in this Section 11.1 shall result in the withdrawal of the General Partner from the Partnership.

(b) Withdrawal of the General Partner from the Partnership upon the occurrence of an Event of Withdrawal shall not constitute a breach of this Agreement under the following circumstances: (i) at any time during the period beginning on the Closing Date and ending at 12:00 midnight, Central Time, on December 31, 2022 the General Partner voluntarily withdraws by giving at least 90 days’ advance notice of its intention to withdraw to the Limited Partners; provided, that prior to the effective date of such withdrawal, the withdrawal is approved by Unitholders holding at least a majority of the Outstanding Common Units (excluding Common Units held by the General Partner and its Affiliates) and the General Partner delivers to the Partnership an Opinion of Counsel (“Withdrawal Opinion of Counsel”) that such withdrawal (following the selection of the successor General Partner) would not result in the loss of the limited liability under the Delaware Act of any Limited Partner or cause any Group Member to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so treated or taxed); (ii) at any time after 12:00 midnight, Central Time, on December 31, 2022 the General Partner voluntarily withdraws by giving at least 90 days’ advance notice to the Unitholders, such withdrawal to take effect on the date specified in such notice; (iii) at any time that the General Partner ceases to be the General Partner pursuant to Section 11.1(a)(ii) or is removed pursuant to Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any time that the General Partner voluntarily withdraws by giving at least 90 days’ advance notice of its intention to withdraw to the Limited Partners, such withdrawal to take effect on the date specified in the notice, if at the time such notice is given one Person and its Affiliates (other than the General Partner and its Affiliates) own beneficially or of record or control at least 50% of the Outstanding Units. The withdrawal of the General Partner from the Partnership upon the occurrence of an Event of Withdrawal shall also constitute the withdrawal of the General Partner as general partner or managing member, if any, to the extent applicable, of the other Group Members. If the General Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit Majority, may, prior to the effective date of such withdrawal, elect a successor General Partner. The Person so elected as successor General Partner shall automatically become the successor general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general partner or a managing member. If, prior to the effective date of the General Partner’s withdrawal, a successor is not elected by the Unitholders as provided herein or the Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in

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accordance with Section 12.1 unless the business of the Partnership is continued pursuant to Section 12.2. Any successor General Partner elected in accordance with the terms of this Section 11.1 shall be subject to the provisions of Section 10.2.

Section 11.2 Removal of the General Partner . The General Partner may be removed if such removal is approved by the Unitholders holding at least 66 2/3% of the Outstanding Units (including Units held by the General Partner and its Affiliates) voting as a single class. Any such action by such holders for removal of the General Partner must also provide for the election of a successor General Partner by the Unitholders holding a majority of the outstanding Common Units voting as a class or series and Unitholders holding a majority of the outstanding Subordinated Units (if any Subordinated Units are then Outstanding) voting as a class (including, in each case, Units held by the General Partner and its Affiliates). Such removal shall be effective immediately following the admission of a successor General Partner pursuant to Section 10.2. The removal of the General Partner shall also automatically constitute the removal of the General Partner as general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general partner or a managing member. If a Person is elected as a successor General Partner in accordance with the terms of this Section 11.2, such Person shall, upon admission pursuant to Section 10.2, automatically become a successor general partner or managing member, to the extent applicable, of the other Group Members of which the General Partner is a general partner or a managing member. The right of the holders of Outstanding Units to remove the General Partner shall not exist or be exercised unless the Partnership has received an opinion opining as to the matters covered by a Withdrawal Opinion of Counsel. Any successor General Partner elected in accordance with the terms of this Section 11.2 shall be subject to the provisions of Section 10.2.

Section 11.3 Interest of Departing General Partner and Successor General Partner .

(a) In the event of (i) withdrawal of the General Partner under circumstances where such withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of Outstanding Units under circumstances where Cause does not exist, if the successor General Partner is elected in accordance with the terms of Section 11.1 or Section 11.2, the Departing General Partner shall have the option, exercisable prior to the effective date of the withdrawal or removal of such Departing General Partner, to require its successor to purchase its General Partner Interest and its or its Affiliates’ general partner interest (or equivalent interest), if any, in the other Group Members and all of its or its Affiliates’ Incentive Distribution Rights (collectively, the “Combined Interest”) in exchange for an amount in cash equal to the fair market value of such Combined Interest, such amount to be determined and payable as of the effective date of its withdrawal or removal. If the General Partner is removed by the Unitholders under circumstances where Cause exists or if the General Partner withdraws under circumstances where such withdrawal violates this Agreement, and if a successor General Partner is elected in accordance with the terms of Section 11.1 or Section 11.2 (or if the business of the Partnership is continued pursuant to Section 12.2 and the successor General Partner is not the former General Partner), such successor shall have the option, exercisable prior to the effective date of the withdrawal or removal of such Departing General Partner (or, in the event the business of the Partnership is continued, prior to the date the business of the Partnership is continued), to purchase the Combined Interest for such fair market value of such Combined Interest. In either event, the Departing General Partner shall be entitled to receive all reimbursements due such

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Departing General Partner pursuant to Section 7.4, including any employee-related liabilities (including severance liabilities), incurred in connection with the termination of any employees employed by the Departing General Partner or its Affiliates (other than any Group Member) for the benefit of the Partnership or the other Group Members.

For purposes of this Section 11.3(a), the fair market value of the Combined Interest shall be determined by agreement between the Departing General Partner and its successor or, failing agreement within 30 days after the effective date of such Departing General Partner’s withdrawal or removal, by an independent investment banking firm or other independent expert selected by the Departing General Partner and its successor, which, in turn, may rely on other experts, and the determination of which shall be conclusive as to such matter. If such parties cannot agree upon one independent investment banking firm or other independent expert within 45 days after the effective date of such withdrawal or removal, then the Departing General Partner shall designate an independent investment banking firm or other independent expert, the Departing General Partner’s successor shall designate an independent investment banking firm or other independent expert, and such firms or experts shall mutually select a third independent investment banking firm or independent expert, which third independent investment banking firm or other independent expert shall determine the fair market value of the Combined Interest. In making its determination, such third independent investment banking firm or other independent expert may consider the then current trading price of Units on any National Securities Exchange on which Units are then listed or admitted to trading, the value of the Partnership’s assets, the rights and obligations of the Departing General Partner, the value of the Incentive Distribution Rights and the General Partner Interest and other factors it may deem relevant.

(b) If the Combined Interest is not purchased in the manner set forth in Section 11.3(a), the Departing General Partner (or its transferee) shall become a Limited Partner and its Combined Interest shall be converted into Common Units pursuant to a valuation made by an investment banking firm or other independent expert selected pursuant to Section 11.3(a), without reduction in such Partnership Interest (but subject to proportionate dilution by reason of the admission of its successor). Any successor General Partner shall indemnify the Departing General Partner (or its transferee) as to all debts and liabilities of the Partnership arising on or after the date on which the Departing General Partner (or its transferee) becomes a Limited Partner. For purposes of this Agreement, conversion of the Combined Interest of the Departing General Partner to Common Units will be characterized as if the Departing General Partner (or its transferee) contributed its Combined Interest to the Partnership in exchange for the newly issued Common Units.

(c) If a successor General Partner is elected in accordance with the terms of Section 11.1 or Section 11.2 (or if the business of the Partnership is continued pursuant to Section 12.2 and the successor General Partner is not the former General Partner) and the option described in Section 11.3(a) is not exercised by the party entitled to do so, the successor General Partner shall, at the effective date of its admission to the Partnership, contribute to the Partnership cash in the amount equal to the product of (x) the quotient obtained by dividing (A) the Percentage Interest of the General Partner Interest of the Departing General Partner by (B) a percentage equal to 100% less the Percentage Interest of the General Partner Interest of the Departing General Partner and (y) the Net Agreed Value of the Partnership’s assets on such date. In such

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event, such successor General Partner shall, subject to the following sentence, be entitled to its Percentage Interest of all Partnership allocations and distributions to which the Departing General Partner was entitled. In addition, the successor General Partner shall cause this Agreement to be amended to reflect that, from and after the date of such successor General Partner’s admission, the successor General Partner’s interest in all Partnership distributions and allocations shall be its Percentage Interest.

Section 11.4 Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages . Notwithstanding any provision of this Agreement, if the General Partner is removed as general partner of the Partnership under circumstances where Cause does not exist and Units held by the General Partner and its Affiliates are not voted in favor of such removal, (i) the Subordination Period will end and all Outstanding Subordinated Units will immediately and automatically convert into Common Units on a one-for-one basis, (ii) all Cumulative Common Unit Arrearages on the Common Units will be extinguished and (iii) the General Partner will have the right to convert its General Partner Interest and its Incentive Distribution Rights into Common Units or to receive cash in exchange therefor in accordance with Section 11.3.

Section 11.5 Withdrawal of Limited Partners . No Limited Partner shall have any right to withdraw from the Partnership; provided, however, that when a transferee of a Limited Partner’s Limited Partner Interest becomes a Record Holder of the Limited Partner Interest so transferred, such transferring Limited Partner shall cease to be a Limited Partner with respect to the Limited Partner Interest so transferred.

ARTICLE XII.
DISSOLUTION AND LIQUIDATION

Section 12.1 Dissolution . The Partnership shall not be dissolved by the admission of additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the removal or withdrawal of the General Partner, if a successor General Partner is elected pursuant to Section 11.1, Section 11.2 or Section 12.2, to the fullest extent permitted by law, the Partnership shall not be dissolved and such successor General Partner shall continue the business of the Partnership. The Partnership shall dissolve, and (subject to Section 12.2) its affairs shall be wound up, upon:

(a) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other than Section 11.1(a)(ii)), unless a successor is elected and a Withdrawal Opinion of Counsel is received as provided in Section 11.1(b) or 11.2 and such successor is admitted to the Partnership pursuant to Section 10.2;

(b) an election to dissolve the Partnership by the General Partner that is approved by the holders of a Unit Majority;

(d) at any time there are no Limited Partners, unless the Partnership is continued without dissolution in accordance with the Delaware Act.

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Section 12.2 Continuation of the Business of the Partnership After Dissolution . Upon (a) dissolution of the Partnership following an Event of Withdrawal caused by the withdrawal or removal of the General Partner as provided in Section 11.1(a)(i) or (iii) and the failure of the Partners to select a successor to such Departing General Partner pursuant to Section 11.1 or Section 11.2, then, to the maximum extent permitted by law, within 90 days thereafter, or (b) dissolution of the Partnership upon an event constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or (vi), then, to the maximum extent permitted by law, within 180 days thereafter, the holders of a Unit Majority may elect to continue the business of the Partnership on the same terms and conditions set forth in this Agreement by appointing as a successor General Partner a Person approved by the holders of a Unit Majority. Unless such an election is made within the applicable time period as set forth above, the Partnership shall conduct only activities necessary to wind up its affairs. If such an election is so made, then:

(i) the Partnership shall continue without dissolution unless earlier dissolved in accordance with this Article XII;

(ii) if the successor General Partner is not the former General Partner, then the interest of the former General Partner shall be treated in the manner provided in Section 11.3; and

(iii) the successor General Partner shall be admitted to the Partnership as General Partner, effective as of the Event of Withdrawal, by agreeing in writing to be bound by this Agreement;

provided, that the right of the holders of a Unit Majority to approve a successor General Partner and to continue the business of the Partnership shall not exist and may not be exercised unless the Partnership has received an Opinion of Counsel that (x) the exercise of the right would not result in the loss of limited liability of any Limited Partner under the Delaware Act and (y) neither the Partnership nor any Group Member would be treated as an association taxable as a corporation or otherwise be taxable as an entity for federal income tax purposes upon the exercise of such right to continue (to the extent not already so treated or taxed).

Section 12.3 Liquidator . Upon dissolution of the Partnership, unless the business of the Partnership is continued pursuant to Section 12.2, the General Partner may elect to act as Liquidator or shall select one or more Persons to act as Liquidator. The Liquidator (if other than the General Partner) shall be entitled to receive such compensation for its services as may be approved by holders of at least a majority of the Outstanding Common Units and Subordinated Units, if any, voting as a single class. The Liquidator (if other than the General Partner) shall agree not to resign at any time without 15 days’ prior notice and may be removed at any time, with or without cause, by notice of removal approved by holders of at least a majority of the Outstanding Common Units and Subordinated Units, if any, voting as a single class. Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall within 30 days thereafter be approved by holders of at least a majority of the Outstanding Common Units and Subordinated Units, if any, voting as a single class. The right to approve a successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to any such successor or substitute Liquidator approved in the manner herein provided. Except as expressly

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provided in this Article XII, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the parties hereto, all of the powers conferred upon the General Partner under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers, other than the limitation on sale set forth in Section 7.3) necessary or appropriate to carry out the duties and functions of the Liquidator hereunder for and during the period of time required to complete the winding up and liquidation of the Partnership as provided for herein.

Section 12.4 Liquidation . The Liquidator shall proceed to dispose of the assets of the Partnership, discharge its liabilities, and otherwise wind up its affairs in such manner and over such period as determined by the Liquidator, subject to Section 17-804 of the Delaware Act and the following:

(a) The assets may be disposed of by public or private sale or by distribution in kind to one or more Partners on such terms as the Liquidator and such Partner or Partners may agree. If any property is distributed in kind, the Partner receiving the property shall be deemed for purposes of Section 12.4(c) to have received cash equal to its fair market value; and contemporaneously therewith, appropriate cash distributions must be made to the other Partners. The Liquidator may defer liquidation or distribution of the Partnership’s assets for a reasonable time if it determines that an immediate sale or distribution of all or some of the Partnership’s assets would be impractical or would cause undue loss to the Partners. The Liquidator may distribute the Partnership’s assets, in whole or in part, in kind if it determines that a sale would be impractical or would cause undue loss to the Partners.

(b) Liabilities of the Partnership include amounts owed to the Liquidator as compensation for serving in such capacity (subject to the terms of Section 12.3) and amounts to Partners otherwise than in respect of their distribution rights under Article VI. With respect to any liability that is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator shall either settle such claim for such amount as it thinks appropriate or establish a reserve of cash or other assets to provide for its payment. When paid, any unused portion of the reserve shall be distributed as additional liquidation proceeds.

(c) All property and all cash in excess of that required to satisfy liabilities as provided in Section 12.4(b) and that required to satisfy liquidation preferences of the Series A Preferred Units provided for under Section 5.12(b)(iv) shall be distributed to the Partners in accordance with, and to the extent of, the positive balances in their respective Capital Accounts, as determined after taking into account all Capital Account adjustments (other than those made by reason of distributions pursuant to this Section 12.4(c)) for the taxable period of the Partnership during which the liquidation of the Partnership occurs (with such date of occurrence being determined pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable period (or, if later, within 90 days after said date of such occurrence).

Section 12.5 Cancellation of Certificate of Limited Partnership . Upon the completion of the distribution of Partnership cash and property as provided in Section 12.4 in connection with the liquidation of the Partnership, the Certificate of Limited Partnership and all qualifications of the Partnership as a foreign limited partnership in jurisdictions other than the

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State of Delaware shall be canceled and such other actions as may be necessary to terminate the Partnership shall be taken.

Section 12.6 Return of Contributions . The General Partner shall not be personally liable for, and shall have no obligation to contribute or loan any monies or property to the Partnership to enable it to effectuate, the return of the Capital Contributions of the Limited Partners or Unitholders, or any portion thereof, it being expressly understood that any such return shall be made solely from Partnership assets.

Section 12.7 Waiver of Partition . To the maximum extent permitted by law, each Partner hereby waives any right to partition of the Partnership property.

Section 12.8 Capital Account Restoration . No Limited Partner shall have any obligation to restore any negative balance in its Capital Account upon liquidation of the Partnership. The General Partner shall be obligated to restore any negative balance in its Capital Account upon liquidation of its interest in the Partnership by the end of the taxable year of the Partnership during which such liquidation occurs, or, if later, within 90 days after the date of such liquidation.

Section 12.9 Series A Liquidation Value . Notwithstanding anything to the contrary set forth in this Agreement, the holders of the Series A Preferred Units shall have the rights, preferences and privileges set forth in Section 5.12(b)(iv) upon liquidation of the Partnership pursuant to this Article XII.

ARTICLE XIII.
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

Section 13.1 Amendments to be Adopted Solely by the General Partner . Except as set forth in Section 5.12(b)(v), each Partner agrees that the General Partner, without the approval of any Partner, may amend any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect:

(a) a change in the name of the Partnership, the location of the principal place of business of the Partnership, the registered agent of the Partnership or the registered office of the Partnership;

(b) admission, substitution, withdrawal or removal of Partners in accordance with this Agreement;

(c) a change that the General Partner determines to be necessary or appropriate to qualify or continue the qualification of the Partnership as a limited partnership or a partnership in which the Limited Partners have limited liability under the laws of any state or to ensure that the Group Members will not be treated as associations taxable as corporations or otherwise taxed as entities for federal income tax purposes;

(d) a change that the General Partner determines, (i) does not adversely affect the Limited Partners considered as a whole or any particular class of Partnership Interests as compared to other classes of Partnership Interests in any material respect (except as permitted by

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subsection (g) of this Section 13.1), (ii) to be necessary or appropriate to (A) satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute (including the Delaware Act) or (B) facilitate the trading of the Units (including the division of any class or classes of Outstanding Units into different classes to facilitate uniformity of tax consequences within such classes of Units) or comply with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Units are or will be listed or admitted to trading, (iii) to be necessary or appropriate in connection with action taken by the General Partner pursuant to Section 5.9 or (iv) is required to effect the intent expressed in the IPO Registration Statement or the intent of the provisions of this Agreement or is otherwise contemplated by this Agreement;

(e) a change in the fiscal year or taxable year of the Partnership and any other changes that the General Partner determines to be necessary or appropriate as a result of a change in the fiscal year or taxable year of the Partnership including, if the General Partner shall so determine, a change in the definition of “Quarter” and the dates on which distributions are to be made by the Partnership;

(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership, or the General Partner or its directors, officers, trustees or agents from in any manner being subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, as amended, regardless of whether such are substantially similar to plan asset regulations currently applied or proposed by the United States Department of Labor;

(g) an amendment that the General Partner determines to be necessary or appropriate in connection with the authorization or issuance of any class or series of Partnership Interests or Derivative Partnership Interests pursuant to Section 5.6;

(h) any amendment expressly permitted in this Agreement to be made by the General Partner acting alone;

(i) an amendment effected, necessitated or contemplated by a Merger Agreement or Plan of Conversion approved in accordance with Section 14.3;

(j) an amendment that the General Partner determines to be necessary or appropriate to reflect and account for the formation by the Partnership of, or investment by the Partnership in, any corporation, partnership, joint venture, limited liability company or other entity, in connection with the conduct by the Partnership of activities permitted by the terms of Section 2.4;

(k) a merger, conveyance or conversion pursuant to Section 14.3(d) or Section 14.3(e); or

(l) any other amendments substantially similar to the foregoing.

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Section 13.2 Amendment Procedures . Amendments to this Agreement may be proposed only by the General Partner. To the fullest extent permitted by law, the General Partner shall have no duty or obligation to propose or approve any amendment to this Agreement and may decline to do so free of any duty or obligation whatsoever to the Partnership, any Limited Partner or any other Person bound by this Agreement, and, in declining to propose or approve an amendment to this Agreement, to the fullest extent permitted by law shall not be required to act in good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity, and the General Partner in determining whether to propose or approve any amendment to this Agreement shall be permitted to do so in its sole and absolute discretion. An amendment to this Agreement shall be effective upon its approval by the General Partner and, except as otherwise provided by Section 13.1 or Section 13.3, the holders of a Unit Majority, unless a greater or different percentage of Outstanding Units is required under this Agreement. Each proposed amendment that requires the approval of the holders of a specified percentage of Outstanding Units shall be set forth in a writing that contains the text of the proposed amendment. If such an amendment is proposed, the General Partner shall seek the written approval of the requisite percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote on such proposed amendment. The General Partner shall notify all Record Holders upon final adoption of any amendments. The General Partner shall be deemed to have notified all Record Holders as required by this Section 13.2 if it has posted or made accessible such amendment through the Partnership’s or the Commission’s website.

Section 13.3 Amendment Requirements .

(a) Notwithstanding the provisions of Section 13.1 and Section 13.2, no provision of this Agreement that establishes a percentage of Outstanding Units required to take any action shall be amended, altered, changed, repealed or rescinded in any respect that would have the effect of (i) in the case of any provision of this Agreement other than Section 11.2 or Section 13.4, reducing such percentage or (ii) in the case of Section 11.2 or Section 13.4, increasing such percentages, unless such amendment is approved by the written consent or the affirmative vote of holders of Outstanding Units whose aggregate Outstanding Units constitute (x) in the case of a reduction as described in subclause (a)(i) hereof, not less than the voting requirement sought to be reduced, (y) in the case of an increase in the percentage in Section 11.2, not less than 90% of the Outstanding Units, or (z) in the case of an increase in the percentage in Section 13.4, not less than a majority of the Outstanding Units.

(b) Notwithstanding the provisions of Section 13.1 and Section 13.2, no amendment to this Agreement may (i) enlarge the obligations of any Limited Partner without its consent, unless such shall be deemed to have occurred as a result of an amendment approved pursuant to Section 13.3(c) or (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable to, the General Partner or any of its Affiliates without its consent, which consent may be given or withheld at its option.

(c) Except as provided in Section 14.3, and without limitation of the General Partner’s authority to adopt amendments to this Agreement without the approval of any Partners as contemplated in Section 13.1, any amendment that would have a material adverse effect on

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the rights or preferences of any class or series of Partnership Interests in relation to other classes or series of Partnership Interests must be approved by the holders of not less than a majority of the Outstanding Partnership Interests of the class or series affected.

(d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to Section 13.1 and except as otherwise provided by Section 14.3(f), no amendments shall become effective without the approval of the holders of at least 90% of the Outstanding Units voting as a single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment will not affect the limited liability of any Limited Partner under applicable partnership law of the state under whose laws the Partnership is organized.

(e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with the approval of the holders of at least 90% of the Outstanding Units.

Section 13.4 Special Meetings . All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the manner provided in this Article XIII. Special meetings of the Limited Partners may be called by the General Partner or by Limited Partners owning 20% or more of the Outstanding Units of the class or classes for which a meeting is proposed. Limited Partners shall call a special meeting by delivering to the General Partner one or more requests in writing stating that the signing Limited Partners wish to call a special meeting and indicating the specific purposes for which the special meeting is to be called and the class or classes of Units for which the meeting is proposed. No business may be brought by any Limited Partner before such special meeting except the business listed in the related request. Within 60 days after receipt of such a call from Limited Partners or within such greater time as may be reasonably necessary for the Partnership to comply with any statutes, rules, regulations, listing agreements or similar requirements governing the holding of a meeting or the solicitation of proxies for use at such a meeting, the General Partner shall send or cause to be sent a notice of the meeting to the Limited Partners. A meeting shall be held at a time and place determined by the General Partner on a date not less than 10 days nor more than 60 days after the time notice of the meeting is given as provided in Section 16.1. Limited Partners shall not be permitted to vote on matters that would cause the Limited Partners to be deemed to be taking part in the management and control of the business and affairs of the Partnership so as to jeopardize the Limited Partners’ limited liability under the Delaware Act or the law of any other state in which the Partnership is qualified to do business. If any such vote were to take place, to the fullest extent permitted by law, it shall be deemed null and void to the extent necessary so as not to jeopardize the Limited Partners’ limited liability under the Delaware Act or the law of any other state in which the Partnership is qualified to do business.

Section 13.5 Notice of a Meeting . Notice of a meeting called pursuant to Section 13.4 shall be given to the Record Holders of the class or classes of Units for which a meeting is proposed in writing by mail or other means of written communication in accordance with Section 16.1.

Section 13.6 Record Date . For purposes of determining the Limited Partners who are Record Holders of the class or classes of Limited Partner Interests entitled to notice of or to vote at a meeting of the Limited Partners or to give approvals without a meeting as provided in Section 13.11, the General Partner shall set a Record Date, which shall not be less than 10 nor

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more than 60 days before (a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Units are listed or admitted to trading or U.S. federal securities laws, in which case the rule, regulation, guideline or requirement of such National Securities Exchange or U.S. federal securities laws shall govern) or (b) in the event that approvals are sought without a meeting, the date by which such Limited Partners are requested in writing by the General Partner to give such approvals.

Section 13.7 Postponement and Adjournment . Prior to the date upon which any meeting of Limited Partners is to be held, the General Partner may postpone such meeting one or more times for any reason by giving notice to each Limited Partner entitled to vote at the meeting so postponed of the place, date and hour at which such meeting would be held. Such notice shall be given not fewer than two days before the date of such meeting and otherwise in accordance with this Article XIII. When a meeting is postponed, a new Record Date need not be fixed unless such postponement shall be for more than 45 days. Any meeting of Limited Partners may be adjourned by the General Partner one or more times for any reason, including the failure of a quorum to be present at the meeting with respect to any proposal or the failure of any proposal to receive sufficient votes for approval. No Limited Partner vote shall be required for any adjournment. A meeting of Limited Partners may be adjourned by the General Partner as to one or more proposals regardless of whether action has been taken on other matters. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are announced at the meeting at which the adjournment is taken, unless such adjournment shall be for more than 45 days. At the adjourned meeting, the Partnership may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 45 days or if a new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given in accordance with this Article XIII.

Section 13.8 Waiver of Notice; Approval of Meeting . The transactions of any meeting of Limited Partners, however called and noticed, and whenever held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy. Attendance of a Limited Partner at a meeting shall constitute a waiver of notice of the meeting, except when the Limited Partner attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened; and except that attendance at a meeting is not a waiver of any right to disapprove of any matters submitted for consideration or to object to the failure to submit for consideration any matters required to be included in the notice of the meeting, but not so included, if such objection is expressly made at the beginning of the meeting.

Section 13.9 Quorum and Voting . The presence, in person or by proxy, of holders of a majority of the Outstanding Units of the class or classes for which a meeting has been called (including Outstanding Units deemed owned by the General Partner) shall constitute a quorum at a meeting of Limited Partners of such class or classes unless any such action by the Limited Partners requires approval by holders of a greater percentage of such Units, in which case the quorum shall be such greater percentage. At any meeting of the Limited Partners duly called and held in accordance with this Agreement at which a quorum is present, the act of Limited Partners holding Outstanding Units that in the aggregate represent a majority of the Outstanding Units

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entitled to vote at such meeting shall be deemed to constitute the act of all Limited Partners, unless a different percentage is required with respect to such action under the provisions of this Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the aggregate represent at least such different percentage shall be required. The Limited Partners present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the exit of enough Limited Partners to leave less than a quorum, if any action taken (other than adjournment) is approved by the required percentage of Outstanding Units specified in this Agreement.

Section 13.10 Conduct of a Meeting . The General Partner shall have full power and authority concerning the manner of conducting any meeting of the Limited Partners or solicitation of approvals in writing, including the determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the requirements of Section 13.4, the conduct of voting, the validity and effect of any proxies and the determination of any controversies, votes or challenges arising in connection with or during the meeting or voting. The Chairman of the Board shall serve as Chairman of any meeting, or if none, the General Partner shall designate a Person to serve as chairman of any meeting and shall further designate a Person to take the minutes of any meeting. All minutes shall be kept with the records of the Partnership maintained by the General Partner. The General Partner may make such other regulations consistent with applicable law and this Agreement as it may deem advisable concerning the conduct of any meeting of the Limited Partners or solicitation of approvals in writing, including regulations in regard to the appointment of proxies, the appointment and duties of inspectors of votes and approvals, the submission and examination of proxies and other evidence of the right to vote, and the submission and revocation of approvals in writing.

Section 13.11 Action Without a Meeting . If authorized by the General Partner, any action that may be taken at a meeting of the Limited Partners may be taken without a meeting if an approval in writing setting forth the action so taken is signed by Limited Partners owning not less than the minimum percentage of the Outstanding Units that would be necessary to authorize or take such action at a meeting at which all the Limited Partners were present and voted (unless such provision conflicts with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Units are listed or admitted to trading, in which case the rule, regulation, guideline or requirement of such National Securities Exchange shall govern). Prompt notice of the taking of action without a meeting shall be given to the Limited Partners who have not approved in writing. The General Partner may specify that any written ballot submitted to Limited Partners for the purpose of taking any action without a meeting shall be returned to the Partnership within the time period, which shall be not less than 20 days, specified by the General Partner. If a ballot returned to the Partnership does not vote all of the Outstanding Units held by such Limited Partners, the Partnership shall be deemed to have failed to receive a ballot for the Outstanding Units that were not voted. If approval of the taking of any permitted action by the Limited Partners is solicited by any Person other than by or on behalf of the General Partner, the written approvals shall have no force and effect unless and until (a) approvals sufficient to take the action proposed are deposited with the Partnership in care of the General Partner, (b) approvals sufficient to take the action proposed are dated as of a date not more than 90 days prior to the date sufficient approvals are first deposited with the Partnership and (c) an Opinion of Counsel is delivered to the General Partner to the effect that the exercise of such right and the action proposed to be taken with respect to any particular matter (i) will not cause the Limited

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Partners to be deemed to be taking part in the management and control of the business and affairs of the Partnership so as to jeopardize the Limited Partners’ limited liability, and (ii) is otherwise permissible under the state statutes then governing the rights, duties and liabilities of the Partnership and the Partners.

Section 13.12 Right to Vote and Related Matters .

(a) Only those Record Holders of the Outstanding Units on the Record Date set pursuant to Section 13.6 (and also subject to the limitations contained in the definition of “Outstanding”) shall be entitled to notice of, and to vote at, a meeting of Limited Partners or to act with respect to matters as to which the holders of the Outstanding Units have the right to vote or to act. All references in this Agreement to votes of, or other acts that may be taken by, the Outstanding Units shall be deemed to be references to the votes or acts of the Record Holders of such Outstanding Units.

(b) With respect to Units that are held for a Person’s account by another Person that is the Record Holder (such as a broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing), such Record Holder shall, in exercising the voting rights in respect of such Units on any matter, and unless the arrangement between such Persons provides otherwise, vote such Units in favor of, and at the direction of, the Person who is the beneficial owner, and the Partnership shall be entitled to assume such Record Holder is so acting without further inquiry. The provisions of this Section 13.12(b) (as well as all other provisions of this Agreement) are subject to the provisions of Section 4.3.

Section 13.13 Voting of Incentive Distribution Rights . Notwithstanding anything in this Agreement to the contrary, the Record Holder of an Incentive Distribution Right shall not be entitled to vote such Incentive Distribution Right on any Partnership matter.

ARTICLE XIV.
MERGER, CONSOLIDATION OR CONVERSION

Section 14.1 Authority . The Partnership may merge or consolidate with or into one or more corporations, limited liability companies, statutory trusts or associations, real estate investment trusts, common law trusts or unincorporated businesses, including a partnership (whether general or limited (including a limited liability partnership)) or convert into any such entity, whether such entity is formed under the laws of the State of Delaware or any other state of the United States of America or any other country, pursuant to a written plan of merger or consolidation (“Merger Agreement”) or a written plan of conversion (“Plan of Conversion”), as the case may be, in accordance with this Article XIV.

Section 14.2 Procedure for Merger, Consolidation or Conversion .

(a) Merger, consolidation or conversion of the Partnership pursuant to this Article XIV requires the prior consent of the General Partner, provided, however, that, to the fullest extent permitted by law, the General Partner shall have no duty or obligation to consent to any merger, consolidation or conversion of the Partnership and may decline to do so free of any duty or obligation whatsoever to the Partnership or any Limited Partner and, in declining to consent to a merger, consolidation or conversion, shall not be required to act in good faith or pursuant to

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any other standard imposed by this Agreement, any other agreement contemplated hereby or under the Act or any other law, rule or regulation or at equity, and the General Partner in determining whether to consent to any merger, consolidation or conversion of the Partnership shall be permitted to do so in its sole and absolute discretion.

(b) If the General Partner shall determine to consent to the merger or consolidation, the General Partner shall approve the Merger Agreement, which shall set forth:

(i) name and state or country of domicile of each of the business entities proposing to merge or consolidate;

(ii) the name and state of domicile of the business entity that is to survive the proposed merger or consolidation (the “Surviving Business Entity”);

(iii) the terms and conditions of the proposed merger or consolidation;

(iv) the manner and basis of exchanging or converting the equity securities of each constituent business entity for, or into, cash, property or interests, rights, securities or obligations of the Surviving Business Entity; and (A) if any general or limited partner interests, securities or rights of any constituent business entity are not to be exchanged or converted solely for, or into, cash, property or general or limited partner interests, rights, securities or obligations of the Surviving Business Entity, the cash, property or interests, rights, securities or obligations of any general or limited partnership, corporation, trust, limited liability company, unincorporated business or other entity (other than the Surviving Business Entity) which the holders of such general or limited partner interests, securities or rights are to receive in exchange for, or upon conversion of their interests, securities or rights, and (B) in the case of securities represented by certificates, upon the surrender of such certificates, which cash, property or general or limited partner interests, rights, securities or obligations of the Surviving Business Entity or any general or limited partnership, corporation, trust, limited liability company, unincorporated business or other entity (other than the Surviving Business Entity), or evidences thereof, are to be delivered;

(v) a statement of any changes in the constituent documents or the adoption of new constituent documents (the articles or certificate of incorporation, articles of trust, declaration of trust, certificate or agreement of limited partnership, operating agreement or other similar charter or governing document) of the Surviving Business Entity to be effected by such merger or consolidation;

(vi) the effective time of the merger, which may be the date of the filing of the certificate of merger pursuant to Section 14.4 or a later date specified in or determinable in accordance with the Merger Agreement (provided, that if the effective time of the merger is to be later than the date of the filing of such certificate of merger, the effective time shall be fixed at a date or time certain at or prior to the time of the filing of such certificate of merger and stated therein); and

(vii) such other provisions with respect to the proposed merger or consolidation that the General Partner determines to be necessary or appropriate.

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(c) If the General Partner shall determine to consent to the conversion, the General Partner shall approve the Plan of Conversion, which shall set forth:

(i) the name of the converting entity and the converted entity;

(ii) a statement that the Partnership is continuing its existence in the organizational form of the converted entity;

(iii) a statement as to the type of entity that the converted entity is to be and the state or country under the laws of which the converted entity is to be incorporated, formed or organized;

(v) in an attachment or exhibit, the certificate of limited partnership of the Partnership; and

(vi) in an attachment or exhibit, the certificate of limited partnership, articles of incorporation, or other organizational documents of the converted entity;

(vii) the effective time of the conversion, which may be the date of the filing of the certificate of conversion or a later date specified in or determinable in accordance with the Plan of Conversion (provided, that if the effective time of the conversion is to be later than the date of the filing of such articles of conversion, the effective time shall be fixed at a date or time certain at or prior to the time of the filing of such certificate of conversion and stated therein); and

(viii) such other provisions with respect to the proposed conversion that the General Partner determines to be necessary or appropriate.

Section 14.3 Approval by Limited Partners .

(a) Except as provided in Section 5.12(b)(v), Section 14.3(d) and Section 14.3(e), the General Partner, upon its approval of the Merger Agreement or the Plan of Conversion, as the case may be, shall direct that the Merger Agreement or the Plan of Conversion, as applicable, be submitted to a vote of Limited Partners, whether at a special meeting or by written consent, in either case in accordance with the requirements of Article XIII. A copy or a summary of the Merger Agreement or the Plan of Conversion, as the case may be, shall be included in or enclosed with the notice of a special meeting or the written consent and, subject to any applicable requirements of Regulation 14A pursuant to the Exchange Act or successor provision, no other disclosure regarding the proposed merger, consolidation or conversion shall be required.

(b) Except as provided in Section 5.12(b)(v), Section 14.3(d) and Section 14.3(e), the Merger Agreement or Plan of Conversion, as the case may be, shall be approved upon receiving the affirmative vote or consent of the holders of a Unit Majority unless the Merger Agreement or Plan of Conversion, as the case may be, effects an amendment to any provision of this

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Agreement that, if contained in an amendment to this Agreement adopted pursuant to Article XIII, would require for its approval the vote or consent of a greater percentage of the Outstanding Units or of any class of Limited Partners, in which case such greater percentage vote or consent shall be required for approval of the Merger Agreement or the Plan of Conversion, as the case may be.

(c) Except as provided in Section 5.12(b)(v), Section 14.3(d) and Section 14.3(e), after such approval by vote or consent of the Limited Partners, and at any time prior to the filing of the certificate of merger or articles of conversion pursuant to Section 14.4, the merger, consolidation or conversion may be abandoned pursuant to provisions therefor, if any, set forth in the Merger Agreement or Plan of Conversion, as the case may be.

(d) Notwithstanding anything else contained in this Article XIV or in this Agreement, the General Partner is permitted, without Limited Partner approval, to convert the Partnership or any other Group Member into a new limited liability entity, to merge the Partnership or any other Group Member into, or convey all of the Partnership’s assets to, another limited liability entity that shall be newly formed and shall have no assets, liabilities or operations at the time of such conversion, merger or conveyance other than those it receives from the Partnership or other Group Member if (i) the General Partner has received an Opinion of Counsel that the conversion, merger or conveyance, as the case may be, would not result in the loss of limited liability under the laws of the jurisdiction governing the other limited liability entity (if that jurisdiction is not Delaware) of any Limited Partner as compared to its limited liability under the Delaware Act or cause the Partnership to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not previously treated as such), (ii) the sole purpose of such conversion, merger, or conveyance is to effect a mere change in the legal form of the Partnership into another limited liability entity and (iii) the General Partner determines that the governing instruments of the new entity provide the Limited Partners and the General Partner with substantially the same rights and obligations as are herein contained.

(e) Additionally, notwithstanding anything else contained in this Article XIV or in this Agreement, the General Partner is permitted, without Limited Partner approval, to merge or consolidate the Partnership with or into another limited liability entity if (i) the General Partner has received an Opinion of Counsel that the merger or consolidation, as the case may be, would not result in the loss of the limited liability of any Limited Partner under the laws of the jurisdiction governing the other limited liability entity (if that jurisdiction is not Delaware) as compared to its limited liability under the Delaware Act or cause the Partnership to be treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent not previously treated as such), (ii) the merger or consolidation would not result in an amendment to this Agreement, other than any amendments that could be adopted pursuant to Section 13.1, (iii) the Partnership is the Surviving Business Entity in such merger or consolidation, (iv) each Unit outstanding immediately prior to the effective date of the merger or consolidation is to be an identical Unit of the Partnership after the effective date of the merger or consolidation, and (v) the number of Partnership Interests to be issued by the Partnership in such merger or consolidation does not exceed 20% of the Partnership Interests (other than Incentive Distribution Rights) Outstanding immediately prior to the effective date of such merger or consolidation.

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(f) Pursuant to Section 17-211(g) of the Delaware Act, an agreement of merger or consolidation approved in accordance with this Article XIV may (i) effect any amendment to this Agreement or (ii) effect the adoption of a new partnership agreement for the Partnership if it is the Surviving Business Entity. Any such amendment or adoption made pursuant to this Section 14.3 shall be effective at the effective time or date of the merger or consolidation.

Section 14.4 Certificate of Merger or Certificate of Conversion . Upon the required approval by the General Partner and the Unitholders of a Merger Agreement or the Plan of Conversion, as the case may be, a certificate of merger or certificate of conversion or other filing, as applicable, shall be executed and filed with the Secretary of State of the State of Delaware or the appropriate filing office of any other jurisdiction, as applicable, in conformity with the requirements of the Delaware Act or other applicable law.

Section 14.5 Effect of Merger, Consolidation or Conversion .

(a) At the effective time of the merger:

(i) all of the rights, privileges and powers of each of the business entities that has merged or consolidated, and all property, real, personal and mixed, and all debts due to any of those business entities and all other things and causes of action belonging to each of those business entities, shall be vested in the Surviving Business Entity and after the merger or consolidation shall be the property of the Surviving Business Entity to the extent they were of each constituent business entity;

(ii) the title to any real property vested by deed or otherwise in any of those constituent business entities shall not revert and is not in any way impaired because of the merger or consolidation;

(iii) all rights of creditors and all liens on or security interests in property of any of those constituent business entities shall be preserved unimpaired; and

(iv) all debts, liabilities and duties of those constituent business entities shall attach to the Surviving Business Entity and may be enforced against it to the same extent as if the debts, liabilities and duties had been incurred or contracted by it.

(b) At the effective time of the conversion:

(i) the Partnership shall continue to exist, without interruption, but in the organizational form of the converted entity rather than in its prior organizational form;

(ii) all rights, title, and interests to all real estate and other property owned by the Partnership shall continue to be owned by the converted entity in its new organizational form without reversion or impairment, without further act or deed, and without any transfer or assignment having occurred, but subject to any existing liens or other encumbrances thereon;

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(iii) all liabilities and obligations of the Partnership shall continue to be liabilities and obligations of the converted entity in its new organizational form without impairment or diminution by reason of the conversion;

(iv) all rights of creditors or other parties with respect to or against the prior interest holders or other owners of the Partnership in their capacities as such in existence as of the effective time of the conversion will continue in existence as to those liabilities and obligations and may be pursued by such creditors and obligees as if the conversion did not occur;

(v) a proceeding pending by or against the Partnership or by or against any of Partners in their capacities as such may be continued by or against the converted entity in its new organizational form and by or against the prior Partners without any need for substitution of parties; and

(vi) the Partnership Interests that are to be converted into partnership interests, shares, evidences of ownership, or other securities in the converted entity as provided in the plan of conversion shall be so converted, and Partners shall be entitled only to the rights provided in the Plan of Conversion.

ARTICLE XV.
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

Section 15.1 Right to Acquire Limited Partner Interests .

(a) Notwithstanding any other provision of this Agreement, if at any time the General Partner and its Affiliates hold more than 80% of the total Limited Partner Interests of any class or series then Outstanding, the General Partner shall then have the right, which right it may assign and transfer in whole or in part to the Partnership or any Affiliate of the General Partner, exercisable at its option, to purchase all, but not less than all, of such Limited Partner Interests of such class then Outstanding held by Persons other than the General Partner and its Affiliates, at the greater of (x) the Current Market Price as of the date three Business Days prior to the date that the notice described in Section 15.1(b) is mailed and (y) the highest price paid by the General Partner or any of its Affiliates for any such Limited Partner Interest of such class purchased during the 90-day period preceding the date that the notice described in Section 15.1(b) is mailed.

(b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to exercise the right to purchase Limited Partner Interests granted pursuant to Section 15.1(a), the General Partner shall deliver to the applicable Transfer Agent or exchange agent notice of such election to purchase (the “Notice of Election to Purchase”) and shall cause the Transfer Agent or exchange agent to mail a copy of such Notice of Election to Purchase to the Record Holders of Limited Partner Interests of such class (as of a Record Date selected by the General Partner), together with such information as may be required by law, rule or regulation, at least 10, but not more than 60, days prior to the Purchase Date. Such Notice of Election to Purchase shall also be filed and distributed as may be required by the Commission or any National Securities Exchange on which such Limited Partner Interests are listed. The Notice of

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Election to Purchase shall specify the Purchase Date and the price (determined in accordance with Section 15.1(a)) at which Limited Partner Interests will be purchased and state that the General Partner, its Affiliate or the Partnership, as the case may be, elects to purchase such Limited Partner Interests, upon surrender of Certificates representing such Limited Partner Interests, in the case of Limited Partner Interests evidenced by Certificates, or instructions agreeing to such redemption in exchange for payment, at such office or offices of the Transfer Agent or exchange agent as the Transfer Agent or exchange agent may specify, or as may be required by any National Securities Exchange on which such Limited Partner Interests are listed. Any such Notice of Election to Purchase mailed to a Record Holder of Limited Partner Interests at his address as reflected in the Partnership Register shall be conclusively presumed to have been given regardless of whether the owner receives such notice. On or prior to the Purchase Date, the General Partner, its Affiliate or the Partnership, as the case may be, shall deposit with the Transfer Agent or exchange agent cash in an amount sufficient to pay the aggregate purchase price of all of such Limited Partner Interests to be purchased in accordance with this Section 15.1. If the Notice of Election to Purchase shall have been duly given as aforesaid at least 10 days prior to the Purchase Date, and if on or prior to the Purchase Date the deposit described in the preceding sentence has been made for the benefit of the holders of Limited Partner Interests subject to purchase as provided herein, then from and after the Purchase Date, notwithstanding that any Certificate or redemption instructions shall not have been surrendered for purchase or provided, respectively, all rights of the holders of such Limited Partner Interests (including any rights pursuant to Article IV, Article V, Article VI, and Article XII) shall thereupon cease, except the right to receive the purchase price (determined in accordance with Section 15.1(a)) for Limited Partner Interests therefor, without interest, upon surrender to the Transfer Agent or exchange agent of the Certificates representing such Limited Partner Interests, in the case of Limited Partner Interests evidenced by Certificates, or instructions agreeing to such redemption, and such Limited Partner Interests shall thereupon be deemed to be transferred to the General Partner, its Affiliate or the Partnership, as the case may be, on the Partnership Register, and the General Partner or any Affiliate of the General Partner, or the Partnership, as the case may be, shall be deemed to be the Record Holder of all such Limited Partner Interests from and after the Purchase Date and shall have all rights as the Record Holder of such Limited Partner Interests (including all rights as owner of such Limited Partner Interests pursuant to Article IV, Article V, Article VI and Article XII).

(c) In the case of Limited Partner Interests evidenced by Certificates, at any time from and after the Purchase Date, a holder of an Outstanding Limited Partner Interest subject to purchase as provided in this Section 15.1 may surrender his Certificate evidencing such Limited Partner Interest to the Transfer Agent in exchange for payment of the amount described in Section 15.1(a), therefor, without interest thereon, in accordance with procedures set forth by the General Partner.

ARTICLE XVI.
GENERAL PROVISIONS

Section 16.1 Addresses and Notices; Written Communications .

(a) Any notice, demand, request, report or proxy materials required or permitted to be given or made to a Partner under this Agreement shall be in writing and shall be deemed given or

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made when delivered in person or when sent by first class United States mail or by other means of written communication to the Partner at the address described below. Except as otherwise provided herein, any notice, payment or report to be given or made to a Partner hereunder shall be deemed conclusively to have been given or made, and the obligation to give such notice or report or to make such payment shall be deemed conclusively to have been fully satisfied, upon sending of such notice, payment or report to the Record Holder of such Partnership Interests at his address as shown in the Partnership Register, regardless of any claim of any Person who may have an interest in such Partnership Interests by reason of any assignment or otherwise. Notwithstanding the foregoing, if (i) a Partner shall consent to receiving notices, demands, requests, reports or proxy materials via electronic mail or by the Internet or (ii) the rules of the Commission shall permit any report or proxy materials to be delivered electronically or made available via the Internet, any such notice, demand, request, report or proxy materials shall be deemed given or made when delivered or made available via such mode of delivery. An affidavit or certificate of making of any notice, payment or report in accordance with the provisions of this Section 16.1 executed by the General Partner, the Transfer Agent or the mailing organization shall be prima facie evidence of the giving or making of such notice, payment or report. If any notice, payment or report addressed to a Record Holder at the address of such Record Holder appearing in the Partnership Register is returned by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver it, such notice, payment or report and any subsequent notices, payments and reports shall be deemed to have been duly given or made without further mailing (until such time as such Record Holder or another Person notifies the Transfer Agent or the Partnership of a change in his address) if they are available for the Partner at the principal office of the Partnership for a period of one year from the date of the giving or making of such notice, payment or report to the other Partners. Any notice to the Partnership shall be deemed given if received by the General Partner at the principal office of the Partnership designated pursuant to Section 2.3. The General Partner may rely and shall be protected in relying on any notice or other document from a Partner or other Person if believed by it to be genuine.

(b) The terms “in writing”, “written communications,” “written notice” and words of similar import shall be deemed satisfied under this Agreement by use of e-mail and other forms of electronic communication.

Section 16.2 Further Action . The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 16.3 Binding Effect . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Section 16.4 Integration . This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

Section 16.5 Creditors . None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Partnership.

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Section 16.6 Waiver . No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

Section 16.7 Third-Party Beneficiaries . Each Partner agrees that (a) any Indemnitee shall be entitled to assert rights and remedies hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to such Indemnitee and (b) any Unrestricted Person shall be entitled to assert rights and remedies hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to such Unrestricted Person.

Section 16.8 Counterparts . This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a Limited Partner Interest, pursuant to Section 10.1(a) or (b) without execution hereof.

Section 16.9 Applicable Law; Forum; Venue and Jurisdiction; Waiver of Trial by Jury .

(a) This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law.

(b) Each of the Partners and each Person or Group holding any beneficial interest in the Partnership (whether through a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing or otherwise):

(i) irrevocably agrees that any claims, suits, actions or proceedings (A) arising out of or relating in any way to this Agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of this Agreement or the duties, obligations or liabilities among Partners or of Partners to the Partnership, or the rights or powers of, or restrictions on, the Partners or the Partnership), (B) brought in a derivative manner on behalf of the Partnership, (C) asserting a claim of breach of a duty owed by any director, officer, or other employee of the Partnership or the General Partner, or owed by the General Partner, to the Partnership or the Partners, (D) asserting a claim arising pursuant to any provision of the Delaware Act or (E) asserting a claim governed by the internal affairs doctrine shall be exclusively brought in the Court of Chancery of the State of Delaware, in each case regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims;

(ii) irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware in connection with any such claim, suit, action or proceeding;

(iii) agrees not to, and waives any right to, assert in any such claim, suit, action or proceeding that (A) it is not personally subject to the jurisdiction of the Court of Chancery of the State of Delaware or of any other court to which proceedings in the

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Court of Chancery of the State of Delaware may be appealed, (B) such claim, suit, action or proceeding is brought in an inconvenient forum, or (C) the venue of such claim, suit, action or proceeding is improper;

(iv) expressly waives any requirement for the posting of a bond by a party bringing such claim, suit, action or proceeding;

(v) consents to process being served in any such claim, suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall constitute good and sufficient service of process and notice thereof; provided, nothing in clause (v) hereof shall affect or limit any right to serve process in any other manner permitted by law; and

(vi) irrevocably waives any and all right to trial by jury in any such claim, suit, action or proceeding.

Section 16.10 Invalidity of Provisions . If any provision or part of a provision of this Agreement is or becomes for any reason, invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions and/or parts thereof contained herein shall not be affected thereby and this Agreement shall, to the fullest extent permitted by law, be reformed and construed as if such invalid, illegal or unenforceable provision, or part of a provision, had never been contained herein, and such provisions and/or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent possible.

Section 16.11 Consent of Partners . Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is specified that an action may be taken upon the affirmative vote or consent of less than all of the Partners, such action may be so taken upon the concurrence of less than all of the Partners and each Partner shall be bound by the results of such action.

Section 16.12 Facsimile and Email Signatures . The use of facsimile signatures and signatures delivered by email in portable document format (.pdf) affixed in the name and on behalf of the transfer agent and registrar of the Partnership on certificates representing Common Units is expressly permitted by this Agreement.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

	GENERAL PARTNER:

	SOUTHCROSS ENERGY PARTNERS GP, LLC

	By:	/s/ David W. Biegler
		Name: David W. Biegler
		Title: President and Chief Executive Officer

Signature Page to Second Amended and Restated

Agreement of Limited Partnership of Southcross Energy Partners, L.P.

EXHIBIT A
to the Second Amended and Restated
Agreement of Limited Partnership of
Southcross Energy Partners, L.P.

Certificate Evidencing Common Units
Representing Limited Partner Interests in
Southcross Energy Partners, L.P.

No. Common Units

In accordance with Section 4.1 of the Second Amended and Restated Agreement of Limited Partnership of Southcross Energy Partners, L.P., as amended, supplemented or restated from time to time (the “Partnership Agreement”), Southcross Energy Partners, L.P., a Delaware limited partnership (the “Partnership”), hereby certifies that (the “Holder”) is the registered owner of Common Units representing limited partner interests in the Partnership (the “Common Units”) transferable on the books of the Partnership, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. The rights, preferences and limitations of the Common Units are set forth in, and this Certificate and the Common Units represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Partnership Agreement. Copies of the Partnership Agreement are on file at, and will be furnished without charge on delivery of written request to the Partnership at, the principal office of the Partnership located at 1700 Pacific Avenue, Suite 2900, Dallas, Texas 75201. Capitalized terms used herein but not defined shall have the meanings given them in the Partnership Agreement.

THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF SOUTHCROSS ENERGY PARTNERS, L.P. THAT THIS SECURITY MAY NOT BE TRANSFERRED IF SUCH TRANSFER (AS DEFINED IN THE PARTNERSHIP AGREEMENT) WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF SOUTHCROSS ENERGY PARTNERS, L.P. UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE SOUTHCROSS ENERGY PARTNERS, L.P. TO BE TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). THE GENERAL PARTNER OF SOUTHCROSS ENERGY PARTNERS, L.P. MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF SOUTHCROSS ENERGY PARTNERS, L.P. BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THIS SECURITY MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS ON ITS TRANSFER PROVIDED IN THE PARTNERSHIP AGREEMENT. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER

A-1

OF RECORD OF THIS SECURITY TO THE SECRETARY OF THE GENERAL PARTNER AT THE PRINCIPAL EXECUTIVE OFFICES OF THE PARTNERSHIP. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.

The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right, power and authority and, if an individual, the capacity necessary to enter into the Partnership Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and (iv) made the waivers and given the consents and approvals contained in the Partnership Agreement.

This Certificate shall not be valid for any purpose unless it has been countersigned and registered by the Transfer Agent. This Certificate shall be governed by and construed in accordance with the laws of the State of Delaware

Dated:	Southcross Energy Partners, L.P.

	By:	Southcross Energy Partners GP, LLC

		By:

Countersigned and Registered by:

[ ]
as Transfer Agent and Registrar


By:
	Authorized Signature

A-2

[Reverse of Certificate]

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as follows according to applicable laws or regulations:

TEN COM — as tenants in common	UNIF GIFT TRANSFERS MIN ACT

TEN ENT — as tenants by the entireties	Custodian

	(Cust)	(Minor)

JT TEN — as joint tenants with right of survivorship and not as tenants in common	under Uniform Gifts/Transfers to CD Minors Act (State)

Additional abbreviations, though not in the above list, may also be used.

A-3

ASSIGNMENT OF COMMON UNITS OF
SOUTHCROSS ENERGY PARTNERS, L.P.

FOR VALUE RECEIVED, hereby assigns, conveys, sells and transfers unto





(Please print or typewrite name and address of assignee)	(Please insert Social Security or other identifying number of assignee)

Common Units representing limited partner interests evidenced by this Certificate, subject to the Partnership Agreement, and does hereby irrevocably constitute and appoint as its attorney-in-fact with full power of substitution to transfer the same on the books of Southcross Energy Partners, L.P.

Dated:			NOTE: The signature to any endorsement hereon must correspond with the name as written upon the face of this Certificate in every particular, without alteration, enlargement or change.




			(Signature)



			(Signature)

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15

No transfer of the Common Units evidenced hereby will be registered on the books of the Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered for registration or transfer.

A-4

Exhibit 4.1

Execution Version

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT , dated as of April 12, 2013 (this “ Agreement ”), is entered into by and between Southcross Energy Partners, L.P., a Delaware limited partnership (“ Southcross ”), and Southcross Energy LLC, a Delaware limited liability company (the “ Purchaser ”).

WHEREAS, this Agreement is made in connection with the Closing of the issuance and sale of the Purchased Units (as defined in the Purchase Agreement) pursuant to the Series A Convertible Preferred Unit Purchase Agreement, dated the date hereof, by and between Southcross and the Purchaser (the “ Purchase Agreement ”);

WHEREAS, Southcross has agreed to provide the registration and other rights set forth in this Agreement for the benefit of the Purchaser pursuant to the Purchase Agreement; and

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

ARTICLE I.
DEFINITIONS

Section 1.01 Definitions . Capitalized terms used in this Agreement and not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement. As used in this Agreement, the following terms have the meanings indicated:

“ Agreement ” shall have the meaning specified in the introductory paragraph of this Agreement.

“ Delay Liquidated Damages ” shall have the meaning specified in Section 2.01(c) of this Agreement.

“ Effective Date ” means, with respect to a particular Shelf Registration Statement, the date of effectiveness of such Shelf Registration Statement.

“ Effectiveness Period ” shall have the meaning specified in Section 2.01(a) of this Agreement.

“ Filing Date ” shall have the meaning specified in Section 2.01(a) of this Agreement.

“ Holder ” means a record holder of Registrable Securities.

“ Included Registrable Securities ” shall have the meaning specified in Section 2.02(a) of this Agreement.

“ Launch Date ” shall have the meaning specified in Section 2.02(b) of this Agreement.

“ Liquidated Damages ” shall have the meaning specified in Section 2.01(c) of this Agreement.

“ Liquidated Damages Cap ” shall have the meaning specified in Section 2.01(d) of this Agreement.

“ Losses ” shall have the meaning specified in Section 2.08(a) of this Agreement.

“ Managing Underwriter ” means, with respect to any Underwritten Offering, the book running lead manager of such Underwritten Offering.

“ Opt-Out Notice ” shall have the meaning specified in Section 2.02(a) of this Agreement.

“ Other Holder ” shall have the meaning specified in Section 2.02(c) of this Agreement.

“ Overnight Underwritten Offering ” shall have the meaning specified in Section 2.02(b) of this Agreement.

“ Piggyback Offering ” shall have the meaning specified in Section 2.02(a) of this Agreement.

“ Pricing Date ” shall have the meaning specified in Section 2.02(b) of this Agreement.

“ Primary Offering ” shall have the meaning specified in Section 2.04(n) of this Agreement.

“ Purchase Agreement ” shall have the meaning specified in the recitals of this Agreement.

“ Purchaser ” shall have the meaning specified in the introductory paragraph of this Agreement.

“ Registrable Securities ” means, except as set forth in Section 1.02 , the Conversion Units underlying the Series A Preferred Units acquired pursuant to the Purchase Agreement (including Conversion Units underlying any Series A Preferred Units issued to the Purchaser as payment in-kind pursuant to the terms of the Series A Preferred Units).

“ Registration Expenses ” shall have the meaning specified in Section 2.07(a) of this Agreement.

“ Selling Expenses ” shall have the meaning specified in Section 2.07(a) of this Agreement.

“ Selling Holder ” means a Holder who is selling Registrable Securities under a registration statement pursuant to the terms of this Agreement.

“ Selling Holder Documentation ” shall have the meaning specified in Section 2.02(b) of this Agreement.

“ Shelf Registration Statement ” means a registration statement under the Securities Act to permit the public resale of the Registrable Securities from time to time as permitted by Rule 415 of the Securities Act (or any similar provision then in force under the Securities Act).

“ Southcross ” shall have the meaning specified in the introductory paragraph of this Agreement.

“ Underwritten Offering ” means an offering (including an offering pursuant to a Shelf Registration Statement) in which Common Units are sold to an underwriter on a best efforts or firm commitment basis for reoffering to the public or an offering that is an Overnight Underwritten Offering with one or more investment banks.

“ Underwritten Offering Filing ” shall have the meaning specified in Section 2.02(a) of this Agreement.

“ Underwritten Offering Request ” shall have the meaning specified in Section 2.03(a) of this Agreement.

“ Unit Purchase Price ” means $22.86.

Section 1.02 Registrable Securities . Any Registrable Security will cease to be a Registrable Security at the earliest of the following: (a) when a registration statement covering such Registrable Security becomes or has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such registration statement; (b) when such Registrable Security has been disposed of pursuant to Rule 144 (or any similar provision then in force) under the Securities Act; (c) when such Registrable Security is held by Southcross or one of its subsidiaries; and (d) when such Registrable Security has been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of such securities pursuant to the terms of this Agreement.

ARTICLE II.
REGISTRATION RIGHTS

Section 2.01 Shelf Registration .

(a) Shelf Registration . As soon as practicable following Southcross’ receipt of written notice from the Holders of a majority of the Registrable Securities then outstanding requesting the filing of a Shelf Registration Statement, Southcross shall use its reasonable best efforts to prepare and file a Shelf Registration Statement under the Securities Act covering Registrable Securities then outstanding; provided, however, that the right of such Holders to request such filing shall expire on the seventh anniversary of the date hereof; provided, further, that Southcross shall have no requirement to file a Shelf Registration Statement at any time when Southcross is not eligible to use a registration statement on Form S-3 to register resales of the Registrable Securities. If Southcross does not meet the Commission’s definition of “well known seasoned issuer,” Southcross shall use its reasonable best efforts to cause the Shelf Registration Statement to become effective no later than 180 days after the date of the filing of such Shelf Registration Statement (the “ Filing Date ”). A Shelf Registration Statement filed pursuant to this Section 2.01(a) shall be on such appropriate registration form of the Commission as shall be selected by Southcross; provided, however, that if a prospectus supplement will be used in connection with the marketing of an Underwritten Offering from a Shelf Registration Statement and the Managing Underwriter at any time shall notify Southcross in writing that, in the reasonable judgment of such Managing Underwriter, inclusion of detailed information to be used in such prospectus supplement is of material importance to the success of the Underwritten Offering of such Registrable Securities, Southcross shall use its reasonable best efforts to include such information in the prospectus supplement. Southcross will use its reasonable best efforts to cause a Shelf Registration Statement filed pursuant to this Section 2.01(a) to be continuously effective under the Securities Act until the earliest date on which any of the following occurs: (i) all Registrable Securities covered by such Shelf Registration Statement have been distributed in the manner set forth and as contemplated in such Shelf Registration Statement, (ii) there are no

longer any Registrable Securities outstanding and (iii) two years from the Effective Date of such Shelf Registration Statement (the “ Effectiveness Period ”). A Shelf Registration Statement when it becomes or is declared effective (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act 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, in the case of any prospectus contained in such Shelf Registration Statement, in the light of the circumstances under which a statement is made). As soon as practicable following the Effective Date of a Shelf Registration Statement, but in any event within three (3) Business Days of such date, Southcross will notify the Selling Holders of the effectiveness of such Shelf Registration Statement.

(b) Maximum Shelf Registration Requests; Delay Rights .

(i) Notwithstanding anything to the contrary contained in this Agreement, Southcross shall not be obligated to file or effect more than two (2) Shelf Registration Statements (including any post-effective amendments to a Shelf Registration Statement filed for the primary purpose of including Selling Holders or adding Conversion Units to such Registration Statement) pursuant to Section 2.01 of this Agreement.

(ii) Notwithstanding anything to the contrary contained in this Agreement, Southcross may, upon written notice to any Selling Holder whose Registrable Securities are included in a Shelf Registration Statement, suspend such Selling Holder’s use of any prospectus that is a part of such Shelf Registration Statement (in which event the Selling Holder shall discontinue sales of the Registrable Securities pursuant to the Shelf Registration Statement) if (A) Southcross is pursuing an acquisition, merger, reorganization, disposition or other similar transaction and Southcross determines in good faith that Southcross’ ability to pursue or consummate such a transaction would be materially and adversely affected by any required disclosure of such transaction in the Shelf Registration Statement or (B) Southcross has experienced some other material non-public event the disclosure of which at such time, in the good faith judgment of Southcross, would materially and adversely affect Southcross; provided, however, that in no event shall the Selling Holders be suspended from selling Registrable Securities pursuant to the Shelf Registration Statement for a period that exceeds an aggregate of sixty (60) days in any one hundred-eighty (180) day period or ninety (90) days (exclusive of days covered by any lock-up agreement executed by a Selling Holder in connection with any Underwritten Offering by Southcross or a Selling Holder) in any 365 day period. Upon disclosure of such information or the termination of the conditions described above, Southcross shall provide prompt notice to the Selling Holders whose Registrable Securities are included in the Shelf Registration Statement, and shall promptly terminate any suspension of sales it has put into effect and shall take such other actions necessary or appropriate to permit registered sales of Registrable Securities as contemplated in this Agreement.

(i) If a Shelf Registration Statement required by Section 2.01(a) does not become or is not declared effective within 180 days after its Filing Date, then each Selling Holder shall be entitled to a payment (with respect to each Registrable Security held by the Selling Holder), as liquidated damages and not as a penalty, of 0.25% per annum of the Unit Purchase Price for the first 60-day period immediately following the 180th day after the Filing Date, with such payment amount increasing by an additional 0.25% per annum of the Unit Purchase Price for each subsequent 60-day period, up to a maximum of 1.00% per annum of the Unit Purchase Price (the “ Liquidated Damages ”), until such time as such Shelf Registration Statement becomes effective or is declared effective or the Registrable Securities covered by such Shelf Registration Statement are no longer outstanding.

(ii) If (A) the Holders shall be prohibited from selling their Registrable Securities under the Registration Statement as a result of a suspension pursuant to Section 2.01(b)(i) of this Agreement in excess of the periods permitted therein or (B) the Registration Statement is filed and effective but, during the Effectiveness Period, shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within ninety (90) Business Days by a post-effective amendment to the Registration Statement, a supplement to the prospectus or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, then, until the suspension is lifted or such amendment, supplement or report is filed and effective, but not including any day on which a suspension is lifted, if applicable, then each Holder shall be entitled to a payment (with respect to each Registrable Security), as liquidated damages and not as a penalty, of 0.125% per annum of the Unit Purchase Price for the first 90 days following (x) the date on which the suspension period exceeded the permitted period under Section 2.01(b)(i) of this Agreement or (y) the 91st Business Day after the Registration Statement ceased to be effective or failed to be useable for its intended purposes, increasing by an additional 0.125% per annum of the Unit Purchase Price for each subsequent 90-day period, up to a maximum of 0.50% per annum of the Unit Purchase Price (the “ Delay Liquidated Damages ”). For purposes of this Section 2.01(c)(ii) , a suspension shall be deemed lifted on the date that notice that the suspension has been lifted or that a post-effective amendment is effective is delivered to the Holders pursuant to Section 3.01 of this Agreement.

(d) General . The Liquidated Damages and the Delay Liquidated Damages shall be paid to each Selling Holder in cash within ten (10) Business Days of the end of each such 60-day or 90-day period, as applicable. Any payments made pursuant to this Section 2.01(d) shall constitute the Selling Holders’ exclusive remedy for such events. The Liquidated Damages and the Delay Liquidated Damages imposed hereunder shall be paid to the Selling Holders in immediately available funds. In no event will the aggregate amount of Liquidated Damages and the Delay Liquidated Damages paid to the Selling Holders exceed 5% of the aggregate of the Purchase Price (the “ Liquidated Damages Cap ”). In addition to being subject to the Liquidated Damages Cap, the payment of the Liquidated Damages and the Delay Liquidated Damages to a Selling Holder shall cease at such time as the Registrable Securities of such Selling Holder become eligible for resale under Rule 144 of the Securities Act.

Section 2.02 Piggyback Rights .

(a) Underwritten Offering Piggyback Rights . Except as provided in Section 2.02(b) , if at any time during any Effectiveness Period Southcross proposes to file (i) a prospectus supplement to an effective shelf registration statement, other than a Shelf Registration Statement contemplated by Section 2.01 , or (ii) a registration statement, other than a shelf registration statement, in either case, for the sale of Common Units in an Underwritten Offering for its own account, then, as soon as practicable but not less than three (3) Business Days prior to the filing of (A) any preliminary prospectus supplement relating to such Underwritten Offering pursuant to Rule 424(b) of the Securities Act, (B) the prospectus supplement relating to such Underwritten Offering pursuant to Rule 424(b) of the Securities Act (if no preliminary prospectus supplement is used) or (C) such registration statement (other than a shelf registration statement), as the case may be (an “ Underwritten Offering Filing ”), Southcross shall give notice of such proposed Underwritten Offering to the Holders and such notice shall offer the Holders the opportunity to include in such Underwritten Offering such number of Registrable Securities (the “ Included Registrable Securities ”) as each such Holder may request in writing (a “ Piggyback Offering ”); provided, however, that Southcross shall not be required to include any Registrable Securities if (aa) the Holders do not offer at least $5 million of the then outstanding Registrable Securities or (bb) Southcross has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the price, timing or distribution of the Common Units, in which case the amount of Registrable Securities to be offered for the accounts of participating Holders shall be determined based on the provisions of Section 2.02(c) of this Agreement. Each Holder shall keep any information relating to any such Underwritten Offering confidential and shall not disseminate or in any way disclose such information. Except as provided in Section 2.02(b) , each Holder shall then have two (2) Business Days from the date of such notice to request inclusion of its Registrable Securities in the Piggyback Offering. If no request for inclusion from a Holder is received within the specified time, such Holder shall have no further right to participate in such Piggyback Offering. If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, Southcross shall determine for any reason not to undertake or to delay such Underwritten Offering, Southcross shall give written notice of such determination to the Selling Holders and, (x) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in connection with such terminated Underwritten Offering, and (y) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities for the same period as the delay of the Underwritten Offering. Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such Underwritten Offering by giving written notice to Southcross of such withdrawal at least one (1) Business Day prior to the time of pricing of such Underwritten Offering. Each Holder’s rights under this Section 2.02(a) shall terminate when such Holder holds less than a majority of the then outstanding Registrable Securities. Notwithstanding the foregoing, any Holder may deliver written notice (an “ Opt-Out Notice ”) to Southcross requesting that such Holder not receive notice from Southcross of any proposed Underwritten Offering; provided, however, that such Holder may later revoke any such Opt-Out Notice in writing.

(b) Overnight Underwritten Offering Piggyback Rights . If at any time during any Effectiveness Period Southcross proposes to make an Underwritten Offering Filing and such Underwritten Offering is expected to be effected by launching an Underwritten Offering after the close of trading on one trading day (the “ Launch Date ”) and pricing the Underwritten Offering before the open of trading on the next succeeding trading day (the “ Pricing Date ” and, such execution format, an “ Overnight Underwritten Offering ”), then no later than three (3) Business Days after Southcross engages a Managing Underwriter for the proposed Overnight Underwritten Offering, (x) Southcross shall notify the Holders of the pendency of the Overnight Underwritten Offering and (y) if the Holders propose to include Registrable Securities in the Overnight Underwritten Offering, then the Managing Underwriter of the Overnight Underwritten Offering shall, no later than the fifth (5th) Business Day prior to the expected Launch Date, provide to the Selling Holders all of the documentation customarily required for the inclusion of Registrable Securities in the Overnight Underwritten Offering, including, without limitation, a custody agreement and power-of-attorney, Selling Holders’ customary representations and warranties, and a form of legal opinion required to be delivered by counsel to the Selling Holders (in form and substance reasonably acceptable to counsel for the Selling Holders) at the closing of an Overnight Underwritten Offering and any over-allotment option closing (collectively, the “ Selling Holder Documentation ”). To include Registrable Securities in an Overnight Underwritten Offering, each Selling Holder shall, subject to receipt of notice of the Overnight Underwritten Offering and Selling Holder Documentation within the time periods set forth above, (A) complete its review and return the Selling Holder Documentation, with such revisions as have been agreed to by Southcross (such agreement not to be unreasonably withheld) and the Selling Holder, at least three (3) Business Days prior to the expected Launch Date, (B) place the Registrable Securities eligible for inclusion in an Overnight Underwritten Offering into the custody of Southcross’ transfer agent at least three (3) Business Days prior to the expected Launch Date, (C) agree to participate following reasonable notice in any due diligence calls arranged by the Managing Underwriter of an Overnight Underwritten Offering on the expected Launch Date, the Pricing Date or in advance of the closing of an Overnight Underwritten Offering and any over-allotment option closing, and (D) unconditionally waive any right to withdraw any Registrable Securities placed into the custody of Southcross’ transfer agent for inclusion in an Overnight Underwritten Offering within two (2) Business Days of the expected Launch Date, whether on the basis of the offering price, underwriter discount, or for any other reason; provided, however, that Southcross shall not be required to include such Registrable Securities if (aa) the Holders do not offer a majority of the then outstanding Registrable Securities or (bb) Southcross has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the price, timing or distribution of the Common Units, in which case the amount of Registrable Securities to be offered for the accounts of participating Holders shall be determined based on the provisions of Section 2.02(c) of this Agreement. If, at any time after giving written notice of its intention to undertake an Overnight Underwritten Offering and prior to the closing of such Overnight Underwritten Offering, Southcross shall determine for any reason not to undertake or to delay such Overnight Underwritten Offering, Southcross shall give written notice of such determination to the Selling Holders and, (i) in the case of a determination not to undertake such Overnight Underwritten Offering, shall be relieved of its obligation to sell any Registrable Securities held by the Selling Holders in connection with such terminated Overnight Underwritten Offering, and (ii) in the case of a determination to delay such Overnight

Underwritten Offering, shall be permitted to delay offering any Registrable Securities held by the Selling Holders for the same period as the delay of the Overnight Underwritten Offering. Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such Overnight Underwritten Offering by giving written notice to Southcross of such withdrawal at least two (2) Business Days prior to the Launch Date. Each Holder’s rights under this Section 2.02(b) shall terminate when such Holder holds less than $5 million of Registrable Securities (based on the Unit Purchase Price). Notwithstanding the foregoing, any Holder may deliver an Opt-Out Notice to Southcross requesting that such Holder not receive notice from Southcross of any proposed Overnight Underwritten Offering; provided, however, that such Holder may later revoke any such Opt-Out Notice in writing.

(c) Priority of Piggyback Rights . In connection with an Underwritten Offering contemplated by Section 2.02(a) or Section 2.02(b) , if the Managing Underwriter or Underwriters of such Underwritten Offering advises Southcross that the total amount of Common Units that the Selling Holders and any other Persons intend to include in such Underwritten Offering exceeds the number that can be sold in such Underwritten Offering without being likely to have an adverse effect on the price, timing or distribution of the Common Units offered or the market for the Common Units, then the Common Units to be included in such Underwritten Offering shall include the number of Common Units that such Managing Underwriter or Underwriters advises Southcross can be sold without having such adverse effect, with such number to be allocated (i) first to Southcross, (ii) second pro rata among the Selling Holders and any other Persons who have been or are granted registration rights on or after the date of this Agreement who have requested participation in the Underwritten Offering (the “Other Holders”) based, for each such Selling Holder or Other Holder, on the percentage derived by dividing (A) the number of Common Units proposed to be sold by such Selling Holder(s) and such Other Holders in such Underwritten Offering; by (B) the aggregate number of Common Units proposed to be sold by all Selling Holders and all Other Holders in the Underwritten Offering.

Section 2.03 Underwritten Offering .

(a) Request for Underwritten Offering . In the event that a Selling Holder (together with any Affiliates that are Selling Holders) elects to dispose of Registrable Securities under a Shelf Registration Statement pursuant to an Underwritten Offering and reasonably anticipates gross proceeds of greater than $20 million from such Underwritten Offering of Registrable Securities, Southcross shall, at the request of such Selling Holder (each, an “ Underwritten Offering Request ”), enter into an underwriting agreement in customary form with the Managing Underwriter or Underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.08 , and shall take all such other reasonable actions as are requested by the Managing Underwriter to expedite or facilitate the disposition of the Registrable Securities; provided, however, that Southcross shall not be required to effect more than two (2) Underwritten Offerings pursuant to Section 2.03 of this Agreement, and the Holders shall be limited to one Underwritten Offering Request in any 240 day period.

(b) General Procedures . In connection with any Underwritten Offering, Southcross shall be entitled to select the Managing Underwriter or Underwriters. In connection with an

Underwritten Offering contemplated by this Agreement in which a Selling Holder participates, each Selling Holder and Southcross shall be obligated to enter into an underwriting agreement with the Managing Underwriter or Underwriters that contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of equity securities. No Selling Holder may participate in an Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers-of-attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement. Each Selling Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, Southcross to and for the benefit of such underwriters also be made to and for such Selling Holder’s benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations. No Selling Holder shall be required to make any representations or warranties to or agreements with Southcross or the underwriters other than representations, warranties or agreements regarding such Selling Holder and its ownership of the securities being registered on its behalf and its intended method of distribution and any other representation required by Law. If any Selling Holder disapproves of the terms of an Underwritten Offering, such Selling Holder may elect to withdraw therefrom by notice to Southcross and the Managing Underwriter; provided, however, that such withdrawal must be made at least one (1) Business Day prior to the pricing of such Underwritten Offering to be effective. No such withdrawal or abandonment shall affect Southcross’ obligation to pay Registration Expenses. Upon the receipt by Southcross of a written request from the Holders of at least $30 million of Common Units that are participating in an Underwritten Offering, Southcross’ management shall be required to participate in a roadshow or similar marketing effort in connection with that Underwritten Offering; provided, that management: (i) is given at least 60 days’ notice prior to the commitment of any roadshow or similar marketing effort; (ii) agrees to the proposed commencement date of any roadshow or similar marketing effort; and (iii) is not required to participate in any roadshow or similar marketing effort for more than two days.

Section 2.04 Sale Procedures . In connection with its obligations under this Article II , Southcross will, as expeditiously as possible:

(a) prepare and file with the Commission such amendments and supplements to a Shelf Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Shelf Registration Statement effective for its Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Shelf Registration Statement;

(b) furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing such Shelf Registration Statement or such other registration

statement and the prospectus included therein or any supplement or amendment thereto, and (ii) an electronic copy of such Shelf Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto as such Selling Holder may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Shelf Registration Statement or other registration statement;

(c) if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by a Shelf Registration Statement or any other registration statement contemplated by this Agreement under the securities or “blue sky” laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request; provided, however, that Southcross shall not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject;

(d) promptly notify each Selling Holder and each underwriter of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the filing of a Shelf Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Shelf Registration Statement or any other registration statement or any post-effective amendment thereto, when the same has become effective; and (ii) the receipt of any written comments from the Commission with respect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to such Shelf Registration Statement or any other registration statement or any prospectus or prospectus supplement thereto;

(e) immediately notify each Selling Holder and each underwriter of Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in a Shelf Registration Statement or any other registration statement contemplated by this Agreement, as then in effect, or any supplemental amendment thereto, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (ii) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by Southcross of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision of such notice, Southcross agrees to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include 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 in the light of the circumstances then existing and to take such other action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;

(f) upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities;

(g) in the case of an Underwritten Offering, furnish upon request, (i) an opinion letter of counsel for Southcross dated the date of the closing under the underwriting agreement, including a standard “10b-5” letter and (ii) a “cold comfort” letter dated the pricing date of such Underwritten Offering and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified Southcross’ financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the “cold comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus included therein and any supplement thereto) and as are customarily covered in opinion letters of issuer’s counsel and in accountants’ letters delivered to the underwriters in underwritten offerings of equity securities;

(h) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

(i) make available to the appropriate representatives of the Managing Underwriter and Selling Holders access to such information and Southcross personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act; provided, however, that Southcross need not disclose any non-public information to any such representative unless and until such representative has entered into a confidentiality agreement with Southcross reasonably satisfactory to Southcross;

(j) cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system, if any, on which similar securities issued by Southcross are then listed;

(k) use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of Southcross to enable the Selling Holders to consummate the disposition of such Registrable Securities;

(l) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the effective date of such registration statement;

(m) take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, to expedite or facilitate the disposition of such Registrable Securities; and

(n) (i) cooperate with a Selling Holder if such Selling Holder could reasonably be deemed to be an “underwriter,” as defined in Section 2(a)(11) of the Securities Act, in connection with the registration statement in respect of any registration of the Registrable

Securities of such Selling Holder pursuant to this Agreement, and any amendment or supplement thereof (any such registration statement or amendment or supplement a “ Primary Offering ”), in allowing such Selling Holder to conduct customary “underwriter’s due diligence” with respect to Southcross and satisfy its obligations in respect thereof, (ii) furnish to such Selling Holder upon such Selling Holder’s request, on the date of the effectiveness of any Primary Offering and thereafter from time to time on such dates as such Selling Holder may reasonably request, the letters covered by Section 2.04(g) of this Agreement, in each case addressed to such Selling Holder, and (iii) permit legal counsel to such Selling Holder to review and comment upon any such Primary Offering at least five (5) Business Days prior to its filing with the Commission and all amendments and supplements to any such Primary Offering within a reasonable number of days prior to their filing with the Commission and not file any Primary Offering or amendment or supplement thereto in a form to which such Selling Holder’s legal counsel reasonably objects in writing.

Each Selling Holder, upon receipt of notice from Southcross of the happening of any event of the kind described in subsection (e) of this Section 2.04 , shall forthwith discontinue disposition of the Registrable Securities until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by subsection (e) of this Section 2.04 or until it is advised in writing by Southcross that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by Southcross, such Selling Holder will deliver, or will request the Managing Underwriter or underwriters, if any, to deliver to Southcross all copies in their possession or control, other than permanent file copies then in such Selling Holder’s possession, of the prospectus and any prospectus supplement covering such Registrable Securities current at the time of receipt of such notice.

If reasonably requested by a Selling Holder, Southcross shall: (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as such Selling Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any Shelf Registration Statement or any other registration statement contemplated by this Agreement.

Section 2.05 Cooperation by Holders . Southcross shall have no obligation to include Registrable Securities of a Holder in a Shelf Registration Statement or in an Underwritten Offering under Article II of this Agreement if such Selling Holder has failed to timely furnish such information that, in the opinion of counsel to Southcross, is reasonably required for such registration statement or prospectus supplement, as applicable, to comply with the Securities Act.

Section 2.06 Restrictions on Public Sale by Holders of Registrable Securities . During the Effectiveness Period, each Holder of Registrable Securities who is included in a Shelf Registration Statement agrees not to effect any public sale or distribution of the Registrable Securities during the thirty (30) calendar day period beginning on the date that a prospectus

supplement or other prospectus (including any free writing prospectus) is filed with the Commission with respect to an Underwritten Offering of equity securities of Southcross; provided, that the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the officers, directors or any other unitholder of Southcross on whom a restriction is imposed in connection with such public offering; provided, further, that this Section 2.06 shall apply only to a Selling Holder (together with any Affiliates that are Selling Holders) that holds a majority of the then outstanding Registrable Securities.

Section 2.07 Expenses .

(a) Certain Definitions . “ Registration Expenses ” means all expenses incident to Southcross’ performance under or compliance with this Agreement to effect the registration of Registrable Securities in a Shelf Registration Statement pursuant to Section 2.01 , a Piggyback Offering or Overnight Underwritten Offering pursuant to Section 2.02 , or an Underwritten Offering pursuant to Section 2.03 , and the disposition of such securities, including, without limitation, all customary registration, filing, securities exchange listing and NYSE fees, all customary registration, filing, qualification and other fees and expenses of complying with securities or “blue sky” laws, fees of the Financial Industry Regulatory Authority, Inc., fees of transfer agents and registrars, all word processing, duplicating and printing expenses, the fees and disbursements of counsel to Southcross and independent public accountants for Southcross, including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance. “ Selling Expenses ” means all underwriting fees, discounts and selling commissions (and similar fees or arrangements associated with) and transfer taxes allocable to the sale of the Registrable Securities.

(b) Expenses . Southcross will pay all reasonable Registration Expenses as determined in good faith, including, in the case of an Underwritten Offering or a Piggyback Offering, whether or not any sale is made pursuant to the related registration statement. Except as otherwise provided in Section 2.08 , Southcross shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’ rights and obligations under this Agreement hereunder, or for any Selling Expenses. Each Selling Holder shall pay all Selling Expenses in connection with any sale of its Registrable Securities.

Section 2.08 Indemnification .

(a) By Southcross . In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, Southcross will indemnify and hold harmless each Selling Holder thereunder, its directors, officers, employees, agents and managers, and each underwriter, pursuant to the applicable underwriting agreement with such underwriter, of Registrable Securities thereunder and each Person, if any, who controls such Selling Holder or underwriter within the meaning of the Securities Act and the Exchange Act, and its directors, officers, employees, agents and managers, against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively, “ Losses ”), joint or several, to which such Selling Holder or underwriter or controlling Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon

any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus, in the light of the circumstances under which such statement is made) contained in a Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein, or any free writing prospectus related thereto, or any amendment or supplement thereof, 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 (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading, and will reimburse each such Selling Holder, its directors and officers, each such underwriter and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; provided, however, that Southcross will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder, such underwriter or such controlling Person in writing specifically for use in the Shelf Registration Statement or such other registration statement, free writing prospectus or prospectus supplement, as applicable. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder or any such director, officer, employee, agent, manager or controlling Person, and shall survive the transfer of such securities by such Selling Holder.

(b) By Each Selling Holder . Each Selling Holder agrees to indemnify and hold harmless Southcross, its directors, officers, employees and agents and each Person, if any, who controls Southcross within the meaning of the Securities Act or of the Exchange Act to the same extent as the foregoing indemnity from Southcross to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in a Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or final prospectus contained therein, or any free writing prospectus related thereto, or any amendment or supplement thereof; provided, however, that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Southcross or any such director, officer, employee, agent, manager or controlling Person, and shall survive the transfer of such securities by such Selling Holder.

(c) Notice . Promptly after any indemnified party has received notice of any indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third person, which the indemnified party believes in good faith is an indemnifiable claim under this Agreement, the indemnified party shall give the indemnifying party written notice of such claim but failure to so notify the indemnifying party will not relieve the indemnifying party from any liability it may have to such indemnified party hereunder except to the extent that the indemnifying party is materially prejudiced by such failure. Such notice shall state the nature and the basis of such claim to the extent then known. The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the

defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.08 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to assume the defense and employ counsel or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable out-of-pocket expenses and fees of such separate counsel and other reasonable out-of-pocket expenses related to such participation to be reimbursed by the indemnifying party as incurred. Notwithstanding any other provision of this Agreement, the indemnifying party shall not settle any indemnified claim without the consent of the indemnified party, unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, and does not contain any admission of wrongdoing by, the indemnified party.

(d) Contribution . If the indemnification provided for in this Section 2.08 is held by a court or government agency of competent jurisdiction to be unavailable to any indemnified party or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of such indemnified party on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations; provided, however, that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of gross proceeds received by such Selling Holder from the sale of Registrable Securities giving rise to such indemnification. The relative fault of the indemnifying party on the one hand and the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to herein. The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss that is the subject of this paragraph. 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 is not guilty of such fraudulent misrepresentation.

(e) Other Indemnification . The provisions of this Section 2.08 shall be in addition to any other rights to indemnification or contribution that an indemnified party may have pursuant to Law, equity, contract or otherwise.

Section 2.09 Rule 144 Reporting . With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, Southcross agrees to use its commercially reasonable efforts to:.

(a) make and keep public information regarding Southcross available, as those terms are understood and defined in Rule 144 of the Securities Act, at all times from and after the date hereof;

(b) file with the Commission in a timely manner all reports and other documents required of Southcross under the Securities Act and the Exchange Act at all times from and after the date hereof; and

(c) so long as a Holder owns any Registrable Securities, furnish, unless otherwise available at no charge by access electronically to the Commission’s EDGAR filing system, to such Holder forthwith upon request (i) a copy of the most recent annual or quarterly report of Southcross, and (ii) such other reports and documents so filed with the Commission as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.

Section 2.10 Transfer or Assignment of Registration Rights . The rights to cause Southcross to register Registrable Securities granted to the Purchaser by Southcross under this Article II may be transferred or assigned by a Holder to a transferee or assignee; provided, that (i) the transferee or assignee is an Affiliate of the Purchaser or (ii) there is transferred to such transferee at least $5 million of the then outstanding Registrable Securities. The transferor shall give written notice to Southcross at least ten (10) Business Days prior to any said transfer or assignment, setting forth the information required under Section 3.01 of this Agreement for each such transferee and identifying the securities with respect to which such registration rights are being transferred or assigned, and each such transferee shall agree in writing to be subject to all of the terms and conditions of this Agreement.

Section 2.11 Limitation on Subsequent Registration Rights . From and after the date hereof, Southcross shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities, enter into any agreement with any current or future holder of any securities of Southcross that would allow such current or future holder to require Southcross to include securities in any Underwritten Offering or Overnight Underwritten Offering by Southcross for its own account on a basis that is superior in any way to the Piggyback Offering rights granted to the Holders pursuant to Section 2.02 of this Agreement.

ARTICLE III.
MISCELLANEOUS

Section 3.01 Communications . All notices and demands provided for hereunder shall be in writing and shall be given by hand delivery, electronic mail, registered or certified mail, return receipt requested, regular mail, facsimile or air courier guaranteeing overnight delivery to the following addresses:.

(a) If to the Purchaser:

Southcross Energy LLC
1700 Pacific Ave., Suite 2900
Dallas, Texas 75201
Attention: David W. Biegler
Facsimile: (214) 393-7504

with a copy to:

Charlesbank Equity Fund VI, Limited Partnership
200 Clarendon Street, 54 th Floor
Boston, Massachusetts 02116
Attention: Jon Biotti

Tami E. Nason

Facsimile: (617) 619-5402

(b) If to Southcross:

Southcross Energy Partners, L.P.
1700 Pacific Ave., Suite 2900
Dallas, Texas 75201
Attention: David W. Biegler
Facsimile: (214) 393-7504

with a copy to:

Latham & Watkins LLP
811 Main Street, Suite 3700
Houston, Texas 77002
Attention: Ryan Maierson
Facsimile: (713) 546-5401

and

Akin Gump Strauss Hauer & Feld LLP
1111 Louisiana Street
Houston, Texas 77002
Attention: John Goodgame
Facsimile: (713) 236-0822

or, if to a transferee of the Purchaser, to the transferee at the addresses provided pursuant to Section 2.10 above. All notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) when notice is sent to the sender that the recipient has read the message, if sent by electronic mail; (iii) upon actual receipt if sent by registered or certified mail, return receipt requested, or regular mail, if mailed; (iv) when

receipt is acknowledged, if sent by facsimile; and (v) upon actual receipt when delivered to an air courier guaranteeing overnight delivery.

Section 3.02 Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein.

Section 3.03 Aggregation of Registrable Securities . All Registrable Securities held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

Section 3.04 Recapitalization, Exchanges, Etc. . Affecting the Registrable Securities. The provisions of this Agreement shall apply to the fullest extent set forth herein with respect to any and all units of Southcross or any successor or assignee of Southcross (whether by merger, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, splits, recapitalizations and the like occurring after the date of this Agreement.

Section 3.05 Specific Performance . Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or in equity which such Person may have.

Section 3.06 Counterparts . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.

Section 3.07 Headings . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

Section 3.08 Governing Law, Submission to Jurisdiction . This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement), will be construed in accordance with and governed by the Laws of the State of Delaware without regard to principles of conflicts of laws. Any action against any party relating to the foregoing shall be brought in any federal or state court of competent jurisdiction located within the State of Delaware, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Delaware over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection which they may now or hereafter have

to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

Section 3.09 Waiver of Jury Trial . THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVE, AND AGREE TO CAUSE THEIR AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 3.10 Severability of Provisions . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

Section 3.11 Entire Agreement . This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by Southcross set forth herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

Section 3.12 Amendment . This Agreement may be amended only by means of a written amendment signed by Southcross and the Holders of a majority of the then outstanding Registrable Securities; provided, however, that no such amendment shall adversely affect the rights of any Holder hereunder without the consent of such Holder.

Section 3.13 No Presumption . In the event any claim is made by a party relating to any conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.

Section 3.14 Obligations Limited to Parties to this Agreement . Each of the parties hereto covenants, agrees and acknowledges that no Person other than the Purchaser, their

respective permitted assignees and Southcross shall have any obligation hereunder and that, notwithstanding that one or more of Southcross and the Purchaser may be a corporation, partnership, limited liability company or other entity, no recourse under this Agreement or under any documents or instruments delivered in connection herewith or therewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of Southcross, the Purchaser or their respective permitted assignees, or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of Southcross, the Purchaser or any of their respective assignees, or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any obligations of Southcross, the Purchaser or their respective permitted assignees under this Agreement or any documents or instruments delivered in connection herewith or therewith or for any claim based on, in respect of or by reason of such obligation or its creation, except in each case for any assignee of a Holder.

Section 3.15 Interpretation . Article and Section references in this Agreement are references to the corresponding Article and Section to this Agreement, unless otherwise specified. All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to.” Whenever any determination, consent or approval is to be made or given by Southcross under this Agreement, such action shall be in the Southcross’ sole discretion unless otherwise specified.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.

	SOUTHCROSS ENERGY PARTNERS, L.P.

	By:	Southcross Energy Partners GP, LLC,
		its general partner


	By:
		Name:
		Title:


	SOUTHCROSS ENERGY LLC


	By:
		Name:
		Title:

Signature Page to Registration Rights Agreement

Exhibit 10.5

Execution Version

LIMITED WAIVER AND SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS LIMITED WAIVER AND SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “ Amendment ”) is entered into effective as of the 12th day of April, 2013, among SOUTHCROSS ENERGY PARTNERS, L.P. , a Delaware limited partnership (the “ Borrower ”), WELLS FARGO BANK, N.A. , a national banking association, as the Administrative Agent (the “ Administrative Agent ”), and each of the Lenders (as defined below) that has executed this Amendment (the “ Consenting Lenders ”).

W I T N E S S E T H:

WHEREAS, the Borrower, the Administrative Agent and the financial institutions party thereto as lenders (the “ Lenders ”) are parties to that certain Second Amended and Restated Credit Agreement dated as of November 7, 2012 (as amended prior to the Second Amendment Effective Date (as defined in Section 3 of this Amendment), the “ Credit Agreement ”) (unless otherwise defined herein, all terms used herein which are defined in the Credit Agreement shall have the meanings given such terms in the Credit Agreement, as amended hereby); and

WHEREAS, pursuant to the Credit Agreement, the Lenders have made Loans to the Borrower and provided certain other credit accommodations to the Borrower; and

WHEREAS, the Borrower has advised the Administrative Agent and the Lenders that it has failed to satisfy the financial covenants set forth in Subsections 9.01(a)(i) and 9.01(c) of the Credit Agreement for the Rolling Period ending March 31, 2013, which failure has resulted in immediate Events of Default under Subsection 10.01(d) of the Credit Agreement (collectively, the “ Specified Defaults ”);

WHEREAS, the Borrower has requested that (i) the Administrative Agent and the Lenders waive the Specified Defaults and (ii) amend certain terms and provisions of the Credit Agreement, in each case as provided in this Amendment; and

WHEREAS, subject to the terms and conditions set forth herein, the Consenting Lenders have agreed to the Borrower’s requests.

NOW THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the Borrower, the Administrative Agent and the Consenting Lenders hereby agree as follows:

SECTION 1 Limited Waiver . In reliance on the representations, warranties, covenants and agreements contained in this Amendment, and subject to and upon the terms and conditions set forth herein, the Administrative Agent and each of the Consenting Lenders hereby waive the Specified Defaults effective as of the Second Amendment Effective Date. The limited waiver contained in this Section 1 is a one-time waiver applicable solely to the Specified Defaults, which are limited to the Rolling Period ending March 31, 2013, but to no other Default or Event of Default. Nothing contained in this Section 1 shall be deemed a consent to or waiver of, or a

commitment or obligation on the part of the Administrative Agent or the Lenders to any future consent to or waiver of, any other action or inaction on the part of the Borrower or any other Credit Party that constitutes (or would constitute) a violation of or departure from any covenant, condition or other obligation of the Credit Parties under the Credit Agreement and the other Loan Documents. Neither the Lenders nor the Administrative Agent shall be obligated to grant any future waivers or consents with respect to any provision of the Credit Agreement or any other Loan Document. Any further waivers or consents must be specifically agreed to in writing in accordance with Section 12.02 of the Credit Agreement.

SECTION 2 Amendments . In reliance on the representations, warranties, covenants and agreements contained in this Amendment, and subject to the satisfaction of each condition precedent set forth in Section 3 hereof, the Credit Agreement shall be amended effective as of the Second Amendment Effective Date in the manner provided in this Section 2 .

2.1 Deleted Definition . Section 1.02 of the Credit Agreement shall be amended by deleting the definition of “Permitted Notes Covenant Option” contained therein.

2.2 Restated Definitions . Each of the following definitions set forth in Section 1.02 of the Credit Agreement shall be amended and restated in its entirety as follows:

“ Annualized Consolidated EBITDA ” means, with respect to each Rolling Period ending on or prior to December 31, 2013, the sum of (a) the product of (i) the Borrower’s Consolidated Unadjusted EBITDA for such Rolling Period multiplied by (ii) the factor set forth for such Rolling Period in the grid below plus (b) the aggregate Specified Projects EBITDA Adjustments for In Process Specified Projects as calculated on the last day of such Rolling Period plus (c) any amounts added to Consolidated Net Income in the calculation of Consolidated EBITDA for such Rolling Period pursuant to clauses (v), (vi), (vii), (viii) and (ix) of the definition of Consolidated EBITDA:

Rolling Period Ending		Factor
September 30, 2013		2
December 31, 2013		4/3

“ Annualized Consolidated Interest Expense ” means, for each Rolling Period ending on or prior to December 31, 2013, the product of (a) the Borrower’s actual Consolidated Interest Expense for such Rolling Period multiplied by (b) the factor set forth for such Rolling Period in the grid below:

Rolling Period Ending		Factor
September 30, 2013		2
December 31, 2013		4/3

“ Availability Block ” means, (a) at any time prior to the Borrower’s exercise of the Target Leverage Option, an amount equal to (x) $100,000,000 minus (y) the dollar amount of immediately available funds on deposit in the GP Cash Collateral Account at such time minus (z) the sum of (i) the LC Exposure at such time (as determined after giving effect to the issuance, amendment, renewal or extension of any Letter of Credit for which such request is being made and in connection with which the Availability Block is being calculated for the purposes of Section 2.07(a) or Section 2.07(b) ) plus (ii) the aggregate amount of all LC Disbursements that have been reimbursed by or on behalf of the Borrower with the proceeds of an ABR Borrowing made after the First Amendment Effective Date at such time, and (b) at any time from and after the Borrower’s exercise of the Target Leverage Option, an amount equal to zero ($0.00).

“ Collateral ” means any and all Property of the Loan Parties or any other Person that is secured by a Lien under one or more Security Instruments.

“ Consolidated Interest Coverage Ratio ” means, for any period of determination, the ratio of (a) Consolidated EBITDA (or Annualized Consolidated EBITDA, in the case of the Rolling Periods ending on or prior to December 31, 2013) divided by (b) Consolidated Interest Expense (or Annualized Consolidated Interest Expense, in the case of Rolling Periods ending on or prior to December 31, 2013).

“ Consolidated Senior Secured Leverage Ratio ” means, for any period of determination, the ratio of Consolidated Senior Secured Indebtedness as of the last day of the fiscal quarter for which such determination is being made divided by Consolidated EBITDA (or Annualized Consolidated EBITDA, in the case of the Rolling Periods ending on or prior to December 31, 2013) for the Rolling Period ending on the last day of such fiscal quarter.

“ Consolidated Total Leverage Ratio ” means, for any period of determination, the ratio of (a) Consolidated Total Funded Indebtedness as of the last day of the fiscal quarter for which such determination is being made divided by (b) Consolidated EBITDA (or Annualized Consolidated EBITDA, in the case of the Rolling Periods ending on or prior to December 31, 2013) for the Rolling Period ending on the last day of such fiscal quarter.

“ Consolidated Unadjusted EBITDA ” means, for any period of determination, Consolidated EBITDA prior to giving effect to (a) any amounts added to Consolidated Net Income in the calculation of Consolidated EBITDA pursuant to clauses (v), (vi), (vii), (viii) and (ix) of the definition of Consolidated EBITDA, and (b) any Specified Projects EBITDA Adjustments for In Process Specified Projects for such period.

“ LC Sublimit ” means, at any time, $50,000,000.

“ Rolling Period ” means (a) for each of the fiscal quarters ending on June 30, 2013, September 30, 2013, and December 31, 2013, the period commencing on April 1, 2013 and ending on the last day of such fiscal quarter, and (b) for the fiscal quarter ending on March 31, 2014 and for each subsequent fiscal quarter, the period of four (4) consecutive fiscal quarters ending on the last day of such fiscal quarter.

2.3 Additional Definitions . Section 1.02 of the Credit Agreement shall be amended to add thereto in alphabetical order the following defined terms:

“ Adjusted Consolidated Total Leverage Ratio ” means, for any period of determination, the ratio of (a) an amount equal to the difference of (x) Consolidated Total Funded Indebtedness as of the last day of the fiscal quarter for which such determination is being made, minus (y) the dollar amount of funds on deposit in the GP Cash Collateral Account as of the last day of the fiscal quarter for which such determination is being made (which, for the avoidance of doubt, shall exclude any Equity Cure Amount deposited therein to cure a Financial Covenant Default occurring on such day) divided by (b) Consolidated EBITDA (or Annualized Consolidated EBITDA, in the case of the Rolling Periods ending on or prior to December 31, 2013) for the Rolling Period ending on the last day of such fiscal quarter.

“ Equity Cure Amount ” means, with respect to any Equity Cure Test Date (subject to the proviso at the end of this definition), an amount equal to the quotient of:

(a) an amount equal to the difference of:

(i) the difference of (x) Consolidated Total Funded Indebtedness as of such Equity Cure Test Date, minus (y) the dollar amount of funds on deposit in the GP Cash Collateral Account as of such Equity Cure Test Date (which, for the avoidance of doubt, shall exclude any Equity Cure Amount deposited therein to cure the Financial Covenant Default occurring on such Equity Cure Test Date); minus

(ii) an amount equal to the product of (x) Annualized Consolidated EBITDA for the Rolling Period ending as of such Equity Cure Test Date, multiplied by (y) the maximum Adjusted Consolidated Total Leverage Ratio set forth in the grid contained in Section 9.01(a)(i)(B) for the Rolling Period ending on such Equity Cure Test Date; divided by

(b) 4.5;

provided , however , that, if the “Equity Cure Amount” is being calculated in connection with the Borrower’s exercise of the Equity Cure Right with respect to a Financial Covenant Default resulting from the Borrower’s failure to satisfy the

requirements of Section 9.01(d) , then the “Equity Cure Amount” shall be an amount equal to the difference of (x) $9,000,000 minus (y) the Borrower’s Consolidated EBITDA for the fiscal quarter ending June 30, 2013.

“ Equity Cure Notice ” has the meaning set forth in Section 9.01(e)(i) .

“ Equity Cure Right ” has the meaning set forth in Section 9.01(e) .

“ Equity Cure Rollover Amount ” means, with respect to any Equity Cure Amount deposited in the GP Cash Collateral Account pursuant to Section 9.01(e)(ii) in connection with the Borrower’s exercise of the Equity Cure Right (subject to the proviso set forth at the end of this definition), the lesser of:

(a) such Equity Cure Amount; and

(b) an amount equal to the difference of:

(i) an amount equal to the quotient of:

(A) the difference of (x) Consolidated Total Funded Indebtedness as of the Equity Cure Test Date, minus (y) the dollar amount of funds on deposit in the GP Cash Collateral Account as of the Equity Cure Test Date (which, for the avoidance of doubt, shall exclude any Equity Cure Amount deposited with respect to the Financial Covenant Default occurring on such Equity Cure Test Date); divided by

(B) the maximum Adjusted Consolidated Total Leverage Ratio set forth in the grid contained in Section 9.01(a)(i)(B) for the Rolling Period ending on such Equity Cure Test Date; minus

(ii) an amount equal to the quotient of:

Default occurring on such Equity Cure Test Date); divided by

(B) the sum of (x) the maximum Adjusted Consolidated Total Leverage Ratio set forth in the grid contained in Section 9.01(a)(i)(B) for the Rolling Period ending on such Equity Cure Test Date plus (y) 0.50;

provided , however , that if such “Equity Cure Rollover Amount” is being calculated in connection with the Borrower’s exercise of the Equity Cure Right with respect to a Financial Covenant Default resulting from the Borrower’s failure to satisfy the requirements of Section 9.01(d) , then the “Equity Cure Rollover Amount” with respect to such Equity Cure Test Date shall be an amount equal to the Equity Cure Amount for Equity Cure Test Date.

“ Equity Cure Test Date ” has the meaning set forth in Section 9.01(e)(i) .

“ Equity Funded Capital Expenditure Amount ” has the meaning set forth in Section 9.23(b) .

“ Financial Covenant Default ” has the meaning set forth in Section 9.01(e) .

“ Growth Capital Expenditures ” means all Capital Expenditures other than Maintenance Capital Expenditures.

“ Initial Equity Amount ” means $40,000,000.

“ Initial Equity Contribution ” has the meaning set forth in Section 8.20(a) .

“ Initial Equity Contribution Date ” has the meaning set forth in Section 8.20(a) .

“ Initial Equity Proceeds ” has the meaning set forth in Section 8.20(a) .

“ Maintenance Capital Expenditures ” means all Capital Expenditures that are, at the time such Capital Expenditures are incurred, (a) made to maintain long term operating income or operating capacity of the Loan Parties, including Capital Expenditures for routine equipment and pipeline maintenance or replacement due to obsolescence. For the purposes of this definition, “long term” generally refers to a period of not less than twelve (12) months, or (b) required to be made by the Borrower or any other Loan Party under applicable law.

“ Qualified Equity Securities ” means any Equity Interests in the Borrower (other than Disqualified Capital Stock) that meet each of the following conditions:

(a) such Equity Interests do not provide for any required periodic cash payments to the holder thereof prior to the Borrower’s exercise of the Target Leverage Option (other than with respect to “General Partnership Units” under and as defined in the Partnership Agreement issued to the General Partner pursuant to Section 5.2(b) of the Partnership Agreement to the extent necessary to maintain the General Partner’s percentage interests in the Borrower; provided that any cash payments received by the General Partner in respect of such Equity Interests are deposited in the GP Cash Collateral Account); and

(b) such Equity Interests do not provide for any dividends or distributions to the holder thereof, other than dividends or other distributions payable solely in additional shares of Equity Interests (other than Disqualified Capital Stock) in the Borrower, prior to the Borrower’s exercise of the Target Leverage Option (other than with respect to “General Partnership Units” under and as defined in the Partnership Agreement issued to the General Partner pursuant to Section 5.2(b) of the Partnership Agreement to the extent necessary to maintain the General Partner’s percentage interests in the Borrower; provided that any cash payments received by the General Partner in respect of such Equity Interests are deposited in the GP Cash Collateral Account).

“ Required Equity Amount ” means the Initial Equity Amount, the aggregate amount of all Equity Cure Amounts, or the Subsequent Equity Amount, as applicable.

“ Required Equity Contribution ” means, the Initial Equity Contribution or the Subsequent Equity Contribution, as applicable.

“ Required Equity Contribution Date ” means any Initial Equity Contribution Date or Subsequent Equity Contribution Date, as applicable.

“ Required Equity Proceeds ” means the Initial Equity Proceeds or the Subsequent Equity Proceeds, as applicable.

“ Second Amendment ” means that certain Limited Waiver and Second Amendment to Second Amended and Restated Credit Agreement dated April 12, 2013, entered into by and among the Borrower, the Administrative Agent, and the Lenders party thereto.

“ Second Amendment Effective Date ” has the meaning assigned to such term in the Second Amendment.

“ Southcross Holdings ” means Southcross Energy LLC, a Delaware limited liability company.

“ Subsequent Equity Amount ” means:

(a) if the Subsequent Equity Contribution Test is satisfied, an amount equal to the sum of:

(i) the aggregate amount of all Equity Cure Amounts deposited into the GP Cash Collateral Account pursuant to Section 9.01(e)(ii) ; plus

(ii) the Equity Funded Capital Expenditure Amount; and

(b) if the Subsequent Equity Contribution Test is not satisfied, an amount equal to the lesser of:

(i) an amount equal to 100% of the funds on deposit in the GP Cash Collateral Account on the last Subsequent Equity Contribution Date (without giving effect to any disbursements from the GP Cash Collateral Account required to be made with respect to the Subsequent Equity Contribution); and

(ii) an amount equal to the sum of the following:

(A) an amount equal to the difference of:

(1) the quotient of (x) Consolidated Total Funded Indebtedness as of June 30, 2014; divided by (y) 4.50; minus

(2) Consolidated EBITDA for the Rolling Period ending June 30, 2014; plus

(B) the amount calculated in accordance with clause (a) of this definition.

“ Subsequent Equity Contribution ” has the meaning set forth in Section 8.20(b) .

“ Subsequent Equity Contribution Date ” has the meaning set forth in Section 8.20(b) .

“ Subsequent Equity Contribution Test ” means a test that is satisfied if the Consolidated Total Leverage Ratio for the Rolling Period ending June 30, 2014 (calculated without adding any Equity Cure Amounts or Equity Cure Rollover Amounts in the calculation of Consolidated EBITDA) is not greater than 4.50 to 1.00.

“ Subsequent Equity Proceeds ” has the meaning set forth in Section 8.20(b) .

“ Target Leverage Date ” means the date that is five (5) Business Days after each of the following conditions is satisfied:

(a) the Target Leverage Test is satisfied as of the most recent Target Leverage Test Date; and

(b) the Administrative Agent has received a certificate from a Financial Officer of the Borrower in accordance with Section 8.01(d) , which certificate shall include calculations of the Target Leverage Ratio in form and substance satisfactory to the Administrative Agent.

“ Target Leverage Option ” means a one-time option of the Borrower, which option shall be exercisable only after the occurrence of the Target Leverage Date, to elect (by delivering irrevocable written notice to the Administrative Agent of such election) the application of the covenants set forth in Section 9.01(a)(i)(A) .

“ Target Leverage Ratio ” means, as of any Target Leverage Test Date, the ratio of (a) an amount equal to (i) Consolidated Total Funded Indebtedness as of such Target Leverage Test Date (calculated after giving effect to any mandatory prepayments made on such date pursuant to Section 3.04(b) ), minus (ii) the dollar amount of funds on deposit in the GP Cash Collateral Account on such Target Leverage Test Date (after giving effect to any disbursements from the GP Cash Collateral Account made on such date), divided by (b) Consolidated EBITDA (or Annualized Consolidated EBITDA, in the case of Rolling Periods ending on or prior to December 31, 2013) for the most recently ended Rolling Period for which financial statements have been delivered to the Administrative Agent pursuant to Section 8.01(a) or (b) (which, for the avoidance of doubt, shall be calculated without adding any Equity Cure Amounts or any Equity Cure Rollover Amounts thereto).

“ Target Leverage Test ” means, as of any Target Leverage Test Date, a test with respect to the Target Leverage Ratio that is satisfied if either of the following conditions is met:

(a) the Target Leverage Ratio calculated as of such Target Leverage Test Date is not more than 4.25 to 1.00; or

(b) (A) the Target Leverage Ratio calculated as of such Target Leverage Test Date is not more than 4.50 to 1.00, and (B) the Target Leverage Ratio calculated as of the last day of the Rolling Period immediately preceding the Rolling Period used in the calculation of the Target Leverage Ratio referred to in the foregoing subclause (A) of this definition is not more than 4.50 to 1.00.

“ Target Leverage Test Date ” means (a) the last day of each fiscal quarter commencing with the fiscal quarter ending June 30, 2013 ending on or prior to the Borrower’s exercise of the Target Leverage Option, and (b) at the election of the Borrower, any date on which the Borrower issues Equity Interests (other than Qualified Equity Securities issued in connection with any Required Equity Contribution).

2.4 Amendment to Definition of Applicable Margin . The definition of “Applicable Margin” set forth in Section 1.02 of the Credit Agreement shall be amended as follows:

(a) The first sentence of the definition of “Applicable Margin” set forth in Section 1.02 of the Credit Agreement shall be amended by inserting the parenthetical “(subject to the proviso in the last paragraph of this definition)” immediately after the phrase “in the grid below” contained therein; and

(b) The proviso contained in first sentence of the last paragraph of the definition of “Applicable Margin” set forth in Section 1.02 of the Credit Agreement shall be amended and restated in its entirety as follows:

provided , however , that (x) if at any time the Borrower fails to deliver any financial statements or a compliance certificate required by Sections 8.01(a) , (b) or (d) , as applicable, then the “Applicable Margin” means the rate per annum set forth on the grid when the Consolidated Total Leverage Ratio is at its highest level,(y) for the period from the Effective Date until March 31, 2013, the Consolidated Total Leverage Ratio shall, for purposes of this definition, be deemed to be greater than or equal to 4.50 to 1.00, and (z) for the period from April 1, 2013 until the date on which the financial statements and compliance certificate required pursuant to Sections 8.01(a) , (b) and/or (d) , as applicable, are delivered to the Administrative Agent for the period ending on the last day of the fiscal quarter in which the Borrower exercises the Target Leverage Option, “Applicable Margin” means, for any day, (i) 4.50% per annum with respect to Eurodollar Loans, (ii) 3.50% per annum with respect to ABR Loans and (iii) 0.500% per annum with respect to the Commitment Fee Rate

2.5 Amendments to Definition of Consolidated EBITDA . The definition of “Consolidated EBITDA” set forth in Section 1.02 of the Credit Agreement shall be amended as follows:

(a) Clause (b) of the definition of “Consolidated EBITDA” set forth in Section 1.02 of the Credit Agreement shall be amended by amending and restating clause (iv) thereof as follows:

(iv) amortization (including amortization of equity compensation expenses), depreciation and other noncash nonrecurring items during such period,

(b) Clause (b) of the definition of “Consolidated EBITDA” set forth in Section 1.02 of the Credit Agreement shall be further amended by (i) deleting the word “and” immediately before sub-clause “(v)” thereof, and (ii) inserting the following new clauses “(vi)”, “(vii)” and “(viii)” and “(ix)” immediately before the word “ plus ” at the end of such clause (b):

(vi) nonrecurring cash expenses for employee severance, employee relocation and employee hiring costs incurred during such period, (vii) nonrecurring cash expenses for accounting and reorganization costs incurred during such period in an aggregate amount not to exceed $750,000 in any Rolling Period, (viii) fees, costs and expenses incurred in connection with the negotiation, documentation, closing and consummation of the Second Amendment in an aggregate amount not to exceed $2,000,000, and (ix) nonrecurring cash expenses for insurance deductible costs incurred during such period,

(c) Clause (c) of the definition of “Consolidated EBITDA” set forth in Section 1.02 of the Credit Agreement shall be amended by inserting the following immediately before the phrase “the aggregate Specified Projects EBITDA Adjustments during such period” contained therein:

any Equity Cure Rollover Amount in such period, plus (d)

2.6 Amendment to Definition of Material Acquisition . Clause (b) of the definition of “Material Acquisition” set forth in Section 1.02 of the Credit Agreement shall be amended and restated in its entirety as follows:

(b) such acquisition occurs prior to the incurrence of Permitted Notes Indebtedness by the Borrower and/or any of its Subsidiaries; and

2.7 Amendment to Definition of Permitted Acquisition . The definition of “Permitted Acquisition” set forth in Section 1.02 of the Credit Agreement shall be amended by inserting the phrase “, in each case made after the Borrower’s exercise of the Target Leverage Option and” immediately before the phrase “meeting each of the following conditions” contained in such definition.

2.8 Amendment to Definition of Permitted Notes Indebtedness . The definition of “Permitted Notes Indebtedness” set forth in Section 1.02 of the Credit Agreement shall be amended by inserting the phrase “after the Borrower’s exercise of the Target Leverage Option” immediately before the semicolon contained in such definition.

2.9 Amendment to Definition of Specified Projects EBITDA Adjustment . The first sentence of the definition of “Specified Projects EBITDA Adjustment” set forth in Section 1.02 of the Credit Agreement shall be amended by deleting the reference to ‘September 30, 2013” contained therein and inserting a reference to “December 31, 2013” in lieu thereof.

2.10 Amendment to Pro Forma Compliance Provision . The second sentence of Subsection 1.05(c) of the Credit Agreement shall be amended and restated in its entirety as follows:

For the purposes of the definition of “ Permitted Note Indebtedness ” and the definition of “Permitted Acquisition” (but only in the event that such Permitted Acquisition is a Material Acquisition), the covenants (and levels thereof) that must be complied with are those set forth in Sections 9.01(a)(ii) , 9.01(b) , and 9.01(c) .

2.11 Amendments to Mandatory Prepayment Provisions . Subsection 3.04(b) of the Credit Agreement shall be amended as follows:

(a) Clause (ii) of Subsection 3.04(b) of the Credit Agreement shall be amended by inserting the phrase “for any Asset Sale made after the Borrower’s exercise of the Target Leverage Option” immediately after the phrase “ provided , however , that” contained therein.

(b) Clause (iii) of Subsection 3.04(b) of the Credit Agreement shall be amended by inserting the phrase “for any Recovery Event that occurs after the Borrower’s exercise of the Target Leverage Option” immediately after the phrase “ provided , however , that” contained therein.

(c) Subsection 3.04(b) of the Credit Agreement shall be amended by (i) renumbering clause “(iv)” thereof as clause “(v)”, (ii) renumbering clause “(v)” thereof as clause “(vi)”, (iii) deleting the references to “ Section 3.04(b)(iv) ” contained in clauses “(ii)” and “(iii)” thereof and inserting references to “ Section 3.04(b)(v) ” in lieu thereof, and (iv) inserting the following new clause “(iv)” in appropriate numerical order:

(iv) On each Required Equity Contribution Date contemporaneously with the consummation of the relevant Required Equity Contribution, 100% of the Required Equity Proceeds with respect to such Required Equity Contribution shall be applied by the Borrower as a mandatory repayment in accordance with the requirements of Section 3.04(b)(v) .

2.12 Amendments to Financial Statements Covenants . Section 8.01 of the Credit Agreement shall be amended as follows:

(a) Clause (d) of Section 8.01 of the Credit Agreement shall be amended and restated in its entirety as follows:

(d) Certificate of Financial Officer — Compliance .

(i) Concurrently with any delivery of financial statements required pursuant to Section 8.01(a) or Section 8.01(b) , a certificate of a Financial Officer in substantially the form of Exhibit D-2 hereto (A) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (B) setting forth reasonably detailed calculations demonstrating compliance with Section 9.01 , including, without limitation, (i) reasonably detailed calculations of the Specified Projects EBITDA Adjustment for each Specified Project (including a reasonably detailed summary of the terms of the applicable customer contracts

relating to such calculation), each Specified Project’s Scheduled Completion Date, and each Specified Project’s Projected Capacity (and, if applicable, any changes to such Projected Capacity and supporting information as required), and (ii) calculations of Consolidated Total Leverage Ratio (whether or not the Target Leverage Date has occurred and whether or not the Borrower has exercised the Target Leverage Option), (C) stating whether any change in GAAP or in the application thereof has occurred since the date of the financial statements referred to in Section 7.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate, (D) attaching reports setting forth the processing volumes for the periods covered by such financial statements, (E) certifying as to whether the Target Leverage Test has been satisfied and setting forth reasonably detailed calculations of the Target Leverage Ratio if such certificate is being delivered on a Target Leverage Test Date, and (F) in the case of such financial statements for the period ending June 30, 2014, setting forth reasonably detailed calculations of the Consolidated Total Leverage Ratio in accordance with the definition of “Subsequent Equity Contribution Test” (separately from and in addition to any calculation of the Consolidated Total Leverage Ratio required for the purpose of determining compliance with Section 9.01(a) ); and

(ii) at the election of the Borrower on any Required Equity Contribution Date or any other date on which the Borrower issues Equity Interests, as applicable, a certificate of a Financial Officer certifying as to whether the Target Leverage Test has been satisfied as of such Target Leverage Test Date and setting forth reasonably detailed calculations of the Target Leverage Ratio.

(b) Section 8.01 of the Credit Agreement shall be amended by (i) renumbering subsection “(n)” thereof as subsection “(o)” and (ii) inserting the following new subsection “(n)” in alphabetical order:

(n) Monthly Financial Statements . As soon as available, but in any event within thirty (30) calendar days after the end of each calendar month that is not the last calendar month in a fiscal quarter or a fiscal year, its unaudited consolidated balance sheet and related statement of operations reflecting results of operations as of the end of and for such calendar month and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or in the case of the balance sheet, as of the end of) the previous fiscal year, together with reports setting forth the processing volumes during such calendar month and the then elapsed portion of the fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and the results of operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal quarter-end or year-end adjustments, as the case may be, and the absence of footnotes.

2.13 Addition of Equity Issuance Covenant . Article VIII of the Credit Agreement shall be amended by inserting the following as new “Section 8.20” immediately after Section 8.19 thereof:

Section 8.20 Required Equity Issuances .

(a) Initial Equity Contribution . Prior to June 30, 2013, the Borrower shall issue Qualified Equity Securities in one or more transactions (the date of each such issuance, an “ Initial Equity Contribution Date ”) to the General Partner and/or Southcross Holdings for cash consideration (such issuances, collectively, the “ Initial Equity Contribution ”), which issuances shall result in the Borrower receiving cash proceeds on or prior to the June 30, 2013 in an aggregate amount of no less than the Initial Equity Amount (such proceeds, the “ Initial Equity Proceeds ”).

(b) Subsequent Equity Contribution . Prior to August 31, 2014, the Borrower shall issue Qualified Equity Securities in one or more transactions (the date of each such issuance, a “ Subsequent Equity Contribution Date ”) to the General Partner and/or Southcross Holdings for cash consideration (such issuances, collectively, the “ Subsequent Equity Contribution ”), which issuances shall result in the Borrower receiving cash proceeds on or prior to August 31, 2014 in an aggregate amount equal to the Subsequent Equity Amount (such proceeds, if any, the “ Subsequent Equity Proceeds ”).

Concurrently with any issuance of Equity Interests in the Borrower pursuant to this Section 8.20 , the Borrower shall furnish the Administrative Agent with (A) written notice informing the Administrative Agent that such issuance has been completed, (B) a certificate of a Financial Officer of the Borrower, in form and substance satisfactory to the Administrative Agent, certifying as to the aggregate amount of cash proceeds received by or on behalf of the Borrower in connection with such issuance, (C) fully executed and assembled copies of the material agreements and documents governing such issuance, and (D) such other information, documents or agreements relating to such issuance as the Administrative Agent may reasonably request.

2.14 Addition of Post-Closing GP Cash Collateral Covenant . Article VIII of the Credit Agreement shall be amended by inserting the following as new “Section 8.21” immediately after new Section 8.20 thereof:

Section 8.21 Post-Closing Deposit of GP Cash Collateral . On or prior to April 22, 2013, the Borrower shall cause the General Partner to deposit $24,200,000 in immediately available funds into the GP Cash Collateral Account (which funds shall be above and in addition to the amount on deposit in the GP Cash Collateral Account prior to such date and shall not be netted or credited against any other amounts required or permitted to be deposited or maintained in the GP Cash Collateral Account pursuant to Section 9.01(e)(ii) or 9.23 or any

other terms or conditions of this Agreement or any other Loan Document), and, after giving effect to such deposit, the GP Cash Collateral Account shall have a balance of at least $34,200,000 in immediately available funds (without giving effect to any amounts deposited therein pursuant to Sections 9.01(e)(ii) or 9.23 ).

2.15 Amendments to Financial Covenants . Section 9.01 of the Credit Agreement shall be amended and restated in its entirety as follows:

Section 9.01 Financial Covenants .

(a) Consolidated Total Leverage Ratio .

(i) Prior to the incurrence by the Borrower and/or any of its Subsidiaries of Permitted Notes Indebtedness:

(A) if the Borrower has exercised the Target Leverage Option thereof prior to the first day of such fiscal quarter, the Borrower will not, as of the last day of any fiscal quarter commencing with the fiscal quarter ending September 30, 2013, permit its Consolidated Total Leverage Ratio to exceed the ratio set forth in the grid below for the corresponding Rolling Period:

Rolling Period Ending		Maximum Consolidated Total Leverage Ratio
September 30, 2013		4.75 to 1.00
December 31, 2013 and thereafter		4.50 to 1.00

and

(B) if the Borrower has not exercised the Target Leverage Option prior to the first day of such fiscal quarter, the Borrower will not, as of the last day of any fiscal quarter commencing with the fiscal quarter ending September 30, 2013, permit its Adjusted Consolidated Total Leverage Ratio to exceed the ratio set forth in the grid below for the corresponding Rolling Period:

Rolling Period Ending		Maximum Adjusted Consolidated Total Leverage Ratio
September 30, 2013		7.25 to 1.00
December 31, 2013		6.75 to 1.00
March 31, 2014		6.25 to 1.00
June 30, 2014		5.25 to 1.00
September 30, 2014		5.00 to 1.00
December 31, 2014		4.75 to 1.00

Rolling Period Ending		Maximum Adjusted Consolidated Total Leverage Ratio
March 31, 2015 and thereafter		4.50 to 1.00

; provided , that upon the Borrower closing a Material Acquisition after the Borrower’s exercise of the Target Leverage Option, the Borrower may elect (by delivering written notice of such election to the Administrative Agent on the closing date of such Material Acquisition) for the Rolling Period ending on the last day of the fiscal quarter in which such acquisition occurs and for the immediately following two Rolling Periods to increase the maximum Consolidated Total Leverage Ratio that is permitted to 5.00 to 1.00; provided , further , that the Borrower is not permitted to make more than one such election in any period of four consecutive fiscal quarters;

(ii) From and after the incurrence by the Borrower and/or any of its Subsidiaries of Permitted Notes Indebtedness, the Borrower will not, as of the last day of each fiscal quarter then remaining during the term of this Agreement, permit its Consolidated Total Leverage Ratio to exceed 5.25 to 1.00.

(b) Consolidated Senior Secured Leverage Ratio . From and after the incurrence by the Borrower and/or any of its Subsidiaries of Permitted Notes Indebtedness, the Borrower will not, as of the last day of each fiscal quarter then remaining during the term of this Agreement, permit its Consolidated Senior Secured Leverage Ratio to exceed 3.50 to 1.00.

(c) Consolidated Interest Coverage Ratio . The Borrower will not, as of the last day of any fiscal quarter commencing with the fiscal quarter ending September 30, 2013, permit its Consolidated Interest Coverage Ratio to be less than the ratio set forth in the grid below for the corresponding Rolling Period:

Rolling Period Ending		Minimum Consolidated Interest Coverage Ratio
September 30, 2013		2.25 to 1.00
December 31, 2013		2.25 to 1.00
March 31, 2014 and thereafter		2.50 to 1.00

(d) Minimum Consolidated EBITDA . The Borrower will not permit the Consolidated EBITDA of the Borrower and its Consolidated Subsidiaries for the fiscal quarter ending June 30, 2013 to be less than $9,000,000.

(e) Borrower’s Right to Cure . Notwithstanding anything to the contrary contained in this Section 9.01 , in the event that the Borrower fails to

comply with the requirements of clauses (a), (b), (c) and/or (d) of this Section 9.01 as of the last day of any fiscal quarter ending on or prior to December 31, 2013 (such event, a “ Financial Covenant Default ”), then the Borrower shall have the right to cure any such Financial Covenant Default (such right, the “ Equity Cure Right ”) subject to the following terms and conditions:

(i) The Borrower shall deliver to the Administrative Agent irrevocable written notice of its intent to exercise the Equity Cure Right (an “ Equity Cure Notice ”) no later than ten (10) calendar days after the date on which financial statements and a compliance certificate as of and for the period ending on the last day (such last day, the “ Equity Cure Test Date ”) of the fiscal quarter for which such Financial Covenant Default occurred are required to be delivered pursuant to Sections 8.01(a) , (b) , and (d) , as applicable. The Equity Cure Notice shall set forth the calculation of the applicable Equity Cure Amount and be certified by a Financial Officer of the Borrower.

(ii) No later than five (5) calendar days after receipt by the Administrative Agent of an Equity Cure Notice the Borrower shall cause the General Partner and/or Southcross Holdings, as applicable, to deposit immediately available funds into the GP Cash Collateral Account (which funds shall be above and in addition to the amount on deposit in the GP Cash Collateral Account prior to the Equity Cure Test Date and shall not be netted or credited against any other amounts required or permitted to be deposited or maintained in the GP Cash Collateral Account pursuant to Sections 8.21 or 9.23 or any other terms or conditions of this Agreement or any other Loan Document) in a dollar amount equal to the Equity Cure Amount.

(iii) The Equity Cure Right shall not be exercised more than two (2) times.

(iv) From the date on which financial statements and a compliance certificate as of and for the period ending on the Equity Cure Test Date are required to be delivered pursuant to Sections 8.01(a) , (b) , and (d) , as applicable, until the earliest of (A) five (5) calendar days after receipt by the Administrative Agent of an Equity Cure Notice or (B) the date on which the Administrative Agent is notified by the Borrower that immediately available funds in an amount equal to the Equity Cure Amount will not be deposited by the General Partner and/or Southcross Holdings into the GP Cash Collateral Account, the applicable Financial Covenant Default shall constitute an Event of Default for all purposes under this Agreement, but neither the Administrative Agent nor any Lender shall impose default interest, accelerate the Secured Obligations, terminate the Commitments or exercise any enforcement remedy against any Credit Party or any of their respective Property, in each case solely with respect to such Financial Covenant Default. Notwithstanding anything to the contrary in this Section

9.01(e)(iv) the Administrative Agent and the Lenders shall be entitled to exercise any of their respective rights and remedies under this Agreement and under applicable law to the extent that any other Event of Default (other than the applicable Financial Covenant Default) has occurred and is continuing.

(v) Upon the timely deposit by the General Partner and/or Southcross Holdings of immediately available funds in a dollar amount equal to the Equity Cure Amount into the GP Cash Collateral Account, the Borrower shall be deemed to have satisfied the requirements of clauses (a), (b), (c) and (d) of this Section 9.01 , as applicable, as of the applicable Equity Cure Test Date with the same effect as though there was no failure to comply therewith as of such Equity Cure Test Date, and the Financial Covenant Default shall be automatically deemed cured and waived for all purposes of this Agreement.

(vi) With respect to any Equity Cure Amount deposited in the GP Cash Collateral Account in accordance with Section 9.01(e)(ii) , solely for the purposes of calculating the Borrower’s compliance with clauses (a), (b) and (c) of this Section 9.01 , as applicable, for each Rolling Period ending after the applicable Equity Cure Test Date that includes the fiscal quarter ending on such Equity Cure Test Date, (A) the Borrower shall be deemed to have received the Equity Cure Rollover Amount during the fiscal quarter ending on such Equity Cure Test Date and (B) the Borrower may add the applicable Equity Cure Rollover Amount in calculating its Consolidated EBITDA (or Annualized Consolidated EBITDA, in the case of Rolling Periods ending on or prior to December 31, 2013) for such Rolling Period. For the avoidance of doubt, (1) no Equity Cure Amount deposited to the GP Cash Collateral Account shall be netted or credited against Consolidated Total Funded Indebtedness in the calculation of the Consolidated Total Leverage Ratio, Adjusted Consolidated Total Leverage Ratio, or Consolidated Senior Secured Leverage Ratio, as applicable, for the purpose of determining the Borrower’s compliance with clauses (a), and (b) of this Section 9.01 for the Rolling Period ending on the Equity Cure Test Date for which such Equity Cure Amount is received, and (2) no Equity Cure Amount or Equity Cure Rollover Amount shall be added in the calculation of Consolidated EBITDA when determining whether or not the Borrower has satisfied the Subsequent Equity Contribution Test.

2.16 Amendments to Indebtedness Covenant . Section 9.02 of the Credit Agreement shall be amended as follows:

(a) Subsection 9.02(b) of the Credit Agreement shall be amended by inserting the following proviso immediately after the semicolon at the end of such subsection:

provided , further , that from and after April 1, 2013 until the date on which the Borrower exercises the Target Leverage Option, the aggregate amount of all Indebtedness described in this Section 9.02(b) at any one time outstanding shall not exceed $2,000,000 in the aggregate;

(b) Subsection 9.02(h) of the Credit Agreement shall be amended by inserting the following proviso immediately after the semicolon at the end of such subsection:

provided , further , that from and after April 1, 2013 until the date on which the Borrower exercises the Target Leverage Option, the Borrower shall not be permitted to incur, create or assume any additional Indebtedness (i.e., any such Indebtedness funded or incurred after March 31, 2013) pursuant to this Section 9.02(h) ;

2.17 Amendments to Restricted Payments Covenant . Section 9.04 of the Credit Agreement shall be amended as follows:

(a) Subsection 9.04(c) of the Credit Agreement shall be amended and restated in its entirety as follows:

(c) the Borrower may declare and pay quarterly cash distributions of Available Cash to the holders of any Equity Interests in the Borrower in accordance with the Borrower’s Organization Documents; provided , that, (i) no Default or Event of Default exists at the time of or after giving effect to such Restricted Payment, (ii) with respect to the quarterly cash distributions declared and paid with respect to the fiscal quarter ending March 30, 2013 (the “ Q1 2013 Distribution ”), the aggregate dollar amount of such Q1 2013 Distribution shall not exceed $10,000,000, and (iii) with respect to any other quarterly cash distributions declared and paid by the Borrower prior to the date on which the Borrower exercises the Target Leverage Option, the per-unit dollar amount of such quarterly cash distributions (adjusted for any distributions paid in kind, unit splits, combinations, recapitalizations, reclassifications or similar events) shall not exceed the per-unit dollar amount of the Q1 2013 Distribution; provided , further , that no such Restricted Payments shall be made in respect of Qualified Equity Securities issued pursuant to Section 8.20 , other than payments in kind consisting of additional Qualified Equity Securities, prior to the Borrower’s exercise of the Target Leverage Option.

(b) Subsection 9.04(e) of the Credit Agreement shall be amended by (i) inserting the phrase “from and after the date on which the Borrower exercises the Target Leverage Option,” immediately prior to the first word of such subsection, and (ii) inserting the following proviso immediately after the semicolon at the end of such subsection:

provided , that , no such Restricted Payments shall be made in respect of Qualified Equity Securities issued pursuant to Section 8.20 , other than payments in kind consisting of additional Qualified Equity Securities, prior to the Borrower’s exercise of the Target Leverage Option;

2.18 Amendments to Investments Covenant . Section 9.05 of the Credit Agreement shall be amended as follows:

(a) Each of Subsections 9.05(c), (d), (e) and (f) of the Credit Agreement shall be amended by inserting the following proviso immediately before the semicolon at the end of such subsection:

; provided , further , that from and after April 1, 2013 until the date on which the Borrower exercises the Target Leverage Option, the Borrower shall not be permitted to make any additional Investments (i.e., any such Investment made after March 31, 2013) pursuant to this subsection except such Investments as are made for the account of the Borrower or a Subsidiary pursuant to and in accordance with any Treasury Management Agreement between the Borrower or such Subsidiary and a Treasury Management Counterparty

(b) Each of Subsections 9.05(j), (k) and (n) of the Credit Agreement shall be amended by inserting the following proviso immediately before the semicolon (or, in the case of Subsetion 9.05(n), the period) at the end of such subsection:

2.19 Amendment to Affiliate Transactions Covenant Section 9.13 of the Credit Agreement shall be amended by inserting the following proviso immediately before the period at the end of such section:

; provided , however , that notwithstanding any contrary provision in this Section 9.13 , no fees, expense reimbursements or other costs in respect of management, consulting, advisory or similar services shall be paid by the Borrower or any Subsidiary to the Sponsor or any of Sponsor’s Affiliates prior to the Borrower’s exercise of the Target Leverage Option except (i) fees and expense reimbursements paid by the Borrower to the General Partner pursuant to and in accordance with the Partnership Agreement as in effect on April 1, 2013 and consistent with past practices, and (2) customary director fees and expense reimbursements paid to Affiliates of the Sponsor under and in accordance with the Borrower’s compensation arrangements for non-employee directors as in effect on April 1, 2013.

2.20 Addition of Limitation on Capital Expenditures . Article IX of the Credit Agreement shall be amended by inserting the following as a new “Section 9.23” immediately after Section 9.22 thereof:

Section 9.23 Limitation on Capital Expenditures . The Borrower shall not, and shall not permit any Subsidiary to, directly or indirectly make or commit to make any Capital Expenditure prior to the date on which the Borrower exercises the Target Leverage Option except:

(a) Maintenance Capital Expenditures; and

(b) Growth Capital Expenditures; provided , that, after giving effect to any such Growth Capital Expenditure the aggregate amount of Growth Capital Expenditures made or committed to be made (measured as of the date that each such Growth Capital Expenditure is made or committed to be made) during (i) the period commencing on April 1, 2013 and ending on December 31, 2013, and (ii) the period commencing on January 1, 2014 and ending on June 30, 2015, for each such period calculated separately does not exceed $25,000,000; provided , however , that the Borrower may make or commit to make (or permit any Subsidiary to make or commit to make) additional Growth Capital Expenditures of up to $3,000,000 for each such period calculated separately so long as (A) the Borrower causes the General Partner and/or Southcross Holdings to deposit funds in a dollar amount equal to the excess of (x) the aggregate amount of Growth Capital Expenditures for such period over (y) $25,000,000 (the aggregate dollar amount of all funds so deposited being referred to herein as the “ Equity Funded Capital Expenditure Amount ”) into the GP Cash Collateral Account prior to the time that such Growth Capital Expenditure is made or committed to be made and, in any case, on or prior to the last Subsequent Equity Contribution Date (which Capital Expenditure Collateral Amount shall be above and in addition to the amount on deposit in the GP Cash Collateral Account on such date and shall not be netted or credited against any other amounts required or permitted to be deposited or maintained in the GP Cash Collateral Account pursuant to Section 9.01(e)(ii) or any other terms or conditions of this Agreement or any other Loan Document), and (B) the aggregate amount of Growth Capital Expenditures made or committed to be made in each such period calculated separately does not exceed $28,000,000 at any time.

2.21 Addition of Required Equity Contributions Event of Default . Subsection 10.01(d) of the Credit Agreement shall be amended by inserting “, Section 8.20 , Section 8.21 ” immediately after the reference to “ Section 8.19 ” contained therein.

2.22 Addition of Release of GP Collateral Provision . Article XII of the Credit Agreement shall be amended by adding the following new “Section 12.20” thereto immediately after Section 12.19 thereof:

Section 12.20 Release of GP Collateral .

(a) Disbursements from GP Cash Collateral Account . Contemporaneously with each Required Equity Contribution, if the Borrower has provided the Administrative Agent a funds flow memorandum signed by a Financial Officer of the Borrower, including irrevocable instructions to transfer the relevant Required Equity Amounts in accordance therewith (which signed funds flow memorandum and irrevocable transfer instructions shall be delivered to the Administrative Agent no later than three (3) Business Days prior to the applicable Required Equity Contribution Date), and other documentation

demonstrating that such funds will be applied in accordance with the terms and conditions of this Agreement and the other Loan Documents, in each case in form and substance satisfactory to the Administrative Agent, then the Administrative Agent shall, so long as no Default or Event of Default exists or would result therefrom, cause funds to be released from the GP Cash Collateral Account in an amount equal to the applicable Required Equity Amount; provided , that the Administrative Agent shall not be required to release such funds (A) to the extent that the Borrower, the General Partner or Southcross Holdings has failed to cause any other funds required to be deposited or maintained in the GP Cash Collateral Account pursuant to Sections 8.21 , 9.01(e)(ii) or 9.23 hereof or any other terms or conditions of this Agreement or any other Loan Document, as applicable, or (B) if after giving effect to such release, the total Revolving Credit Exposures would exceed an amount equal to (x) the total Commitments minus (y) the Availability Block. Any funds released from the GP Cash Collateral Account pursuant to this Section 12.20(a) shall be used solely for the purpose of consummating the applicable Required Equity Contribution, and the related Required Equity Proceeds shall be applied as a mandatory repayment in accordance with Section 3.04(b)(iv) on the applicable Required Equity Contribution Date immediately after the Borrower’s receipt thereof.

(b) Final Release of GP Collateral . After June 30, 2014, if (i) the Borrower has exercised the Target Leverage Option, and (ii) either (A) the Borrower has satisfied the Subsequent Equity Contribution Test, and no amounts have been deposited to the GP Cash Collateral Account pursuant to Sections 9.01(e)(ii) or 9.23(b) , or (B) the Borrower has failed to satisfy the Subsequent Equity Contribution Test, and the Subsequent Equity Contribution has occurred, then the Administrative Agent shall, so long as no Default or Event of Default exists or would result therefrom, take any and all actions necessary (including any actions necessary to terminate the GP Cash Collateral Account Control Agreement and the GP Cash Collateral Pledge Agreement) to cause its Lien on and security interest in the GP Collateral, including, without limitation, the GP Cash Collateral Account, to be released.

2.23 Replacement of Ongoing Compliance Certificate Exhibit . Exhibit D-2 to the Credit Agreement shall be amended and restated in its entirety in the form of Exhibit D-2 to this Amendment, and Exhibit D-2 to this Amendment shall be deemed to be attached as Exhibit D-2 to the Credit Agreement.

SECTION 3 Conditions Precedent . This Amendment will be effective as of the date that each of the following conditions precedent has been satisfied (such date, the “ Second Amendment Effective Date ”):

3.1 Closing Deliveries . Administrative Agent shall have received each of the following documents, instruments, and agreements, each of which shall be in form and substance and executed in such counterparts (if applicable) as shall be acceptable to Administrative Agent

and each of which shall, unless otherwise indicated, be dated as of the Second Amendment Effective Date:

(a) counterparts hereof duly executed by the Borrower and Consenting Lenders that are sufficient to constitute the Required Lenders and consent and agreement counterparts hereof duly executed by the other Loan Parties;

(b) counterparts of an amended and restated or replacement deposit account control agreement duly executed by the General Partner, the Administrative Agent and Wells Fargo Bank, N.A. (the “ A&R GP Cash Collateral Control Agreement ”), which shall, among other things, restrict the General Partner’s access to and establish the Administrative Agent’s “control” (as such term is defined in Section 9.104 of the Texas UCC (as defined in the Guaranty and Collateral Agreement)) of the GP Cash Collateral Account;

(c) counterparts of an amendment and restatement of the Equity Holder Agreement (the “ A&R Equity Holder Agreement ”) duly executed by the General Partner, Southcross Holdings (together with the General Partner as the owners of at least 58% of the issued and outstanding Equity Interests in the Borrower, the “ Equity Holders ” and each individually, an “ Equity Holder ”), and the Administrative Agent, which shall require (i) each Equity Holder to (A) promptly deposit or cause to be deposited, as applicable, into the GP Cash Collateral Account any and all proceeds received by such Equity Holder (or received by any transfer agent holding Equity Interests on behalf of such Equity Holder) in respect of the quarterly cash distributions of Available Cash to be declared and paid by the Borrower for the fiscal quarters ending March 31, 2013, June 30, 2013, September 30, 2013 and December 31, 2013, and (B) consummate the Initial Equity Contribution and the Subsequent Equity Contribution, and (ii) the Administrative Agent to release funds from the GP Cash Collateral Account, in each case in accordance with and subject to the terms and conditions of the Credit Agreement (as amended hereby);

(d) a perfection certificate date as of the date hereof and signed by a Responsible Officer of the Borrower, together with all attachments contemplated thereby, in form and substance satisfactory to the Administrative Agent;

(e) an opinion of Gardere Wynne Sewell LLP, as special counsel to the Loan Parties and the General Partner, favorably opining as to such matters as the Administrative Agent may reasonably request; and

(f) such other documents, instruments and certificates as the Administrative Agent or its counsel may reasonably request relating to the foregoing, the organization, existence and good standing of the General Partner and each of the Loan Parties, the authorization of this Amendment and the transactions contemplated hereby, and any other legal matters relating to the General Partner, the Loan Parties and this Amendment.

3.2 Fees and Expenses . The Borrower shall have paid to the Administrative Agent all fees due and owing to the Administrative Agent or the Consenting Lenders in connection with this Amendment including, without limitation, (a) an amendment consent fee in an amount equal to 0.250% of the aggregate amount of the Commitments of the Consenting Lenders (including Wells Fargo), and (b) all reasonable fees and expenses incurred by the Administrative Agent (including, without limitation, fees and expenses of counsel to the Administrative Agent) in the preparation, execution, review and negotiation of this Amendment and any other related documents for which the Borrower shall have been invoiced by the Administrative Agent on or before the Second Amendment Effective Date.

3.3 Absence of Defaults . After giving effect to the limited waiver set forth in Section 1 of this Amendment, no Default or Event of Default shall have occurred which is continuing.

3.4 Representations and Warranties . Each representation and warranty contained in Section 4 hereof shall be true and correct in all material respects.

3.5 Other Documents . The Administrative Agent shall have been provided with such documents, instruments, and agreements, and the Borrower and the other Loan Parties shall have taken such actions, in each case as the Administrative Agent may reasonably require in connection with this Amendment and the transactions contemplated hereby.

SECTION 4 Representations and Warranties . In order to induce the Administrative Agent and the Lenders to enter into this Amendment, Borrower hereby represents and warrants to the Administrative Agent and each Lender that:

4.1 Minimum Consolidated EBITDA . To the Borrower’s knowledge, the Consolidated EBITDA of the Borrower for the fiscal quarter ended March 31, 2013 (the calculation of which may include a one-time add back of fees, costs and expenses incurred in connection with the negotiation, documentation, closing and consummation of the First Amendment in an aggregate amount not to exceed $1,000,000, solely to the extent deducted in determining Consolidated Net Income in such period and solely for the purposes of this Section 4.1 ) will be equal to or greater than $4,000,000.

4.2 Accuracy of Representations and Warranties . After giving effect to the limited waiver set forth in Section 1 of this Amendment, each representation and warranty of each Loan Party contained in the Loan Documents is true and correct in all material respects as of the date hereof (except that (i) to the extent that any such representation and warranty is expressly limited to an earlier date, in which case, on the date hereof, such representation and warranty shall continue to be true and correct in all material respects as of such specified earlier date and (ii) to the extent that any such representations and warranties are qualified by materiality, such representations and warranties shall continue to be true and correct in all respects).

4.3 Due Authorization, No Conflicts . The execution, delivery and performance by the Borrower of this Amendment are within the Borrower’s limited partnership powers, have

been duly authorized by necessary action, require no action by or in respect of, or filing with, any governmental body, agency or official (other than filings with the SEC required under applicable law) and do not violate or constitute a default under any provision of applicable law or any material agreement binding upon the Borrower or any of its Subsidiaries, or result in the creation or imposition of any Lien upon any of the assets of the Borrower or any of its Subsidiaries.

4.4 Validity and Binding Effect . This Amendment constitutes the valid and binding obligations of the Borrower enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor’s rights generally, and subject to general principles of equity, regardless of whether considered in a proceeding in equity or law.

4.5 Absence of Defaults . After giving effect to the limited waiver set forth in Section 1 of this Amendment, no Default or Event of Default has occurred which is continuing.

4.6 No Defense . The Borrower has no defenses to (a) payment, counterclaims or rights of set-off with respect to the Secured Obligations on the date hereof or (b) the validity, enforceability or binding effect against the Borrower of the Credit Agreement or any of the other Loan Documents or any Liens intended to be created thereby.

4.7 Review and Construction of Documents . The Borrower (a) has had the opportunity to consult with legal counsel of its own choice and has been afforded an opportunity to review this Amendment with its legal counsel, (b) has reviewed this Amendment and fully understands the effects thereof and all terms and provisions contained in this Amendment, and (c) has executed this Amendment of its own free will and volition. Furthermore, the Borrower acknowledges that (i) this Amendment shall be construed as if jointly drafted by the Borrower and the Lenders, and (ii) the recitals contained in this Amendment shall be construed to be part of the operative terms and provisions of this Amendment.

SECTION 5 Miscellaneous .

5.1 Limitations; Reservation of Rights . Except for the limited waiver set forth in Section 1 hereof and the amendments set forth in Section 2 hereof, nothing contained herein shall be deemed a consent to or waiver of any action or inaction of the Borrower or any other Loan Party that constitutes a violation of any provision of the Credit Agreement or any other Loan Document, or which results in a Default or Event of Default (including any and all existing or prospective Defaults or Events of Default) under the Credit Agreement or any other Loan Document. Neither the Lenders nor the Administrative Agent shall be obligated to grant any future waivers, consents or amendments with respect to the Credit Agreement or any other Loan Document. No failure or delay on the part of Administrative Agent or any Lender to exercise any right or remedy under the Credit Agreement, any other Loan Document or applicable law shall operate as a consent to or waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of any right or remedy, all of which are cumulative and are expressly reserved.

5.2 Reaffirmation of Loan Documents; Extension of Liens . Any and all of the terms and provisions of the Credit Agreement and the Loan Documents shall, except as amended and modified hereby, remain in full force and effect. The Borrower hereby extends the Liens securing the Secured Obligations until the Secured Obligations have been paid in full, and agrees that the amendments and modifications herein contained shall in no manner affect or impair the Secured Obligations or the Liens securing payment and performance thereof.

5.3 Parties in Interest . All of the terms and provisions of this Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

5.4 Counterparts . This Amendment may be executed in counterparts, and all parties need not execute the same counterpart; however, no party shall be bound by this Amendment until this Amendment has been executed by the Borrower and the Required Lenders, and the consent and agreement counterparts have been executed by the other Loan Parties, at which time this Amendment shall be binding on, enforceable against and inure to the benefit of the Borrower and all Lenders. Facsimiles or other electronic copies (e.g., .pdf) shall be effective as originals.

5.5 COMPLETE AGREEMENT . THIS AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

5.6 Release . The Borrower and each other Loan Party on their own behalf and on behalf of their predecessors, successors, heirs, legal representatives and assigns (collectively, the “ Releasing Parties ”), hereby acknowledge and stipulate that as of the Second Amendment Effective Date, none of the Releasing Parties has any claims or causes of action of any kind whatsoever against Administrative Agent, any other Secured Party or any of their officers, directors, employees, agents, attorneys, or representatives, or against any of their respective predecessors, successors, or assigns (each of the foregoing, collectively, the “ Released Parties ”). Each of the Releasing Parties hereby forever releases, remises, discharges and holds harmless the Released Parties, from any and all claims, causes of action, demands, and liabilities of any kind whatsoever, whether direct or indirect, fixed or contingent, liquidated or nonliquidated, disputed or undisputed, known or unknown, which any of the Releasing Parties has or may acquire in the future relating in any way to any event, circumstance, action, or failure to act from the beginning of time through the date of this Amendment.

5.7 Covenant Not to Sue . The Borrower and each other Loan Party, on their own behalf and on behalf of the Releasing Parties, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Released Party that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Released Party on the basis of any claim released, remised and discharged by Borrower or such other Loan Party pursuant to Section 5.6 above. If the Borrower or any other Loan Party or any of their successors, assigns or other legal representatives violates the foregoing covenant, such Person, for itself and its successors, assigns and legal representatives, agrees to pay, in addition to such other damages as

any Released Party may sustain as a result of such violation, all attorneys’ fees and costs incurred by any Released Party as a result of such violation.

5.8 Headings . The headings, captions and arrangements used in this Amendment are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of this Amendment, nor affect the meaning thereof.

5.9 No Implied Waivers . No failure or delay on the part of the Administrative Agent or the Lenders in exercising, and no course of dealing with respect to, any right, power or privilege under this Amendment, the Credit Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Amendment, the Credit Agreement or any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

5.10 Arms-Length/Good Faith . This Amendment has been negotiated at arms-length and in good faith by the parties hereto.

5.11 Interpretation . Wherever the context hereof shall so require, the singular shall include the plural, the masculine gender shall include the feminine gender and the neuter and vice versa. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

5.12 Severability . In case any one or more of the provisions contained in this Amendment shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Amendment shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

5.13 Loan Documents . The Loan Parties acknowledge and agree that each of the A&R Equity Holder Agreement and this Amendment is a Loan Document and the A&R GP Cash Collateral Control Agreement is a Security Instrument.

5.14 Further Assurances . The Borrower agrees to execute, acknowledge, deliver, file and record such further certificates, instruments and documents, and to do all other acts and things, as may be requested by the Lenders as necessary or advisable to carry out the intents and purposes of this Amendment.

5.15 Governing Law . THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF TEXAS.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers on the date and year first above written.

THE BORROWER :	SOUTHCROSS ENERGY PARTNERS, L.P.

	By:	Southcross Energy Partners GP, LLC,
		its general partner


	By:	/s/ David W. Biegler
		David W. Biegler
		Chairman and Chief Executive Officer

SIGNATURE PAGE

LIMITED WAIVER AND SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY PARTNERS, L.P.

The undersigned (i) consent and agree to this Amendment, and (ii) agree that the Loan Documents to which it is a party (including, without limitation, the Second Amended and Restated Guaranty and Collateral Agreement dated as of November 7, 2012, as applicable) shall remain in full force and effect and shall continue to be the legal, valid and binding obligation of the undersigned, enforceable against it in accordance with its terms.

CONSENTED, ACKNOWLEDGED AND AGREED TO BY:

SOUTHCROSS ENERGY OPERATING, LLC
SOUTHCROSS ENERGY LP LLC
SOUTHCROSS ENERGY GP LLC
SOUTHCROSS DELTA PIPELINE LLC
SOUTHCROSS PROCESSING LLC
SOUTHCROSS ALABAMA PIPELINE LLC


By:	/s/ David W. Biegler
	David W. Biegler
	Chairman and Chief Executive Officer

SOUTHCROSS CCNG GATHERING LTD.
SOUTHCROSS CCNG TRANSMISSION LTD.
SOUTHCROSS GULF COAST TRANSMISSION
	LTD.
SOUTHCROSS MISSISSIPPI PIPELINE, L.P.
SOUTHCROSS MISSISSIPPI GATHERING, L.P.
SOUTHCROSS ALABAMA GATHERING
	SYSTEM, L.P.
SOUTHCROSS MIDSTREAM SERVICES, L.P.
SOUTHCROSS MARKETING COMPANY LTD.
SOUTHCROSS NGL PIPELINE LTD.
SOUTHCROSS GATHERING LTD.
SOUTHCROSS MISSISSIPPI INDUSTRIAL
	GAS SALES, L.P.

By:	Southcross Energy GP LLC,
		as general partner


By:	/s/ David W. Biegler
	David W. Biegler
	Chairman and Chief Executive Officer

CONSENT AND AGREEMENT SIGNATURE PAGE

LIMITED WAIVER AND SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

SOUTHCROSS ENERGY PARTNERS, L.P.

THE ADMINISTRATIVE AGENT
AND A LENDER :	WELLS FARGO BANK, N.A. ,
	as the Administrative Agent and a Lender


	By:	Andrew Ostrov
		Andrew Ostrov
		Director

Exhibit D-2-1

LENDER :	CITIBANK, N.A. , as a Lender


	By:	/s/ Thomas Benavides
	Name:	Thomas Benavides
	Title:	Senior Vice President

Exhibit D-2-2

LENDER :	BARCLAYS BANK PLC , as a Lender


	By:	/s/ Vanessa A. Kurbatskiy
	Name:	Vanessa A. Kurbatskiy
	Title:	Vice President

Exhibit D-2-3

LENDER :	JPMORGAN CHASE BANK, N.A. ,
	as a Lender


	By:	/s/ Preeti Bhatnagar
	Name:	Preeti Bhatnagar
	Title:	Authorized Officer

Exhibit D-2-4

LENDER :	COMPASS BANK ,
	as a Lender


	By:	/s/ Blake Kirshman
	Name:	Blake Kirshman
	Title:	Senior Vice President

Exhibit D-2-5

LENDER :	AMEGY BANK NATIONAL ASSOCIATION , as a Lender


	By:	/s/ Jill McSorley
	Name:	Jill McSorley
	Title:	Senior Vice President

Exhibit D-2-6

LENDER :	ROYAL BANK OF CANADA , as a Lender


	By:	Jason S. York
	Name:	Jason S. York
	Title:	Authorized Signatory

Exhibit D-2-7

LENDER :	COMERICA BANK , as a Lender


	By:	/s/ Brandon M. White
	Name:	Brandon M. White
	Title:	Corporate Banking Officer

Exhibit D-2-8

LENDER :	MIDFIRST BANK , as a Lender


	By:	/s/ W. Thomas Portman
	Name:	W. Thomas Portman
	Title:	Vice President

Exhibit D-2-9

Exhibit 10.12

Southcross Energy Partners GP, LLC

Non-Employee Director Compensation Arrangement

Directors of Southcross Energy Partners GP, LLC who are not officers, employees or paid consultants are entitled to be paid the following (pro-rated for time served):

1. An annual retainer of $50,000, to be paid quarterly in arrears;

2. An annual retainer of $10,000 for the Chairperson of the Audit Committee, to be paid quarterly in arrears;

3. An annual retainer of $5,000 for the Chairperson of the Compensation Committee of the Board, to be paid quarterly in arrears;

4. An annual retainer of $2,500 for the Chairperson of the Conflicts Committee of the Board, to be paid quarterly in arrears;

5. $1,500 for each Board meeting attended (whether in person or telephonically);

6. $1,200 for each Committee (Audit, Compensation or Conflicts) meeting attended (whether attended in person or telephonically);

7. A per diem amount for assistance with special projects, in an amount commensurate with the amount payable for attendance at Board or Committee meetings; and

8. An annual equity grant of common units of Southcross Energy Partners, L.P. (the “Partnership”) pursuant to the Partnership’s 2012 Long-Term Incentive Plan equivalent to $75,000 divided by the average of the closing daily sales price of the Partnership’s common units for the ten trading days immediately prior to April 1 of each year.

Exhibit 10.13

SOUTHCROSS ENERGY PARTNERS, L.P.

NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN

ARTICLE I
ESTABLISHMENT AND PURPOSE

1.1 Establishment . Southcross Energy Partners GP, LLC, a Delaware limited liability company (the “Company”), as the general partner of Southcross Energy Partners, L.P. (the “Partnership”), has established the Southcross Energy Partners, L.P. Non-Employee Director Deferred Compensation Plan for Non-Employee Directors. The Plan allows Non-Employee Directors to defer the receipt of compensation payable for their Board service, whether in the form of cash compensation or equity-based compensation, and to receive such deferred compensation in the form of cash and Units as provided for in the Plan.

1.2 Purpose . The Plan is intended to advance the interests of the Partnership and the holders of its Units by providing a means to attract and retain qualified persons to serve as Non-Employee Directors and to align Non-Employee Directors’ interests more closely with the interests of the holders of the Partnership’s Units by providing Non-Employee Directors with the opportunity to defer compensation they receive for their service as a Non-Employee Director in the form of Phantom Units and DERs. The Plan sets forth the terms and conditions pursuant to which deferrals of compensation by Non-Employee Directors may be made, and describes the nature and extent of the Non-Employee Directors’ rights with respect to such deferred amounts.

1.3 Type of Plan . The Plan constitutes an unfunded, nonqualified deferred compensation plan. The interest of each Participant in any Fees deferred under the Plan (and any Phantom Units or Account relating thereto) shall be that of a general creditor of the Company. Plan Accounts, and Phantom Units credited thereto, shall at all times be maintained by the Company as bookkeeping entries evidencing unfunded and unsecured general obligations of the Company. The nonqualified deferred compensation provided for in the Plan and credited to Participants’ Accounts consists of amounts of Phantom Units and DERs under the LTIP.

ARTICLE II
DEFINITIONS

Whenever the following terms are used in this Plan, they shall have the meaning specified below, unless the context clearly indicates to the contrary:

2.1 “Account” means each of the bookkeeping accounts established and maintained by the Company as described in Section 5.1 to which Non-Employee Directors’ deferrals and earnings will be credited.

2.2 “Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person,

whether through ownership of voting securities, by contract or otherwise. As used herein, the term “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended, and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

2.3 “Beneficiary” means the person(s) or entity(ies) designated by the Non-Employee Director as described in Section 8.7 hereof who will receive the balance of the Non-Employee Director’s Account(s) in the event of his or her death.

2.4 “Board of Directors” or “Board” means the Board of Directors of the Company.

2.5 “Cash Compensation” means all forms of cash compensation paid by the Company for services as a Director including, but not limited to, retainer, committee fees and meeting fees. Cash Compensation shall not include any expenses paid to a Non-Employee Director directly or through reimbursement.

2.6 “Code” means the Internal Revenue Code of 1986, as amended, including any rules and regulations promulgated thereunder and any successor thereto.

2.7 “Deferral Date” means each date on which a Non-Employee Directors’ Fees are deferred under the Plan pursuant to Article IV and credited to his or her Account pursuant to Article V.

2.8 “Deferral Election” means a written election by a Non-Employee Director to defer Fees under the Plan.

2.9 “DER” means a distribution equivalent right, representing a contingent right to receive an amount in Phantom Units equal in value to the distributions made by the Partnership with respect to a Unit during the period the Phantom Units are credited to Accounts.

2.10 “Effective Date” means March 7, 2013.

2.11 “Equity Compensation” means the annual equity award of Units paid by the Company as a retainer.

2.12 “Fair Market Value” means the closing sales price of a Unit on the applicable date (or if there is no trading in the Units on such date, on the preceding date on which there was trading) as reported in The Wall Street Journal (or other reporting service approved by the Board). In the event Units are not publicly traded at the time a determination of Fair Market Value is required to be made hereunder, the determination of Fair Market Value shall be made in good faith by the Board.

2.13 “Fees” means all Cash Compensation and Equity Compensation.

2.14 “LTIP” means the Southcross Energy Partners, L.P. 2012 Long-Term Incentive Plan, as it may be amended or amended and restated from time to time.

2.15 “Non-Employee Director” means, at any given time, a member of the Board who is not an employee or a paid consultant of the Company, the Partnership or any of their controlled Affiliates.

2.16 “Participant” means a Non-Employee Director who defers Equity Compensation and/or Cash Compensation under Article IV of the Plan.

2.17 “Phantom Unit” means the credit to a Participants Account under Article V of the Plan which represents the right to receive one Unit (or cash equal to the Fair Market Value of one Unit) on settlement of the Account.

2.18 “Plan” shall mean Southcross Energy Partners, L.P. Non-Employee Director Deferred Compensation Plan, as set forth herein and as it may be amended or amended and restated from time to time.

2.19 “Termination of Service” means a Non-Employee Director’s “Separation from Service” within the meaning given such term under Section 409A of the Code and United States Treasury Regulation Section 1.409A-1(h).

2.20 “Unit” means a Common Unit of the Partnership.

ARTICLE III
UNITS ISSUES UNDER THE PLAN

Units distributed in settlement of Accounts under the Plan will be issued pursuant to, and subject to additional terms and conditions described, in the LTIP.

ARTICLE IV
PARTICIPATION

4.1 Eligibility and Participation . Each Non-Employee Director shall be eligible to elect to defer Fees in accordance with this Article IV. If any Non-Employee Director subsequently becomes an employee, officer or paid consultant of the Company, the Partnership or any of their controlled Affiliates, but does not incur a Termination of Service, such Non-Employee Director shall continue as a Participant with respect to Fees previously deferred but shall cease eligibility with respect to future Fees, if any, earned while an employee, officer or paid consultant.

4.2 Timing of Election . Each Non-Employee Director may make a Deferral Election on or before the last day of a calendar year to defer Fees payable during the next following calendar year with respect to services to be performed in such next following calendar year. In addition, any person who first becomes a Non-Employee Director on or after the Effective Date may, within 30 days after the date he or she first becomes a Non-Employee Director, make a Deferral Election with respect to Fees for services performed after the date of the Deferral Election. In the case of Non-Employee Directors who first become eligible to participate in the Plan as a result of the establishment of the Plan, such Non-Employee Directors may make a Deferral Election within 30 days after the Effective Date with respect to Fees for services performed after the date of the Deferral Election. A Non-Employee Director who does not make a Deferral Election when first

eligible to do so may make a Deferral Election at any time before the first day of any subsequent calendar year with respect to that calendar year.

4.3 Effect and Duration of Election . A timely made and properly completed Deferral Election shall apply to Fees payable with respect to services performed after the date such election becomes effective as described in Section 4.2. Deferral Elections only are effective for the calendar year indicated on the written election form with respect to Fees payable for such calendar year and are not deemed continuous for subsequent calendar years and new Deferral Elections must be made for each calendar year for which a Non-Employee Director intends to defer Fees. Except as permitted under Section 409A of the Code, Deferral Elections shall be irrevocable during the calendar year with respect to which the Deferral Election is made.

4.4 Form of Election . A Deferral Election shall be made in a manner satisfactory to the Board, and in accordance with the requirements of Section 409A of the Code, by completing and filing the specified election form with the Board or the Board’s designee within the period described in Section 4.2. The Board may require a Non-Employee Director to complete other forms and provide other data as a condition of participation in the Plan.

4.5 Deferral Election Amounts . A Participant may elect to defer all or any portion of the Fees for each calendar year for which the Participant is eligible to make a Deferral Election only as follows:

(a) 100% of his or her Cash Compensation; and/or

(b) 100% of his or her Equity Compensation.

ARTICLE V
ACCOUNTS

5.1 Establishment of Account . The Company will establish and maintain a separate Account in the name of each Non-Employee Director who has elected to defer Fees under the Plan. If a Non-Employee Director elects to defer Fees pursuant to Article IV, the Company will credit the Non-Employee Director’s Account with the amount of Fees deferred as of the date the Fees would have been paid to the Non-Employee Director in the absence of a Deferral Election. All Fees credited to a Non-Employee Director’s Account shall be converted into Phantom Units. The number of Phantom Units credited to a Participant’s Account with respect to deferrals of Cash Compensation shall equal the amount of such Fees deferred on the date the Cash Compensation would have been paid to the Participant in the absence of the Deferral Election divided by the Fair Market Value of a Unit on the day immediately before such date (fractional Phantom Units shall be calculated to three decimal places, and shall be credited cumulatively). With respect to deferrals of the Equity Compensation, the number of Units that would have been payable to the Participant as the Equity Compensation in the absence of a Deferral Election shall be converted into the same number of Phantom Units and credited to the Participant’s Account as of the date such Equity Compensation would have been paid to the Participant in the absence of the Deferral Election.

5.2 Crediting of DER . As of each distribution payment date with respect to Units, each Participant shall have credited to his or her Phantom Account a dollar amount equal to the amount

of cash distributions that would have been paid on the number of Units equal to the number of Phantom Units credited to the Participant’s Account as of the close of business on the record date for such distribution. Such dollar amount shall then be converted into a number of Phantom Units equal to the number of whole and fractional Units that could have been purchased with such dollar amount at Fair Market Value on the distribution payment date (fractional Phantom Units shall be calculated to three decimal places, and shall be credited cumulatively).

5.3 Valuation of Accounts . Each Non-Employee Director’s Account will be valued at the beginning of each quarter during the period Fees are deferred based upon the Fair Market Value of the Phantom Units at such date. The Account balance may increase or decrease depending upon fluctuations in value of the Units and any DERs credited to the Account since the last valuation.

5.4 Limitations on Rights Associated with Units . The Phantom Units credited to a Participant’s Account shall be used solely as a device for the determination of the amount of the payment to be eventually distributed to the Participant in accordance with this Plan. The Phantom Units are a notional interest only and shall not be treated as property or as a trust fund of any kind. No Participant shall be entitled to a distribution of Units, except as provided in the Plan relating to payments of deferred Equity Compensation, or to any voting or other rights with respect to Phantom Units credited under this Plan.

ARTICLE VI
PAYMENT OF ACCOUNT

6.1 Time and Form of Payment . A Participant’s Account shall be distributed to the Participant (or, if applicable, to the Participant’s Beneficiary, spouse or estate pursuant to Sections 6.2 and 8.7) in a single sum payment within 30 days following the Participant’s Termination of Service in the form of (i) Units equal to the number of Phantom Units credited to the Participant’s Account as a result of the Participant’s Deferral Election(s) attributable to Equity Compensation and (ii) cash equal to the Fair Market Value on the date of the Participant’s Termination of Service of the Phantom Units credited to the Participant’s Account as a result of the Participant’s Deferral Elections attributable to Cash Compensation and credits to the Participant’s Account resulting from DERs.

6.2 Death Benefits; Participant’s Beneficiary . Subject to the provisions of Section 4.4, in the event that a Participant dies before payment of the Participant’s Account(s) has been made, the Participant’s Account shall be distributed to the Participant’s Beneficiary (or, if applicable, to the Participant’s spouse or estate pursuant to Section 8.7) within 30 days of the date of the Participant’s death in the form and manner described in Section 6.1.

6.3 Tax Withholding . No withholding or deduction for any taxes shall be made by the Company in respect of the Plan, unless required otherwise by applicable law. Each Participant, Beneficiary or other death payee shall be solely responsible for the payment of any federal, state, local or other taxes, including but not limited to, estimated taxes and self-employment taxes, as well as any interest or penalties that may be assessed, imposed or incurred, as a result of the compensation paid under the Plan.

ARTICLE VII
ADMINISTRATION, AMENDMENT AND TERMINATION

7.1 Administration . This Plan shall be interpreted and administered by the Board. The Board shall have the complete and final discretionary authority to determine the benefits to which any Participant or beneficiary may be entitled, to make factual findings with respect to claims for benefits, and to make all other determinations it deems necessary or advisable for administering the Plan, subject to the provisions of the Plan. Notwithstanding the foregoing, no Director who is a Participant under the Plan shall participate in any determination relating solely or primarily to his or her own Units, Phantom Units or Account. Determinations made by the Board pursuant to this Plan shall be final, binding and conclusive on all parties.

7.2 Amendment and Termination . This Plan may be amended, modified or terminated by the Board at any time, except that no such action shall (without the consent of affected Non-Employee Directors or, if appropriate following their death, their respective Beneficiaries, spouses or personal representatives) adversely affect the rights of Non-Employee Directors or, if appropriate, their respective Beneficiaries or personal representatives with respect to amounts deferred under this Plan prior to the date of such amendment, modification, or termination. In addition, any amendment, modification or termination shall be made in a manner that complies with Section 409A of the Code.

ARTICLE VIII
MISCELLANEOUS PROVISIONS

8.1 Limitation on Director’s Rights . Participation in this Plan shall not give any Non-Employee Director the right to continue to serve as a member of the Board or any rights or interests other than as herein provided. No Non-Employee Director shall have any right to any payment or benefit hereunder, except to the extent provided in this Plan. This Plan shall create only a contractual obligation on the part of the Company as to such amounts and shall not be construed as creating a trust. Non-Employee Directors shall have only the rights of general unsecured creditors of the Company with respect to amounts credited to or payable from their Accounts.

8.2 Benefits Not Transferable; Obligations Binding Upon Successors . Benefits of a Participant under this Plan shall not be assignable or transferable and any purported transfer, assignment, pledge or other encumbrance or attachment of any payments or benefits under this Plan, or any interest thereon, other than pursuant to Section 6.2, shall not be permitted or recognized. Obligations of the Company under this Plan shall be binding upon successors of the Company.

8.3 Governing Law; Severability . The validity of this Plan or any of its provisions shall be construed, administered and governed in all respects under and by the laws of the State of Delaware. If any provisions of this instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective.

8.4 Headings Not Part of Plan . Headings and subheadings in this Plan are inserted for reference only and are not to be considered in the construction of this Plan.

8.5 Consent to Plan Terms . By electing to participate in this Plan, a Participant shall be deemed conclusively to have accepted and consented to all of the terms of this Plan and to all actions and decisions of the Board with respect to the Plan. Such terms and consent shall also apply to and be binding upon each Participant’s Beneficiary or Beneficiaries, personal representative(s) and other successors in interest.

8.6 Adjustments . In the event any recapitalization, reorganization, merger, consolidation, spin-off, combination, repurchase, exchange of shares or other securities of the Partnership, stock split or reverse split, or similar business transaction or event affects Units such that an adjustment is determined by the Board to be appropriate to prevent dilution or enlargement of Participants’ rights under the Plan, then the Board shall, in a manner that is proportionate to the change to the Units and is otherwise equitable, adjust the number or kind of Phantom Units and the number of Units to be delivered upon settlement of Accounts under Article VI.

8.7 Designation of Beneficiary . Each Participant may designate, on a form provided by the Board, one or more beneficiaries to receive payment of the Participant’s Account in the event of such Participant’s death. The Company may rely upon the beneficiary designation last filed with the Board, provided that such form was executed by the Participant or his or her legal representative and filed with the Board prior to the Participant’s death. If a Participant has not designated a beneficiary, or if the designated beneficiary is not surviving when a payment is to be made to such person under the Plan, the beneficiary with respect to such payment shall be the Participant’s surviving spouse, or if there is no surviving spouse, the Participant’s estate.

8.8 Code Section 409A . The Plan is intended to comply with the applicable requirements of Section 409A of the Code, and to the maximum extent permitted shall be interpreted and administered accordingly.

Exhibit 10.14

Execution Version

SERIES A CONVERTIBLE PREFERRED UNIT

PURCHASE AGREEMENT

among

SOUTHCROSS ENERGY PARTNERS, L.P.

and

SOUTHCROSS ENERGY LLC

dated as of April 12, 2013

TABLE OF CONTENTS

		Page

ARTICLE I

DEFINITIONS

Section 1.01	Definitions	1
Section 1.02	Accounting Procedures and Interpretation	5

ARTICLE II

AGREEMENT TO SELL AND PURCHASE

Section 2.01	Sale and Purchase	6
Section 2.02	Closing	6
Section 2.03	Southcross Closing Deliverables	6
Section 2.04	Purchaser Closing Deliverables	7

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SOUTHCROSS

Section 3.01	Formation and Qualification	8
Section 3.02	Ownership of Subsidiaries	8
Section 3.03	No Other Subsidiaries	8
Section 3.04	Authorization; Enforceability; Valid Issuance	9
Section 3.05	No Preemptive Rights, Registration Rights or Options	9
Section 3.06	Capitalization	10
Section 3.07	No Breach	10
Section 3.08	No Approvals	10
Section 3.09	No Default	10
Section 3.10	Southcross SEC Documents; Southcross Financial Statements	11
Section 3.11	No Material Adverse Change	11
Section 3.12	Title to Real Property	11
Section 3.13	Rights-of-Way	12
Section 3.14	Insurance	12
Section 3.15	Litigation	12
Section 3.16	No Labor Dispute	13
Section 3.17	Tax Returns	13
Section 3.18	Environmental Compliance	13
Section 3.19	Permits	13
Section 3.20	NYSE Listing	14
Section 3.21	Investment Company	14
Section 3.22	Certain Fees	14

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

Section 4.01	Existence		14
Section 4.02	Authorization; Enforceability		14
Section 4.03	No Breach		15
Section 4.04	Certain Fees		15
Section 4.05	Unregistered Securities		15
Section 4.06	Short Selling		16
Section 4.07	Southcross Information		17

ARTICLE V

COVENANTS

Section 5.01	Transfer of Purchased Units		17
Section 5.02	Further Assurances; NYSE Listing		17
Section 5.03	Use of Proceeds		17

ARTICLE VI

INDEMNIFICATION, COSTS AND EXPENSES

Section 6.01	Indemnification by Southcross		18
Section 6.02	Indemnification by the Purchaser		18
Section 6.03	Indemnification Procedure		19
Section 6.04	Tax Matters		20

ARTICLE VII

MISCELLANEOUS

Section 7.01	Fees and Expenses		20
Section 7.02	Interpretation		20
Section 7.03	Survival of Provisions		21
Section 7.04	No Waiver; Modifications in Writing		21
Section 7.05	Binding Effect; Assignment		22
Section 7.06	Communications		22
Section 7.07	Removal of Legend		23
Section 7.08	No Third Party Beneficiaries		24
Section 7.09	Entire Agreement		24
Section 7.10	Governing Law; Submission to Jurisdiction		24
Section 7.11	Waiver of Jury Trial		25
Section 7.12	Execution in Counterparts		25

Schedule I	-	Subsidiaries

SERIES A CONVERTIBLE PREFERRED UNIT PURCHASE AGREEMENT

This SERIES A CONVERTIBLE PREFERRED UNIT PURCHASE AGREEMENT , dated as of April 12, 2013 (this “ Agreement ”), is entered into by and between Southcross Energy Partners, L.P., a Delaware limited partnership (“ Southcross ”), and Southcross Energy LLC, a Delaware limited liability company (the “ Purchaser ”).

WHEREAS, Southcross desires to sell to the Purchaser, and the Purchaser desires to purchase from Southcross, (i) $33,516,000 of Series A Preferred Units (as defined below) at the Initial Closing (as defined below) and (ii) $5,684,000 of Series A Preferred Units at the Follow-On Closing (as defined below), in each case in accordance with the provisions of this Agreement; and

WHEREAS, Southcross has agreed to provide the Purchaser with certain registration rights with respect to the Conversion Units (as defined below) underlying the Series A Preferred Units acquired pursuant to this Agreement (including Conversion Units underlying any Series A Preferred Units issued to the Purchaser as payment in-kind distributions pursuant to the terms of the Series A Preferred Units).

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

ARTICLE I

DEFINITIONS

Section 1.01 Definitions . As used in this Agreement, the following terms have the meanings indicated:

“ Affiliate ” means, with respect to a specified Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise; provided, however , that the Southcross Entities and the Purchaser shall not be considered Affiliates for purposes of this Agreement.

“ Agreement ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Basic Documents ” means, collectively, this Agreement, the Registration Rights Agreement and the Southcross Partnership Agreement.

“ Board ” means the Board of Directors of the General Partner.

“ Business Day ” means any day other than a Saturday, Sunday, any federal holiday or day on which banking institutions in the State of New York or State of Texas are authorized or required by Law or other governmental action to close.

“ CERCLA ” shall have the meaning specified in Section 3.18 .

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

“ Common Unitholders ” means holders of Common Units.

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

“ consent ” shall have the meaning specified in Section 3.08 .

“ Contract ” means any contract, agreement, indenture, note, bond, mortgage, deed of trust, loan, instrument, lease, license, commitment or other arrangement, understanding, undertaking, commitment or obligation, whether written or oral.

“ Conversion Units ” means the Common Units issuable upon conversion of the Purchased Units in accordance with the Southcross Partnership Agreement.

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

“ Environmental Law ” means any Law, Environmental Permit, and other legally enforceable requirements applicable to the Southcross Entities or the operation of their business in any way relating to the protection of human health and safety (to the extent such health or safety relate to exposure to Hazardous Materials), the environment and natural resources (including, without limitation, any natural resource damages, any generation, manufacture, processing, use, storage, treatment, disposal, release, threatened release, discharge, or emission of Hazardous Materials into the environment, and any exposure to Hazardous Materials), including, without limitation, CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Occupational Safety and Health Act (29 C.F.R. part 24 et seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.).

“ Environmental Permits ” means all permits, approvals, identification numbers, registrations, consents, licenses, exemptions, variances and authorizations required under or issued pursuant to any applicable Environmental Law.

“ 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.

“ Follow-On Closing ” shall have the meaning specified in Section 2.02 .

“ Follow-On Closing Date ” shall have the meaning specified in Section 2.02 .

“ Follow-On Purchase Price ” means $5,684,000.

“ General Partner ” means Southcross Energy Partners GP, LLC, a Delaware limited liability company and the general partner of Southcross.

“ GAAP ” means generally accepted accounting principles in the United States of America as of the date hereof; provided, however , that for the Southcross Financial Statements prepared as of a certain date, GAAP referenced therein shall be GAAP as of the date of such Southcross Financial Statements.

“ Governmental Authority ” means, with respect to a particular Person, any state, county, city and political subdivision of the United States 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 that exercises valid jurisdiction over any such Person or such Person’s Property. Unless otherwise specified, all references to Governmental Authority herein with respect to Southcross means a Governmental Authority having jurisdiction over Southcross, its Subsidiaries or any of their respective Properties.

“ governmental permits ” shall have the meaning specified in Section 3.19 .

“ Hazardous Material ” shall have the meaning specified in Section 3.18 .

“ Indemnified Party ” shall have the meaning specified in Section 6.03(b) .

“ Indemnifying Party ” shall have the meaning specified in Section 6.03(b) .

“ Initial Closing ” shall have the meaning specified in Section 2.02 .

“ Initial Closing Date ” shall have the meaning specified in Section 2.02 .

“ Initial Purchase Price ” means $33,516,000.

“ Law ” means any applicable federal, state, tribal or local order, writ, injunction, judgment, settlement, award, decree, statute, law (including common 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 that 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.

“ NYSE ” means the New York Stock Exchange.

“ Operating Agreements ” means, collectively, the Southcross Entity Operating Agreements, the Southcross Partnership Agreement and the Certificate of Limited Partnership of Southcross, each as amended to date.

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

“ Property ” or “ Properties ” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible (including intellectual property rights).

“ Purchase Price ” means, collectively, the Initial Purchase Price and the Follow-On Purchase Price.

“ Purchased Units ” shall have the meaning specified in Section 2.01(b) .

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

“ Purchaser Related Parties ” shall have the meaning specified in Section 6.01 .

“ Registration Rights Agreement ” means the Registration Rights Agreement, dated as of the Initial Closing Date, between Southcross and the Purchaser.

“ Representatives ” means, with respect to a specified Person, the officers, directors, managers, members, employees, agents, counsel, accountants, investment bankers, and other representatives of such Person.

“ rights-of-way ” shall have the meaning specified in Section 3.13 .

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

“ Series A Preferred Units ” means Southcross’ Series A Convertible Preferred Units.

“ Short Sales ” means, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and forward sale contracts, options, puts, calls, short sales, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements, and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

“ Simmons ” means Simmons & Company International.

“ Southcross ” has the meaning set forth in the introductory paragraph of this Agreement.

“ Southcross Credit Agreement ” shall have the meaning specified in Section 3.02 .

“ Southcross Credit Agreement First Amendment ” means the First Amendment, dated as of March 27, 2013, to the Southcross Credit Agreement.

“ Southcross Credit Agreement Second Amendment ” means the Limited Waiver and Second Amendment, dated as of April 12, 2013, to the Southcross Credit Agreement.

“ Southcross Entities ” means, collectively, the entities listed on Schedule I to this Agreement.

“ Southcross Entity Operating Agreements ” means the certificate of incorporation, certificate of formation, bylaws, limited liability company agreement, limited partnership agreement or other organizational documents, as applicable, of the Southcross Entities (excluding Southcross).

“ Southcross Financial Statements ” shall have the meaning specified in Section 3.10 .

“ Southcross Material Adverse Effect ” means any material adverse change (a) on the condition, financial or otherwise, earnings, business or properties of the Southcross Entities, taken as a whole, whether or not arising from transactions in the ordinary course of business; or (b) that could reasonably be expected to have a material adverse effect on the performance of this Agreement or any other Basic Document or the consummation of any of the transactions contemplated hereby or thereby.

“ Southcross Partnership Agreement ” means the Second Amended and Restated Agreement of Limited Partnership of Southcross, dated as of April 12, 2013, as may be amended through the date hereof.

“ Southcross Related Parties ” shall have the meaning specified in Section 6.02 .

“ Southcross SEC Documents ” shall have the meaning specified in Section 3.10 .

“ 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; (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; or (iii) any corporation or other entity as to which such Person consolidates for accounting purposes.

“ Third Party Claim ” shall have the meaning specified in Section 6.03(b) .

“ Transfer ” shall have the meaning specified in Section 5.01 .

“ Unitholders ” means holders of limited partner interests in Southcross.

Section 1.02 Accounting Procedures and Interpretation . Unless otherwise specified in this Agreement, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters under this Agreement shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to the Purchaser under

this Agreement shall be prepared, in accordance with GAAP applied on a consistent basis during the periods involved (except, in the case of unaudited financial 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 Sale and Purchase .

(a) Pursuant to the terms of this Agreement, at the Initial Closing: (i) Southcross hereby agrees to issue and sell to the Purchaser, and the Purchaser hereby agrees to purchase from Southcross, 1,466,325 Series A Preferred Units (the “ Initial Purchased Units ”) on the Initial Closing Date and (ii) as consideration for the issuance and sale of the Initial Purchased Units to the Purchaser, the Purchaser hereby agrees to pay Southcross the Initial Purchase Price.

(b) Pursuant to the terms of this Agreement, at the Follow-On Closing: (i) Southcross hereby agrees to issue and sell to the Purchaser, and the Purchaser hereby agrees to purchase from Southcross, 248,675 Series A Preferred Units (the “ Follow-On Purchased Units ” and, together with the Initial Purchased Units, the “ Purchased Units ”) on the Follow-On Closing Date and (ii) as consideration for the issuance and sale of the Follow-On Purchased Units to the Purchaser, the Purchaser hereby agrees to pay Southcross the Follow-On Purchase Price.

Section 2.02 Closing . Pursuant to the terms of this Agreement, the consummation of the purchase and sale of (i) the Initial Purchased Units (the “ Initial Closing ”) is taking place concurrently with the execution and delivery of this Agreement and (ii) the Follow-On Purchased Units (the “ Follow-On Closing ”) will take place on or before June 30, 2013 (the “ Follow-On Closing Date ”). The Initial Closing and the Follow-On Closing shall take place at the offices of Gardere Wynne Sewell LLP, Thanksgiving Tower, Suite 3000, 1601 Elm Street, Dallas, Texas 75201. The parties agree that each of the Initial Closing and the Follow-On Closing may occur via delivery of facsimiles or photocopies of the Basic Documents and the closing deliverables contemplated hereby and thereby. Unless otherwise provided herein, all proceedings to be taken and all documents to be executed and delivered by all parties at each of the Initial Closing and the Follow-On Closing will be deemed to have been taken and executed simultaneously, and no proceedings will be deemed to have been taken nor documents executed or delivered until all have been taken. The date on which the Initial Closing occurs and the transactions contemplated by this Agreement become effective is referred to as the “ First Closing Date .”

Section 2.03 Southcross Closing Deliverables . Upon the terms and subject to the conditions of this Agreement, at the Initial Closing and the Follow-On Closing, Southcross is delivering (or causing to be delivered) the following:

(a) a certificate or certificates (bearing the legend set forth in Section 4.05(e) of this Agreement) representing the Initial Purchased Units and the Follow-On Purchased

Units, as the case may be, and meeting the requirements of the Southcross Partnership Agreement, registered in such name(s) as the Purchaser has designated (which shall be limited to Purchaser and its Affiliates);

(b) a certificate of the Secretary or Assistant Secretary of the General Partner, dated as of the Initial Closing Date or the Follow-On Closing Date, as the case may be, certifying as to and attaching: (i) the Certificate of Limited Partnership of Southcross, as filed with the Delaware Secretary of State, (ii) the Southcross Partnership Agreement, (iii) the resolutions of the Board authorizing the Basic Documents and the transactions contemplated thereby, including the issuance of the Purchased Units, and (iv) the incumbency of the officers executing the Basic Documents;

(c) a certificate from the Delaware Secretary of State evidencing that Southcross is in good standing and dated as of a recent date;

(d) certificates of the Secretary of State (or corresponding state official) of each of the jurisdictions listed on Schedule I to this Agreement, dated as of a recent date, evidencing the qualification and good standing of Southcross as a foreign limited partnership;

(e) a cross-receipt executed by Southcross and delivered to the Purchaser certifying that it has received the Initial Purchase Price or the Follow-On Purchase Price, as the case may be;

(f) the Registration Rights Agreement with respect to the Purchased Units, which shall have been duly executed by Southcross and delivered on the Initial Closing Date;

(g) the Southcross Partnership Agreement, which shall be delivered on the Initial Closing Date as duly adopted and in full force and effect;

(h) the Southcross Credit Agreement Second Amendment, which shall have been duly executed by Southcross and delivered on the Initial Closing Date; and

(i) all other documents, instruments and writings required to be delivered by Southcross at the Initial Closing or the Follow-On Closing under the Basic Documents.

Section 2.04 Purchaser Closing Deliverables . Upon the terms and subject to the conditions of this Agreement, at the Initial Closing and the Follow-On Closing, Purchaser is delivering (or causing to be delivered) the following:

(a) the Initial Purchase Price or the Follow-On Purchase Price, as the case may be, in immediately available funds;

(b) the Registration Rights Agreement with respect to the Purchased Units, which shall have been duly executed by the Purchaser and delivered on the Initial Closing Date;

(c) a cross-receipt executed by the Purchaser and delivered to Southcross certifying that it has received the Initial Purchased Units or the Follow-On Purchased Units, as the case may be; and

(d) all other documents, instruments and writings required to be delivered by the Purchaser at the Initial Closing or the Follow-On Closing, as the case may be, under the Basic Documents.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SOUTHCROSS

Southcross represents and warrants to the Purchaser, on and as of the date of this Agreement and as of the Follow-On Closing Date, as follows:

Section 3.01 Formation and Qualification . Each of the Southcross Entities has been duly formed and is validly existing as a limited partnership or limited liability company, as applicable, in good standing under the laws of the jurisdiction in which it is organized or formed, as applicable, with full limited partnership or limited liability company, as applicable, power and authority to enter into and perform its obligations under the Basic Documents to which it is a party, to own or lease, as the case may be, and to operate its Properties currently owned or leased and to conduct its business as currently conducted, in each case in all material respects as described in the Southcross SEC Documents. Each of the Southcross Entities is duly qualified to do business as a foreign limited partnership or limited liability company, as applicable, and is in good standing under the laws of each jurisdiction that requires such qualification, except where the failure so to register or qualify would not, individually or in the aggregate, be reasonably likely to have a Southcross Material Adverse Effect.

Section 3.02 Ownership of Subsidiaries . Southcross owns, directly or indirectly, 100% of the limited liability company interests, general partner interests or limited partnership interests, as applicable, in the Southcross Entities (other than the General Partner and Southcross); such equity interests have been duly authorized and validly issued in accordance with the Operating Agreements of each Subsidiary and are fully paid (to the extent required under such Operating Agreements) and nonassessable (except as such nonassessability may be affected by Sections 18-303, 18-607 and 18-804 of the Delaware Limited Liability Company Act, Section 153.210 of the Texas Business Organizations Code and Sections 17-303, 17-607 and 17-804 of the Delaware Revised Uniform Limited Partnership Act (the “ Delaware LP Act ”); and Southcross owns such equity interests free and clear of all Liens, except for those liens securing obligations under the Second Amended and Restated Credit Agreement, dated as of November 7, 2012, by and among the Partnership, as borrower, Wells Fargo Bank, N.A., as Administrative Agent, and the lenders named therein, as amended by the Southcross Credit Agreement First Amendment and the Southcross Credit Agreement Second Amendment (the “ Southcross Credit Agreement ”).

Section 3.03 No Other Subsidiaries . Other than its ownership interests in the other Southcross Entities, Southcross does not own, directly or indirectly, any equity or long-term debt

securities of any other Person that, individually or in the aggregate, would be deemed to be a “significant subsidiary” as such term is defined in Rule 405 of the Securities Act.

Section 3.04 Authorization; Enforceability; Valid Issuance .

(a) Southcross has all requisite power and authority to issue and sell the Purchased Units, in accordance with and upon the terms and conditions set forth in the Basic Documents, and no further consent or authorization is required.

(b) The Basic Documents to which Southcross is a party have been duly authorized and validly executed and delivered by Southcross and, assuming due authorization, execution and delivery by the Purchaser or its Affiliates, as applicable (if either the Purchaser or its Affiliates is a party thereto), constitute, valid and binding obligations of Southcross; provided , that the enforceability thereof may be limited by (i) 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 (ii) public policy, applicable law relating to fiduciary duties and indemnification and contribution and an implied covenant of good faith and fair dealing.

(c) The Purchased Units and the limited partner interests represented thereby have been duly authorized in accordance with the Southcross Partnership Agreement and, when issued and delivered against payment therefor in accordance with this Agreement, will be validly issued, fully paid (to the extent required under the Southcross Partnership Agreement) and non-assessable (except as such non-assessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) and will be free of any and all Liens and restrictions on transfer, other than (i) restrictions on transfer under the Southcross Partnership Agreement or this Agreement and under applicable state and federal securities laws, (ii) such Liens as are created by the Purchaser and (iii) such Liens as arise under the Southcross Partnership Agreement or the Delaware LP Act.

(d) Upon issuance in accordance with this Agreement and the Southcross Partnership Agreement, the Conversion Units will be duly authorized, validly issued, fully paid (to the extent required by the Southcross Partnership Agreement) and non-assessable (except as such non-assessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) and will be free of any and all Liens and restrictions on transfer, other than (i) restrictions on transfer under the Southcross Partnership Agreement or this Agreement and under applicable state and federal securities laws, (ii) such Liens as are created by the Purchaser and (iii) such Liens as arise under the Southcross Partnership Agreement or the Delaware LP Act.

Section 3.05 No Preemptive Rights, Registration Rights or Options . Except as described in the Southcross SEC Documents or as set forth in the Southcross Partnership Agreement, the Limited Liability Company Agreement of the General Partner, dated as of November 7, 2012, or the Limited Liability Company Agreement of Southcross Delta Pipeline LLC, dated as of January 29, 2009, there are no (i) preemptive rights or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any equity interests in any of the Southcross Entities or (ii) outstanding options or warrants to purchase any securities of any

of the Southcross Entities. Except as contemplated by the Basic Documents, the issuance and sale of the Purchased Units as contemplated by this Agreement does not give rise to any rights for or relating to the registration of any Common Units or other securities of Southcross other than as have been waived or deemed waived.

Section 3.06 Capitalization . As of the date of this Agreement, immediately prior to the issuance and sale of the Initial Purchased Units, the issued and outstanding partnership interests of Southcross consist of 12,213,713 Common Units, 12,213,713 Subordinated Units (as defined in the Southcross Partnership Agreement), the General Partner’s 2.0% general partner interest in Southcross and the Incentive Distribution Rights (as defined in the Southcross Partnership Agreement). All outstanding Common Units and Subordinated Units and the limited partner interests represented thereby have been duly authorized and validly issued in accordance with the Southcross Partnership Agreement and are fully paid (to the extent required under the Southcross Partnership Agreement) and non-assessable (except as such non-assessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act).

Section 3.07 No Breach . None of (i) the issuance or sale of the Purchased Units or (ii) the execution, delivery and performance of the Basic Documents or the consummation of the transactions contemplated hereby or thereby, (A) conflicts or will conflict with or constitutes or will constitute a violation of the Operating Agreements, (B) 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 Contract to which any of the Southcross Entities is a party or by which any of them or any of their respective Properties may be bound (other than conflicts, breaches, violations or defaults that have been waived or cured), (C) violates or will violate any Law of any Governmental Authority directed to any of the Southcross Entities or any of their respective Properties in a proceeding to which any of them or their respective Property is a party or (D) results or will result in the creation or imposition of any Lien upon any Property of any of the Southcross Entities (other than Liens arising under the Southcross Credit Agreement), which conflicts, breaches, violations, defaults or Liens, in the case of clauses (B), (C) or (D), would reasonably be expected to have a Southcross Material Adverse Effect.

Section 3.08 No Approvals . No permit, consent, approval, authorization, order, registration, filing or qualification (“ consent ”) of or with any Governmental Authority having jurisdiction over any of the Southcross Entities or any of their respective Properties or assets is required in connection with (i) the issuance or sale by Southcross of the Purchased Units, (ii) the execution, delivery and performance of each of the Basic Documents to which it is a party, or (iii) the consummation by Southcross of the transactions contemplated by the Basic Documents except, in the case of clauses (i) through (iii), (A) consents required under applicable state securities or blue sky laws, (B) for such consents that have been obtained or made, and (C) for such consents that, if not obtained, would not reasonably be expected to have, individually or in the aggregate, a Southcross Material Adverse Effect.

Section 3.09 No Default . None of the Southcross Entities (i) is in violation of its applicable Operating Agreement, (ii) is in default (and no event has occurred which, with notice or lapse of time or both, would constitute such a default) in the due performance or observance of any term, covenant or condition contained in any Contract to which it is a party or by which it

is bound or to which any of its Properties is subject or (iii) is in violation of any Law of any Governmental Authority, which default or violation in the case of clause (ii) or (iii), could reasonably be expected to have, individually or in the aggregate, a Southcross Material Adverse Effect.

Section 3.10 Southcross SEC Documents; Southcross Financial Statements . Southcross has filed or furnished with the Commission all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) required to be filed or furnished by it under the Exchange Act or the Securities Act since November 7, 2012 (all such documents, collectively, the “ Southcross SEC Documents ”). The Southcross SEC Documents, including any audited or unaudited financial statements and any notes thereto or schedules included therein (the “ Southcross Financial Statements ”), at the time filed or furnished (except to the extent corrected by a subsequently filed or furnished Southcross SEC Document filed or furnished prior to the date hereof) (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein (in the light of the circumstances under which they were made in the case of any prospectus) not misleading, (ii) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as applicable, (iii) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, (iv) in the case of the Southcross Financial Statements, were 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 of the Commission), and (v) in the case of the Southcross Financial Statements, fairly present (subject in the case of unaudited statements to normal, recurring and year-end audit adjustments) in all material respects the financial condition, results of operations and cash flows of Southcross and its Subsidiaries as of the dates and for the periods indicated. Deloitte & Touche LLP is an independent registered public accounting firm with respect to Southcross and has not resigned or been dismissed as independent registered public accountants of Southcross as a result of or in connection with any disagreement with Southcross on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

Section 3.11 No Material Adverse Change . Except as expressly set forth in or contemplated by the Southcross SEC Documents furnished or filed with the Commission after January 1, 2013 and prior to the date hereof, since December 31, 2012, and except as contemplated by the Basic Documents, there has not been (i) any material adverse change in the condition, financial or otherwise, earnings, business or properties of the Southcross Entities, taken as a whole, whether or not arising from transactions in the ordinary course of business, (ii) any transaction that is material to the Southcross Entities taken as a whole, or (iii) any dividend or distribution of any kind declared, paid or made by Southcross on any class of its partnership interests.

Section 3.12 Title to Real Property . Each of the Southcross Entities has indefeasible title to all real property (excluding easements or rights-of-way) and good title to all personal property described in the Southcross SEC Documents as being owned by each of them, which real and personal property shall be free and clear of all Liens, except (i) as described, and subject to the limitations contained, in the Southcross SEC Documents, (ii) that arise under or are

expressly permitted by the Southcross Credit Agreement or (iii) as do not materially interfere with the use of such Properties individually or in the aggregate as they have been used in the past and are proposed to be used in the future as described in the Southcross SEC Documents. All the real and personal property described in the Southcross SEC Documents, if any, as being held under lease by any of the Southcross Entities is held thereby under valid, subsisting and enforceable leases and with such exceptions as do not materially interfere with the use of such properties in the manner in which such properties are used in the business of any of the Southcross Entities as described in the Southcross SEC Documents.

Section 3.13 Rights-of-Way . Each of the Southcross Entities has such consents, easements, rights-of-way, permits or licenses from each Person (collectively, “ rights-of-way ”) as are necessary to conduct its respective business in the manner described, and subject to the limitations contained, in the Southcross SEC Documents, if any, except for (i) qualifications, reservations and encumbrances that would not have a Southcross Material Adverse Effect and (ii) such rights-of-way that, if not obtained, would not have, individually or in the aggregate, a Southcross Material Adverse Effect; other than as set forth, and subject to the limitations contained, in the Southcross SEC Documents, each of the Southcross Entities has fulfilled and performed, in all material respects, its respective obligations with respect to such rights-of-way and no event has occurred that allows, or after notice or 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 individually or in the aggregate, would not have a Southcross Material Adverse Effect; and, except as described in the Southcross SEC Documents, if any, none of such rights-of-way contains any restriction that is materially burdensome to the Southcross Entities, individually or in the aggregate.

Section 3.14 Insurance . The Southcross Entities carry, or are entitled to the benefits of, insurance relating to the business of the Southcross Entities, with reputable insurers, in such amounts and covering such risks as is commercially reasonable, and all such insurance is in full force and effect; the Southcross Entities are in compliance with the terms of such policies and instruments in all material respects; and there are no claims by any of the Southcross Entities under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; none of the Southcross Entities has been refused any insurance coverage sought or applied for. Neither the General Partner nor Southcross has received notice from such insurers that Southcross will not be able to (i) renew its existing insurance coverage relating to the business of the Southcross Entities as and when such policies expire or (ii) obtain comparable coverage relating to the business of the Southcross Entities as may be necessary or appropriate to conduct such business as now conducted and at a cost that would not be reasonably expected to have a Southcross Material Adverse Effect.

Section 3.15 Litigation . There are no legal or governmental proceedings pending or, to the knowledge of Southcross, threatened, against any of the Southcross Entities, or to which any of the Southcross Entities is a party, or to which any of their respective Properties is subject, that (i) would individually or in the aggregate have a Southcross Material Adverse Effect or (ii) are required to be described in the Southcross SEC Documents that are not described as required by the Exchange Act.

Section 3.16 No Labor Dispute . No labor problem or dispute with the employees of any of the Southcross Entities exists or is threatened or imminent, and Southcross is not aware of any existing or imminent labor disturbance by the employees of any of the Southcross Entities’ principal suppliers, contractors or customers, that could have a Southcross Material Adverse Effect, except as set forth in or contemplated in the Southcross SEC Documents.

Section 3.17 Tax Returns . Each of the Southcross Entities has filed (or has obtained extensions with respect to) all material federal, state and local income and franchise tax returns required to be filed through the date of this Agreement, which returns are complete and correct in all material respects, and has timely paid all taxes shown to be due pursuant to such returns. No tax deficiency has been determined adversely to any of the Southcross Entities, and Southcross is not aware of any tax deficiency or related assessment, fine or penalty that, individually or in the aggregate, would reasonably be expected to have a Southcross Material Adverse Effect, except those that are being contested in good faith and for which adequate reserves have been established in accordance with GAAP.

Section 3.18 Environmental Compliance . Each of the Southcross Entities (i) is in compliance with any and all Environmental Laws, (ii) has received and is in compliance with all Environmental Permits required of them under applicable Environmental Laws to conduct their respective businesses as they are currently being conducted, (iii) has not received written or oral notice of any actual or potential liability under any Environmental Law, and (iv) is not a party to or affected by any pending or, to the knowledge of Southcross, threatened action, suit or proceeding relating to any alleged violation of any Environmental Law or any actual or alleged release or threatened release or cleanup at any location of any Hazardous Material, except where such noncompliance or deviation from that described in (i)-(iv) above would not, individually or in the aggregate, reasonably be expected to have a Southcross 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 (“ CERCLA ”), (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 any applicable Environmental Law. None of the Southcross Entities has received written notice that they are currently named as a “potentially responsible party” under CERCLA.

Section 3.19 Permits . Each of the Southcross Entities has such permits, consents, licenses, franchises, certificates and authorizations of Governmental Authorities (“ governmental permits ”) as are necessary to own or lease its Properties and to conduct its business in the manner described in the Southcross SEC Documents, subject to such qualifications set forth in the Southcross SEC Documents and except for such governmental permits that, if not obtained, would not reasonably be expected to have, individually or in the aggregate, a Southcross Material Adverse Effect; each of the Southcross Entities has all such governmental permits, except where the failure so to comply would not reasonably be expected to result in, individually or in the aggregate, a Southcross Material Adverse Effect; and no event has occurred that would prevent the governmental permits from being renewed or reissued or 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 governmental permit, except for such non-

renewals, non-issuances, revocations, terminations and impairments that would not reasonably be expected to have, individually or in the aggregate, a Southcross Material Adverse Effect.

Section 3.20 NYSE Listing . The Common Units are listed on the NYSE, and Southcross has not received any notice of delisting. The issuance and sale of the Purchased Units and the issuance of Conversion Units does not contravene the NYSE’s rules and regulations.

Section 3.21 Investment Company . None of the Southcross Entities is nor, after giving effect to the issuance and sale of the Purchased Units and the application of the proceeds thereof, will be an “investment company” or a company “controlled by” an “investment company” as defined in the Investment Company Act of 1940, as amended.

Section 3.22 Certain Fees . Except for (i) the fees contemplated by Section 7.01 of this Agreement to be paid by Southcross to the Purchaser or its designee and (ii) fees to be paid by Southcross to Simmons for a fairness opinion in connection with this Agreement and the transactions contemplated hereby, no fees or commissions are or will be payable by Southcross to brokers, finders or investment bankers with respect to the sale of any of the Purchased Units or the consummation of the transactions contemplated by this Agreement. Southcross agrees that it will indemnify and hold harmless the Purchaser from and against any and all claims, demands or liabilities for broker’s, finder’s, placement or other similar fees or commissions incurred by Southcross or alleged to have been incurred by Southcross in connection with the sale of the Purchased Units or the consummation of the transactions contemplated by the Basic Documents.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants to Southcross with respect to itself, on and as of the date of this Agreement and the Follow-On Closing Date, as follows:

Section 4.01 Existence . The Purchaser is duly organized and validly existing and in good standing under the laws of its state of formation, with all necessary power and authority to own properties and to conduct its business as currently conducted.

Section 4.02 Authorization; Enforceability .

(a) The Purchaser has all necessary legal power and authority to purchase the Purchased Units, in accordance with and upon the terms and conditions set forth in the Basic Documents, and no further consent or authorization of the Purchaser is required.

(b) The Basic Documents to which the Purchaser is a party have been duly authorized and validly executed and delivered by the Purchaser and, assuming due authorization, execution and delivery by Southcross, constitute valid and binding obligations of the Purchaser; provided , that the enforceability thereof may be limited by (i) 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 (ii) public policy, applicable law relating to fiduciary duties and indemnification and contribution and an implied covenant of good faith and fair dealing.

Section 4.03 No Breach . The execution, delivery and performance of the Basic Documents by the Purchaser and the consummation by the Purchaser of the transactions contemplated thereby will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any material agreement to which the Purchaser is a party or by which the Purchaser is bound or to which any of the property or assets of the Purchaser is subject, (ii) conflict with or result in any violation of the provisions of the organizational documents of the Purchaser, or (iii) violate any statute, order, rule or regulation of any court or Governmental Authority, except in the case of clauses (i) and (iii), for such conflicts, breaches, violations or defaults as would not prevent the consummation of the transactions contemplated by the Basic Documents.

Section 4.04 Certain Fees . No fees or commissions are or will be payable by the Purchaser to brokers, finders or investment bankers with respect to the purchase of any of the Purchased Units or the consummation of the transactions contemplated by this Agreement. The Purchaser agrees that it will indemnify and hold harmless Southcross from and against any and all claims, demands or liabilities for broker’s, finder’s, placement or other similar fees or commissions incurred by the Purchaser or alleged to have been incurred by the Purchaser in connection with the purchase of the Purchased Units or the consummation of the transactions contemplated by the Basic Documents.

Section 4.05 Unregistered Securities .

(a) Accredited Investor Status; Sophisticated Purchaser . The Purchaser is an “accredited investor” within the meaning of Rule 501 under the Securities Act and is able to bear the risk of its investment in the Purchased Units and the Conversion Units. The Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the purchase of the Purchased Units and the Conversion Units.

(b) Information . The Purchaser or its Representatives have been furnished with materials relating to the business, finances and operations of Southcross and relating to the offer and sale of the Purchased Units and Conversion Units that have been requested by the Purchaser. The Purchaser or its Representatives has been afforded the opportunity to ask questions of Southcross or its Representatives. Neither such inquiries nor any other due diligence investigations conducted at any time by the Purchaser or its Representatives shall modify, amend or affect the Purchaser’s right (i) to rely on Southcross’ representations and warranties contained in Article III or (ii) to indemnification or any other remedy based on, or with respect to the accuracy or inaccuracy of, or compliance with, the representations, warranties, covenants and agreements in this Agreement. The Purchaser understands and acknowledges that its purchase of the Purchased Units involves a high degree of risk and uncertainty. The Purchaser has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its investment in the Purchased Units.

(c) Cooperation . The Purchaser shall cooperate reasonably with Southcross to provide any information necessary for any applicable securities filings.

(d) Purchaser Representation . The Purchaser is purchasing the Purchased Units for its own account and not with a view to distribution in violation of any securities laws. The Purchaser understands and acknowledges that there is no public trading market for the Purchased Units and that none is expected to develop. The Purchaser has been advised and understands and acknowledges that neither the Purchased Units nor the Conversion Units have been registered under the Securities Act or under the “blue sky” laws of any jurisdiction and may be resold only if registered pursuant to the provisions of the Securities Act (or if eligible, pursuant to the provisions of Rule 144 promulgated under the Securities Act or pursuant to another available exemption from the registration requirements of the Securities Act). The Purchaser has been advised of and is aware of the provisions of Rule 144 promulgated under the Securities Act.

(e) Legends . The Purchaser understands and acknowledges that, until such time as the Purchased Units and the Conversion Units have been registered pursuant to the provisions of the Securities Act, or the Purchased Units and the Conversion Units are eligible for resale pursuant to Rule 144 promulgated under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Purchased Units and Conversion Units will bear the following restrictive legend: “NEITHER THE OFFER NOR SALE OF THESE SECURITIES HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER AND, IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT OR THE PARTNERSHIP HAS RECEIVED DOCUMENTATION REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER SUCH ACT. THIS SECURITY IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN THE SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF THE PARTNERSHIP, DATED AS OF APRIL 12, 2013, A COPY OF WHICH MAY BE OBTAINED FROM THE PARTNERSHIP AT ITS PRINCIPAL EXECUTIVE OFFICES.”

(f) Reliance Upon the Purchaser’s Representations and Warranties . The Purchaser understands and acknowledges that the Purchased Units are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities laws, and that Southcross is relying in part upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth in this Agreement in (i) concluding that the issuance and sale of the Purchased Units is a “private offering” and, as such, is exempt from the registration requirements of the Securities Act, and (ii) determining the applicability of such exemptions and the suitability of the Purchaser to purchase the Purchased Units.

Section 4.06 Short Selling . The Purchaser represents and warrants that it (i) has not entered into any Short Sales of the Common Units owned by it between the time it first began discussions with Southcross about the transactions contemplated by this Agreement and the date hereof and (ii) will not enter into any Short Sales of the Common Units owned by it from the date hereof and such time as the Shelf Registration Statement (as defined in the Registration Rights Agreement) is declared or deemed effective by the Commission.

Section 4.07 Southcross Information . The Purchaser acknowledges and agrees that Southcross has provided or made available to the Purchaser (through EDGAR, Southcross’ website or otherwise) all Southcross SEC Documents, as well as all press releases issued by Southcross through the date of this Agreement that are included in a filing by Southcross on Form 8-K or clearly posted on Southcross’ website.

ARTICLE V

COVENANTS

Section 5.01 Transfer of Purchased Units . The Purchaser shall have the right to transfer the Purchased Units, in whole or in part, to an Affiliate or a third party at any time after the date of this Agreement (any such transaction, a “ Transfer ”); provided, however , that any such transferee (i) agrees to be bound by all of the terms and conditions of this Agreement, including this Section 5.01 , (ii) expressly assumes a proportionate share (based on the number of Series A Preferred Units being Transferred relative to the total number of Purchased Units) of the Purchaser’s obligations in respect of indemnification pursuant to Section 6.02 of this Agreement, and (iii) the Purchaser acknowledges and agrees that it shall remain the primary obligor under this Agreement, and as such, the Purchaser further acknowledges and agrees that any claims for indemnity pursuant to Section 6.02 of this Agreement shall be satisfied first by the Purchaser, and if the Purchaser does not have sufficient assets to satisfy claims for indemnity pursuant to Section 6.02 of this Agreement, then the transferee shall be liable to Southcross for up to the balance due on any such claims pursuant to Section 6.02 of this Agreement (based on the number of Series A Preferred Units Transferred relative to the total number of Purchased Units).

Section 5.02 Further Assurances; NYSE Listing . From time to time after the date hereof, without further consideration, Southcross and the Purchaser shall use their commercially reasonable efforts to take, or cause to be taken, all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and the other Basic Documents. Without limiting the foregoing, Southcross shall (i) file with the NYSE the proper form or other notification and required supporting documentation, and provide to the NYSE any other requested information, related to the Conversion Units and (ii) ensure that the issuance of the Series A Preferred Units and Conversion Units is in compliance with applicable NYSE rules and regulations.

Section 5.03 Use of Proceeds . Promptly after the Initial Closing and the Follow-On Closing, Southcross shall repay borrowings outstanding under the Southcross Credit Agreement in an amount equal to the Initial Purchase Price or the Follow-On Purchase Price, as the case may be, less the expenses contemplated by Section 7.01 and any other reasonable out-of-pocket expenses incurred by Southcross in connection with the transactions contemplated by this Agreement, including the preparation and execution of the Basic Documents and the fees to be paid by Southcross to Simmons for a fairness opinion in connection with this Agreement and the transactions contemplated hereby.

ARTICLE VI

INDEMNIFICATION, COSTS AND EXPENSES

Section 6.01 Indemnification by Southcross . Southcross agrees to indemnify the Purchaser, its Affiliates and their officers, directors, members, managers, employees and agents (collectively, “ Purchaser Related Parties ”) from, and hold each of them harmless against, any and all losses, actions, suits, proceedings (including any investigations, litigation or inquiries), demands and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs, losses, liabilities, damages or expenses of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them), whether or not involving a Third Party Claim, as a result of, arising out of, or in any way related to (i) the failure of any of the representations or warranties made by Southcross contained herein to be true and correct in all material respects as of the date hereof (except with respect to any provisions including the word “material” or words of similar import, with respect to which such representations and warranties must have been true and correct) or (ii) the breach of any of the covenants of Southcross contained herein; provided , that in the case of the immediately preceding clause (i), such claim for indemnification relating to a breach of any representation or warranty is made prior to the expiration of such representation or warranty; provided, however , that for purposes of determining when an indemnification claim has been made, the date upon which a Purchaser Related Party shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to Southcross shall constitute the date upon which such claim has been made; provided, further , that the liability of Southcross shall not be greater in amount than the Purchase Price.

Section 6.02 Indemnification by the Purchaser . The Purchaser agrees to indemnify Southcross, its Affiliates and their officers, directors, members, managers, employees and agents (collectively, “ Southcross Related Parties ”) from, and hold each of them harmless against, any and all losses, actions, suits, proceedings (including any investigations, litigation or inquiries), demands and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all reasonable costs, losses, liabilities, damages or expenses of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them), whether or not involving a Third Party Claim, as a result of, arising out of, or in any way related to (i) the failure of any of the representations or warranties made by the Purchaser contained herein to be true and correct in all material respects as of the date hereof or (ii) the breach of any of the covenants of the Purchaser contained herein; provided , that in the case of the immediately preceding clause (i), such claim for indemnification relating to a breach of any representation or warranty is made prior to the expiration of such representation or warranty; provided, however , that for purposes of determining when an indemnification claim has been made, the date upon which a Southcross Related Party shall have given notice (stating in reasonable detail the basis of the claim for indemnification) to the Purchaser shall constitute the date upon which such claim has been made; provided, further , that the liability of the Purchaser (and its Affiliates, if the

Purchaser Transfers a portion or all of the Purchased Units to an Affiliate as permitted by Section 5.02 ) shall not be greater in amount than the Purchase Price.

Section 6.03 Indemnification Procedure .

(a) A claim for indemnification for any matter not involving a Third Party Claim may be asserted by notice to the party from whom indemnification is sought; provided, however , that failure to so notify the indemnifying party shall not preclude the indemnified party from any indemnification that it may claim in accordance with this Article VI , except as otherwise provided in Sections 6.01 and 6.02 .

(b) Promptly after any Southcross Related Party or Purchaser Related Party (hereinafter, the “ Indemnified Party ”) has received notice of any indemnifiable claim hereunder, or the commencement of any action, suit or proceeding by a third person, which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement (each, a “ Third Party Claim ”), the Indemnified Party shall give the indemnitor hereunder (the “ Indemnifying Party ”) written notice of such Third Party Claim but failure to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may have to such Indemnified Party hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure. Such notice shall state the nature and the basis of such Third Party Claim to the extent then known. The Indemnifying Party shall have the right to defend and settle, at its own expense and by its own counsel, any such matter as long as the Indemnifying Party pursues the same diligently and in good faith. If the Indemnifying Party undertakes to defend or settle such Third Party Claim, it shall promptly, and in no event later than five (5) days, notify the Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof and/or the settlement thereof. Such cooperation shall include, but shall not be limited to, furnishing the Indemnifying Party with any books, records and other information reasonably requested by the Indemnifying Party and in the Indemnified Party’s possession or control. Such cooperation of the Indemnified Party shall be at the cost of the Indemnifying Party. After the Indemnifying Party has notified the Indemnified Party of its intention to undertake to defend or settle any such asserted liability, and for so long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be liable for any additional legal expenses incurred by the Indemnified Party in connection with any defense or settlement of such asserted liability; provided, however , that the Indemnified Party shall be entitled (i) at its expense, to participate in the defense of such asserted liability and the negotiations of the settlement thereof and (ii) if (A) the Indemnifying Party has, within ten (10) Business Days of when the Indemnified Party provides written notice of a Third Party Claim, failed (y) to assume the defense or settlement of such Third Party Claim and employ counsel and (z) notify the Indemnified Party of such assumption, or (B) if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and counsel to the Indemnified Party shall have concluded that there may be reasonable defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, then the Indemnified Party shall have the right to select a separate counsel and to assume such settlement or legal defense and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the

Indemnifying Party as incurred. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not settle any indemnified claim without the consent of the Indemnified Party, unless the settlement thereof imposes no liability or obligation on, and includes a complete release from liability of, and does not contain any admission of wrongdoing by, the Indemnified Party.

Section 6.04 Tax Matters . All indemnification payments under this Article VI shall be adjustments to the Purchase Price, except as otherwise required by applicable Law.

ARTICLE VII

MISCELLANEOUS

Section 7.01 Fees and Expenses . Southcross shall pay out of the proceeds received from the consummation of the transactions contemplated by this Agreement the reasonable out-of-pocket fees and expenses incurred by the Purchaser in connection the transactions contemplated by the Basic Documents, including without limitation, legal, accounting, advisory and other reasonable out-of-pocket fees and expenses; provided , that the expenses of the Purchaser paid out of such proceeds shall not exceed $50,000 in the aggregate.

Section 7.02 Interpretation . Article, Section and Schedule references in this Agreement are references to the corresponding Article, Section and Schedule to this Agreement, unless otherwise specified. All Schedules to this Agreement are hereby incorporated and made a part hereof as if set forth in full herein and are an integral part of this Agreement. All references to instruments, documents, Contracts and agreements are references to such instruments, documents, Contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it. Whenever Southcross has an obligation under the Basic Documents, the expense of complying with that obligation shall be an expense of Southcross unless otherwise specified. Any reference in this Agreement to $ shall mean U.S. dollars. Whenever any determination, consent or approval is to be made or given by the Purchaser, such action shall be in the Purchaser’s sole discretion, unless otherwise specified in this Agreement. If any provision in the Basic Documents is held to be illegal, invalid, not binding or unenforceable, (i) such provision shall be fully severable and the Basic Documents shall be construed and enforced as if such illegal, invalid, not binding or unenforceable provision had never comprised a part of the Basic Documents, and the remaining provisions shall remain in full force and effect and (ii) the parties hereto shall negotiate in good faith to modify the Basic Documents so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to the Basic Documents, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day. Any words imparting the singular number only shall include the plural and vice versa. The words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such

words appear unless the context otherwise requires. The provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.

Section 7.03 Survival of Provisions . The representations and warranties set forth in Sections 3.01 , 3.02 , 3.04 , 3.06 , 3.22 , 4.01 , 4.02 , 4.04 and 4.05 hereunder shall survive the execution and delivery of this Agreement indefinitely, the representations and warranties set forth in Sections 3.17 shall survive for a period of thirty (30) days following the applicable statute of limitations regardless of any investigation made by or on behalf of Southcross or the Purchaser, and the other representations and warranties set forth herein shall survive for a period of twelve (12) months following the date hereof regardless of any investigation made by or on behalf of Southcross or the Purchaser. The covenants made in this Agreement or any other Basic Document shall survive the Initial Closing and the Follow-On Closing and remain operative and in full force and effect regardless of acceptance of any of the Purchased Units and payment therefor and repayment, conversion or repurchase thereof. Regardless of any purported general termination of this Agreement, the provisions of Article VI and all indemnification rights and obligations of Southcross and the Purchaser thereunder, and this Article VII shall remain operative and in full force and effect as between Southcross and the Purchaser, unless Southcross and the Purchaser execute a writing that expressly (with specific references to the applicable Section or subsection of this Agreement) terminates such rights and obligations as between Southcross and the Purchaser.

Section 7.04 No Waiver; Modifications in Writing .

(a) Delay . No failure or delay on the part of any party in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise.

(b) Specific Waiver . Except as otherwise provided herein, no amendment, waiver, consent, modification or termination of any provision of this Agreement or any other Basic Document (except in the case of the Southcross Partnership Agreement for amendments adopted pursuant to Section 13.1 thereof) shall be effective unless signed by each of the parties hereto or thereto affected by such amendment, waiver, consent, modification or termination. Any amendment, supplement or modification of or to any provision of this Agreement or any other Basic Document, any waiver of any provision of this Agreement or any other Basic Document and any consent to any departure by Southcross from the terms of any provision of this Agreement or any other Basic Document shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on Southcross in any case shall entitle Southcross to any other or further notice or demand in similar or other circumstances. Any investigation by or on behalf of any party shall not be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.

Section 7.05 Binding Effect; Assignment .

(a) Binding Effect . This Agreement shall be binding upon Southcross, the Purchaser and their respective successors and permitted assigns. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns.

(b) Assignment of Rights . The Purchaser’s rights and obligations hereunder (including the right to seek indemnification) may be transferred or assigned in whole or in part by the Purchaser to any Affiliate of the Purchaser without the consent of Southcross. Upon any such permitted transfer or assignment, references in this Agreement to the Purchaser (as they apply to the transferor or assignor, as the case may be) shall thereafter apply to such transferee or assignee of the Purchaser unless the context otherwise requires. Without the written consent of Southcross, which consent shall not be unreasonably withheld, no portion of the rights and obligations of the Purchaser under this Agreement may be assigned or transferred by the Purchaser or such a transferee of Purchased Units to a Person that is not an Affiliate of the Purchaser. No portion of the rights and obligations of Southcross under this Agreement may be transferred or assigned without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld.

Section 7.06 Communications . All notices and demands provided for hereunder shall be in writing and shall be given by hand delivery, electronic mail, registered or certified mail, return receipt requested, regular mail, facsimile or air courier guaranteeing overnight delivery to the following addresses:

(a) If to the Purchaser:

Southcross Energy LLC

1700 Pacific Avenue, Suite 2900

Dallas, Texas 75201

Attention: David W. Biegler

Facsimile: (214) 979-3710

E-mail: biegler@southcrossenergy.com

with a copy to:

Charlesbank Equity Fund VI, Limited Partnership

200 Clarendon Street, 54 th Floor

Boston, Massachusetts 02116

Attention: Jon Biotti

Tami E. Nason

Facsimile: (617) 619-5402

E-mail: jbiotti@charlesbank.com and tnason@charlesbank.com

If to Southcross:

Southcross Energy Partners, L.P.

1700 Pacific Avenue, Suite 2900

Dallas, Texas 75201

Attention: David W. Biegler

Facsimile: (214) 979-3710

E-mail: biegler@southcrossenergy.com

with a copy to:

Latham & Watkins LLP

811 Main Street, 37 th Floor

Houston, Texas 77002

Attention: Ryan J. Maierson

Facsimile: (713) 546-5401

E- mail: ryan.maierson@lw.com

and

Akin Gump Strauss Hauer & Feld LLP

1111 Louisiana Street

Houston, Texas 77002

Attention: John Goodgame

Facsimile: (713) 236-0822

E- mail: jgoodgame@akingump.com

or to such other address as Southcross or the Purchaser may designate in writing. All notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) when notice is sent to the sender that the recipient has read the message, if sent by electronic mail; (iii) upon actual receipt if sent by registered or certified mail, return receipt requested, or regular mail, if mailed; (iv) when receipt is acknowledged, if sent by facsimile; and (v) upon actual receipt when delivered to an air courier guaranteeing overnight delivery.

Section 7.07 Removal of Legend .

(a) The Purchaser may request Southcross to remove the legend set forth in Section 4.05(e) from the certificates evidencing the Purchased Units by submitting to Southcross such certificates, together with an opinion of counsel to the effect that such legend is no longer required under the Securities Act or applicable state laws as the case may be, as Southcross may request; provided , that, no opinion of counsel shall be required if the Purchaser is effecting a sale of Purchased Units pursuant to Rule 144 under the Securities Act (and the Purchaser delivers a Rule 144 Representation Letter to Southcross) or the Conversion Units have been registered under the Securities Act pursuant to an effective registration statement. Southcross shall cooperate with the Purchaser to effect removal of such legend. Subject to the provisions of the

Southcross Partnership Agreement, the legend described in Section 4.05(e) shall be removed and Southcross shall issue a certificate without such legend to the holder of Purchased Units upon which it is stamped, if, unless otherwise required by state securities Laws, (i) such Purchased Units are sold pursuant to an effective registration statement, (ii) in connection with a sale, assignment or other transfer, such holder provides Southcross with an opinion of a law firm reasonably acceptable to Southcross, in a generally acceptable form, to the effect that such sale, assignment or transfer of such Purchased Units may be made without registration under the applicable requirements of the Securities Act, or (iii) in connection with a sale, assignment of or other transfer of such Purchased Units, such holder provides Southcross with a representation letter that such Purchased Units will be sold, assigned or transferred pursuant to Rule 144 under the Securities Act. Southcross shall bear all direct costs and expenses associated with the removal of a legend pursuant to this Section 7.07 ; provided , that the Purchaser shall be responsible for all legal fees and expenses of counsel incurred by the Purchaser with respect to matters addressed in this Section 7.07 .

(b) Certificates evidencing Conversion Units shall not contain any legend (including the legend set forth in Section 4.05(e) ), (i) while a registration statement covering the resale of such security is effective under the Securities Act and the Purchaser delivers to Southcross a representation letter agreeing that such Conversion Units will be sold under such effective registration statement, (ii) following any sale of such Conversion Units pursuant to Rule 144, or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).

Section 7.08 No Third Party Beneficiaries . Except as provided in Section 6.01 and Section 6.02, nothing in this Agreement shall provide any benefit to any third Person or entitle any third Person to any claim, cause of action, remedy or right of any kind, it being the intent of the parties that this Agreement shall otherwise not be construed as a third Person beneficiary contract.

Section 7.09 Entire Agreement . This Agreement, the other Basic Documents and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or the other Basic Documents with respect to the rights granted by Southcross or any of its Affiliates or the Purchaser or any of its Affiliates set forth herein or therein. This Agreement, the other Basic Documents and the other agreements and documents referred to herein or therein supersede all prior agreements and understandings between the parties with respect to such subject matter.

Section 7.10 Governing Law; Submission to Jurisdiction . This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement), will be construed in accordance with and governed by the laws of the State of Delaware without regard to principles of conflicts of laws. Any action against any party relating to the foregoing shall be brought in any federal or

state court of competent jurisdiction located within the State of Delaware, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Delaware over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection that they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

Section 7.11 Waiver of Jury Trial . THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 7.12 Execution in Counterparts . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same agreement.

[ Remainder of Page Left Intentionally Blank ]

IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.

	SOUTHCROSS ENERGY PARTNERS, L.P.


	By:	Southcross Energy Partners GP, LLC, its
		general partner


	By:
	Name:
	Title:


	SOUTHCROSS ENERGY LLC


	By:
	Name:
	Title:

Signature Page to Purchase Agreement

Schedule I

Southcross Entities

Name	Jurisdiction in which registered	Jurisdiction(s) in which qualified

Southcross Energy Partners GP, LLC	Delaware	Texas

Southcross Energy Operating, LLC	Delaware	Texas

Southcross Energy Partners, L.P.	Delaware	Texas

Southcross Energy GP LLC	Delaware	Alabama Mississippi Texas

Southcross Energy LP LLC	Delaware	N/A

Southcross Delta Pipeline LLC	Delaware	Mississippi

Southcross Processing LLC	Delaware	Texas

Southcross Mississippi Pipeline, L.P.	Delaware	Mississippi

Southcross Mississippi Gathering, L.P.	Delaware	Mississippi

Southcross Mississippi Industrial Gas Sales, L.P.	Delaware	Mississippi

Southcross Alabama Gathering System, L.P.	Delaware	Alabama

Southcross Alabama Pipeline LLC	Delaware	Alabama

Southcross Midstream Services, L.P.	Delaware	Mississippi

Southcross CCNG Gathering Ltd.	Texas	N/A

Southcross CCNG Transmission Ltd.	Texas	N/A

Southcross Gulf Coast Transmission Ltd.	Texas	N/A

Southcross Marketing Company Ltd.	Texas	Mississippi

Southcross NGL Pipeline Ltd.	Texas	N/A

Southcross Gathering Ltd.	Texas	N/A

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EXHIBIT 21.1

SOUTHCROSS ENERGY PARTNERS, L.P.

LIST OF SUBSIDIARIES

Name		Jurisdiction of Organization

Southcross Operating, LLC		Delaware
Southcross Energy GP LLC		Delaware
Southcross Energy LP LLC		Delaware
Southcross CCNG Gathering Ltd.		Texas
Southcross CCNG Transmission Ltd.		Texas
Southcross Gulf Coast Transmission Ltd.		Texas
Southcross Mississippi Pipeline, L.P.		Delaware
Southcross Mississippi Industrial Gas Sales, L.P.		Delaware
Southcross Alabama Gathering System, L.P.		Delaware
Southcross Midstream Services, L.P.		Delaware
Southcross Marketing Company Ltd.		Texas
Southcross NGL Pipeline Ltd.		Texas
Southcross Gathering Ltd.		Texas
Southcross Mississippi Gathering, L.P.		Delaware
Southcross Delta Pipeline LLC		Delaware
Southcross Alabama Pipeline LLC		Delaware
Southcross Processing LLC		Delaware

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EXHIBIT 21.1

SOUTHCROSS ENERGY PARTNERS, L.P.
LIST OF SUBSIDIARIES

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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-184760 on Form S-8 of our report dated April 15, 2013, relating to the consolidated financial statements of Southcross Energy Partners, L.P. and subsidiaries appearing in this Annual Report on Form 10-K of Southcross Energy Partners, L.P. for the year ended December 31, 2012.


/s/ Deloitte & Touche LLP
Dallas, Texas
April 15, 2013

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Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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EXHIBIT 31.1

CERTIFICATION

I, David W. Biegler, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Southcross Energy Partners, L.P.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b): Omitted pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e);
(c): Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d): Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: April 15, 2013
/s/ DAVID W. BIEGLER David W. Biegler President and Chief Executive Officer of Southcross Energy Partners GP, LLC (the general partner of Southcross Energy Partners, L.P.)

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EXHIBIT 31.1

CERTIFICATION

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EXHIBIT 31.2

CERTIFICATION

I, J. Michael Anderson, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Southcross Energy Partners, L.P.;

2.

3.

4.

(a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b): Omitted pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e);
(c): Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d): Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

(a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 15, 2013


/s/ J. MICHAEL ANDERSON J. Michael Anderson Senior Vice President and Chief Financial Officer of Southcross Energy Partners GP, LLC (the general partner of Southcross Energy Partners, L.P.)

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EXHIBIT 31.2

CERTIFICATION

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EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of Southcross Energy Partners, L.P. (the "Partnership") for the annual period ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, David W. Biegler, President and Chief Executive Officer of Southcross Energy Partners GP, LLC, the general partner of the Partnership (the "General Partner"), and J. Michael Anderson, Senior Vice President and Chief Financial Officer of the General Partner, each hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to his knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Dated: April 15, 2013


/s/ DAVID W. BIEGLER David W. Biegler President and Chief Executive Officer of Southcross Energy Partners GP, LLC (the general partner of Southcross Energy Partners, L.P.)
/s/ J. MICHAEL ANDERSON J. Michael Anderson Senior Vice President and Chief Financial Officer of Southcross Energy Partners GP, LLC (the general partner of Southcross Energy Partners, L.P.)

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EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002