CONTRIBUTION, CONVEYANCE AND ASSUMPTION
AGREEMENT

 

By and Among

 

CYPRESS ENERGY HOLDINGS, LLC

 

CYPRESS ENERGY HOLDINGS II, LLC

 

CYPRESS ENERGY PARTNERS, LLC

 

CYPRESS ENERGY PARTNERS, L.P.

 

CYPRESS ENERGY PARTNERS GP, LLC

 

CYPRESS ENERGY PARTNERS – SBG, LLC

 

CYPRESS ENERGY PARTNERS – TIR, LLC

 

TULSA INSPECTION RESOURCES, LLC

 

MR. CHARLES C. STEPHENSON, JR.

 

MS. CYNTHIA FIELD

 

MR. G. LES AUSTIN

 

AND

 

MR. RICHARD CARSON

 

Dated as of January 21, 2014

 

 

 

 

 

 

 

CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT

 

This Contribution, Conveyance and Assumption Agreement, dated as of January 21,
2014 (this “Agreement”), is by and among Cypress Energy Holdings, LLC, a
Delaware limited liability company (“Holdings”), Cypress Energy Holdings II,
LLC, a Delaware limited liability company (“Holdings II”), Cypress Energy
Partners, LLC, a Delaware limited liability company (the “OLLC”), Cypress Energy
Partners, L.P., a Delaware limited partnership (the “Partnership”), Cypress
Energy Partners GP, LLC, a Delaware limited liability company (the “General
Partner”), Cypress Energy Partners – SBG, LLC, a Delaware limited liability
company (“CEP SBG”), Cypress Energy Partners – TIR, LLC, a Delaware limited
liability company (“CEP-TIR”), Tulsa Inspection Resources, LLC, a Delaware
limited liability company (“TIR”), Mr. Charles C. Stephenson, Jr., Ms. Cynthia
Field, Mr. G. Les Austin and Mr. Richard Carson. The above-named entities and
individuals are sometimes referred to in this Agreement each as a “Party” and
collectively as the “Parties.” Capitalized terms used herein shall have the
meanings assigned to such terms in Article I.

 

RECITALS

 

WHEREAS, the General Partner and Holdings II have formed the Partnership,
pursuant to the Delaware Revised Uniform Limited Partnership Act (the “Delaware
LP Act”), for the purpose of engaging 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 LP Act.

 

WHEREAS, in order to accomplish the objectives and purposes in the preceding
recital, each of the following actions has been taken prior to the date hereof:

 

1.Holdings II formed the General Partner under the terms of the Delaware Limited
Liability Company Act (the “Delaware LLC Act”), and contributed to the General
Partner $1,000 in exchange for all of the limited liability company interests in
the General Partner.

 

2.The General Partner and Holdings II formed the Partnership under the terms of
the Delaware LP Act and contributed $0 and $1,000 to the Partnership,
respectively, in exchange for a 0% non-economic general partner interest and a
100% limited partner interest, respectively, in the Partnership.

 

3.SBG Disposal, LLC, a North Dakota limited liability company (“SBG Disposal”),
contributed its working capital and fixed assets, a 25% ownership interest in
Alati Arnegard, LLC, a North Dakota limited liability company, and management
contracts related to various saltwater disposal facilities to Cypress Energy
Services, LLC, a Delaware limited liability company, in exchange for a 49%
limited liability company interest in Cypress Energy Services, LLC and $500,000.

 

4.Effective December 23, 2013, all of the employees of SBG Disposal were
transferred to and became employees of Cypress Energy Management – Bakken
Operations, LLC, a Delaware limited liability company.

 

5.Holdings borrowed $52.5 million under the Holdings Credit Facility.

 

 

 

 

6.Holdings contributed $52.2 million to Cypress Energy Investments, LLC, a
Delaware limited liability company.

 

7.Cypress Energy Investments, LLC contributed $52.2 million to CEP-TIR.

 

8.CEP-TIR formed TIR under the terms of the Delaware LLC Act and contributed to
TIR $1,000 in exchange for all of the limited liability company interests in
TIR.

 

9.CEP-TIR formed Tulsa Inspection Resources Holdings, LLC (“TIR Holdings”) under
the terms of the Delaware LLC Act and contributed to TIR Holdings $1,000 in
exchange for all of the limited liability company interests in TIR Holdings.

 

10.Tulsa Inspection Resources – Canada, Inc., a corporation organized under the
Canada Business Corporations Act, continued as a corporation (“TIR-Canada Inc.”)
under the Alberta Business Corporations Act (the “ABC Act”).

 

11.TIR-Canada Inc. converted to an Alberta unlimited liability corporation named
Tulsa Inspection Resources – Canada ULC (“TIR-Canada”).

 

12.Tulsa Inspection Resources – Nondestructive Examination, Inc. converted to a
Delaware limited liability company named Tulsa Inspection Resources –
Nondestructive Examination, LLC (“TIR-NDE”).

 

13.Tulsa Inspection Resources, Inc., an Oklahoma corporation (“TIR Inc.”),
merged with and into TIR with TIR surviving and with, in connection with the
merger, (i) certain minority shareholders receiving cash totaling $14.8 million
in exchange for 27.88% of the issued and outstanding shares of TIR Inc., (ii)
CEP-TIR receiving limited liability company interests representing a 70.43%
interest in TIR in exchange for approximately 36.04% of the shares of TIR Inc.,
(iii) Cynthia Field receiving limited liability company interests representing a
8.10% interest in TIR in exchange for approximately 9.88% of the shares of TIR
Inc. and (iv) Charles C. Stephenson, Jr. receiving limited liability company
interests representing a 21.47% interest in TIR in exchange for approximately
26.20% of the shares of TIR Inc.

 

14.TIR distributed (i) limited liability company interests representing a 70.43%
interest in TIR-NDE and 70.43% of the shares in each of TIR-Canada and Tulsa
Inspection Resources – Acquisition Corp. (“TIR-Acquisition”), a corporation
under the ABC Act to CEP-TIR, (ii) limited liability company interests
representing a 8.10% interest in TIR-NDE and 8.10% of the shares in each of
TIR-Canada and TIR-Acquisition to Cynthia Field and (iii) limited liability
company interests representing a 21.47% interest in TIR-NDE and 21.47% of the
shares in each of TIR-Canada and TIR-Acquisition to Charles C. Stephenson, Jr.

 

15.CEP-TIR conveyed its shares in TIR-Canada and TIR-Acquisition to TIR Holdings
in exchange for limited liability company interests representing a 72.52%
interest in TIR Holdings.

 

 

 

 

16.Cynthia Field conveyed her shares in TIR-Canada and TIR-Acquisition to TIR
Holdings in exchange for limited liability company interests representing a
6.01% interest in TIR Holdings.

 

17.Charles C. Stephenson, Jr. conveyed his shares in TIR-Canada and
TIR-Acquisition to TIR Holdings in exchange for limited liability company
interests representing a 21.47% interest in TIR Holdings.

 

18.TIR-Acquisition converted to an Alberta unlimited liability corporation named
Tulsa Inspection Resources – Acquisition ULC.

 

19.Foley Inspection Services Inc. converted to an Alberta unlimited liability
corporation named Foley Inspection Services ULC (“Foley”).

 

20.G. Les Austin conveyed his Class C Interests in the OLLC to Holdings in
exchange for limited liability company interests in Holdings equal to the
current value of his Class C Interests in the OLLC.

 

21.Richard Carson conveyed his Class C Interests in the OLLC to Holdings in
exchange for limited liability company interests in Holdings equal to the
current value of his Class C Interests in the OLLC.

 

22.The Partnership, TIR, CEP-TIR and the OLLC entered into (i) a new $65.0
million working capital facility to finance the carrying of accounts receivable,
to pay fees and expenses to the agents and the lenders party thereto, to
refinance all or a portion of the existing TIR credit facilities and for other
corporate purposes (the “Working Capital Facility”) and (ii) a new $55.0 million
acquisition facility to refinance all or a portion of the existing TIR credit
facilities and for making permitted acquisitions and capital expenditures (the
“Acquisition Facility”).

 

23.TIR borrowed a total of $75 million under the Working Capital Facility and
the Acquisition Facility and repaid $59.0 million of indebtedness owed to TIR
Capital Partners, LLC, a Delaware limited liability company.

 

24.Foley amalgamated with TIR-Acquisition with the surviving entity named Foley
Inspection Services ULC.

 

25.Cypress Energy Management, LLC, a Delaware limited liability company (“CEM”),
formed Cypress Energy Management – TIR, LLC (“CEM TIR”), under the Delaware LLC
Act and contributed to CEM TIR $1,000 in exchange for all of the limited
liability company interests in CEM TIR.

 

26.TIR formed Tulsa Inspection Resources - PUC, LLC (“TIR PUC”), under the
Delaware LLC Act and contributed to TIR PUC $1,000 in exchange for all of the
limited liability company interests in TIR PUC. TIR PUC’s election with the
Internal Revenue Service (“IRS”) on Form 8832 to be treated as an association
taxable as a corporation for U.S. federal income tax purposes became effective
on the date of formation of TIR PUC.

 

 

 

 

WHEREAS, concurrently with the consummation of the transactions contemplated
hereby, each of the following transactions will occur at the times specified
herein:

 

1.CEP SBG will distribute its 100% limited liability company interest in SBG
Sheridan Facility LLC, a Montana limited liability company, and Cypress Energy
Partners – Prairie Lakes SWD, LLC (“Prairie Lakes LLC”), a North Dakota limited
liability company (together, the “SBG Distribution Interest”), to the OLLC.

 

2.The OLLC will distribute its 100% limited liability company interest in (i)
SBG Sheridan Facility LLC, (ii) Prairie Lakes LLC, (iii) Cypress Equipment, LLC,
a Delaware limited liability company, and (iv) Cypress Energy Solutions, LLC, a
Delaware limited liability company (together, the “OLLC Distribution Interest”),
to Holdings II.

 

3.Holdings II will distribute its 100% limited liability company interest in (i)
SBG Sheridan Facility LLC, (ii) Prairie Lakes LLC, (iii) Cypress Equipment, LLC,
and (iv) Cypress Energy Solutions, LLC (together, the “Holdings II Distribution
Interest”), to Holdings.

 

4.The Partnership will issue 100% of the Incentive Distribution Rights in the
Partnership to the General Partner.

 

5.Holdings II will convey 100% of its Class A Interest in the OLLC to the
Partnership, as a capital contribution, in exchange for (i) 671,250 Common Units
representing a 5.7% limited partner interest in the Partnership, (ii) 4,939,299
Sub Units representing a 41.7% limited partner interest in the Partnership
(excluding Sub Units to be transferred to G. Les Austin and Richard Carson), and
(iii) the right to receive $80,212,500 in proceeds of the initial public
offering, all of which will reimburse Holdings II for certain capital
expenditures incurred with respect to the contributed assets.

 

6.CEP-TIR will convey an approximate 36.2% interest in each of TIR, TIR-NDE and
TIR Holdings (together, the “CEP-TIR Contribution Interest”) to the Partnership,
as a capital contribution, in exchange for (i) 673,400 Common Units representing
a 5.7% limited partner interest in the Partnership and (ii) 673,400 Sub Units
representing a 5.7% limited partner interest in the Partnership.

 

7.Cynthia Field will convey an approximate 3.0% interest in each of TIR, TIR-NDE
and TIR Holdings (together, the “CF Contribution Interest”) to the Partnership,
as a capital contribution, in exchange for (i) 57,450 Common Units representing
a 0.50% limited partner interest in the Partnership and (ii) 57,450 Sub Units
representing a 0.50% limited partner interest in the Partnership.

 

8.Charles C. Stephenson, Jr. will convey an approximate 10.7% interest in each
of TIR, TIR-NDE and TIR Holdings (together, the “CS Contribution Interest”) to
the Partnership, as a capital contribution, in exchange for (i) 198,400 Common
Units representing a 1.7% limited partner interest in the Partnership and (ii)
198,400 Sub Units representing a 1.7% limited partner interest in the
Partnership.

 

 

 

 

9.The public, through the Underwriters, will contribute $86,250,000 in cash to
the Partnership, as a capital contribution, in exchange for 4,312,500 Common
Units, including 562,500 Common Units to be issued pursuant to the
Over-Allotment Option, representing a 36.4% limited partner interest in the
Partnership.

 

10.The Partnership will (i) pay the Structuring Fee, (ii) pay the Underwriters’
discount of $5,606,250 and (iii) distribute $80,212,500 to Holdings II (the
“Holdings II Equity Distribution”) in satisfaction of its right to a
reimbursement of certain capital expenditures incurred with respect to the
contributed assets.

 

11.The Partnership will pay transaction expenses related to the offering,
estimated to be $3.0 million, out of operating cash flow existing on its balance
sheet.

 

12.The Partnership will convey its 50.1% limited liability company interests in
each of TIR, TIR-NDE and TIR Holdings (together, the “Partnership TIR
Contribution Interest”) to the OLLC as a capital contribution.

 

13.The Partnership will redeem the initial limited partner interests of Holdings
II and will refund Holding II’s initial contribution of $1,000, as well as any
interest or other profit that may have resulted from the investment or other use
of such initial capital contribution to Holdings II, in proportion to such
initial contribution.

 

14.Holdings will convey its 100% limited liability company interest in CEM to
Holdings II as a capital contribution.

 

15.Holdings II will convey its 100% limited liability company interest in CEM to
the General Partner as a capital contribution.

 

16.Holdings II will distribute 44,451 Sub Units representing an approximate 0.4%
limited partner interest in the Partnership to Holdings that will be sufficient
for Holdings to redeem all of G. Les Austin’s and Richard Carson’s limited
liability company interests in Holdings.

 

17.Holdings will distribute the Sub Units representing limited partner interest
in the Partnership received from Holdings II to G. Les Austin in complete
redemption of his interest in Holdings.

 

18.Holdings will distribute the Sub Units representing limited partner interest
in the Partnership received from Holdings II to Richard Carson in complete
redemption of his interest in Holdings.

 

WHEREAS, the members, partners or stockholders of the Parties have taken all
partnership, limited liability company or corporate action, as the case may be,
required to approve the transactions contemplated by this Agreement.

 

 

 

 

NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

The terms set forth below in this Article I shall have the meanings ascribed to
them below or in the part of this Agreement referred to below:

 

“ABC Act” has the meaning assigned to such term in the recitals.

 

“Agreement” has the meaning assigned to such term in the preamble.

 

“Acquisition Facility” has the meaning assigned to such term in the recitals.

 

“CEM” has the meaning assigned to such term in the recitals.

 

“CEM Agreement” has the meaning set forth in Section 2.14.

 

“CEM TIR” has the meaning assigned to such term in the recitals.

 

“CEP SBG” has the meaning assigned to such term in the preamble.

 

“CEP-TIR” has the meaning assigned to such term in the preamble.

 

“CEP-TIR Contribution Interest” has the meaning assigned to such term in the
recitals.

 

“CES LLC Agreement” has the meaning set forth in Section 2.2.

 

“CF Contribution Interest” has the meaning assigned to such term in the
recitals.

 

“Class A Interest” has the meaning assigned to such term in the OLLC Agreement.

 

“Class C Interest” has the meaning assigned to such term in the OLLC Agreement.

 

“Commission” means the U.S. Securities and Exchange Commission.

 

“Common Units” has the meaning assigned to such term in the Partnership
Agreement.

 

“CS Contribution Interest” has the meaning assigned to such term in the
recitals.

 

“Cypress Equipment Agreement” has the meaning set forth in Section 2.2.

 

“Delaware LLC Act” has the meaning assigned to such term in the recitals.

 

“Delaware LP Act” has the meaning assigned to such term in the recitals.

 

“Effective Time” means immediately prior to the closing of the initial public
offering pursuant to the Underwriting Agreement.

 

 

 

 

“Foley” has the meaning assigned to such term in the recitals.

 

“General Partner” has the meaning assigned to such term in the preamble.

 

“Holdings” has the meaning assigned to such term in the preamble.

 

“Holdings II” has the meaning assigned to such term in the preamble.

 

“Holdings Credit Facility” means the $35 million credit facility with JPMorgan
Bank entered into by Cypress Energy Holdings, LLC on November 6, 2012.

 

“Holdings II Distribution Interest” has the meaning assigned to such term in the
recitals.

 

“Holdings II Equity Distribution” has the meaning assigned to such term in the
recitals.

 

“Incentive Distribution Rights” has the meaning assigned to such term in the
Partnership Agreement.

 

“IRS” has the meaning assigned to such term in the recitals.

 

“OLLC” has the meaning assigned to such term in the preamble.

 

“OLLC Agreement” has the meaning set forth in Section 2.5.

 

“OLLC Distribution Interest” has the meaning assigned to such term in the
recitals.

 

“Over-Allotment Option” means the option given to the Underwriters to purchase
Additional Units (as defined in the Underwriting Agreement) pursuant to Section
2(b) of the Underwriting Agreement.

 

“Partnership” has the meaning assigned to such term in the preamble.

 

“Partnership Agreement” means the First Amended and Restated Agreement of
Limited Partnership of Cypress Energy Partners, L.P. dated as of January 21,
2014.

 

“Partnership TIR Contribution Interest” has the meaning assigned to such term in
the recitals.

 

“Party” and “Parties” has the meaning assigned to such term in the preamble.

 

“Prairie Lakes Agreement” has the meaning set forth in Section 2.1.

 

“Prairie Lakes LLC” has the meaning assigned to such term in the recitals.

 

“Registration Statement” means the Registration Statement on Form S-1 filed with
the Commission (Registration No. 333-192328), as amended and effective at the
Effective Time.

 

“SBG Disposal” has the meaning assigned to such term in the recitals.

 

 

 

 

“SBG Distribution Interest” has the meaning assigned to such term in the
recitals.

 

“SBG Sheridan Agreement” has the meaning set forth in Section 2.1.

 

“Structuring Fee” means a fee for certain advisory services equal to $375,000
pursuant to the Underwriting Agreement payable to Raymond James & Associates,
Inc., Robert W. Baird & Co. Incorporated and Stifel, Nicolaus & Company,
Incorporated.

 

“Sub Units” has the meaning assigned to “Subordinated Units” in the Partnership
Agreement.

 

“TIR” has the meaning assigned to such term in the preamble.

 

“TIR-Acquisition” has the meaning assigned to such term in the recitals.

 

“TIR Agreement” has the meaning set forth in Section 2.6.

 

“TIR-Canada” has the meaning assigned to such term in the recitals.

 

“TIR-Canada Inc.” has the meaning assigned to such term in the recitals.

 

“TIR Holdings” has the meaning assigned to such term in the recitals.

 

“TIR Holdings Agreement” has the meaning set forth in Section 2.6.

 

“TIR Inc.” has the meaning assigned to such term in the recitals.

 

“TIR-NDE” has the meaning assigned to such term in the recitals.

 

“TIR-NDE Agreement” has the meaning set forth in Section 2.6.

 

“TIR PUC” has the meaning assigned to such term in the recitals.

 

“Underwriters” means those underwriters listed on Schedule A to the Underwriting
Agreement.

 

“Underwriting Agreement” means that certain Underwriting Agreement by and among
Raymond James & Associates, Inc., Robert W. Baird & Co. Incorporated, Stifel,
Nicolaus & Company, Incorporated and BMO Capital Markets Corp., as
representatives of the Underwriters, the General Partner, the Partnership,
CEP-TIR and OLLC, dated as of January 14, 2014.

 

“Working Capital Facility” has the meaning assigned to such term in the
recitals.

 

 

 

 

ARTICLE II
CONTRIBUTION, ACKNOWLEDGEMENTS AND DISTRIBUTIONS

 

Unless otherwise indicated, the following shall be completed either at the
Effective Time or immediately following the Effective Time in the order set
forth herein:

 

Section 2.1            Distribution by CEP SBG of the SBG Distribution Interest
to the OLLC. CEP SBG hereby distributes, assigns, transfers, sets over and
delivers to the OLLC, its successors and its assigns, for its and their own use
forever, all right, title and interest in and to its (i) 100% limited liability
company interest in SBG Sheridan Facility LLC and (ii) 100% limited liability
company interest in Prairie Lakes LLC. The OLLC hereby accepts the SBG
Distribution Interest. Notwithstanding anything in the Amended and Restated
Operating Agreement of SBG Sheridan Facility LLC, dated as of January 1, 2013
(the “SBG Sheridan Agreement”), or the Amended and Restated Member Control
Agreement of Prairie Lakes LLC, dated as of January 1, 2013 (the “Prairie Lakes
Agreement”), to the contrary, pursuant to this distribution (i) the OLLC is
hereby admitted as the sole member of both SBG Sheridan Facility LLC and Prairie
Lakes LLC and agrees that it is bound by the SBG Sheridan Agreement and the
Prairie Lakes Agreement, (ii) CEP SBG hereby ceases to be the sole member of
both SBG Sheridan Facility LLC and Prairie Lakes LLC immediately following the
OLLC’s admission as described in (i), and (iii) SBG Sheridan Facility LLC and
Prairie Lakes LLC hereby continue without dissolution with the OLLC as the sole
member of each.

 

Section 2.2            Distribution by the OLLC of the OLLC Distribution
Interest to Holdings II. The OLLC hereby distributes, assigns, transfers, sets
over and delivers to Holdings II, its successors and its assigns, for its and
their own use forever, all right, title and interest in and to its (i) 100%
limited liability company interest in SBG Sheridan Facility LLC, (ii) 100%
limited liability company interest in Prairie Lakes LLC, (iii) 100% limited
liability company interest in Cypress Equipment, LLC, and (iv) 100% limited
liability company interest in Cypress Energy Solutions, LLC. Holdings II hereby
accepts the OLLC Distribution Interest. Notwithstanding anything in the SBG
Sheridan Agreement, the Prairie Lakes Agreement, the Limited Liability Company
Agreement of Cypress Equipment, LLC dated as of March 15, 2013 (the “Cypress
Equipment Agreement”), or the Limited Liability Company Agreement of Cypress
Energy Solutions, LLC, dated as of March 15, 2012 (the “CES LLC Agreement”), to
the contrary, as applicable, pursuant to this distribution (i) Holdings II is
hereby admitted as a member of each of SBG Sheridan Facility LLC, Prairie Lakes
LLC, Cypress Equipment, LLC and Cypress Energy Solutions, LLC and agrees that it
is bound by the SBG Sheridan Agreement, the Prairie Lakes Agreement, the Cypress
Equipment Agreement and the CES LLC Agreement, (ii) the OLLC hereby ceases to be
a member of each of SBG Sheridan Facility LLC, Prairie Lakes LLC, Cypress
Equipment, LLC and Cypress Energy Solutions, LLC immediately following Holdings
II’s admission to each as described in (i), and (iii) SBG Sheridan Facility LLC,
Prairie Lakes LLC, Cypress Equipment, LLC and Cypress Energy Solutions, LLC all
hereby continue without dissolution with Holdings II as the sole member of each.

 

 

 

 

Section 2.3            Distribution by Holdings II of the Holdings II
Distribution Interest to Holdings. Holdings II hereby distributes, assigns,
transfers, sets over and delivers to Holdings, its successors and its assigns,
for its and their own use forever, all right, title and interest in and to its
(i) 100% limited liability company interest in SBG Sheridan Facility LLC, (ii)
100% limited liability company interest in Prairie Lakes LLC, (iii) 100% limited
liability company interest in Cypress Equipment, LLC, and (iv) 100% limited
liability company interest in Cypress Energy Solutions, LLC. Holdings hereby
accepts the Holdings II Distribution Interest. Notwithstanding anything in the
SBG Sheridan Agreement, the Prairie Lakes Agreement, the Cypress Equipment
Agreement or the CES LLC Agreement to the contrary, as applicable, pursuant to
this distribution (i) Holdings is hereby admitted as a member of each of SBG
Sheridan Facility LLC, Prairie Lakes LLC, Cypress Equipment, LLC and Cypress
Energy Solutions, LLC and agrees that it is bound by the SBG Sheridan Agreement,
the Prairie Lakes Agreement, the Cypress Equipment Agreement and the CES LLC
Agreement, (ii) Holdings II hereby ceases to be a member of each of SBG Sheridan
Facility LLC, Prairie Lakes LLC, Cypress Equipment, LLC and Cypress Energy
Solutions, LLC immediately following Holdings’ admission to each as described in
(i), and (iii) SBG Sheridan Facility LLC, Prairie Lakes LLC, Cypress Equipment,
LLC and Cypress Energy Solutions, LLC all hereby continue without dissolution
with Holdings as the sole member of each.

 

Section 2.4            Issuance of Incentive Distribution Rights to the General
Partner. The Partnership agrees to issue 100% of its Incentive Distribution
Rights to the General Partner.

 

Section 2.5            Contribution by Holdings II of 100% of its Class A
Interest in the OLLC to the Partnership. Holdings II hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to the
Partnership, its successors and its assigns, for its and their own use forever,
all right, title and interest in and to its 100% Class A Interest in the OLLC,
as a capital contribution, in exchange for (i) 671,250 Common Units representing
a 5.7% limited partner interest in the Partnership, (ii) 4,983,750 Sub Units
representing a 41.7% limited partner interest in the Partnership, of which
30,143 Sub Units will be transferred to G. Les Austin and 14,308 Sub Units will
be transferred to Richard Carson, and (iii) the right to receive $80,212,500 in
proceeds of the initial public offering, all of which is to reimburse it for
certain capital expenditures incurred with respect to the contributed assets.
The Partnership hereby accepts the 100% Class A Interest in the OLLC.
Notwithstanding anything in the Amended and Restated Limited Liability Company
Agreement of the OLLC, dated as of December 31, 2012 (the “OLLC Agreement”), to
the contrary, pursuant to this contribution (i) the Partnership is hereby
admitted as a member of the OLLC and agrees that it is bound by the OLLC
Agreement, (ii) Holdings II hereby ceases to be a member of the OLLC immediately
following the Partnership’s admission as described in (i), and (iii) the OLLC
hereby continues without dissolution with the Partnership as the sole member.

 

Section 2.6            Contribution by CEP-TIR of the CEP-TIR Contribution
Interest to the Partnership. CEP-TIR hereby grants, contributes, bargains,
conveys, assigns, transfers, sets over and delivers to the Partnership, its
successors and its assigns, for its and their own use forever, all right, title
and interest in and to a (i) 36.3% limited liability company interest in TIR,
(ii) 36.3% limited liability company interest in TIR-NDE, and (iii) 36.3%
limited liability company interest in TIR Holdings, as a capital contribution,
in exchange for (i) 673,400 Common Units representing a 5.7% limited partner
interest in the Partnership, and (ii) 673,400 Sub Units representing a 5.7%
limited partner interest in the Partnership. The Partnership hereby accepts the
CEP-TIR Contribution Interest. Notwithstanding anything in the Limited Liability
Company Agreement of Tulsa Inspection Resources, LLC, dated as of November 20,
2013 (the “TIR Agreement”), the Amended and Restated Limited Liability Company
Agreement of TIR-NDE, dated as of December 20, 2013 (the “TIR-NDE Agreement”),
or the Limited Liability Company Agreement of TIR Holdings, dated December 3,
2013 (the “TIR Holdings Agreement”), to the contrary, as applicable, pursuant to
this contribution, (i) the Partnership is hereby admitted as a member of each of
TIR, TIR-NDE and TIR Holdings and agrees that it is bound by the TIR Agreement,
the TIR-NDE Agreement and the TIR Holdings Agreement, and (ii) TIR, TIR-NDE and
TIR Holdings hereby all continue without dissolution with the Partnership as a
member.

 

 

 

 

Section 2.7            Contribution by Cynthia Field of the CF Contribution
Interest to the Partnership. Cynthia Field hereby grants, contributes, bargains,
conveys, assigns, transfers, sets over and delivers to the Partnership, its
successors and its assigns, for its and their own use forever, all right, title
and interest in and to a (i) 2.9% limited liability company interest in TIR,
(ii) 2.9% limited liability company interest in TIR-NDE, and (iii) 2.9% limited
liability company interest in TIR Holdings, as a capital contribution, in
exchange for (i) 57,450 Common Units representing a 0.50% limited partner
interest in the Partnership, and (ii) 57,450 Sub Units representing a 0.50%
limited partner interest in the Partnership. The Partnership hereby accepts the
CF Contribution Interest. Notwithstanding anything in the TIR Agreement, the
TIR-NDE Agreement or the TIR Holdings Agreement to the contrary, as applicable,
pursuant to this contribution, (i) the Partnership is hereby admitted as a
member of each of TIR, TIR-NDE and TIR Holdings and agrees that it is bound by
the TIR Agreement, the TIR-NDE Agreement and the TIR Holdings Agreement, and
(ii) TIR, TIR-NDE and TIR Holdings hereby all continue without dissolution with
the Partnership as a member.

 

Section 2.8            Contribution by Charles C. Stephenson, Jr. of the CS
Contribution Interest to the Partnership. Charles C. Stephenson, Jr. hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and
delivers to the Partnership, its successors and its assigns, for its and their
own use forever, all right, title and interest in and to a (i) 10.8% limited
liability company interest in TIR, (ii) 10.8% limited liability company interest
in TIR-NDE, and (iii) 10.8% limited liability company interest in TIR Holdings,
as a capital contribution, in exchange for (i) 198,400 Common Units representing
a 1.7% limited partner interest in the Partnership, and (ii) 198,400 Sub Units
representing a 1.7% limited partner interest in the Partnership. The Partnership
hereby accepts the CS Contribution Interest. Notwithstanding anything in the TIR
Agreement, the TIR-NDE Agreement or TIR Holdings Agreement to the contrary, as
applicable, pursuant to this contribution, (i) the Partnership is hereby
admitted as a member of each of TIR, TIR-NDE and TIR Holdings and agrees that it
is bound by the TIR Agreement, the TIR-NDE Agreement and the TIR Holdings
Agreement, and (ii) TIR, TIR-NDE and TIR Holdings hereby all continue without
dissolution with the Partnership as a member.

 

Section 2.9            Public Cash Contribution. The Parties acknowledge that,
in connection with the initial public offering, public investors, through the
Underwriters, have made a capital contribution to the Partnership of
approximately $75 million in cash ($69.75 million net to the Partnership after
deducting the underwriting discounts and commissions of $5.25 million and the
Structuring Fee) in exchange for the issuance by the Partnership of 3,750,000
Common Units, representing a 31.7% limited partner interest in the Partnership.

 

Section 2.10        Payment of Transaction Costs. The Parties acknowledge the
payment by the Partnership of transaction expenses in the amount of
approximately $3.0 million from operating cash flow on the Partnership’s balance
sheet.

 

Section 2.11        Contribution by the Partnership of the Partnership TIR
Contribution Interest to the OLLC. The Partnership hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to the OLLC, its
successors and its assigns, for its and their own use forever, all right, title
and interest in and to the Partnership’s (i) 50.1% limited liability company
interest in TIR, (ii) 50.1% limited liability company interest in TIR-NDE, and
(iii) 50.1% limited liability company interest in TIR Holdings. The OLLC hereby
accepts the Partnership TIR Contribution Interest, as a capital contribution.
Notwithstanding anything in the TIR Agreement, the TIR-NDE Agreement or the TIR
Holdings Agreement to the contrary, as applicable, pursuant to this
contribution, (i) the OLLC is hereby admitted as a member of each of TIR,
TIR-NDE and TIR Holdings and agrees that it is bound by the TIR Agreement, the
TIR-NDE Agreement and the TIR Holdings Agreement, (ii) the Partnership ceases to
be a member of each of TIR, TIR-NDE and TIR Holdings immediately following the
OLLC’s admission to each as described in (i), and (iii) TIR, TIR-NDE and TIR
Holdings hereby all continue without dissolution with the OLLC as a member.

 

 

 

 

Section 2.12        Distribution of Equity Distribution. The Partnership hereby
distributes the Holdings II Equity Distribution to Holdings II in satisfaction
of its right to a reimbursement of capital expenditures incurred with respect to
the contributed assets.

 

Section 2.13        Redemption of Holdings II Initial Limited Partner Interests.
For and in consideration of the redemption by the Partnership of $1,000 to
Holdings II as a refund of its initial capital contributions to the Partnership,
along with 100% of any interest or profit that resulted from the investment or
other use of such capital contribution, the Partnership hereby redeems all of
the initial limited partner interests of Holdings II.

 

Section 2.14        Contribution by Holdings of its 100% limited liability
company interest in CEM to Holdings II. Holdings hereby grants, contributes,
bargains, conveys, assigns, transfers, sets over and delivers to Holdings II,
its successors and its assigns, for its and their own use forever, all right,
title and interest in and to Holdings’ 100% limited liability company interest
in CEM. Holdings II hereby accepts the 100% limited liability company interest
in CEM, as a capital contribution. Notwithstanding anything in the Limited
Liability Company Agreement of CEM, dated as of August 15, 2012 (the “CEM
Agreement”), to the contrary, as applicable, pursuant to this contribution, (i)
Holdings II is hereby admitted as sole member of CEM and agrees that it is bound
by the CEM Agreement, as sole member of CEM, (ii) Holdings ceases to be a member
of CEM immediately following Holdings II’s admission to each as described in
(i), and (iii) CEM hereby continues without dissolution with Holdings II as the
sole member.

 

Section 2.15        Contribution by Holdings II of its 100% limited liability
company interest in CEM to the General Partner. Holdings II hereby grants,
contributes, bargains, conveys, assigns, transfers, sets over and delivers to
the General Partner, its successors and its assigns, for its and their own use
forever, all right, title and interest in and to Holding II’s 100% limited
liability company interest in CEM. The General Partner hereby accepts the 100%
limited liability company interest in CEM, as a capital contribution.
Notwithstanding anything in the CEM Agreement to the contrary, as applicable,
pursuant to this contribution, (i) the General Partner is hereby admitted as
sole member of CEM and agrees that it is bound by the CEM Agreement, as sole
member of CEM, (ii) Holdings II ceases to be a member of CEM immediately
following the General Partner’s admission to each as described in (i), and (iii)
CEM hereby continues without dissolution with the General Partner as the sole
member.

 

 

 

 

Section 2.16        Distribution by Holdings II of Sub Units in the Partnership
to Holdings. Holdings II hereby distributes, assigns, transfers, sets over and
delivers to Holdings, its successors and its assigns, for its and their own use
forever, all right, title and interest in and to 44,451 Sub Units representing
an approximate 0.4% limited partner interest in the Partnership, all of which
will be used to completely redeem the limited liability company interests in
Holdings held by G. Les Austin and Richard Carson. Holdings hereby accepts the
0.4% limited partner interest in the Partnership.

 

Section 2.17        Redemption of G. Les Austin Limited Liability Company
Interest in Holdings. Holdings hereby distributes, assigns, transfers, sets over
and delivers to G. Les Austin, his successors and his assigns, for his and their
own use forever, all right, title and interest in and to 30,143 Sub Units
representing an approximate 0.3% limited partner interest in the Partnership, in
complete redemption of the limited liability company interests in Holdings held
by G. Les Austin. G. Les Austin hereby accepts the 0.3% limited partner interest
in the Partnership.

 

Section 2.18        Redemption of Richard Carson Limited Liability Company
Interest in Holdings. Holdings hereby distributes, assigns, transfers, sets over
and delivers to Richard Carson, his successors and his assigns, for his and
their own use forever, all right, title and interest in and to 14,308 Sub Units
representing an approximate 0.1% limited partner interest in the Partnership, in
complete redemption of the limited liability company interests in Holdings held
by Richard Carson. Richard Carson hereby accepts the 0.1% limited partner
interest in the Partnership.

 

Section 2.19        Form 8832 Election by TIR PUC. TIR PUC hereby agrees to file
with the IRS an election on Form 8832 electing to be treated as an association
taxable as a corporation for U.S. federal income tax purposes to be effective
prior to the Effective Time.

 

ARTICLE III
ADDITIONAL TRANSACTIONS

 

On January 17, 2014, the Underwriters provided notice that they would exercise
the Over-Allotment Option in whole. The Underwriters will contribute additional
cash to the Partnership in exchange for an additional 562,500 Common Units on
the basis of the initial public offering price per Common Unit set forth in the
Registration Statement less the amount of underwriting discounts and the
Structuring Fee, and the Partnership shall use all of the net proceeds from that
exercise to make a cash distribution to Holdings.

 

ARTICLE IV
FURTHER ASSURANCES

 

From time to time after the Effective Time, and without any further
consideration, the Parties agree to execute, acknowledge and deliver all such
additional deeds, assignments, bills of sale, conveyances, instruments, notices,
releases, acquittances and other documents, and to do all such other acts and
things, all in accordance with applicable law, as may be necessary or
appropriate (i) more fully to assure that the applicable Parties own all of the
properties, rights, titles, interests, estates, remedies, powers and privileges
granted by this Agreement, or which are intended to be so granted, (ii) more
fully and effectively to vest in the applicable Parties and their respective
successors and assigns beneficial and record title to the interests contributed
and assigned by this Agreement or intended to be so and (iii) more fully and
effectively to carry out the purposes and intent of this Agreement.

 

 

 

 

ARTICLE V
EFFECTIVE TIME

 

Notwithstanding anything contained in this Agreement to the contrary, none of
the provisions of Article II of this Agreement shall be operative or have any
effect until the Effective Time, at which time all the provisions of Article II
of this Agreement shall be effective and operative in accordance with Article
VI, without further action by any Party hereto.

 

ARTICLE VI
MISCELLANEOUS

 

Section 6.1             Order of Completion of Transactions. The transactions
provided for in Article II and Article III of this Agreement shall each be
completed immediately following the Effective Time.

 

Section 6.2             Headings; References; Interpretation. All Article and
Section headings in this Agreement are for convenience only and shall not be
deemed to control or affect the meaning or construction of any of the provisions
hereof. The words “hereof,” “herein” and “hereunder” and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole,
including, without limitation, all Schedules and Exhibits attached hereto, and
not to any particular provision of this Agreement. All references herein to
Articles, Sections, Schedules and Exhibits shall, unless the context requires a
different construction, be deemed to be references to the Articles and Sections
of this Agreement and the Schedules and Exhibits attached hereto, and all such
Schedules and Exhibits attached hereto are hereby incorporated herein and made a
part hereof for all purposes. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender shall include all other
genders, and the singular shall include the plural and vice versa. The use
herein of the word “including” following any general statement, term or matter
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not non-limiting language (such as “without limitation”,
“but not limited to”, or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that
could reasonably fall within the broadest possible scope of such general
statement, term or matter.

 

Section 6.3             Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
assigns.

 

Section 6.4            No Third Party Rights. The provisions of this Agreement
are intended to bind the Parties as to each other and are not intended to and do
not create rights in any other person or confer upon any other person any
benefits, rights or remedies, and no person is or is intended to be a third
party beneficiary of any of the provisions of this Agreement.

 

 

 

 

Section 6.5            Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all signatory Parties had
signed the same document. All counterparts shall be construed together and shall
constitute one and the same instrument.

 

Section 6.6            Choice of Law. This Agreement shall be subject to and
governed by the laws of the state of Delaware. EACH OF THE PARTIES HERETO AGREES
THAT THIS AGREEMENT INVOLVES AT LEAST U.S. $100,000 AND THAT THIS AGREEMENT HAS
BEEN ENTERED INTO IN EXPRESS RELIANCE UPON 6 Del. C. § 2708. EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES (i) TO BE SUBJECT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND OF THE FEDERAL COURTS
SITTING IN THE STATE OF DELAWARE, AND (ii) TO THE EXTENT SUCH PARTY IS NOT
OTHERWISE SUBJECT TO SERVICE OF PROCESS IN THE STATE OF DELAWARE, TO APPOINT AND
MAINTAIN AN AGENT IN THE STATE OF DELAWARE AS SUCH PARTY’S AGENT FOR ACCEPTANCE
OF LEGAL PROCESS AND TO NOTIFY THE OTHER PARTIES OF THE NAME AND ADDRESS OF SUCH
AGENT.

 

Section 6.7            Severability. If any of the provisions of this Agreement
are held by any court of competent jurisdiction to contravene, or to be invalid
under, the laws of any political body having jurisdiction over the subject
matter hereof, such contravention or invalidity shall not invalidate the entire
Agreement. Instead, this Agreement shall be construed as if it did not contain
the particular provisions or provisions held to be invalid and an equitable
adjustment shall be made and necessary provision added so as to give effect to
the intention of the Parties as expressed in this Agreement at the time of
execution of this Agreement.

 

Section 6.8            Amendment or Modification. This Agreement may be amended
or modified from time to time only by the written agreement of all the Parties.
Each such instrument shall be reduced to writing and shall be designated on its
face as an amendment to this Agreement.

 

Section 6.9            Integration. This Agreement and the instruments
referenced herein supersede all previous understandings or agreements among the
Parties, whether oral or written, with respect to the subject matter of this
Agreement and such instruments. This Agreement and such instruments contain the
entire understanding of the Parties with respect to the subject matter hereof
and thereof. There are no unwritten oral agreements between the parties. No
understanding, representation, promise or agreement, whether oral or written, is
intended to be or shall be included in or form part of this Agreement unless it
is contained in a written amendment hereto executed by the parties hereto after
the date of this Agreement.

 

Section 6.10           Deed; Bill of Sale; Assignment. To the extent required
and permitted by applicable law, this Agreement shall also constitute a “deed,”
“bill of sale” or “assignment” of the assets and interests referenced herein.

 

[Signature Pages Follow]

 

 

 

 

IN WITNESS WHEREOF, the parties to this Agreement have caused it to be duly
executed as of the date first above written.

  

  CYPRESS ENERGY HOLDINGS, LLC                               By: /s/ G. Les
Austin         Name: G. Les Austin         Title:   Chief Financial Officer    
              CYPRESS ENERGY HOLDINGS II, LLC                               By:
/s/ G. Les Austin         Name: G. Les Austin         Title: Chief Financial
Officer, Vice                    President, Secretary and Treasurer            
      CYPRESS ENERGY PARTNERS, LLC                               By: /s/ G. Les
Austin         Name: G. Les Austin         Title: Chief Financial Officer, Vice
          President and Treasurer                   CYPRESS ENERGY PARTNERS GP,
LLC                               By: /s/ G. Les Austin         Name: G. Les
Austin         Title: Vice President and Chief Financial                   
Officer    

 

  CYPRESS ENERGY PARTNERS, L.P.                 By: CYPRESS ENERGY PARTNERS GP,
LLC       its general partner                     By: /s/ G. Les Austin        
Name: G. Les Austin         Title: Vice President and Chief Financial Officer  
                    

   

Signature Pages to Contribution, Conveyance and Assumption Agreement

 

 

 

 

  CYPRESS ENERGY PARTNERS – SBG, LLC                         By: /s/ G. Les
Austin       Name: G. Les Austin       Title: Chief Financial Officer, Vice    
    President, Secretary and Treasurer               CYPRESS ENERGY PARTNERS –
TIR, LLC                         By: /s/ G. Les Austin       Name: G. Les Austin
      Title: Chief Financial Officer, Vice         President, Secretary and
Treasurer               TULSA INSPECTION RESOURCES, LLC                        
By: /s/ Richard Carson       Name: Richard Carson       Title:   Secretary      
        MR. CHARLES C. STEPHENSON, JR.                           /s/ Charles C.
Stephenson, Jr.               MS. CYNTHIA FIELD                           /s/
Cynthia Field               MR. G. LES AUSTIN                           /s/ G.
Les Austin               MR. RICHARD CARSON                           /s/
Richard Carson  

 

Signature Pages to Contribution, Conveyance and Assumption Agreement