Exhibit 10.1

 

Execution Version

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of August 8,
2016, is by and among Emerge Energy Services LP, a Delaware limited partnership
with offices located at 180 State Street, Suite 225, Southlake, Texas 76092 (the
“Partnership”), and each of the investors listed on the Schedule of Buyers
attached hereto (individually, a “Buyer” and collectively, the “Buyers”).

 

RECITALS

 

A.                                    The Partnership and each Buyer is
executing, delivering and performing the transactions contemplated by this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”),
as promulgated by the United States Securities and Exchange Commission (the
“SEC”) under the 1933 Act.

 

B.                                    The Partnership has authorized the
issuance of a new series of convertible Preferred Units (as defined below) of
the Partnership designated as Series A Convertible Preferred Units the terms of
which will be set forth in Amendment No. 1 (the “LP Amendment”) to that certain
First Amended and Restated Limited Partnership Agreement of Emerge Energy
Services LP, dated as of May 14, 2013 (as amended and in effect as of the date
hereof, the “Limited Partnership Agreement”) substantially on the terms set
forth on Exhibit A hereto (together with any convertible preferred units issued
in replacement thereof in accordance with the terms thereof, the “Series A
Preferred Units”), which Series A Preferred Units shall be convertible into
Common Units (as defined below) (such Common Units issuable pursuant to the
terms of the LP Amendment, including, without limitation, upon conversion or
otherwise, collectively, the “Conversion Units”) in accordance with the terms of
the LP Amendment.

 

C.                                    Each Buyer wishes to purchase, and the
Partnership wishes to sell, upon the terms and conditions stated in this
Agreement, (i) the aggregate number of Series A Preferred Units set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers, and (ii) a
warrant to initially acquire up to that aggregate number of additional Common
Units set forth opposite such Buyer’s name in column (4) on the Schedule of
Buyers, substantially in the form attached hereto as Exhibit B (the “Warrants”)
(as exercised, collectively, the “Warrant Units”).

 

D.                                    At the Closing (as defined below), the
parties hereto shall execute and deliver a Registration Rights Agreement, in the
form attached hereto as Exhibit C (the “Registration Rights Agreement”),
pursuant to which the Partnership will provide certain registration rights with
respect to the Registrable Securities (as defined in the Registration Rights
Agreement), under the 1933 Act and the rules and regulations promulgated
thereunder and applicable state securities laws.

 

E.                                     The Series A Preferred Units, the
Conversion Units, the Warrants and the Warrant Units are collectively referred
to herein as the “Securities.”

 

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AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partnership and each Buyer
hereby agree as follows:

 

1.                                      PURCHASE AND SALE OF PREFERRED UNITS AND
WARRANTS.

 

(a)                                 Purchase of Series A Preferred Units and
Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in
Sections 6 and 7 below, the Partnership shall issue and sell to each Buyer, and
each Buyer severally, but not jointly, agrees to purchase from the Partnership
on the Closing Date (as defined below) the aggregate number of Series A
Preferred Units as is set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers, along with Warrants to initially acquire up to that
aggregate number of Warrant Units as is set forth opposite such Buyer’s name in
column (4) on the Schedule of Buyers.

 

(b)                                 Closing.  The closing (the “Closing”) of the
purchase of the Series A Preferred Units and the Warrants by the Buyers shall
occur at the offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY
10178. The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York time, on the first (1st) Business Day on which the conditions to
the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such
other date as is mutually agreed to by the Partnership and each Buyer).  As used
herein “Business Day” means any day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to remain closed.

 

(c)                                  Purchase Price.  The aggregate purchase
price for the Series A Preferred Units and the Warrants to be purchased by each
Buyer (the “Purchase Price”) shall be the amount set forth opposite such Buyer’s
name in column (5) on the Schedule of Buyers.

 

(d)                                 Form of Payment.  On the Closing Date,
(i) each Buyer shall pay its respective Purchase Price (less, in the case of any
Buyer, the amounts withheld pursuant to Section 4(g)) to the Partnership for the
Series A Preferred Units and the Warrants to be issued and sold to such Buyer at
the Closing, by wire transfer of immediately available funds in accordance with
the Flow of Funds Letter (as defined below) and (ii) the Partnership shall
deliver to each Buyer (A) the aggregate number of Series A Preferred Units as is
set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers,
and (B) a Warrant pursuant to which such Buyer shall have the right to initially
acquire up to such aggregate number of Warrant Units as is set forth opposite
such Buyer’s name in column (4) of the Schedule of Buyers, in each case, duly
executed on behalf of the Partnership and registered in the name of such Buyer
or its designee.

 

2.                                      BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally and not jointly, represents and warrants to the
Partnership with respect to only itself that, as of the date hereof and as of
the Closing Date:

 

(a)                                 Organization; Authority. Such Buyer is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite power and authority to
enter into and to consummate the transactions contemplated by the

 

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Transaction Documents (as defined below) to which it is a party and otherwise to
carry out its obligations hereunder and thereunder.

 

(b)                                 No Public Sale or Distribution.  Such Buyer
(i) is acquiring its Series A Preferred Units and Warrants, (ii) upon conversion
of its Series A Preferred Units will acquire the Conversion Units issuable upon
conversion thereof, and (iii) upon exercise of its Warrants (other than pursuant
to a Cashless Exercise (as defined in the Warrants)) will acquire the Warrant
Units issuable upon exercise thereof, in each case, entirely for its own account
and not with a view towards, or for resale in connection with, the public sale
or distribution thereof in violation of applicable securities laws, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
by making the representations herein, such Buyer does not agree, or make any
representation or warranty, to hold any of the Securities for any minimum or
other specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an exemption
from registration under the 1933 Act.  Such Buyer does not presently have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities in violation of applicable securities laws. 
For purposes of this Agreement, “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and any Governmental Entity or any
department or agency thereof.

 

(c)                                  Accredited Investor Status.  Such Buyer is
(a) an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D, (b) an Institutional Account as defined in FINRA Rule 4512(c) and
(c) a sophisticated institutional investor, experienced in investing in private
equity transactions and capable of evaluating investment risks independently,
both in general and with regard to all transactions and investment strategies
involving a security or securities, including such Buyer’s participation in the
transactions contemplated hereby.  Such Buyer has determined based on such
Buyer’s own independent review and such professional advice as such Buyer deems
appropriate that the purchase of the Securities and participation in the
transactions contemplated hereby (i) are fully consistent with such Buyer’s
financial needs, objectives and condition and (ii) are a fit, proper and
suitable investment for such Buyer, notwithstanding the substantial risks
inherent in investing in or holding the Securities.  Such Buyer is able to bear
the substantial risks associated with the purchase of the Securities, including
but not limited to loss of such Buyer’s entire investment therein.

 

(d)                                 Reliance on Exemptions.  Such Buyer
understands that the Securities are being offered and sold to it in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Partnership is relying in part upon the
truth and accuracy of, and such Buyer’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire the Securities.

 

(e)                                  Information.  Such Buyer and its advisors,
if any, have been furnished with, and have reviewed and understood, all
materials relating to the business, finances and operations of the Partnership
and materials relating to the offer and sale of the Securities that have been
requested by such Buyer.  Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of, and receive answers from, the
Partnership and have conducted

 

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and completed their its own due diligence.  Neither such inquiries nor any other
due diligence investigations conducted by such Buyer or its advisors, if any, or
its representatives shall modify, amend or affect such Buyer’s right to rely on
the Partnership’s representations and warranties contained herein.  Such Buyer
understands that its investment in the Securities involves a high degree of
risk.  Such Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.  Such Buyer confirms that it has received
information that constitutes or could reasonably be expected to constitute
material, non-public information concerning the Partnership and its Subsidiaries
in connection with making its decision to engage in the transactions
contemplated by this Agreement.  Based on such information as such Buyer has
deemed appropriate and without reliance upon the Placement Agent or counsel to
the Placement Agent, such Buyer has independently made its own analysis and
decision to enter into the transactions contemplated hereby.  Except for the
representations, warranties and agreements of the Partnership expressly set
forth in this Agreement, such Buyer is relying exclusively on its own sources of
information, investment analysis and due diligence (including professional
advice such Buyer deems appropriate) with respect to the transactions
contemplated hereby, the Securities and the business, condition (financial and
otherwise), management, operations, properties and prospects of the Partnership,
including but not limited to all business, legal, regulatory, accounting, credit
and tax matters.

 

(f)                                   No Governmental Review.  Such Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.

 

(g)                                  Transfer or Resale.  Such Buyer understands
that except as provided in the Registration Rights Agreement and
Section 4(h) hereof:  (i) the Securities have not been and are not being
registered under the 1933 Act or any state securities laws or securities laws of
any other jurisdiction, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
have delivered to the Partnership (if requested by the Partnership) an opinion
of counsel, in a form reasonably acceptable to the Partnership, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration, or (C) such
Buyer provides the Partnership with reasonable assurance that such Securities
can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the 1933 Act (or a successor rule thereto) (collectively,
“Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144, and further, if Rule 144 is
not applicable, any resale of the Securities under circumstances in which the
seller (or the Person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC promulgated thereunder; and (iii) neither the Partnership nor any other
Person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.

 

(h)                                 Validity; Enforcement.  This Agreement and
the Registration Rights Agreement have been duly and validly authorized,
executed and delivered on behalf of such Buyer and

 

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constitute the legal, valid and binding obligations of such Buyer enforceable
against such Buyer in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

 

(i)                                     No Conflicts.  The execution, delivery
and performance by such Buyer of this Agreement and the Registration Rights
Agreement and the consummation by such Buyer of the transactions contemplated
hereby and thereby will not (i) result in a violation of the organizational
documents of such Buyer, or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Buyer is a
party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
such Buyer, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Buyer to perform its obligations hereunder.

 

(j)                                    No Reliance on Placement Agent.  Such
Buyer acknowledges that J.P. Morgan Securities LLC. (the “Placement Agent”) and
its directors, officers, employees, representatives and controlling persons have
no responsibility for making any independent investigation of the information
contained in the Partnership’s 1934 Act filings and make no representation or
warranty to such Buyer, express or implied, with respect to the Partnership or
the Securities or the accuracy, completeness or adequacy of the Partnership’s
1934 Act filings or any other publicly available information, nor shall any of
the foregoing persons be liable for any loss or damages of any kind resulting
from the use of the information contained therein or otherwise supplied to such
Buyer. Such Buyer hereby acknowledges and agrees that (a) the Placement Agent is
acting solely as placement agent in connection with the transactions
contemplated hereby and is not acting as an underwriter or in any other capacity
and is not and shall not be construed as a fiduciary for such Buyer, the
Partnership or any other person or entity in connection with the transactions
contemplated hereby, (b) the Placement Agent has not made and will not make any
representation or warranty, whether express or implied, of any kind or character
and has not provided any advice or recommendation in connection with the
transactions contemplated hereby, (c) the Placement Agent will have no
responsibility with respect to (i) any representations, warranties or agreements
made by any person or entity under or in connection with the transactions
contemplated hereby or any of the documents furnished pursuant thereto or in
connection therewith, or the execution, legality, validity or enforceability
(with respect to any person) or any thereof, or (ii) the business, affairs,
financial condition, operations, properties or prospects of, or any other matter
concerning the Partnership or transactions contemplated hereby, and (d) the
Placement Agent shall have no liability or obligation (including without
limitation, for or with respect to any losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses or disbursements
incurred by such Buyer, the Partnership or any other person or entity), whether
in contract, tort or otherwise, to such Buyer, or to any person claiming through
such Buyer, in respect of the transactions contemplated hereby.

 

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3.                                      REPRESENTATIONS AND WARRANTIES OF THE
PARTNERSHIP.

 

The Partnership represents and warrants to each of the Buyers that, as of the
date hereof and as of the Closing Date:

 

(a)                                 Organization and Qualification.  Each of the
Partnership and each of its Subsidiaries are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in which they
are formed, and have the requisite power and authority to own their properties
and to carry on their business as now being conducted and as presently proposed
to be conducted.  Each of the Partnership and each of its Subsidiaries is duly
qualified as a foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not reasonably be
expected to have a Material Adverse Effect (as defined below).  As used in this
Agreement, “Material Adverse Effect” means any material adverse effect on
(i) the business, properties, assets, liabilities, operations (including results
thereof), condition (financial or otherwise) or prospects of the Partnership and
its Subsidiaries, taken as a whole, (ii) the ability of the Partnership to
consummate the transactions contemplated hereby or in any of the other
Transaction Documents or any other agreements or instruments to be entered into
in connection herewith or therewith or (iii) the authority or ability of the
Partnership or any of its Subsidiaries to perform any of their respective
obligations under any of the Transaction Documents.  Other than the Persons (as
defined below) set forth on Schedule 3(a), the Partnership has no Subsidiaries. 
“Subsidiaries” means any Person in which the Partnership, directly or
indirectly, (I) owns any of the outstanding unit capital or capital stock or
holds any equity or similar interest of such Person or (II) controls or operates
all or any part of the business, operations or administration of such Person,
and each of the foregoing, is individually referred to herein as a “Subsidiary.”

 

(b)                                 Authorization; Enforcement; Validity.  The
Partnership has the requisite power and authority to enter into and perform its
obligations under this Agreement and the other Transaction Documents and to
issue the Securities in accordance with the terms hereof and thereof.  The
execution and delivery of this Agreement and the other Transaction Documents by
the Partnership, and the consummation by the Partnership of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Series A Preferred Units, the issuance of the Conversion Units issuable upon
conversion of the Series A Preferred Units, the issuance of the Warrants and the
issuance of the Warrant Units issuable upon exercise of the Warrants) have been
duly authorized by the board of directors of the Partnership’s general partner
and (other than the filing with the SEC of one or more registration statements
in accordance with the requirements of the Registration Rights Agreement and any
other filings as may be required by any state securities agencies) no further
filing, consent or authorization is required by the Partnership, its
Subsidiaries, their respective boards of directors or their unitholders or other
governing body.  This Agreement has been, and the other Transaction Documents to
which it is a party will be prior to the Closing, duly executed and delivered by
the Partnership, and each constitutes or will constitute the legal, valid and
binding obligations of the Partnership, enforceable against the Partnership in
accordance with its respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting

 

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generally, the enforcement of applicable creditors’ rights and remedies and
except as rights to indemnification and to contribution may be limited by
federal or state securities law.  The LP Amendment that includes the terms
attached hereto as Exhibit A has been approved by the board of directors of the
general partner of the Partnership and upon its execution and delivery in
connection with the Closing will be enforceable against the Partnership in
accordance with its terms and not have been amended.  “Transaction Documents”
means, collectively, this Agreement, the Warrants, the LP Amendment, the
Registration Rights Agreement, the Irrevocable Transfer Agent Instructions (as
defined below) and each of the other agreements and instruments entered into or
delivered by any of the parties hereto in connection with the transactions
contemplated hereby and thereby, as may be amended from time to time.

 

(c)                                  Issuance of Securities.  The issuance of
the Series A Preferred Units and the Warrants are duly authorized and upon
issuance in accordance with the terms of the Transaction Documents shall be
validly issued and free from all preemptive or similar rights, mortgages,
defects, claims, liens, pledges, charges, taxes, rights of first refusal,
encumbrances, security interests and other encumbrances (collectively “Liens”)
with respect to the issuance thereof, except as set forth in the Limited
Partnership Agreement.  Upon issuance or conversion in accordance with the
Series A Preferred Units or exercise in accordance with the Warrants (as the
case may be), the Conversion Units and the Warrant Units, respectively, when
issued, will be validly issued and free from all preemptive or similar rights or
Liens with respect to the issue thereof, with the holders being entitled to all
rights accorded to a holder of Common Units.  Subject to the accuracy of the
representations and warranties of the Buyers in this Agreement, the offer and
issuance by the Partnership of the Securities is exempt from registration under
the 1933 Act.

 

(d)                                 No Conflicts.  The execution, delivery and
performance of the Transaction Documents by the Partnership and its Subsidiaries
and the consummation by the Partnership of the transactions contemplated hereby
and thereby (including, without limitation, the issuance of the Series A
Preferred Units, the Warrants, the Conversion Units and the Warrant Units) will
not (i) result in a violation of the Limited Partnership Agreement (as defined
below), certificate of formation or other organizational documents of the
Partnership or any of its Subsidiaries, or any units or other equity securities
of the Partnership or any of its Subsidiaries, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) in any respect under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Partnership or any of its Subsidiaries is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including, without limitation, foreign, federal and state securities
laws and regulations and the rules and regulations of The New York Stock
Exchange (the “Principal Market”) and including all applicable foreign, federal
and state laws, rules and regulations) applicable to the Partnership or any of
its Subsidiaries or by which any property or asset of the Partnership or any of
its Subsidiaries is bound or affected, except in the case of clauses (ii) and
(iii) above, for such conflicts, defaults, rights or violations which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(e)                                  Consents.  Neither the Partnership nor any
Subsidiary is required to obtain any consent from, authorization or order of, or
make any filing or registration with (other than the filing with the SEC of one
or more registration statements in accordance with the requirements

 

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of the Registration Rights Agreement and any other filings as may be required by
any state securities agencies), any Governmental Entity (as defined below) or
any regulatory or self-regulatory agency (other than any listing application and
related consents or any notices required by the Principal Market) or any other
Person in order for it to execute, deliver or perform any of its respective
obligations under or contemplated by the Transaction Documents, in each case, in
accordance with the terms hereof or thereof.  All consents, authorizations,
orders, filings and registrations which the Partnership or any Subsidiary is
required to obtain pursuant to the preceding sentence have been or will be
obtained or effected on or prior to the Closing Date, and neither the
Partnership nor any of its Subsidiaries are aware of any facts or circumstances
which might prevent the Partnership or any of its Subsidiaries from obtaining or
effecting any of the registration, application or filings contemplated by the
Transaction Documents.  Except as has been disclosed in Current Reports on
Form 8-K filed with the SEC, the Partnership is not in violation of the
requirements of the Principal Market and has no knowledge of any facts or
circumstances which could reasonably lead to delisting or suspension of the
Common Units in the foreseeable future.  “Governmental Entity” means any nation,
state, county, city, town, village, district, or other political jurisdiction of
any nature, federal, state, local, municipal, foreign, or other government,
governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal), multi-national organization or body; or body exercising, or
entitled to exercise, any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature or
instrumentality of any of the foregoing, including any entity or enterprise
owned or controlled by a government or a public international organization or
any of the foregoing.

 

(f)                                   Acknowledgment Regarding Buyer’s Purchase
of Securities.  The Partnership acknowledges and agrees that each Buyer is
acting solely in the capacity of an arm’s length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby and thereby and
that no Buyer is (i) an officer or director of the Partnership or any of its
Subsidiaries, (ii) to its knowledge, an “affiliate” (as defined in Rule 144) of
the Partnership or any of its Subsidiaries or (iii) to its knowledge, a
“beneficial owner” of more than 10% of the Common Units (as defined for purposes
of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934
Act”)).  The Partnership further acknowledges that no Buyer is acting as a
financial advisor or fiduciary of the Partnership or any of its Subsidiaries (or
in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby, and any advice given by a Buyer or
any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to such Buyer’s purchase of the Securities.  The Partnership further
represents to each Buyer that the Partnership’s decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Partnership and its representatives.

 

(g)                                  No General Solicitation; Placement Agent’s
Fees.  Neither the Partnership, nor any of its Subsidiaries or affiliates, nor
any Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Securities.  The Partnership shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, or brokers’ commissions (other than for Persons engaged by any Buyer or
its investment advisor) relating to or arising out of the transactions
contemplated hereby, including, without limitation, placement agent fees payable
to

 

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the Placement Agent in connection with the sale of the Securities.  The fees and
expenses of the Placement Agent to be paid by the Partnership are as set forth
on Schedule 3(g) attached hereto.  The Partnership shall pay, and hold each
Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney’s fees and out-of-pocket expenses) arising in connection
with any such claim.  The Partnership acknowledges that it has engaged the
Placement Agent in connection with the sale of the Securities.  Other than the
Placement Agent, neither the Partnership nor any of its Subsidiaries has engaged
any placement agent or other agent in connection with the offer or sale of the
Securities.

 

(h)                                 No Integrated Offering.  Assuming the
accuracy of the Buyers’ representations and warranties, none of the Partnership,
its Subsidiaries or any of their affiliates, nor any Person acting on their
behalf has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require
registration of the issuance of any of the Securities under the 1933 Act,
whether through integration with prior offerings or otherwise, or cause this
offering of the Securities to require approval of unitholders of the Partnership
for purposes of the 1933 Act or under any applicable unitholder approval
provisions, including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the securities of the
Partnership are listed or designated for quotation.  Assuming the accuracy of
the Buyers’ representations and warranties, none of the Partnership, its
Subsidiaries, their affiliates nor any Person acting on their behalf will take
any action or steps that would require registration of the issuance of any of
the Securities under the 1933 Act or cause the offering of any of the Securities
to be integrated with other offerings of securities of the Partnership.

 

(i)                                     Dilutive Effect.  The Partnership
understands and acknowledges that the number of Conversion Units and Warrant
Units will increase in certain circumstances. The Partnership further
acknowledges that its obligation to issue the Conversion Units pursuant to the
terms of the Series A Preferred Units in accordance with this Agreement and the
LP Amendment and the Warrant Units upon exercise of the Warrants in accordance
with this Agreement and the Warrants is, in each case, absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other unitholders of the Partnership.

 

(j)                                    Application of Takeover Protections;
Rights Agreement.  The Partnership and the board of directors of its general
partner have taken all necessary action, if any, in order to render inapplicable
any control unit acquisition, interested unitholder, business combination,
poison pill (including, without limitation, any distribution under a rights
agreement), unitholder rights plan or other similar anti-takeover provision
under the Limited Partnership Agreement or other organizational documents or the
laws of the jurisdiction of its organization or otherwise which is or could
become applicable to any Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Partnership’s issuance of the
Securities and any Buyer’s ownership of the Securities.  The Partnership and the
board of directors of its general partner have taken all necessary action, if
any, in order to render inapplicable any unitholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Units or
a change in control of the Partnership or any of its Subsidiaries.

 

(k)                                 SEC Documents; Financial Statements.  Except
with respect to (A) the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2015, which was not timely filed, (B)

 

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the Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, which
has not been filed with the SEC as of the date of this Agreement, and (C) the
Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which may not
be filed by the Closing, during the two (2) years prior to the date hereof, the
Partnership has timely filed all reports, schedules, forms, proxy statements,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the 1934 Act (all of the foregoing filed during
the two-year period prior to the date hereof and all exhibits and appendices
included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
“SEC Documents”).  The Partnership has delivered or has made available to the
Buyers or their respective representatives true, correct and complete copies of
each of the SEC Documents not available on the EDGAR system.  As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1933 Act or 1934 Act, as applicable, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted 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, not
misleading.  As of their respective dates, the financial statements of the
Partnership included in the SEC Documents complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto as in effect as of the time of filing.  Such
financial statements have been prepared in all material respects in accordance
with generally accepted accounting principles (“GAAP”), consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Partnership as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).  The reserves, if
any, established by the Partnership or the lack of reserves, if applicable, are
reasonable based upon facts and circumstances known by the Partnership on the
date hereof and there are no loss contingencies that are required to be accrued
by Accounting Standards Codification 450-20, Loss Contingencies, which are not
provided for by the Partnership in its financial statements or otherwise.  The
other information provided by or on behalf of the Partnership to any of the
Buyers, as a whole, which is not included in the SEC Documents (including,
without limitation, information referred to in Section 2(e) of this Agreement or
in the disclosure schedules to this Agreement) does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein not misleading, in the light of the
circumstance under which they are or were made.  The Partnership is not
currently contemplating to amend or restate any of the financial statements
(including, without limitation, any notes or any letter of the independent
accountants of the Partnership with respect thereto) included in the SEC
Documents (the “Financial Statements”), nor is the Partnership currently aware
of facts or circumstances which would require the Partnership to amend or
restate any of the Financial Statements, in each case, in order for any of the
Financials Statements to be in compliance with GAAP and the rules and
regulations of the SEC.  The Partnership has not been informed by its
independent accountants that they recommend that the Partnership amend or
restate any of the Financial Statements or that there is any need for the
Partnership to amend or restate any of the Financial Statements.

 

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(l)                                     Absence of Certain Changes.  Since the
date of the Partnership’s most recent audited financial statements contained in
a Form 10-K, there has been no material adverse change and no material adverse
development in the business, assets, liabilities, properties, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Partnership or any of its Subsidiaries other than changes resulting from or
relating to general economic conditions and conditions in the industry and
markets in which the Partnership operates.  Since the date of the Partnership’s
most recent audited financial statements contained in a Form 10-K, neither the
Partnership nor any of its Subsidiaries has (i) declared or paid any
distributions in respect of its common units, (ii) sold any assets, individually
or in the aggregate, outside of the ordinary course of business or (iii) made
any capital expenditures, individually or in the aggregate, outside of the
ordinary course of business.  Neither the Partnership nor any of its
Subsidiaries has taken any steps to seek protection pursuant to any law or
statute relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up, nor, except as has been disclosed in the SEC
Documents, does the Partnership or any Subsidiary have any knowledge or reason
to believe that any of their respective creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so.  The Partnership and its Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and
after giving effect to the transactions contemplated hereby to occur at the
Closing, will not be Insolvent (as defined below).  For purposes of this
Section 3(l), “Insolvent” means, (i) with respect to the Partnership and its
Subsidiaries, on a consolidated basis, (A) the present fair saleable value of
the Partnership’s and its Subsidiaries’ assets is less than the amount required
to pay the Partnership’s and its Subsidiaries’ total Indebtedness (as defined
below), (B) the Partnership and its Subsidiaries are unable to pay their debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured or (C) the Partnership and its
Subsidiaries intend to incur or believe that they will incur debts that would be
beyond their ability to pay as such debts mature; and (ii) with respect to the
Partnership and each Subsidiary, individually, (A) the present fair saleable
value of the Partnership’s or such Subsidiary’s (as the case may be) assets is
less than the amount required to pay its respective total Indebtedness, (B) the
Partnership or such Subsidiary (as the case may be) is unable to pay its
respective debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured or (C) the Partnership or such
Subsidiary (as the case may be) intends to incur or believes that it will incur
debts that would be beyond its respective ability to pay as such debts mature. 
Neither the Partnership nor any of its Subsidiaries has engaged in any business
or in any transaction, and is not about to engage in any business or in any
transaction, for which the Partnership’s or such Subsidiary’s remaining assets
constitute unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be
conducted.

 

(m)                             No Undisclosed Events, Liabilities, Developments
or Circumstances.  No event, liability, development or circumstance has occurred
or exists, or is reasonably expected to exist or occur with respect to the
Partnership, any of its Subsidiaries or any of their respective businesses,
properties, liabilities, prospects, operations (including results thereof) or
condition (financial or otherwise), that could reasonably be expected to have a
Material Adverse Effect.

 

(n)                                 Conduct of Business; Regulatory Permits. 
Neither the Partnership nor any of its Subsidiaries is in violation of any term
of or in default under its Limited Partnership Agreement or their respective
organizational documents.  Neither the Partnership nor any of its Subsidiaries

 

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is in violation of any judgment, decree or order or any statute, ordinance,
rule or regulation applicable to the Partnership or any of its Subsidiaries, and
neither the Partnership nor any of its Subsidiaries has conducted its business
in violation of any of the foregoing, except in all cases for violations which
do not, individually or in the aggregate, have a Material Adverse Effect. 
Without limiting the generality of the foregoing, except as set forth in the SEC
Documents, the Partnership is not in violation of any of the rules, regulations
or requirements of the Principal Market and has no knowledge of any facts or
circumstances that could reasonably lead to delisting or suspension of the
Common Units by the Principal Market in the foreseeable future.  During the two
years prior to the date hereof, (i) the Common Units have been listed or
designated for quotation on the Principal Market, (ii) trading in the Common
Units has not been suspended by the SEC or the Principal Market and (iii) except
as set forth in the SEC Documents, the Partnership has received no
communication, written or oral, from the SEC or the Principal Market regarding
the suspension or delisting of the Common Units from the Principal Market.  The
Partnership and each of its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and except as set
forth in the SEC Documents, neither the Partnership nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.  There is no agreement,
commitment, judgment, injunction, order or decree binding upon the Partnership
or any of its Subsidiaries or to which the Partnership or any of its
Subsidiaries is a party which has or would reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of the
Partnership or any of its Subsidiaries, any acquisition of property by the
Partnership or any of its Subsidiaries or the conduct of business by the
Partnership or any of its Subsidiaries as currently conducted other than such
effects, individually or in the aggregate, which have not had and would not
reasonably be expected to have a Material Adverse Effect on the Partnership or
any of its Subsidiaries.

 

(o)                                 Foreign Corrupt Practices.  None of the
Partnership, the Partnership’s Subsidiaries or any director, officer, agent,
employee, nor any other person acting for or on behalf of the foregoing with
respect to the Partnership or any of its Subsidiaries (individually and
collectively, a “Partnership Affiliate”) acting in such capacity has violated
the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable
anti-bribery or anti-corruption laws, nor has any Partnership Affiliate offered,
paid, promised to pay, or authorized the payment of any money, or offered,
given, promised to give, or authorized the giving of anything of value, to any
officer, employee or any other person acting in an official capacity for any
Governmental Entity to any political party or official thereof or to any
candidate for political office (individually and collectively, a “Government
Official”) or to any person under circumstances where such Partnership Affiliate
knew or was aware of a high probability that all or a portion of such money or
thing of value would be offered, given or promised, directly or indirectly, to
any Government Official, for the purpose of:

 

(i)                                     (A) influencing any act or decision of
such Government Official in his/her official capacity, (B) inducing such
Government Official to do or omit to do any act in violation of his/her lawful
duty, (C) securing any improper advantage, or (D) inducing such Government
Official to influence or affect any act or decision of any Governmental Entity,
or

 

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(ii)                                  assisting the Partnership or its
Subsidiaries in obtaining or retaining business for or with, or directing
business to, the Partnership or its Subsidiaries.

 

(p)                                 Sarbanes-Oxley Act.  The Partnership and
each Subsidiary (or, to the extent permitted by the SEC in lieu of such
compliance, the general partner of the Partnership) is in compliance with any
and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended,
and any and all applicable rules and regulations promulgated by the SEC
thereunder (collectively, the “SOX Rules”, in each case, to the extent the SEC
accepts compliance by the general partner of the Partnership and/or such
Subsidiary, as applicable, such Partnership and/or Subsidiary, as applicable,
for such purpose).

 

(q)                                 Transactions With Affiliates.  No
relationship, direct or indirect, exists between or among the Partnership or any
of its Subsidiaries, on the one hand, and any directors, officers,
equityholders, affiliates, customers or suppliers of such entity, on the other
hand, that would be required to be described in the SEC Documents and is not so
described.

 

(r)                                    Equity Capitalization.

 

(i)                                     Definitions:

 

(A)                               “Common Units” means (x) the common units
representing limited partnership interests in the Partnership, and (y) any units
or other securities into which such common units shall have been changed or any
units resulting from a reclassification of such common units.

 

(B)                               “Preferred Units” means (x) any preferred
units representing limited partnership interests in the Partnership and (y) any
units or other securities into which such preferred units shall have been
changed or any units resulting from a reclassification of such preferred units
(other than a conversion of such preferred units into Common Units in accordance
with the terms of such preferred units).

 

(ii)                                  Authorized and Outstanding Unit Capital. 
As of the date hereof, (A) 24,132,851 Common Units are issued and outstanding
and (B) no Preferred Units are issued and outstanding.

 

(iii)                               Valid Issuance; Available Units;
Affiliates.  All of such outstanding Common Units have been duly authorized and
have been, or upon issuance will be, validly issued.  Schedule 3(r)(iii) sets
forth the number of Common Units that are, as of the date hereof, owned by
Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and
calculated based on the assumption that only officers, directors and holders of
at least 10% of the Partnership’s issued and outstanding Common Units are
“affiliates” without conceding that any such Persons are “affiliates” for
purposes of federal securities laws) of the Partnership.

 

(iv)                              Existing Securities; Obligations.  Except as
disclosed in the SEC Documents, as set forth in the Limited Partnership
Agreement and as set forth in Schedule 3(r)(iv): (A) none of the Partnership’s
or any Subsidiary’s units are subject to

 

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preemptive rights or any other similar rights or Liens suffered or permitted by
the Partnership or any Subsidiary; (B) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable
or exchangeable for, any units or other equity securities of the Partnership or
any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Partnership or any of its Subsidiaries is or may
become bound to issue additional units or other equity securities of the
Partnership or any of its Subsidiaries; (C) there are no agreements or
arrangements under which the Partnership or any of its Subsidiaries is obligated
to register the sale of any of their securities under the 1933 Act (except
pursuant to the Registration Rights Agreement); (D) there are no outstanding
securities or instruments of the Partnership or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Partnership or any of
its Subsidiaries is or may become bound to redeem a security of the Partnership
or any of its Subsidiaries; (E) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; and (F) neither the Partnership nor any Subsidiary
has any unit appreciation rights or “phantom unit” plans or agreements or any
similar plan or agreement other than those issued under the Partnership’s
long-term incentive plan.

 

(v)                                 Organizational Documents.  The Partnership
has furnished or made available to the Buyers true, correct and complete copies
of the Partnership’s Limited Partnership Agreement, as amended and as in effect
on the date hereof, and the terms of all securities convertible into equity
interests in the Partnership and the material rights of the holders thereof in
respect thereto.

 

(s)                                   Indebtedness and Other Contracts.  Except
as disclosed in the SEC Documents or on Schedule 3(s), neither the Partnership
nor any of its Subsidiaries, (i) has any outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of the Partnership or any of its
Subsidiaries or by which the Partnership or any of its Subsidiaries is or may
become bound, (ii) is a party to any contract, agreement or instrument, the
violation of which, or default under which, by the other party(ies) to such
contract, agreement or instrument could reasonably be expected to result in a
Material Adverse Effect, (iii) has any financing statements securing obligations
in any amounts filed in connection with the Partnership or any of its
Subsidiaries; (iv) is in violation of any term of, or in default under, any
contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate,
in a Material Adverse Effect, or (v) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the
judgment of the Partnership’s officers, has or is expected to have a Material
Adverse Effect. Neither the Partnership nor any of its Subsidiaries have any
liabilities or obligations required to be disclosed in the SEC Documents which
are not so disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Partnership’s or its Subsidiaries’ respective businesses
and those which, individually or in the aggregate, do not or could not have a
Material Adverse Effect.   For purposes of this Agreement:  (x) “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (including, without limitation, “capital
leases” in accordance with GAAP)

 

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(other than trade payables entered into in the ordinary course of business
consistent with past practice), (C) all reimbursement or payment obligations
with respect to letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness created or
arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to any property or assets
acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with GAAP,
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in any property or
assets (including accounts and contract rights) owned by any Person, even though
the Person which owns such assets or property has not assumed or become liable
for the payment of such indebtedness, and (H) all Contingent Obligations in
respect of indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to any Indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee
of such liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto.

 

(t)                                    Litigation.  There is no action, suit,
arbitration, proceeding, inquiry or investigation before or by the Principal
Market, any court, public board, other Governmental Entity, self-regulatory
organization or body pending or, to the knowledge of the Partnership, threatened
against or affecting the Partnership or any of its Subsidiaries, the Common
Units or any of the Partnership’s or its Subsidiaries’ officers or directors,
that is outside of the ordinary course of business or individually or in the
aggregate material to the Partnership and its Subsidiaries taken as a whole,
whether of a civil or criminal nature or otherwise, in their capacities as such,
except as set forth in Schedule 3(t) or in the SEC Documents.  No director,
officer or employee of the Partnership or any of its subsidiaries has willfully
violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of
litigation.  Without limitation of the foregoing, there has not been, and to the
knowledge of the Partnership, there is not pending or contemplated, any
enforcement investigation by the SEC involving the Partnership, any of its
Subsidiaries or any current or former director or officer of the Partnership or
any of its Subsidiaries.  The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the
Partnership under the 1933 Act or the 1934 Act.  Neither the Partnership nor any
of its Subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity that would reasonably be
expected to have a Material Adverse Effect.

 

(u)                                 Insurance.  The Partnership and each of its
Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the
Partnership believes to be prudent and customary in the businesses in which the
Partnership and its Subsidiaries are engaged.  Neither the Partnership nor any
such

 

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Subsidiary has been refused any insurance coverage sought or applied for, and
neither the Partnership nor any such Subsidiary has any reason to believe that
it will be unable to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Material
Adverse Effect.

 

(v)                                 Employee Relations.  No labor dispute with
the employees of the Partnership or any Subsidiary exists or, to the knowledge
of the Partnership, is imminent that may reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect.  No executive officer
(as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee
of the Company or any of its Subsidiaries has notified the Company or any such
Subsidiary that such officer intends to leave the Company or any such Subsidiary
or otherwise terminate such officer’s employment with the Company or any such
Subsidiary.

 

(w)                               Title.

 

(i)                                     Real Property.  Each of the Partnership
and its Subsidiaries holds good title to all real property, leases in real
property, facilities or other interests in real property owned by the
Partnership or any of its Subsidiaries (the “Real Property”) owned by the
Partnership or any of its Subsidiaries (as applicable). The Real Property is
free and clear of all Liens and is not subject to any rights of way, building
use restrictions, exceptions, variances, reservations, or limitations of any
nature except for (a) Liens for current taxes not yet due, (b) zoning laws and
other land use restrictions that do not impair the present or anticipated use of
the property subject thereto, (c) Liens arising under or expressly permitted by
the Partnership’s credit agreement and (d) Liens that do not, individually or in
the aggregate, materially affect the value of such property and do not
materially interfere with the use of such properties as they have been used in
the past and are proposed to be used in the future.  Any Real Property held
under lease by the Partnership or any of its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Partnership or any of its Subsidiaries and except
as may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws relating to or affecting creditors’
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

 

(ii)                                  Fixtures and Equipment.  Each of the
Partnership and its Subsidiaries (as applicable) has good title to, or a valid
leasehold interest in, the tangible personal property, equipment, improvements,
fixtures, and other personal property and appurtenances that are used by the
Partnership or its Subsidiary in connection with the conduct of its business
(the “Fixtures and Equipment”). The Fixtures and Equipment are structurally
sound, are in good operating condition and repair, are adequate for the uses to
which they are being put, are not in need of maintenance or repairs except for
ordinary, routine maintenance and repairs and are sufficient for the conduct of
the Partnership’s and/or its Subsidiaries’ businesses (as applicable) in the
manner as conducted prior to the Closing. Each of the Partnership and its
Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens
except for (a) liens for current taxes

 

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not yet due, (b) zoning laws and other land use restrictions that do not impair
the present or anticipated use of the property subject thereto, (c) Liens
arising under or expressly permitted by the Partnership’s credit agreement and
(d) Liens that do not, individually or in the aggregate, materially affect the
value of such Fixtures and Equipment and do not materially interfere with the
use of such Fixtures and Equipment as they have been used in the past and are
proposed to be used in the future.

 

(x)                                 Intellectual Property Rights.  The
Partnership and its Subsidiaries own, possess, license or have other rights to
use on reasonable terms, all patents, patent applications, trade and service
marks, trade and service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, know-how and other intellectual property
necessary for the operations of their respective businesses as now conducted.

 

(y)                                 Environmental Laws.  Except as described in
SEC Documents, (A) with respect to the ownership and operation of the
Partnership’s properties, the Partnership is in compliance with any and all
applicable federal, state, local or foreign statutes, laws, rules, regulations,
ordinances, codes, policies or rules of common law or any judicial or
administrative interpretations thereof, including, without limitation, any
judicial or administrative orders, consents, decrees or judgments, relating to
pollution or the protection of human health and safety (to the extent such
health and safety protection relates to exposure to Hazardous Materials, as
defined below), natural resources, wildlife or the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws and regulations imposing
liability or standards of conduct concerning any pollutants or contaminants,
hazardous, dangerous or toxic chemicals, materials, wastes or substances, any
petroleum or petroleum products, or any polychlorinated biphenyls or radioactive
materials (collectively, “Hazardous Materials”) or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
arrangement for disposal or transport, release, threatened release or handling
of, or exposure to, Hazardous Materials (collectively, “Environmental Laws”),
(B) with respect to the ownership and operation of the Partnership’s properties,
the Partnership and its Subsidiaries have all permits, authorizations and other
approvals required for the operation of their business under any applicable
Environmental Laws and are each in compliance with all terms and conditions of
any such permits, authorizations and other approvals, (C) with respect to the
ownership and operation of the Partnership’s properties, the Partnership and its
Subsidiaries have not received notice of any pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of liability, noncompliance or violation, investigation
or proceedings relating to any Environmental Law against any of the Partnership
or its Subsidiaries, and (D) with respect to the ownership and operation of the
Partnership’s properties, the Partnership and its Subsidiaries do not have any
liability in connection with the release or threatened release of any Hazardous
Materials and, to the knowledge of the Partnership, there are no events or
circumstances that might reasonably be expected to form the basis of an order
for clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against the Partnership or any of its
Subsidiaries relating to any Environmental Laws, which noncompliance or
liability in the case of this clause (D) would reasonably be expected to have a
Material Adverse Effect.

 

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(z)                                  Subsidiary Rights.  Except as described in
the SEC Documents, the Partnership or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Partnership or such Subsidiary.

 

(aa)                          Tax Status.  The Partnership and its Subsidiaries
have filed all foreign, federal, state and local tax returns that are required
to be filed or has requested extensions thereof, except in any case in which the
failure to so file would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and have paid all taxes required to
be paid by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for any such
tax, assessment, fine or penalty that is currently being contested in good faith
and except for such taxes, assessments, fines or penalties the nonpayment of
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.  The Partnership is a “publicly traded
partnership” within the meaning of Section 7704(b) of the Code, and has met the
requirements of Section 7704(c) of the Code for each taxable year during which
the Partnership was a “publicly traded partnership.”  The Partnership is not
operated in such a manner as to qualify as a passive foreign investment company,
as defined in Section 1297 of the Code.

 

(bb)                          Internal Accounting and Disclosure Controls.  The
Partnership and each of its Subsidiaries maintains internal control over
financial reporting (as such term is defined in Rule 13a-15(f) under the 1934
Act) that is effective to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, including
that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference.  The
Partnership maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring
that information required to be disclosed by the Partnership in the reports that
it files or submits under the 1934 Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the SEC,
including, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Partnership in the reports that it
files or submits under the 1934 Act is accumulated and communicated to the
Partnership’s management, including its principal executive officer or officers
and its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure.  Neither the Partnership nor any of its
Subsidiaries has received any notice or correspondence from any accountant,
Governmental Entity or other Person relating to any potential material weakness
in any part of the internal controls over financial reporting of the Partnership
or any of its Subsidiaries.

 

(cc)                            Off Balance Sheet Arrangements.  There is no
transaction, arrangement, or other relationship between the Partnership or any
of its Subsidiaries and an unconsolidated or other off balance sheet entity that
is required to be disclosed by the Partnership in its 1934 Act filings and

 

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is not so disclosed or that otherwise could be reasonably likely to have a
Material Adverse Effect.

 

(dd)                          Investment Company Status.  The Partnership is
not, and upon consummation of the sale of the Securities will not be, an
“investment company,” an affiliate of an “investment company,” a company
controlled by an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended.

 

(ee)                            Acknowledgement Regarding Buyers’ Trading
Activity.  It is understood and acknowledged by the Partnership that
(i) following the public disclosure of the transactions contemplated by the
Transaction Documents, in accordance with the terms thereof, none of the Buyers
have been asked by the Partnership or any of its Subsidiaries to agree, nor has
any Buyer agreed with the Partnership or any of its Subsidiaries, to desist from
effecting any transactions in or with respect to (including, without limitation,
purchasing or selling, long and/or short) any securities of the Partnership, or
“derivative” securities based on securities issued by the Partnership or to hold
any of the Securities for any specified term; (ii) any Buyer, and counterparties
in “derivative” transactions to which any such Buyer is a party, directly or
indirectly, presently may have a “short” position in the Common Units which was
established prior to such Buyer’s knowledge of the transactions contemplated by
the Transaction Documents; and (iii) each Buyer shall not be deemed to have any
affiliation with or control over any arm’s length counterparty in any
“derivative” transaction.  The Partnership further understands and acknowledges
that following the public disclosure of the transactions contemplated by the
Transaction Documents pursuant to the Press Release (as defined below) one or
more Buyers may engage in hedging and/or trading activities at various times
during the period that the Securities are outstanding, including, without
limitation, during the periods that the value and/or number of the Warrant Units
or Conversion Units, as applicable, deliverable with respect to the Securities
are being determined and such hedging and/or trading activities, if any, can
reduce the value of the existing unitholders’ equity interest in the Partnership
both at and after the time the hedging and/or trading activities are being
conducted.  The Partnership acknowledges that such aforementioned hedging and/or
trading activities do not constitute a breach of this Agreement, the Series A
Preferred Units, the Warrants or any other Transaction Document or any of the
documents executed in connection herewith or therewith.

 

(ff)                              Manipulation of Price.  Neither the
Partnership nor any of its Subsidiaries has, and, to the knowledge of the
Partnership, no Person acting on their behalf has, directly or indirectly,
(i) taken any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Partnership or any of its
Subsidiaries to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or paid any compensation for soliciting purchases
of, any of the Securities (other than the Placement Agent), (iii) paid or agreed
to pay to any Person any compensation for soliciting another to purchase any
other securities of the Partnership or any of its Subsidiaries or (iv) paid or
agreed to pay any Person for research services with respect to any securities of
the Partnership or any of its Subsidiaries.

 

(gg)                            Transfer Taxes.  On the Closing Date, all unit
transfer or other taxes (other than income or similar taxes) which are required
to be paid in connection with the issuance, sale and transfer of the Securities
to be sold to each Buyer hereunder will be, or will have been, fully paid

 

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or provided for by the Partnership, and all laws imposing such taxes will be or
will have been complied with.

 

(hh)                          Bank Holding Company Act.  Neither the Partnership
nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the
Federal Reserve System (the “Federal Reserve”).  Neither the Partnership nor any
of its Subsidiaries or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding units of any class of voting securities
or twenty-five percent (25%) or more of the total equity of a bank or any entity
that is subject to the BHCA and to regulation by the Federal Reserve.  Neither
the Partnership nor any of its Subsidiaries or affiliates exercises a
controlling influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal Reserve.

 

(ii)                                  Shell Company Status.  The Partnership is
not, and has never been, an issuer identified in, or subject to, Rule 144(i).

 

(jj)                                Illegal or Unauthorized Payments; Political
Contributions.  Neither the Partnership nor any of its Subsidiaries nor, to the
best of the Partnership’s knowledge (after reasonable inquiry of its officers
and directors), any of the officers, directors, employees, agents or other
representatives of the Partnership or any of its Subsidiaries or any other
business entity or enterprise with which the Partnership or any Subsidiary is or
has been affiliated or associated, has, directly or indirectly, made or
authorized any payment, contribution or gift of money, property, or services,
whether or not in contravention of applicable law, (i) as a kickback or bribe to
any Person or (ii) to any political organization, or the holder of or any
aspirant to any elective or appointive public office except for personal
political contributions not involving the direct or indirect use of funds of the
Partnership or any of its Subsidiaries.

 

(kk)                          Money Laundering.  The Partnership and its
Subsidiaries are in compliance with, and have not previously violated, the USA
Patriot Act of 2001 and all other applicable U.S. and non-U.S. anti-money
laundering laws and regulations, including, without limitation, the laws,
regulations and Executive Orders and sanctions programs administered by the U.S.
Office of Foreign Assets Control, including, but not limited, to (i) Executive
Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism”
(66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR,
Subtitle B, Chapter V.

 

(ll)                                  Management.  Except as set forth in
Schedule 3(ll) hereto or in the SEC Documents, during the past five year period,
no current or former officer or director or, to the knowledge of the
Partnership, no current ten percent (10%) or greater unitholder of the
Partnership or any of its Subsidiaries has been the subject of:

 

(i)                                     a petition under bankruptcy laws or any
other insolvency or moratorium law or the appointment by a court of a receiver,
fiscal agent or similar officer for such Person, or any partnership in which
such person was a general partner at or within two years before the filing of
such petition or such appointment, or any corporation or business association of
which such person was an executive officer at or within two years before the
time of the filing of such petition or such appointment;

 

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(ii)                                  a conviction in a criminal proceeding or a
named subject of a pending criminal proceeding (excluding traffic violations
that do not relate to driving while intoxicated or driving under the influence);

 

(iii)                               any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining any such person from, or
otherwise limiting, the following activities:

 

(1)                                 Acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant, any other person regulated by the United
States Commodity Futures Trading Commission or an associated person of any of
the foregoing, or as an investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, or engaging in
or continuing any conduct or practice in connection with such activity;

 

(2)                                 Engaging in any particular type of business
practice; or

 

(3)                                 Engaging in any activity in connection with
the purchase or sale of any security or commodity or in connection with any
violation of securities laws or commodities laws;

 

(iv)                              any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any authority barring,
suspending or otherwise limiting for more than sixty (60) days the right of any
such person to engage in any activity described in the preceding sub paragraph,
or to be associated with persons engaged in any such activity;

 

(v)                                 a finding by a court of competent
jurisdiction in a civil action or by the SEC or other authority to have violated
any securities law, regulation or decree and the judgment in such civil action
or finding by the SEC or any other authority has not been subsequently reversed,
suspended or vacated; or

 

(vi)                              a finding by a court of competent jurisdiction
in a civil action or by the Commodity Futures Trading Commission to have
violated any federal commodities law, and the judgment in such civil action or
finding has not been subsequently reversed, suspended or vacated.

 

(mm)                  Unit Option Plans.  As of the date of this Agreement, no
unit options have been granted by the Partnership.

 

(nn)                          No Disagreements with Accountants .  There are no
material disagreements of any kind presently existing, or reasonably anticipated
by the Partnership to arise, between the Partnership and the accountants
formerly or presently employed by the Partnership.

 

(oo)                          Public Utility Holding Act.  None of the
Partnership nor any of its Subsidiaries is a “holding company,” or an
“affiliate” of a “holding company,” as such terms are defined in the Public
Utility Holding Act of 2005.

 

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(pp)                          Federal Power Act.  None of the Partnership nor
any of its Subsidiaries is subject to regulation as a “public utility” under the
Federal Power Act, as amended.

 

(qq)                          Disclosure.  The Partnership confirms that it has
provided or has caused to be provided to the Buyers or their agents or counsel
information that constitutes or could reasonably be expected to constitute
material, non-public information concerning the Partnership and its
Subsidiaries, and all such material, non-public information will be publicly
disclosed on the date of public announcement of the execution and delivery of
this Agreement.  The Partnership understands and confirms that each of the
Buyers will rely on the foregoing representations in effecting transactions in
securities of the Partnership.  All written disclosure provided to the Buyers
regarding the Partnership and its Subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement,
furnished by or on behalf of the Partnership or any of its Subsidiaries, taken
as a whole, is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.  All of the written information furnished after the date
hereof by or on behalf of the Partnership or any of its Subsidiaries to each
Buyer pursuant to or in connection with this Agreement and the other Transaction
Documents, taken as a whole and together with all written information previously
provided to each Buyer and the SEC Documents, will be true and correct in all
material respects as of the date on which such information is so provided and
will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.  All
financial projections and forecasts that have been prepared by or on behalf of
the Partnership or any of its Subsidiaries and furnished in writing to the
Buyers have been prepared in good faith based upon reasonable assumptions and
represented, at the time each such financial projection or forecast was
delivered to each Buyer, the Partnership’s reasonable estimate of future
financial performance (it being recognized that such financial projections or
forecasts are not to be viewed as facts and that the actual results during the
period or periods covered by any such financial projections or forecasts may
differ from the projected or forecasted results).  The Partnership acknowledges
and agrees that no Buyer makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 2.

 

4.                                      COVENANTS.

 

(a)                                 Best Efforts.  Each Buyer shall use its best
efforts to timely satisfy each of the covenants hereunder and conditions to be
satisfied by it as provided in Section 6 of this Agreement. The Partnership
shall use its best efforts to timely satisfy each of the covenants hereunder and
conditions to be satisfied by it as provided in Section 7 of this Agreement.

 

(b)                                 Blue Sky.  The Partnership shall, on or
before the Closing Date, take such action as the Partnership shall reasonably
determine is necessary in order to obtain an exemption for, or to, qualify the
Securities for sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or “Blue Sky” laws of the states of the United
States (or to obtain an exemption from such qualification), and shall provide
evidence of any such action so taken to the Buyers on or prior to the Closing
Date.  Without limiting any other obligation of the Partnership under this
Agreement, the Partnership shall timely make all filings and reports relating to
the

 

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offer and sale of the Securities required under all applicable securities laws
(including, without limitation, all applicable federal securities laws and all
applicable “Blue Sky” laws), and the Partnership shall comply with all
applicable foreign, federal, state and local laws, statutes, rules, regulations
and the like relating to the offering and sale of the Securities to the Buyers.

 

(c)                                  Reporting Status.  Beginning after the date
of filing of the Partnership’s Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2016 and June 30, 2016 until the earlier of the date on which
the Buyers shall not hold any Registrable Securities (the “Reporting Period”) or
the date on which the Buyers are permitted to sell the Registrable Securities
under Rule 144 promulgated by the SEC in the absence of current public
information regarding the Partnership, the Partnership shall timely file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Partnership shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would no longer require or otherwise permit such termination.

 

(d)                                 Use of Proceeds.  The Partnership will use
the proceeds from the sale of the Securities to repay indebtedness or for
general partnership purposes.

 

(e)                                  Financial Information.  The Partnership
agrees to send the following to each Investor (as defined in the Registration
Rights Agreement) during the Reporting Period (i) unless the following are filed
with the SEC through EDGAR and are available to the public through the EDGAR
system, within one (1) Business Day after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any
Current Reports on Form 8-K and any registration statements (other than on
Form S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the
following are either filed with the SEC through EDGAR or are otherwise widely
disseminated via a recognized news release service (such as PR Newswire), on the
same day as the release thereof, facsimile copies of all press releases issued
by the Partnership or any of its Subsidiaries and (iii) unless the following are
filed with the SEC through EDGAR, copies of any notices and other information
made available or given to the unitholders of the Partnership generally,
contemporaneously with the making available or giving thereof to the
unitholders.

 

(f)                                   Listing.  The Partnership shall promptly
secure the listing or designation for quotation (as the case may be) of all of
the Registrable Securities upon each national securities exchange and automated
quotation system, if any, upon which the Common Units is then listed or
designated for quotation (as the case may be) (subject to official notice of
issuance) and shall maintain such listing or designation for quotation (as the
case may be) of all Registrable Securities from time to time issuable under the
terms of the Transaction Documents on such national securities exchange or
automated quotation system.  The Partnership shall maintain the Common Units’
listing or authorization for quotation (as the case may be) on the Principal
Market, the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market or the
Nasdaq Global Select Market (each, an “Eligible Market”).  Neither the
Partnership nor any of its Subsidiaries shall take any action which could be
reasonably expected to result in the delisting or suspension of the Common Units
on an Eligible Market.  The Partnership shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(f).

 

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(g)                                  Fees.  The Partnership shall reimburse the
lead Buyer for all costs and expenses reasonably incurred by it or its
affiliates in connection with the structuring, documentation, negotiation and
closing of the transactions contemplated by the Transaction Documents
(including, without limitation, as applicable, all reasonable legal fees of
outside counsel and disbursements of Kelley Drye & Warren LLP, counsel to the
lead Buyer, any other reasonable fees and expenses in connection with the
structuring, documentation, negotiation and closing of the transactions
contemplated by the Transaction Documents and due diligence and regulatory
filings in connection therewith) not to exceed $75,000 in the aggregate (the
“Transaction Expenses”) and shall be withheld by the lead Buyer from its
Purchase Price at the Closing, less $50,000 previously paid by the Partnership
to the lead Buyer; provided, that the Partnership shall promptly reimburse
Kelley Drye & Warren LLP on demand for all Transaction Expenses not so
reimbursed through such withholding at the Closing.  The Partnership shall be
responsible for the payment of any placement agent’s fees, financial advisory
fees, transfer agent fees, DTC (as defined below) fees or broker’s commissions
(other than for Persons engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby (including, without limitation, any fees or
commissions payable to the Placement Agent, who is the Partnership’s sole
placement agent in connection with the transactions contemplated by this
Agreement).  The Partnership shall pay, and hold each Buyer harmless against,
any liability, loss or expense (including, without limitation, reasonable
attorneys’ fees and out-of-pocket expenses) arising in connection with any claim
relating to any such payment.  Except as otherwise set forth in the Transaction
Documents, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyers.

 

(h)                                 Pledge of Securities.  Notwithstanding
anything to the contrary contained in this Agreement, the Partnership
acknowledges and agrees that the Securities may be pledged by an Investor in
connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities as long as such pledge is made in
compliance with the 1933 Act and the rules and regulations thereunder.  The
pledge of Securities shall not be deemed to be a transfer, sale or assignment of
the Securities hereunder, and no Investor effecting a pledge of Securities shall
be required to provide the Partnership with any notice thereof or otherwise make
any delivery to the Partnership pursuant to this Agreement or any other
Transaction Document, including, without limitation, Section 2(g) hereof;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(g) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee.  The Partnership hereby agrees to
execute and deliver such documentation as a pledgee of the Securities may
reasonably request in connection with a pledge of the Securities to such pledgee
by a Buyer.

 

(i)                                     Disclosure of Transactions and Other
Material Information.

 

(i)                                     Disclosure of Transaction.  The
Partnership shall, on or before 9:30 a.m., New York time, on the first (1st)
Business Day after the date of this Agreement, issue a press release (the “Press
Release”) reasonably acceptable to the Buyers disclosing all the material terms
of the transactions contemplated by the Transaction Documents.  On or before
9:30 a.m., New York time, on the first (1st) Business Day after the date of this
Agreement, the Partnership shall file a Current Report on Form 8-K describing
all the material terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching executed copies or
forms of all the material

 

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Transaction Documents (including, without limitation, this Agreement (and all
schedules to this Agreement), the form of Series A Preferred Units, the form of
the Warrants, the form of LP Amendment and the form of the Registration Rights
Agreement) (including all attachments, the “8-K Filing”).  In connection with
the issuance of the Press Release, the filing of the 8-K Filing and the
Partnership’s earnings conference call on the date hereof, the Partnership shall
have disclosed all material, non-public information (if any) provided to any of
the Buyers by the Partnership or any of its Subsidiaries or any of their
respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents.  In addition, effective
upon the filing of the 8-K Filing, the Partnership acknowledges and agrees that
any and all confidentiality or similar obligations under any agreement, whether
written or oral, between the Partnership, any of its Subsidiaries or any of
their respective officers, directors, affiliates, employees or agents, on the
one hand, and any of the Buyers or any of their affiliates, on the other hand,
shall terminate.

 

(ii)                                  Limitations on Disclosure.  The
Partnership shall not, and the Partnership shall cause each of its Subsidiaries
and each of its and their respective officers, directors, employees and agents
not to, provide any Buyer with any material, non-public information regarding
the Partnership or any of its Subsidiaries from and after the date hereof
without the express prior written consent of such Buyer (which may be granted or
withheld in such Buyer’s sole discretion).  In the event of a breach of any of
the foregoing covenants, or any of the covenants or agreements contained in any
other Transaction Document, by the Partnership, any of its Subsidiaries, or any
of its or their respective officers, directors, employees and agents (as
determined in the reasonable good faith judgment of such Buyer after
consultation with counsel), in addition to any other remedy provided herein or
in the Transaction Documents, such Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such breach or such material, non-public information, as applicable, if such
Buyer has notified the Partnership of its breach and the Partnership has failed
for 24 hours to publicly disclose such information required by this Agreement. 
No Buyer shall have any liability to the Partnership, any of its Subsidiaries,
or any of its or their respective officers, directors, employees, affiliates,
unitholders, stockholders or agents, for any such disclosure.  To the extent
that the Partnership delivers any material, non-public information to a Buyer
without such Buyer’s consent, the Partnership hereby covenants and agrees that
such Buyer shall not have any duty of confidentiality with respect to, or a duty
to the Partnership not to trade on the basis of, such material, non-public
information.  Subject to the foregoing, neither the Partnership, its
Subsidiaries nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, the Partnership shall be entitled, without the prior approval of any
Buyer, to make the Press Release and any press release or other public
disclosure with respect to such transactions (i) in substantial conformity with
the 8-K Filing and contemporaneously therewith and (ii) as is required by
applicable law and regulations (provided that in the case of clause (i) each
Buyer shall be consulted by the Partnership in connection with any such press
release or other public disclosure prior to its release).  Without the prior
written consent of the applicable Buyer (which may be granted or withheld in
such Buyer’s sole discretion), the Partnership shall not (and shall cause each
of its Subsidiaries and affiliates to not) disclose the name of such

 

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Buyer in any filing, announcement, release or otherwise except as required by
applicable law, rule or regulation.  Notwithstanding anything contained in this
Agreement to the contrary and without implication that the contrary would
otherwise be true, the Partnership expressly acknowledges and agrees that no
Buyer shall have (unless expressly agreed to by a particular Buyer after the
date hereof in a written definitive and binding agreement executed by the
Partnership and such particular Buyer (it being understood and agreed that no
Buyer may bind any other Buyer with respect thereto)), any duty of
confidentiality with respect to, or a duty to the Partnership not to trade on
the basis of, any material, non-public information regarding the Partnership or
any of its Subsidiaries provided by the Partnership or any of its Subsidiaries,
or at the direction of the Partnership of any of its Subsidiaries to such Buyer,
in violation of this Section 4(i).

 

(j)                                    Additional Registration Statements. 
Until the Applicable Date (as defined below) and at any time thereafter while
any Registration Statement is not effective or the prospectus contained therein
is not available for use or any Current Public Information Failure (as defined
in the Registration Rights Agreement) exists, the Partnership shall not file a
registration statement under the 1933 Act relating to securities that are not
the Registrable Securities (other than a registration statement on Form S-8 or
such supplements or amendments to registration statements that are outstanding
and have been declared effective by the SEC as of the date hereof (solely to the
extent necessary to keep such registration statements effective and available
and not with respect to any Subsequent Placement)).  “Applicable Date” means the
earlier of (x) the first date on which the resale by the Buyers of all the
Registrable Securities required to be filed on the initial Registration
Statement (as defined in the Registration Rights Agreement) pursuant to the
Registration Rights Agreement is declared effective by the SEC (and each
prospectus contained therein is available for use on such date) or (y) the first
date on which all of the Registrable Securities are eligible to be resold by the
Buyers pursuant to Rule 144 (or, if a Current Public Information Failure (as
defined in the Registration Rights Agreement) has occurred and is continuing,
such later date after which the Partnership has cured such Current Public
Information Failure).

 

(k)                                 Conduct of Business.  The business of the
Partnership and its Subsidiaries shall not be conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except where such violations
would not reasonably be expected to result, either individually or in the
aggregate, in a Material Adverse Effect.

 

(l)                                     Other Series A Preferred Units; Variable
Securities.  So long as any Series A Preferred Units remain outstanding, the
Partnership and each Subsidiary shall be prohibited from effecting or entering
into an agreement to effect any Variable Rate Transaction.  “Variable Rate
Transaction” means a transaction in which the Partnership or any Subsidiary
(i) issues or sells any Convertible Securities either (A) at a conversion,
exercise or exchange rate or other price that is based upon and/or varies with
the trading prices of or quotations for the Common Units at any time after the
initial issuance of such Convertible Securities, or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such Convertible Securities or upon the occurrence
of specified or contingent events directly or indirectly related to the business
of the Partnership or the market for the Common Units, other than pursuant to a
customary “weighted average” anti-dilution provision or (ii) enters into any
agreement (including, without limitation, an equity line of credit or an
“at-the-

 

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market” offering) whereby the Partnership or any Subsidiary may sell securities
at a future determined price (other than standard and customary “preemptive” or
“participation” rights).  Each Buyer shall be entitled to obtain injunctive
relief against the Partnership and its Subsidiaries to preclude any such
issuance, which remedy shall be in addition to any right to collect damages.

 

(m)                             Partnership Existence.  So long as any Buyer
beneficially owns any Series A Preferred Units or Warrants, the Partnership
shall not be party to any Fundamental Transaction (as defined in the LP
Amendment) unless the Partnership is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the LP Amendment and
the Warrants.

 

(n)                                 Unit Splits.  Until the Series A Preferred
Units and all preferred units issued pursuant to the LP Amendment are no longer
outstanding, the Partnership shall not effect any unit combination, reverse unit
split or other similar transaction (or make any public announcement or
disclosure with respect to any of the foregoing) (x) unless the Partnership is
in compliance with the applicable provisions governing such transactions set
forth in the Limited Partnership Agreement and (y) except to the consent
necessary to maintain compliance with the continuing listing requirements of the
Principal Market.

 

(o)                                 Conversion and Exercise Procedures.  Each of
the form of Exercise Notice (as defined in the Warrants) included in the
Warrants and the form of Conversion Notice (as defined in the LP Amendment)
included in the LP Amendment set forth the totality of the procedures required
of the Buyers in order to exercise the Warrants or convert the Series A
Preferred Units.  Except as provided in Section 5(d), no additional legal
opinion, other information or instructions shall be required of the Buyers to
exercise their Warrants or convert their Series A Preferred Units.  The
Partnership shall honor exercises of the Warrants and conversions of the
Series A Preferred Units and shall deliver the Conversion Units and Warrant
Units in accordance with the terms, conditions and time periods set forth in the
LP Amendment and Warrants.

 

(p)                                 Regulation M.  The Partnership will not take
any action prohibited by Regulation M under the 1934 Act in connection with the
distribution of the Securities contemplated hereby.

 

(q)                                 Integration.  None of the Partnership, any
of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person
acting on behalf of the Partnership or such affiliate will sell, offer for sale,
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the 1933 Act) which will be integrated with the sale of the
Securities in a manner which would require the registration of the Securities
under the 1933 Act or require unitholder approval under the rules and
regulations of the Principal Market and the Partnership will take all action
that is appropriate or necessary to assure that its offerings of other
securities will not be integrated for purposes of the 1933 Act or the rules and
regulations of the Principal Market, with the issuance of Securities
contemplated hereby.

 

(r)                                    Closing Documents.  On or prior to
fourteen (14) calendar days after the Closing Date, the Partnership agrees to
deliver, or cause to be delivered, to each Buyer and Kelley Drye & Warren LLP a
complete closing set of the executed Transaction Documents, Securities and

 

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any other document required to be delivered to any party pursuant to Section 7
hereof or otherwise.

 

(s)                                   Trading in Common Units.

 

(i)                                     Each Buyer hereby agrees solely with the
Partnership, severally and not jointly, and not with any other Buyer, for so
long as such Buyer owns any Series A Preferred Units, not to (x) maintain a Net
Short Position (as defined below) or (y) sell Common Units during any Trading
Day during each ten (10) Trading Day period preceding each Mandatory Conversion
Date (as defined in the LP Amendment), in an amount, in the aggregate, exceeding
10% of the composite aggregate daily share trading volume as reported on
Bloomberg (as defined in the Warrant) of the Common Units measured at the time
of each sale of Common Units during such Trading Day.

 

(ii)                                  For purposes hereof, a “Net Short
Position” by a Person means a position whereby such person has executed one or
more sales of Common Units that is marked as a short sale (but not including any
sale marked “short exempt”) and that is executed at a time when such Buyer has
no equivalent offsetting long position in the Common Units (or is deemed to have
a long position hereunder or otherwise in accordance with Regulation SHO of the
1934 Act).  For purposes of determining whether a Buyer has an equivalent
offsetting long position in the Common Units, all Common Units (A) that is owned
by such Buyer, or (B) that would be issuable upon conversion or exercise in full
of all Securities issuable to such Buyer or then held by such Buyer, as
applicable, (assuming that such Securities were then fully convertible or
exercisable, notwithstanding any provisions to the contrary, and giving effect
to any conversion or exercise price adjustments that would take effect given
only the passage of time) shall be deemed to be held long by such Buyer.

 

5.                                      REGISTER; TRANSFER AGENT INSTRUCTIONS;
LEGEND.

 

(a)                                 Register.  The Partnership shall maintain at
its principal executive offices (or such other office or agency of the
Partnership as it may designate by notice to each holder of Securities), a
register for the Series A Preferred Units and the Warrants in which the
Partnership shall record the name and address of the Person in whose name the
Series A Preferred Units and the Warrants have been issued (including the name
and address of each transferee), the principal amount of the Series A Preferred
Units held by such Person, the number of Conversion Units issuable pursuant to
the terms of the Series A Preferred Units and the number of Warrant Units
issuable upon exercise of the Warrants held by such Person.  The Partnership
shall keep the register open and available at all times during business hours
for inspection of any Buyer or its legal representatives upon reasonable prior
notice.

 

(b)                                 Transfer Agent Instructions.  Upon
conversion of Series A Preferred Units or the exercise of Warrants, the
Partnership shall issue irrevocable instructions to its transfer agent and any
subsequent transfer agent (as applicable, the “Transfer Agent”) in a form
reasonably acceptable to each of the Buyers (the “Irrevocable Transfer Agent
Instructions”) to issue certificates (or create a book entry on the stock
register of the Company with the Transfer Agent (as applicable, a “Book Entry”))
or credit units to the applicable balance accounts at The

 

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Depository Trust Company (“DTC”), registered in the name of each Buyer or its
respective nominee(s), for the Conversion Units or the Warrant Units (as the
case may be).  The Partnership represents and warrants that no instruction other
than the Irrevocable Transfer Agent Instructions referred to in this
Section 5(b), and stop transfer instructions to give effect to
Section 2(g) hereof, will be given by the Partnership to its transfer agent with
respect to the Securities, and that the Securities shall otherwise be freely
transferable on the books and records of the Partnership, as applicable, to the
extent permitted in this Agreement and the other Transaction Documents.  If a
Buyer effects a sale, assignment or transfer of the Securities in accordance
with Section 2(g), the Partnership shall permit the transfer and shall promptly
instruct its transfer agent to issue one or more certificates (or Book Entry) or
credit units to the applicable balance accounts at DTC in such name and in such
denominations as specified by such Buyer to effect such sale, transfer or
assignment.  In the event that such sale, assignment or transfer involves
Conversion Units or Warrant Units sold, assigned or transferred pursuant to an
effective registration statement or in compliance with Rule 144, the transfer
agent shall issue such units to such Buyer, assignee or transferee (as the case
may be) without any restrictive legend in accordance with Section 5(d) below. 
The Partnership acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to a Buyer.  Accordingly, the Partnership
acknowledges that the remedy at law for a breach of its obligations under this
Section 5(b) will be inadequate and agrees, in the event of a breach or
threatened breach by the Partnership of the provisions of this Section 5(b),
that a Buyer shall be entitled, in addition to all other available remedies, to
an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.  The Partnership shall cause
its counsel to issue the legal opinion referred to in the Irrevocable Transfer
Agent Instructions to the Partnership’s transfer agent on each Effective Date
(as defined in the Registration Rights Agreement).  Any fees (with respect to
the transfer agent, counsel to the Partnership or otherwise) incurred by the
Partnership associated with the issuance of such opinion or the removal of any
legends on any of the Securities shall be borne by the Partnership.

 

(c)                                  Legends.  Each Buyer understands that the
Securities have been issued (or will be issued in the case of the Conversion
Units and the Warrant Units) pursuant to an exemption from registration or
qualification under the 1933 Act and applicable state securities laws, and
except as set forth below, the Securities shall bear any legend as required by
the “blue sky” laws of any state and a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
unit certificates):

 

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE]
HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN]
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE PARTNERSHIP), IN A FORM REASONABLY
ACCEPTABLE TO THE PARTNERSHIP, THAT

 

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REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO
BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

(d)                                 Removal of Legends.  Certificates evidencing
Securities shall not be required to contain the legend set forth in
Section 5(c) above or any other legend (i) while a registration statement
(including a Registration Statement) covering the resale of such Securities is
effective under the 1933 Act, (ii) following any sale of such Securities
pursuant to Rule 144 (assuming the transferor is not an affiliate of the
Partnership), (iii) if such Securities are eligible to be sold, assigned or
transferred under Rule 144 (provided that a Buyer provides the Partnership with
reasonable assurances that such Securities are eligible for sale, assignment or
transfer under Rule 144 (and, if prior to the first anniversary of the Closing
Date, will be sold during a period permitted under Rule 144) which shall not
include an opinion of Buyer’s counsel), (iv) in connection with a sale,
assignment or other transfer (other than under Rule 144), provided that such
Buyer provides the Partnership with an opinion of counsel to such Buyer, in a
generally acceptable form, to the effect that such sale, assignment or transfer
of the Securities may be made without registration under the applicable
requirements of the 1933 Act or (v) if such legend is not required under
applicable requirements of the 1933 Act (including, without limitation,
controlling judicial interpretations and pronouncements issued by the SEC).  If
a legend is not required pursuant to the foregoing, the Partnership shall no
later than three (3) Trading Days (or such earlier date as required pursuant to
the 1934 Act or other applicable law, rule or regulation for the settlement of a
trade initiated on the date such Buyer delivers such legended certificate (or
evidence of Book Entry) representing such Securities to the Partnership)
following the delivery by a Buyer to the Partnership or the transfer agent (with
notice to the Partnership) of a legended certificate (or evidence of Book Entry)
representing such Securities (endorsed or with unit powers attached, signatures
guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer, if applicable), together with any other deliveries from such Buyer as
may be required above in this Section 5(d), as directed by such Buyer, either: 
(A) provided that the Partnership’s transfer agent is participating in the DTC
Fast Automated Securities Transfer Program and such Securities are Conversion
Units or Warrant Units, credit the aggregate number of Common Units to which
such Buyer shall be entitled to such Buyer’s or its designee’s balance account
with DTC through its Deposit/Withdrawal at Custodian system or (B) if the
Partnership’s transfer agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver (via reputable overnight courier)
to such Buyer, a certificate representing such Securities that is free from all
restrictive and other legends, registered in the name of such Buyer or its
designee (the date by which such credit is so required to be made to the balance
account of such Buyer’s or such Buyer’s designee with DTC or such certificate is
required to be delivered to such Buyer pursuant to the foregoing is referred to
herein as the “Required Delivery Date”, and the date such Common Units are
actually delivered without restrictive legend to such Buyer or such Buyer’s
designee with DTC, as applicable, the “Unit Delivery Date”).  The Partnership
shall be responsible for any transfer agent fees or DTC fees with respect to any
issuance of Securities or the removal of any legends with respect to any
Securities in accordance herewith.

 

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(e)                                  Failure to Timely Deliver; Buy-In.  If the
Partnership fails, for any reason or for no reason (other than failure of a
Buyer to comply with Section 5(d)),, to issue and deliver (or cause to be
delivered) to a Buyer (or its designee) by the Required Delivery Date, either
(I) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, a certificate for the number of Conversion Units or
Warrant Units (as the case may be) to which such Buyer is entitled and register
such Conversion Units or Warrant Units (as the case may be) on the Partnership’s
unit register or, if the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program, to credit the balance account of such
Buyer or such Buyer’s designee with DTC for such number of Conversion Units or
Warrant Units (as the case may be) submitted for legend removal by such Buyer
pursuant to Section 5(d) above or (II) if the Registration Statement covering
the resale of the Conversion Units or Warrant Units (as the case may be)
submitted for legend removal by such Buyer pursuant to Section 5(d) above (the
“Unavailable Shares”) is not available for the resale of such Unavailable Shares
and the Partnership fails to promptly, but in no event later than as required
pursuant to the Registration Rights Agreement (x) so notify such Buyer and
(y) deliver the Conversion Units or Warrant Units, as applicable, electronically
without any restrictive legend by crediting such aggregate number of Conversion
Units or Warrant Units (as the case may be) submitted for legend removal by such
Buyer pursuant to Section 5(d) above to such Buyer’s or its designee’s balance
account with DTC through its Deposit/Withdrawal At Custodian system (the event
described in the immediately foregoing clause (II) is hereinafter referred as a
“Notice Failure” and together with the event described in clause (I) above, a
“Delivery Failure”) and if on or after such Trading Day such Buyer purchases (in
an open market transaction or otherwise) Common Units to deliver in satisfaction
of a sale by such Buyer of Common Units submitted for legend removal by such
Buyer pursuant to Section 5(d) above that such Buyer is entitled to receive from
the Partnership (a “Buy-In”), then the Partnership shall, within three
(3) Trading Days after such Buyer’s request and in such Buyer’s discretion,
either (i) pay cash to such Buyer in an amount equal to such Buyer’s total
purchase price (including brokerage commissions and other out-of-pocket
expenses, if any, for the Common Units so purchased) (the “Buy-In Price”), at
which point the Partnership’s obligation to so deliver such certificate or
credit such Buyer’s balance account shall terminate and such units shall be
cancelled, or (ii) promptly honor its obligation to so deliver to such Buyer a
certificate or certificates or credit the balance account of such Buyer or such
Buyer’s designee with DTC representing such number of Common Units that would
have been so delivered if the Partnership timely complied with its obligations
hereunder and pay cash to such Buyer in an amount equal to the excess (if any)
of the Buy-In Price over the product of (A) such number of units of Conversion
Units or Warrant Units (as the case may be) that the Partnership was required to
deliver to such Buyer by the Required Delivery Date multiplied by (B) the lowest
Closing Sale Price (as defined in the Warrants) of the Common Units on any
Trading Day during the period commencing on the date of the delivery by such
Buyer to the Partnership of the applicable Conversion Units or Warrant Units (as
the case may be) and ending on the date of such delivery and payment under this
clause (ii).  Nothing shall limit such Buyer’s right to pursue any other
remedies available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Partnership’s failure to timely deliver certificates representing
Common Units (or to electronically deliver such Common Units) as required
pursuant to the terms hereof.  Notwithstanding anything herein to the contrary,
with respect to any given Notice Failure and/or Delivery Failure, this
Section 5(e) shall not apply to the applicable Buyer the extent the

 

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Partnership has already paid such amounts in full to such Buyer with respect to
such Notice Failure and/or Delivery Failure, as applicable, pursuant to the
analogous sections of the Note or Warrant, as applicable, held by such Buyer.

 

(f)                                   FAST Compliance.  While any Warrants
remain outstanding, the Partnership shall maintain a transfer agent that
participates in the DTC Fast Automated Securities Transfer Program.

 

6.                                      CONDITIONS TO THE PARTNERSHIP’S
OBLIGATION TO SELL.

 

(a)                                 The obligation of the Partnership hereunder
to issue and sell the Series A Preferred Units and the related Warrants to each
Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Partnership’s sole benefit and may be waived by the Partnership at any
time in its sole discretion by providing each Buyer with prior written notice
thereof:

 

(i)                                     Such Buyer shall have executed each of
the other Transaction Documents to which it is a party and delivered the same to
the Partnership.

 

(ii)                                  Such Buyer and each other Buyer shall have
delivered to the Partnership the Purchase Price (less, in the case of any Buyer,
the amounts withheld pursuant to Section 4(g))for the Series A Preferred Units
and the related Warrants being purchased by such Buyer at the Closing by wire
transfer of immediately available funds in accordance with the Flow of Funds
Letter.

 

(iii)                               Each and every representation and warranty
of such Buyer shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though originally made at that time
(except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date), and such Buyer shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by such Buyer at or prior to the Closing Date.

 

7.                                      CONDITIONS TO EACH BUYER’S OBLIGATION TO
PURCHASE.

 

(a)                                 The obligation of each Buyer hereunder to
purchase its Note and its related Warrants at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer’s sole benefit and
may be waived by such Buyer at any time in its sole discretion by providing the
Partnership with prior written notice thereof:

 

(i)                                     The Partnership shall have duly executed
and delivered to such Buyer each of the Transaction Documents party and the
Partnership shall have duly executed and delivered to such Buyer (A) such
aggregate number of Series A Preferred Units as set forth across from such
Buyer’s name in column (3) of the Schedule of Buyers, and (B) Warrants initially
exercisable for such aggregate number of Warrant Units as is set forth across
from such Buyer’s name in column (4) of the Schedule of Buyers, in each case, as
being purchased by such Buyer at the Closing pursuant to this Agreement.

 

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(ii)                                  Such Buyer shall have received the opinion
of Latham & Watkins LLP, the Partnership’s counsel, dated as of the Closing
Date, in a form reasonably acceptable to Buyer.

 

(iii)                               The Partnership shall have delivered to such
Buyer a certificate evidencing the formation and good standing of the
Partnership issued by the Secretary of State of Delaware as of a date within ten
(10) days of the Closing Date.

 

(iv)                              The Partnership shall have delivered to such
Buyer a certificate, in the form reasonably acceptable to such Buyer, executed
by the Secretary of the Partnership and dated as of the Closing Date, as to
(i) the resolutions consistent with Section 3(b) as adopted by the board of
directors of the general partner of the Partnership and (ii) the Limited
Partnership Agreement and the LP Amendment, each as in effect at the Closing.

 

(v)                                 Each and every representation and warranty
of the Partnership shall be true and correct as of the date when made and as of
the Closing Date as though originally made at that time (except for
representations and warranties that speak as of a specific date, which shall be
true and correct as of such specific date) and the Partnership shall have
performed, satisfied and complied in all respects with the covenants, agreements
and conditions required to be performed, satisfied or complied with by the
Partnership at or prior to the Closing Date.  Such Buyer shall have received a
certificate, duly executed by the Chief Executive Officer of the Partnership,
dated as of the Closing Date, to the foregoing effect in the form reasonably
acceptable to such Buyer.

 

(vi)                              The Partnership shall have delivered to such
Buyer a letter from the Partnership’s transfer agent certifying the number of
Common Units outstanding on the Closing Date immediately prior to the Closing.

 

(vii)                           The Common Units (A) shall continue to be
designated for quotation or listed (as applicable) on the Principal Market and
(B) shall not have been suspended, as of the Closing Date, by the SEC or the
Principal Market from trading on the Principal Market.

 

(viii)                        The Partnership shall have obtained all
governmental, regulatory or third party consents and approvals, if any,
necessary for the sale of the Securities and shall have applied to list the
Conversion Units and the Warrant Units on the Principal Market.

 

(ix)                              No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or Governmental Entity of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents.

 

(x)                                 Since the date of execution of this
Agreement, no event or series of events shall have occurred that reasonably
would have or result in a Material Adverse Effect.

 

(xi)                              The Partnership shall have completed, executed
and delivered to such Buyer the FCPA Questionnaire in the form attached hereto
as Exhibit D.

 

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(xii)                           The Partnership shall have obtained approval, if
required, of the Principal Market to list or designate for quotation (as the
case may be) the Conversion Units and the Warrant Units.

 

(xiii)                        Such Buyer shall have received a letter on the
letterhead of the Partnership, duly executed by an executive officer of the
general partner of the Partnership, setting forth the wire amounts of each Buyer
and the wire transfer instructions of the Partnership (the “Flow of Funds
Letter”).

 

(xiv)                       The Partnership shall have delivered to such Buyer
such other documents, instruments or certificates relating to the transactions
contemplated by this Agreement as such Buyer or its counsel may reasonably
request.

 

8.                                      TERMINATION.

 

In the event that the Closing shall not have occurred with respect to a Buyer
within five (5) days of the date hereof, then the Partnership and such Buyer
each shall have the right to terminate its obligations under this Agreement with
respect to itself at any time on or after the close of business on such date
without liability of such terminating party to any other party; provided,
however, (i) the right to terminate this Agreement under this Section 8 shall
not be available to a party if the failure of the transactions contemplated by
this Agreement to have been consummated by such date is the result of such
party’s breach of this Agreement and (ii) the abandonment of the sale and
purchase of the Series A Preferred Units and the Warrants shall be applicable
only as it relates to such Buyer, provided further that no such termination
shall affect any obligation of the Partnership under this Agreement to reimburse
such Buyer for the expenses described in Section 4(g) above.  Nothing contained
in this Section 8 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement or the
other Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement
or the other Transaction Documents.

 

9.                                      MISCELLANEOUS.

 

(a)                                 Governing Law; Jurisdiction; Jury Trial. 
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York.  The Partnership hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith (except for any disputes arising under the Limited
Partnership Agreement or the LP Amendment, which shall be adjudicated
exclusively in state court in the State of Delaware), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or

 

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proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.  Nothing contained herein shall be deemed or operate to
preclude any Buyer from bringing suit or taking other legal action against the
Partnership in any other jurisdiction to collect on the Partnership’s
obligations to such Buyer or to enforce a judgment or other court ruling in
favor of such Buyer. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY.

 

(b)                                 Counterparts.  This Agreement may be
executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party.  In the event that
any signature is delivered by facsimile transmission or by an e-mail which
contains a portable document format (.pdf) file of an executed signature page,
such signature page shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such signature page were an original thereof.

 

(c)                                  Headings; Gender.  The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement.  Unless the context clearly indicates
otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof.  The terms “including,”
“includes,” “include” and words of like import shall be construed broadly as if
followed by the words “without limitation.”  The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just
the provision in which they are found.

 

(d)                                 Severability; Maximum Payment Amounts.  If
any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s). 
Notwithstanding anything to the contrary contained in this Agreement or any
other Transaction Document (and without implication that the following is
required or applicable), it is the intention of the parties that in no event
shall amounts and value paid by the Partnership and/or any of its Subsidiaries
(as the case may be), or payable to or received by any of the Buyers, under the
Transaction

 

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Documents (including without limitation, any amounts that would be characterized
as “interest” under applicable law) exceed amounts permitted under any
applicable law.  Accordingly, if any obligation to pay, payment made to any
Buyer, or collection by any Buyer pursuant the Transaction Documents is finally
judicially determined to be contrary to any such applicable law, such obligation
to pay, payment or collection shall be deemed to have been made by mutual
mistake of such Buyer, the Partnership and its Subsidiaries and such amount
shall be deemed to have been adjusted with retroactive effect to the maximum
amount or rate of interest, as the case may be, as would not be so prohibited by
the applicable law.  Such adjustment shall be effected, to the extent necessary,
by reducing or refunding, at the option of such Buyer, the amount of interest or
any other amounts which would constitute unlawful amounts required to be paid or
actually paid to such Buyer under the Transaction Documents.  For greater
certainty, to the extent that any interest, charges, fees, expenses or other
amounts required to be paid to or received by such Buyer under any of the
Transaction Documents or related thereto are held to be within the meaning of
“interest” or another applicable term to otherwise be violative of applicable
law, such amounts shall be pro-rated over the period of time to which they
relate.

 

(e)                                  Entire Agreement; Amendments.  This
Agreement, the other Transaction Documents and the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
supersede all other prior oral or written agreements between the Buyers, the
Partnership, its Subsidiaries, their affiliates and Persons acting on their
behalf, including, without limitation, any transactions by any Buyer with
respect to Common Units or the Securities, and the other matters contained
herein and therein, and this Agreement, the other Transaction Documents, the
schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties
solely with respect to the matters covered herein and therein; provided,
however, nothing contained in this Agreement or any other Transaction Document
shall (or shall be deemed to) (i) have any effect on any agreements any Buyer
has entered into with, or any instruments any Buyer has received from, the
Partnership or any of its Subsidiaries prior to the date hereof with respect to
any prior investment made by such Buyer in the Partnership or (ii) waive, alter,
modify or amend in any respect any obligations of the Partnership or any of its
Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in
any agreement entered into prior to the date hereof between or among the
Partnership and/or any of its Subsidiaries and any Buyer, or any instruments any
Buyer received from the Partnership and/or any of its Subsidiaries prior to the
date hereof, and all such agreements and instruments shall continue in full
force and effect. Except as specifically set forth herein or therein, neither
the Partnership nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters.  For clarification purposes, the
Recitals are part of this Agreement.  No provision of this Agreement may be
amended other than by an instrument in writing signed by the Partnership and the
Required Holders (as defined below), and any amendment to any provision of this
Agreement made in conformity with the provisions of this Section 9(e) shall be
binding on all Buyers and holders of Securities, as applicable; provided that no
such amendment shall be effective to the extent that it (A) applies to less than
all of the holders of the Securities then outstanding or (B) imposes any
obligation or liability on any Buyer without such Buyer’s prior written consent
(which may be granted or withheld in such Buyer’s sole discretion).  No waiver
shall be effective unless it is in writing and signed by an authorized
representative of the waiving party, provided that the Required Holders may
waive any provision of this Agreement, and any waiver of any provision of this
Agreement made in conformity with the provisions of this Section 9(e) shall be

 

36

--------------------------------------------------------------------------------

 

binding on all Buyers and holders of Securities, as applicable, provided that no
such waiver shall be effective to the extent that it (1) applies to less than
all of the holders of the Securities then outstanding (unless a party gives a
waiver as to itself only) or (2) imposes any obligation or liability on any
Buyer without such Buyer’s prior written consent (which may be granted or
withheld in such Buyer’s sole discretion).  Without limiting the foregoing, the
Partnership confirms that, except as set forth in this Agreement, no Buyer has
made any commitment or promise or has any other obligation to provide any
financing to the Partnership, any Subsidiary or otherwise.  As a material
inducement for each Buyer to enter into this Agreement, the Partnership
expressly acknowledges and agrees that (x) no due diligence or other
investigation or inquiry conducted by a Buyer, any of its advisors or any of its
representatives shall affect such Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the Partnership’s
representations and warranties contained in this Agreement or any other
Transaction Document and (y) unless a provision of this Agreement or any other
Transaction Document is expressly qualified by the phrase “except as disclosed
in the SEC Documents” or words of similar effect, nothing contained in any of
the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or
qualify in any manner or be an exception to any of, the Partnership’s
representations and warranties contained in this Agreement or any other
Transaction Document.  “Required Holders” means (I) prior to the Closing Date,
each Buyer entitled to purchase Series A Preferred Units at the Closing and
(II) on or after the Closing Date, holders of a majority of the Registrable
Securities as of such time (excluding any Registrable Securities held by the
Partnership or any of its Subsidiaries as of such time) issued or issuable
hereunder or pursuant to the LP Amendment and/or the Warrants.

 

(f)                                   Notices.  Any notices, consents, waivers
or other communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been delivered: 
(i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party) or electronic
mail; or (iii) one (1) Business Day after deposit with an overnight courier
service with next day delivery specified, in each case, properly addressed to
the party to receive the same.  The addresses, facsimile numbers and e-mail
addresses for such communications shall be:

 

If to the Partnership:

 

Emerge Energy Services LP
180 State Street, Suite 225
Southlake, Texas 76092
Telephone:  (817) 865-5830
Attention:  Deborah Deibert
E-Mail:  ddeibert@emergelp.com

 

With a copy (for informational purposes only) to:

 

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

 

37

--------------------------------------------------------------------------------

 

Telephone:  (713) 546-5400
Facsimile:  (713) 546-5401
Attention:  Ryan J Maierson
E-Mail:  ryan.maierson@lw.com

 

If to the Transfer Agent:

 

American Stock Transfer & Trust Company, LLC

15455 Dallas Parkway, Suite 600

Addison, TX 75001

Telephone:  (972) 764-2716
Facsimile:  (972) 764-5101
Attention:  William Torre
E-Mail:  wtorre@amstock.com

 

If to a Buyer, to its address, e-mail address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer’s representatives as set forth
on the Schedule of Buyers,

 

with a copy (for informational purposes only) to:

 

Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Telephone:  (212) 808-7540
Facsimile:  (212) 808-7897
Attention:  Michael A. Adelstein, Esq.
E-mail:   madelstein@kelleydrye.com

 

or to such other address, e-mail address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change, provided that Kelley Drye & Warren LLP shall only be provided
copies of notices sent to the lead Buyer.  Written confirmation of receipt
(A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender’s
facsimile machine or e-mail containing the time, date, recipient facsimile
number and, with respect to each facsimile transmission, an image of the first
page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from
an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

(g)                                  Successors and Assigns.  This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns, including any purchasers of any of the
Series A Preferred Units and Warrants.  The Partnership shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Required Holders, including, without limitation, by way of a
Fundamental Transaction (as defined in the Warrants) (unless the Partnership is
in compliance with the applicable provisions governing Fundamental Transactions
set forth in the Warrants) or a Fundamental Transaction (as defined in the LP
Amendment) (unless the Partnership is in compliance with the applicable
provisions governing

 

38

--------------------------------------------------------------------------------

 

Fundamental Transactions set forth in the LP Amendment).  A Buyer may assign
some or all of its rights hereunder in connection with any transfer of any of
its Securities that is permitted under this Agreement without the consent of the
Partnership, in which event such assignee shall be deemed to be a Buyer
hereunder with respect to such assigned rights.

 

(h)                                 Third Party Beneficiaries.  This Agreement
is intended solely for the benefit of the parties hereto and their respective
permitted successors and assigns and the Placement Agent. The Placement Agent is
hereby designated as a third-party beneficiary of Sections 2 and 3 of this
Agreement and may rely on the representations and warranties of the Buyer and
the Partnership, as applicable, set forth therein.

 

(i)                                     Survival.  The representations,
warranties, agreements and covenants shall survive the Closing.  Each Buyer
shall be responsible only for its own representations, warranties, agreements
and covenants hereunder.

 

(j)                                    Further Assurances.  Each party shall do
and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates,
instruments and documents, as any other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

(k)                                 Indemnification.  In consideration of each
Buyer’s execution and delivery of the Transaction Documents and acquiring the
Securities thereunder and in addition to all of the Partnership’s other
obligations under the Transaction Documents, the Partnership shall defend,
protect, indemnify and hold harmless each Buyer and its stockholders, partners,
members, officers, directors, employees and direct or indirect investors and any
of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Partnership or any Subsidiary in any of
the Transaction Documents, (ii) any breach of any covenant, agreement or
obligation of the Partnership or any Subsidiary contained in any of the
Transaction Documents or (iii) any cause of action, suit, proceeding or claim
brought or made against such Indemnitee by a third party (including for these
purposes a derivative action brought on behalf of the Partnership or any
Subsidiary) or which otherwise involves such Indemnitee that arises out of or
results from (A) the execution, delivery, performance or enforcement of any of
the Transaction Documents, (B) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of the issuance of
the Securities, (C) any disclosure properly made by such Buyer pursuant to
Section 4(i), or (D) the status of such Buyer or holder of the Securities either
as an investor in the Partnership pursuant to the transactions contemplated by
the Transaction Documents or as a party to this Agreement (including, without
limitation, as a party in interest or otherwise in any action or proceeding for
injunctive or other equitable relief).   For the avoidance of doubt, with
respect to any Buyer (or related Indemnitees) seeking indemnification hereunder,

 

39

--------------------------------------------------------------------------------

 

clause (iii)(A) of the immediately preceding sentence shall not apply to
(X) actions or omissions of such Buyer or Indemnitee after purchasing the
Securities (other than such actions or omissions that are made or omitted in
reliance on the accuracy of the representations or warranties (or compliance
with the covenants) of the Partnership or any of its Subsidiaries set forth in
any of the Transaction Documents) or (Y) any breach of any representation or
warranty or covenant of such Buyer under the Transaction Documents. To the
extent that the foregoing undertaking by the Partnership may be unenforceable
for any reason, the Partnership shall make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.  Except as otherwise set forth herein, the
mechanics and procedures with respect to the rights and obligations under this
Section 9(k) shall be the same as those set forth in Section 6 of the
Registration Rights Agreement.

 

(l)                                     Construction.  The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.  No specific representation or warranty shall limit the generality or
applicability of a more general representation or warranty. Each and every
reference to unit prices, Common Units and any other numbers in this Agreement
that relate to the Common Units shall be automatically adjusted for any unit
splits, unit dividends, unit combinations, recapitalizations or other similar
transactions that occur with respect to the Common Units after the date of this
Agreement.  It is expressly understood and agreed that for all purposes of this
Agreement, and without implication that the contrary would otherwise be true,
neither transactions nor purchases nor sales shall include the location and/or
reservation of borrowable Common Units.

 

(m)                             Remedies.  Each Buyer and in the event of
assignment by Buyer of its rights and obligations hereunder in accordance with
this Agreement, each such assignee, shall have all rights and remedies set forth
in the Transaction Documents and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the
rights which such holders have under any law.  Any Person having any rights
under any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.  Furthermore, the Partnership recognizes that in
the event that it or any Subsidiary fails to perform, observe, or discharge any
or all of its or such Subsidiary’s (as the case may be) obligations under the
Transaction Documents, any remedy at law would inadequate relief to the Buyers. 
The Partnership therefore agrees that the Buyers shall be entitled to seek
specific performance and/or temporary, preliminary and permanent injunctive or
other equitable relief from any court of competent jurisdiction in any such case
without the necessity of proving actual damages and without posting a bond or
other security.  The remedies provided in this Agreement and the other
Transaction Documents shall be cumulative and in addition to all other remedies
available under this Agreement and the other Transaction Documents, at law or in
equity (including a decree of specific performance and/or other injunctive
relief).

 

(n)                                 Withdrawal Right.  Notwithstanding anything
to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Buyer exercises a right, election,
demand or option under a Transaction Document and the Partnership or any
Subsidiary does not timely perform its related obligations within the periods
therein

 

40

--------------------------------------------------------------------------------

 

provided, then such Buyer may rescind or withdraw, in its sole discretion from
time to time upon written notice to the Partnership or such Subsidiary (as the
case may be), any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights.

 

(o)           Payment Set Aside; Currency.  To the extent that the Partnership
makes a payment or payments to any Buyer hereunder or pursuant to any of the
other Transaction Documents or any of the Buyers enforce or exercise their
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the
Partnership, a trustee, receiver or any other Person under any law (including,
without limitation, any bankruptcy law, foreign, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.  Unless otherwise expressly
indicated, all dollar amounts referred to in this Agreement and the other
Transaction Documents are in United States Dollars (“U.S. Dollars”), and all
amounts owing under this Agreement and all other Transaction Documents shall be
paid in U.S. Dollars.  All amounts denominated in other currencies (if any)
shall be converted into the U.S. Dollar equivalent amount in accordance with the
Exchange Rate on the date of calculation.  “Exchange Rate” means, in relation to
any amount of currency to be converted into U.S. Dollars pursuant to this
Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal
on the relevant date of calculation.

 

(p)           Judgment Currency.

 

(i)            If for the purpose of obtaining or enforcing judgment against the
Partnership in connection with this Agreement or any other Transaction Document
in any court in any jurisdiction it becomes necessary to convert into any other
currency (such other currency being hereinafter in this Section 9(p) referred to
as the “Judgment Currency”) an amount due in US Dollars under this Agreement,
the conversion shall be made at the Exchange Rate prevailing on the Trading Day
immediately preceding:

 

(1)           the date actual payment of the amount due, in the case of any
proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date:  or

 

(2)           the date on which the foreign court determines, in the case of any
proceeding in the courts of any other jurisdiction (the date as of which such
conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter
referred to as the “Judgment Conversion Date”).

 

(ii)           If in the case of any proceeding in the court of any jurisdiction
referred to in Section 9(p)(i)(2) above, there is a change in the Exchange Rate
prevailing between the Judgment Conversion Date and the date of actual payment
of the amount due, the applicable party shall pay such adjusted amount as may be
necessary to ensure that the amount paid in the Judgment Currency, when
converted at the Exchange Rate prevailing on the date of payment, will produce
the amount of US Dollars which could have been

 

41

--------------------------------------------------------------------------------

 

purchased with the amount of Judgment Currency stipulated in the judgment or
judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.

 

(iii)          Any amount due from the Partnership under this provision shall be
due as a separate debt and shall not be affected by judgment being obtained for
any other amounts due under or in respect of this Agreement or any other
Transaction Document.

 

(q)           Independent Nature of Buyers’ Obligations and Rights.  The
obligations of each Buyer under the Transaction Documents are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document.  Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as, and the Partnership acknowledges that the
Buyers do not so constitute, a partnership, an association, a joint venture or
any other kind of group or entity, or create a presumption that the Buyers are
in any way acting in concert or as a group or entity, and the Partnership shall
not assert any such claim with respect to such obligations or the transactions
contemplated by the Transaction Documents or any matters, and the Partnership
acknowledges that the Buyers are not acting in concert or as a group, and the
Partnership shall not assert any such claim, with respect to such obligations or
the transactions contemplated by the Transaction Documents.  The decision of
each Buyer to purchase Securities pursuant to the Transaction Documents has been
made by such Buyer independently of any other Buyer.  Each Buyer acknowledges
that no other Buyer has acted as agent for such Buyer in connection with such
Buyer making its investment hereunder and that no other Buyer will be acting as
agent of such Buyer in connection with monitoring such Buyer’s investment in the
Securities or enforcing its rights under the Transaction Documents.  The
Partnership and each Buyer confirms that each Buyer has independently
participated with the Partnership and its Subsidiaries in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and advisors.
 Each Buyer shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other
Buyer to be joined as an additional party in any proceeding for such purpose. 
The use of a single agreement to effectuate the purchase and sale of the
Securities contemplated hereby was solely in the control of the Partnership, not
the action or decision of any Buyer, and was done solely for the convenience of
the Partnership and its Subsidiaries and not because it was required or
requested to do so by any Buyer.  It is expressly understood and agreed that
each provision contained in this Agreement and in each other Transaction
Document is between the Partnership, each Subsidiary and a Buyer, solely, and
not between the Partnership, its Subsidiaries and the Buyers collectively and
not between and among the Buyers.  Notwithstanding the foregoing, the parties
hereto acknowledge and agree that as of the date hereof, the only Buyer shall be
SIG Strategic Investments, LLLP.

 

[signature pages follow]

 

42

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each Buyer and the Partnership have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 

 

PARTNERSHIP:

 

 

 

EMERGE ENERGY SERVICES LP

 

 

 

By: EMERGE ENERGY SERVICES GP LLC,
its general partner

 

 

 

 

 

By:

/s/ Warren Bonham

 

 

Name: Warren Bonham 

 

 

Title: Vice President 

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, each Buyer and the Partnership have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 

 

BUYER:

 

 

 

SIG STRATEGIC INVESTMENTS, LLLP

 

 

 

 

 

By:

/s/ Martin Kobinger

 

 

Name: Martin Kobinger 

 

 

Title: Authorized Signatory

 

--------------------------------------------------------------------------------

 

SCHEDULE OF BUYERS

 

(1)

 

(2)

 

(3)

 

(4)

 

(5)

 

(6)

 

(7)

 

(9)

Buyer

 

Address and Facsimile
Number

 

Aggregate
Number
of
Series A
Preferred
Units

 

Aggregate
Number of
Warrant
Units

 

Purchase Price

 

Purchase
Price
Allocated to
Series A
Preferred
Units

 

Purchase
Price
Allocated to
Warrant
Units

 

Legal
Representative’s
Address and
Facsimile Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SIG Strategic Investments, LLLP

 

c/o Heights Capital Management
101 California Street
Suite 3250
San Francisco, CA 94111
Attention: Martin Kobinger,
Investment Manager
Facsimile: 415-403-6525
E-Mail: martin.kobinger@sig.com

 

20,000

 

887,099

 

$20,000,000

 

$15,800,000

 

$4,200,000

 

Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Telephone: (212) 808-7540
Facsimile: (212) 808-7897
Attention: Michael A. Adelstein, Esq.

 

--------------------------------------------------------------------------------

 

Section 3(a)

 

Subsidiaries of Partnership

 

 

 

Jurisdiction of
Formation/Organization

 

Issued and Outstanding
Equity Interests

 

Owner

Emerge Energy Services Operating LLC

 

Delaware

 

Limited Liability Company Interests

 

100% owned by Emerge Energy Services LP

Direct Fuels LLC

 

Delaware

 

Limited Liability Company Interests

 

100% owned by Emerge Energy Services Operating LLC

Allied Energy Company LLC

 

Alabama

 

Limited Liability Company Interests

 

100% owned by Emerge Energy Services Operating LLC

Allied Renewable Energy, LLC

 

Delaware

 

Limited Liability Company Interests

 

100% owned by Allied Energy Company LLC

Emerge Energy Distributors Inc.

 

Delaware

 

100 Shares of Common Stock

 

100% owned by Emerge Energy Services Operating LLC

Superior Silica Sands LLC

 

Texas

 

Limited Liability Company Interests

 

100% owned by Emerge Energy Services Operating LLC

 

--------------------------------------------------------------------------------

 

Section 3(g)

 

Placement Agent’s Fees and Expenses

 

$1,200,000 (estimated)

 

--------------------------------------------------------------------------------

 

Section 3(r)(iii)

 

Affiliates

 

 

 

Common Units

 

Insight Equity

 

7,168,545

 

Ted W. Beneski

 

1,172,624

 

Rick Shearer

 

219,743

 

Victor L. Vescovo

 

139,752

 

Warren B. Bonham

 

6,899

 

Deborah Deibert

 

134

 

Mark Gottfredson

 

12,291

 

Francis J Kelly III

 

6,285

 

Kevin Clark

 

5,764

 

Eliot E. Kerlin, Jr.

 

2,408

 

Peter Jones

 

2,823

 

 

--------------------------------------------------------------------------------

 

Section 3(r)(iv)

 

Existing Securities; Obligations

 

Outstanding Options, Warrants, Scrip, Rights to Subscribe to, Calls or
Commitments:

 

·                  Warrants to purchase 370,000 common units at $4.77 per unit,
exercisable through June 2, 2021

 

--------------------------------------------------------------------------------

 

Section 3(s)

 

Indebtedness and Other Contracts

 

Outstanding Debt Securities, Notes, Credit Agreements, Credit Facilities or
Other Agreements Evidencing Indebtedness:

 

·                  $4 million unsecured PIK note due to lessor 30 days after
financial statements are publicly available covering the first date on which the
Total Leverage Ratio is < 4.00 to 1.00, 5% per annum in-kind interest compounds
quarterly.

 

·                  $8 million unsecured promissory note due to lessor June 2,
2020, 10% interest paid quarterly or in-kind until trailing four quarters
consolidated EBITDA (as defined in the Credit Agreement) is at least $40
million.

 

--------------------------------------------------------------------------------

 

Section 3(t)

 

Litigation

 

·                  On November 21, 2013, the Environmental Protection Agency
(“EPA”) provided notice to Allied Energy Corporation (“AEC”) about a potential
liability associated with the Reef Environmental Site (“Site”) located in
Sylacauga, Alabama. The EPA notice was provided pursuant to Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(CERCLA), 42 U.S.C. § 9604, (commonly known as the federal Superfund law). The
notice also requested information about AEC’s involvement with the Site, and
required a response to their notice. AEC submitted a timely response. On
June 15, 2016, AEC received an additional information request under Section 104
of CERCLA, dated June 8, 2016.  AEC is currently reviewing this request.  To
date, there has been no demand from EPA or any other party, nor any other
administrative findings related to this matter.

 

·                  On January 22, 2016, AEC experienced a leak in its
proprietary pipeline that connects the bulk storage terminal at 2700
Ishkooda-Wenonah Road to the transmix facility located near 2511 28th Street
SW.  AEC management notified the controlling governmental agencies of this
condition, and commenced efforts to locate the leak, determine the cause of the
leak, repair the leak, and remediate known contamination to the proximate soils
and sub-grade.  These efforts remain in progress.  There have been no findings
related to this matter.

 

--------------------------------------------------------------------------------

 

Section 3(ll)

 

Management

 

None.

 

--------------------------------------------------------------------------------

 

Exhibit A

 

EMERGE ENERGY SERVICES LP

TERM SHEET FOR CONVERTIBLE PREFERRED UNITS

 

ISSUER:

 

Emerge Energy Services LP (the “Partnership”).

 

 

 

SECURITY:

 

Series A Convertible Preferred Units (the “Preferred Units”)

 

 

 

INVESTMENT AMOUNT:

 

The Buyers collectively will purchase 20,000 Preferred Units and warrants to
purchase 887,099 Common Units for an aggregate purchase price of $20 million in
accordance with terms set forth in the Securities Purchase Agreement to which
this Exhibit A is attached.

 

 

 

RANKING:

 

The Preferred Units will rank senior to all of the Partnership’s Common Units
and any other class or series of equity securities of the Partnership with
respect to distribution rights and, subject to liquidation in accordance with
capital accounts, liquidation preference.

 

 

 

DISTRIBUTIONS:

 

The Partnership will pay to the holders of outstanding Preferred Units (the
“Holders”) the same distributions, if any, on an as-converted basis as are paid
to the Common Unit holders.

 

 

 

VOTING RIGHTS:

 

The Preferred Units shall not have voting rights in respect of the Preferred
Units, except as required by applicable law.

 

 

 

CONVERSION AT HOLDERS’ ELECTION:

 

The Preferred Units will be convertible by the Holders in their sole discretion,
in full or in part, into Common Units based on the Conversion Rate, which shall
equal the $1,000 stated value of each Preferred Unit plus any accrued and unpaid
distributions in respect thereof, divided by the Conversion Price of $10.15 per
Preferred Unit. In addition, the Preferred Units will alternatively be
convertible at a discount upon the occurrence of (x) a change of control or
(y) certain triggering events at a alternate conversion price to be set forth in
the amendment to the limited partnership agreement reflecting the terms of
Preferred Units (the “Amendment”).

 

 

 

AUTOMATIC CONVERSION:

 

On each of (A) the 10th trading day after a registration statement relating to
the resale of the Common Units underlying the Preferred Units (the “Conversion
Units”) and the Common Units underlying the warrants being issued to the Buyers
is declared effective, and (B) the 10th trading day after the 90th calendar day
after the date described in clause (A) immediately above, 50% of the Preferred
Units shall be converted into Common Units at a conversion price equal to the
lower of (1) the conversion price then in effect based on the Conversion Rate
and (2) 90% of the market price based on a 10-day VWAP preceding the conversion
date, in each case, subject to the satisfaction of customary equity conditions
and no triggering event having occurred and being continuing.

 

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ANTI-DILUTION ADJUSTMENTS:

 

The Preferred Units will be entitled to full ratchet anti-dilution protection.

 

 

 

REDEMPTION:

 

The Holders will have the right to cause the Partnership to redeem the Preferred
Units in connection with certain bankruptcy-related events and in connection
with a Change of Control at the Bankruptcy Redemption Price of the Change of
Control Redemption Price, each to be defined in the Amendment.

 

 

 

REGISTRATION RIGHTS:

 

To be as set forth in the Registration Rights Agreement in the form attached to
the Securities Purchase Agreement.

 

 

 

LIQUIDATION PREFERENCE:

 

In the event of any liquidation, dissolution and winding up of the Partnership,
or a sale, exchange or other disposition of all or substantially all of the
assets of the Partnership, either voluntary or involuntary, the Holders 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 holders of any other class
or series of Partnership interests, the positive value in each such Holder’s
capital account in respect of such Preferred Units, after taking into account
all capital account adjustments for the relevant taxable periods.

 

 

 

 

 

The Holders shall have the right to convert prior to the effectiveness of any
voluntary liquidation or winding up.

 

 

 

MINORITY PROTECTIONS:

 

During the period that any Preferred Unit remains outstanding, the Partnership
may not:

(i) issue any equity security senior in right of distribution or in liquidation
to the Preferred Units,

 

(ii) issue additional pari passu equity interests,

 

(iii) effect any amendments to the Partnership’s partnership agreement or
certificate of limited partnership that would adversely change the rights,
preferences or privileges of the Preferred Units, or

 

in each case, without the consent of the holders of a majority of the
outstanding Preferred Units.

 

 

 

LIMITATIONS ON BENEFICIAL OWNERSHIP:

 

No conversion of the Preferred Units shall occur to the extent such conversion
would cause the Holder and its attribution parties to beneficially own in excess
of 4.99% of the Common Units outstanding immediately after giving effect to such
conversion.

 

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EXHIBIT B

 

[FORM OF WARRANT]

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE PARTNERSHIP), IN A FORM REASONABLY
ACCEPTABLE TO THE PARTNERSHIP, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.  THE NUMBER OF COMMON UNITS ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE
HEREOF PURSUANT TO SECTION 1(a) OF THIS WARRANT.

 

EMERGE ENERGY SERVICES LP

 

WARRANT TO PURCHASE COMMON UNITS

 

Warrant No.: W-[   ]

 

Date of Issuance: [                   ], 2016 (“Issuance Date”)

 

Emerge Energy Services LP, a Delaware limited partnership (the “Partnership”),
hereby certifies that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, [BUYER], the registered holder
hereof or its permitted assigns (the “Holder”), is entitled, subject to the
terms set forth below, to purchase from the Partnership, at the Exercise Price
(as defined below) then in effect, upon exercise of this Warrant to Purchase
Common Units (including any Warrants to Purchase Common Units issued in
exchange, transfer or replacement hereof, the “Warrant”), at any time or times
on or after the Issuance Date, but not after 11:59 p.m., New York time, on the
Expiration Date (as defined below), 887,099   (subject to adjustment as provided
herein) fully paid and non-assessable Common Units (as defined below) (the
“Warrant Units”).  Except as otherwise defined herein, capitalized terms in this
Warrant shall have the meanings set forth in Section 17.  This Warrant is one of
the Warrants to Purchase Common Units (the “SPA Warrants”) issued pursuant to
Section 1 of that certain Securities Purchase Agreement, dated as of August 8,
2016 (the “Subscription Date”), by and among the Partnership and the investors
(the “Buyers”) referred to therein, as amended from time to time (the
“Securities Purchase Agreement”).

 

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1.                                      EXERCISE OF WARRANT.

 

(a)                                 Mechanics of Exercise.  Subject to the terms
and conditions hereof (including, without limitation, the limitations set forth
in Section 1(f)), this Warrant may be exercised by the Holder on any day on or
after the Issuance Date (an “Exercise Date”), in whole or in part, by delivery
(whether via facsimile or otherwise) of a written notice, in the form attached
hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to
exercise this Warrant.  Within one (1) Trading Day following an exercise of this
Warrant as aforesaid, the Holder shall deliver payment to the Partnership of an
amount equal to the Exercise Price in effect on the date of such exercise
multiplied by the number of Warrant Units as to which this Warrant was so
exercised (the “Aggregate Exercise Price”) in cash or via wire transfer of
immediately available funds if the Holder did not notify the Partnership in such
Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as
defined in Section 1(d)).  The Holder shall not be required to deliver the
original of this Warrant in order to effect an exercise hereunder.  Execution
and delivery of an Exercise Notice with respect to less than all of the Warrant
Units shall have the same effect as cancellation of the original of this Warrant
and issuance of a new Warrant evidencing the right to purchase the remaining
number of Warrant Units.  Execution and delivery of an Exercise Notice for all
of the then-remaining Warrant Units shall have the same effect as cancellation
of the original of this Warrant after delivery of the Warrant Units in
accordance with the terms hereof.  On or before the first (1st) Trading Day
following the date on which the Partnership has received an Exercise Notice, the
Partnership shall transmit by facsimile or electronic mail an acknowledgment of
confirmation of receipt of such Exercise Notice, in the form attached hereto as
Exhibit B, to the Holder and the Partnership’s transfer agent (the “Transfer
Agent”), which confirmation shall constitute an instruction to the Transfer
Agent to process such Exercise Notice in accordance with the terms herein. On or
before the third (3rd) Trading Day following the date on which the Partnership
has received such Exercise Notice (or such earlier date as required pursuant to
the 1934 Act or other applicable law, rule or regulation for the settlement of a
trade of such Warrant Units initiated on the applicable Exercise Date), the
Partnership shall (X) provided that the Transfer Agent is participating in The
Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of Common Units to
which the Holder is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit/Withdrawal at Custodian
system, or (Y) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, upon the request of the Holder, issue and
deliver (via reputable overnight courier) to the address as specified in the
Exercise Notice, a certificate, registered in the name of the Holder or its
designee, for the number of Common Units to which the Holder shall be entitled
pursuant to such exercise.  Upon delivery of an Exercise Notice, the Holder
shall be deemed for all corporate purposes to have become the holder of record
of the Warrant Units with respect to which this Warrant has been exercised,
irrespective of the date such Warrant Units are credited to the Holder’s DTC
account or the date of delivery of the certificates evidencing such Warrant
Units (as the case may be).  If this Warrant is submitted in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Units
represented by this Warrant submitted for exercise is greater than the number of
Warrant Units being acquired upon an exercise and upon surrender of this Warrant
to the Partnership by the Holder, then, at the request of the Holder, the
Partnership shall as soon as practicable and in no event later than three
(3) Business Days after any exercise and at its own

 

2

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expense, issue and deliver to the Holder (or its designee) a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the number of
Warrant Units purchasable immediately prior to such exercise under this Warrant,
less the number of Warrant Units with respect to which this Warrant is
exercised.  No fractional Common Units are to be issued upon the exercise of
this Warrant, but rather the number of Common Units to be issued shall be
rounded up to the nearest whole number.  The Partnership shall pay any and all
transfer, stamp, issuance and similar taxes, costs and expenses (including,
without limitation, fees and expenses of the Transfer Agent) that may be payable
with respect to the issuance and delivery of Warrant Units upon exercise of this
Warrant; provided, however, that (i) the Partnership shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance or delivery of this Warrant or of the Warrant Units in a name other
than that of the Holder at the time of surrender, and until the payment of such
tax the Partnership shall not be required to issue such Warrant Units, and
(ii) the Holder shall be responsible for any income tax due under federal, state
or other law as a result of owning this Warrant or any Warrant Units issued upon
the exercise of this Warrant.  Notwithstanding the foregoing, except in the case
where an exercise of this Warrant is validly made pursuant to a Cashless
Exercise, the Partnership’s failure to deliver Warrant Units to the Holder on or
prior to the later of (i) three (3) Trading Days after receipt of the applicable
Exercise Notice (or such earlier date as required pursuant to the 1934 Act or
other applicable law, rule or regulation for the settlement of a trade of such
Warrant Units initiated on the applicable Exercise Date) and (ii) one
(1) Trading Day after the Partnership’s receipt of the Aggregate Exercise Price
(or valid notice of a Cashless Exercise) (such later date, the “Unit Delivery
Deadline”) shall not be deemed to be a breach of this Warrant.  Notwithstanding
anything to the contrary contained in this Warrant or the Registration Rights
Agreement, after the effective date of the Registration Statement (as defined in
the Registration Rights Agreement) and prior to the Holder’s receipt of the
notice of a Grace Period (as defined in the Registration Rights Agreement), the
Partnership shall cause the Transfer Agent to deliver unlegended Common Units to
the Holder (or its designee) in connection with any sale of Registrable
Securities (as defined in the Registration Rights Agreement) with respect to
which the Holder has entered into a contract for sale, and delivered a copy of
the prospectus included as part of the particular Registration Statement to the
extent applicable, and for which the Holder has not yet settled.  From the
Issuance Date through and including the Expiration Date, the Partnership shall
maintain a transfer agent that participates in the DTC’s Fast Automated
Securities Transfer Program.

 

(b)                                 Exercise Price.  For purposes of this
Warrant, “Exercise Price” means $10.82, subject to adjustment as provided
herein.

 

(c)                                  Partnership’s Failure to Timely Deliver
Securities.  If the Partnership shall fail, for any reason or for no reason, on
or prior to the Unit Delivery Deadline, either (I) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, to issue
and deliver to the Holder (or its designee) a certificate for the number of
Warrant Units to which the Holder is entitled and register such Warrant Units on
the Partnership’s unit register or, if the Transfer Agent is participating in
the DTC Fast Automated Securities Transfer Program, to credit the balance
account of the Holder or the Holder’s designee with DTC for such number of
Warrant Units to which the Holder is entitled upon the Holder’s exercise of this
Warrant (as the case may be) or (II) if a Registration Statement covering the
resale of the Warrant Units that are

 

3

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the subject of the Exercise Notice (the “Unavailable Warrant Units”) is not
available for the resale of such Unavailable Warrant Units and the Partnership
fails to promptly, but in no event later than as required pursuant to the
Registration Rights Agreement (x) so notify the Holder and (y) deliver the
Warrant Units electronically without any restrictive legend by crediting such
aggregate number of Warrant Units to which the Holder is entitled pursuant to
such exercise to the Holder’s or its designee’s balance account with DTC through
its Deposit/Withdrawal At Custodian system (the event described in the
immediately foregoing clause (II) is hereinafter referred as a “Notice Failure”
and together with the event described in clause (I) above, a “Delivery
Failure”), and if on or after such Unit Delivery Deadline the Holder purchases
(in an open market transaction or otherwise) Common Units to deliver in
satisfaction of a sale by the Holder of all or any portion of the number of
Common Units issuable upon such exercise that the Holder is entitled to receive
from the Partnership (a “Buy-In”), then, in addition to all other remedies
available to the Holder, the Partnership shall, within three (3) Business Days
after the Holder’s request and in the Holder’s discretion, either (i) pay cash
to the Holder in an amount equal to the Holder’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for the Common
Units so purchased (including, without limitation, by any other Person in
respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the
Partnership’s obligation to so issue and deliver such certificate (and to issue
such Common Units) or credit the balance account of such Holder or such Holder’s
designee, as applicable, with DTC for the number of Warrant Units to which the
Holder is entitled upon the Holder’s exercise hereunder (as the case may be)
(and to issue such Warrant Units) shall terminate, or (ii) promptly honor its
obligation to so issue and deliver to the Holder a certificate or certificates
representing such Warrant Units or credit the balance account of such Holder or
such Holder’s designee, as applicable, with DTC for the number of Warrant Units
to which the Holder is entitled upon the Holder’s exercise hereunder (as the
case may be) and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of Warrant Units
multiplied by (B) the lowest Closing Sale Price of the Common Units on any
Trading Day during the period commencing on the date of the applicable Exercise
Notice and ending on the date of such issuance and payment under this clause
(ii) (the “Buy-In Payment Amount”).  Nothing shall limit the Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity,
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Partnership’s failure to timely deliver
certificates representing Common Units (or to electronically deliver such Common
Units) upon the exercise of this Warrant as required pursuant to the terms
hereof.

 

(d)                                 Cashless Exercise.  Notwithstanding anything
contained herein to the contrary (other than Section 1(f) below), if at the time
of exercise hereof a Registration Statement (as defined in the Registration
Rights Agreement (as defined in the Securities Purchase Agreement)) is not
effective (or the prospectus contained therein is not available for use) for the
resale by the Holder of all of the Warrant Units, then the Holder may, in its
sole discretion, exercise this Warrant in whole or in part and, in lieu of
making the cash payment otherwise contemplated to be made to the Partnership
upon such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the “Net Number” of Warrant Units determined
according to the following formula (a “Cashless Exercise”):

 

4

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Net Number = (A x B) - (A x C)

                                     D

 

For purposes of the foregoing formula:

 

A= the total number of units with respect to which this Warrant is then being
exercised.

 

B = the quotient of (x) the sum of the VWAP of the Common Units of each of the
ten (10) Trading Days ending at the close of business on the Principal Market
immediately prior to the time of exercise as set forth in the applicable
Exercise Notice, divided by (y) ten (10).

 

C = the Exercise Price then in effect for the applicable Warrant Units at the
time of such exercise.

 

D = the VWAP of the Common Units at the close of business on the Principal
Market on the date of the delivery of the applicable Exercise Notice.

 

For purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the
Subscription Date, it is intended that the Warrant Units issued in a Cashless
Exercise shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Units shall be deemed to have commenced, on the date this
Warrant was originally issued pursuant to the Securities Purchase Agreement.

 

(e)                                  Disputes.  In the case of a dispute as to
the determination of the Exercise Price or the arithmetic calculation of the
number of Warrant Units to be issued pursuant to the terms hereof, the
Partnership shall promptly issue to the Holder the number of Warrant Units that
are not disputed and resolve such dispute in accordance with Section 13.

 

(f)                                   Limitations on Exercises.  The Partnership
shall not effect the exercise of any portion of this Warrant, and the Holder
shall not have the right to exercise any portion of this Warrant, pursuant to
the terms and conditions of this Warrant and any such exercise shall be null and
void and treated as if never made, to the extent that after giving effect to
such exercise, the Holder together with the other Attribution Parties
collectively would beneficially own in excess of 4.99% (the “Maximum
Percentage”) of the Common Units outstanding immediately after giving effect to
such exercise.  For purposes of the foregoing sentence, the aggregate number of
Common Units beneficially owned by the Holder and the other Attribution Parties
shall include the number of Common Units held by the Holder and all other
Attribution Parties plus the number of Common Units issuable upon exercise of
this Warrant with respect to which the determination of such sentence is being
made, but shall exclude Common Units which would be issuable upon (A) exercise
of the remaining, unexercised portion of this Warrant beneficially owned by the
Holder or any of the other Attribution Parties and (B) exercise or conversion of
the unexercised or unconverted portion of any other securities of the
Partnership (including, without limitation, any convertible notes or convertible
preferred units or warrants, including other SPA Warrants) beneficially owned by
the Holder or any other Attribution Party subject to a limitation on conversion
or exercise analogous to the limitation contained in this Section 1(f).  For
purposes

 

5

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of this Section 1(f)(i), beneficial ownership shall be calculated in accordance
with Section 13(d) of the 1934 Act.  For purposes of determining the number of
outstanding Common Units the Holder may acquire upon the exercise of this
Warrant without exceeding the Maximum Percentage, the Holder may rely on the
number of outstanding Common Units as reflected in (x) the Partnership’s most
recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report
on Form 8-K or other public filing with the SEC, as the case may be, (y) a more
recent public announcement by the Partnership or (z) any other written notice by
the Partnership or the Transfer Agent, if any, setting forth the number of
Common Units outstanding (the “Reported Outstanding Unit Number”).  If the
Partnership receives an Exercise Notice from the Holder at a time when the
actual number of outstanding Common Units is less than the Reported Outstanding
Unit Number, the Partnership shall (i) notify the Holder in writing of the
number of Common Units then outstanding and, to the extent that such Exercise
Notice would otherwise cause the Holder’s beneficial ownership, as determined
pursuant to this Section 1(f), to exceed the Maximum Percentage, the Holder must
notify the Partnership of a reduced number of Warrant Units to be acquired
pursuant to such Exercise Notice (the number of units by which such purchase is
reduced, the “Reduction Units”) and (ii) as soon as reasonably practicable, the
Partnership shall return to the Holder any exercise price paid by the Holder for
the Reduction Units.  For any reason at any time, upon the written or oral
request of the Holder, the Partnership shall within one (1) Business Day confirm
orally and in writing or by electronic mail to the Holder the number of Common
Units then outstanding.  In any case, the number of outstanding Common Units
shall be determined after giving effect to the conversion or exercise of
securities of the Partnership, including this Warrant, by the Holder and any
other Attribution Party since the date as of which the Reported Outstanding Unit
Number was reported.  In the event that the issuance of Common Units to the
Holder upon exercise of this Warrant results in the Holder and the other
Attribution Parties being deemed to beneficially own, in the aggregate, more
than the Maximum Percentage of the number of outstanding Common Units (as
determined under Section 13(d) of the 1934 Act), the number of units so issued
by which the Holder’s and the other Attribution Parties’ aggregate beneficial
ownership exceeds the Maximum Percentage (the “Excess Units”) shall be deemed
null and void and shall be cancelled ab initio, and the Holder shall not have
the power to vote or to transfer the Excess Units.  As soon as reasonably
practicable after the issuance of the Excess Units has been deemed null and
void, the Partnership shall return to the Holder the exercise price paid by the
Holder for the Excess Units.  Upon delivery of a written notice to the
Partnership, the Holder may from time to time increase (with such increase not
effective until the sixty-first (61st) day after delivery of such notice) or
decrease the Maximum Percentage to any other percentage not in excess of 9.99%
as specified in such notice; provided that (i) any such increase in the Maximum
Percentage will not be effective until the sixty-first (61st) day after such
notice is delivered to the Partnership and (ii) any such increase or decrease
will apply only to the Holder and the other Attribution Parties and not to any
other holder of SPA Warrants that is not an Attribution Party of the Holder. 
For purposes of clarity, the Common Units issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to be
beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act.  No prior inability to
exercise this Warrant pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 1(f) to the extent necessary to correct this

 

6

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paragraph or any portion of this paragraph which may be defective or
inconsistent with the intended beneficial ownership limitation contained in this
Section 1(f) or to make changes or supplements necessary or desirable to
properly give effect to such limitation.  The limitation contained in this
paragraph may not be waived and shall apply to a successor holder of this
Warrant.

 

(g)                                  Taxes.  The Partnership and the Holder
agree (a) the Warrant is properly treated, for U.S. federal income tax purposes,
as a noncompensatory option (as defined in U.S. Treasury regulation section
1.721-2(f)); (b) the Warrant will not be treated as exercised, for U.S. federal
income tax purposes, upon issuance and, thus, the Holder will not receive any
allocation of income, gain, loss or deduction prior to the receipt of Common
Units acquired upon exercise of the Warrant; (c) to follow the U.S. Treasury
regulations regarding the exercise of noncompensatory options (as defined in
U.S. Treasury regulation section 1.721-2(f)) with respect to the U.S. federal
income tax treatment of the Warrant and the capital account treatment with
respect to the Common Units acquired upon exercise of the Warrant, including
with respect to a capital account reallocation in connection with the
revaluation of property in accordance with U.S. Treasury regulation section
1.704-1(b)(2)(iv)(s) and (d) if, as a result of the exercise of a Warrant, a
capital account reallocation is required under U.S. Treasury regulation section
1.704-1(b)(2)(iv)(s), the General Partner shall make corrective allocations
pursuant to U.S. Treasury regulation section 1.704-1(b)(4)(x).

 

2.                                      ADJUSTMENT OF EXERCISE PRICE AND NUMBER
OF WARRANT UNITS.  The Exercise Price and number of Warrant Units issuable upon
exercise of this Warrant are subject to adjustment from time to time as set
forth in this Section 2.

 

(a)                                 Unit Dividends and Splits.  Without limiting
any provision of Section 2(b) or Section 4, if the Partnership, but excluding
any Distributions made to the Holder pursuant to Section 3 below (or held in
abeyance in accordance with Section 3 below), at any time on or after the
Subscription Date, (i) pays a unit dividend on one or more classes of its then
outstanding Common Units or otherwise makes a distribution on any class of units
that is payable in Common Units, (ii) subdivides (by any unit split, unit
dividend, recapitalization or otherwise) one or more classes of its then
outstanding Common Units into a larger number of units or (iii) combines (by
combination, reverse unit split or otherwise) one or more classes of its then
outstanding Common Units into a smaller number of units, then in each such case
the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of Common Units outstanding immediately before such event
and of which the denominator shall be the number of Common Units outstanding
immediately after such event.  Any adjustment made pursuant to clause (i) of
this paragraph shall become effective immediately after the record date for the
determination of unitholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.  If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

 

(b)                                 Adjustment Upon Issuance of Units of Common
Units.  If and whenever on or after the Subscription Date, the Partnership
issues or sells, or in accordance with this Section 2 is

 

7

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deemed to have issued or sold, any Common Units (including the issuance or sale
of Common Units owned or held by or for the account of the Partnership, but
excluding any Excluded Securities issued or sold or deemed to have been issued
or sold) for a consideration per unit (the “New Issuance Price”) less than a
price equal to the Exercise Price in effect immediately prior to such issuance
or sale or deemed issuance or sale (such Exercise Price then in effect is
referred to herein as the “Applicable Price”) (the foregoing a “Dilutive
Issuance”), then immediately after such Dilutive Issuance, the Exercise Price
then in effect shall be reduced to an amount equal to (x) if such Dilutive
Issuance occurs prior to the later of (1) the 90th calendar day after the
Issuance Date and (2) the Effective Date (as defined in the Registration Rights
Agreement) of the initial Registration Statement filed pursuant to the
Registration Rights Agreement (such later date, the “Trigger Date”), the New
Issuance Price or (y) and if on or prior to the Trigger Date the Partnership
shall have failed to consummate the transactions contemplated by that certain
Purchase and Sale Agreement, dated June 23, 2016, by and among the Partnership,
Emerge Energy Services Operating LLC, Susser Petroleum Operating Company LLC and
Sunoco LP (collectively, the “Sale Transaction”), the product of (A) the
Applicable Price and (B) the quotient determined by dividing (1) the sum of
(I) the product derived by multiplying the Conversion Price in effect
immediately prior to such Dilutive Issuance and the number of Common Units
Deemed Outstanding immediately prior to such Dilutive Issuance plus (II) the
consideration, if any, received by the Partnership upon such Dilutive Issuance,
by (2) the product derived by multiplying (I) the Applicable Price by (II) the
number of Common Units Deemed Outstanding immediately after such Dilutive
Issuance.  For the avoidance of doubt, if the Partnership shall have consummated
the Sale Transaction on or prior to the Trigger Date, from and after the Trigger
Date no further adjustments to the Exercise Price shall occur pursuant to this
Section 2(b).  For all purposes of the foregoing (including, without limitation,
determining the adjusted Exercise Price and the New Issuance Price under this
Section 2(b)), the following shall be applicable:

 

(i)                                     Issuance of Options.  If the Partnership
in any manner grants or sells any Options and the lowest price per unit for
which one Common Units is at any time issuable upon the exercise of any such
Option or upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option or otherwise pursuant to the terms
thereof is less than the Applicable Price, then such Common Units shall be
deemed to be outstanding and to have been issued and sold by the Partnership at
the time of the granting or sale of such Option for such price per unit.  For
purposes of this Section 2(b)(i), the “lowest price per unit for which one
Common Units is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option or otherwise pursuant to the terms thereof”  shall
be equal to (1) the lower of (x) the sum of the lowest amounts of consideration
(if any) received or receivable by the Partnership with respect to any one
Common Units upon the granting or sale of such Option, upon exercise of such
Option and upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option or otherwise pursuant to the terms thereof
and (y) the lowest exercise price set forth in such Option for which one Common
Units is issuable upon the exercise of any such Options or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any
such Option or otherwise pursuant to the terms thereof minus (2) the sum of all
amounts paid or payable to the holder of such

 

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Option (or any other Person) upon the granting or sale of such Option, upon
exercise of such Option and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Option or otherwise pursuant
to the terms thereof plus the value of any other consideration received or
receivable by, or benefit conferred on, the holder of such Option (or any other
Person).  Except as contemplated below, no further adjustment of the Exercise
Price shall be made upon the actual issuance of such Common Units or of such
Convertible Securities upon the exercise of such Options or otherwise pursuant
to the terms of or upon the actual issuance of such Common Units upon
conversion, exercise or exchange of such Convertible Securities.

 

(ii)                                  Issuance of Convertible Securities.  If
the Partnership in any manner issues or sells any Convertible Securities and the
lowest price per unit for which one Common Units is at any time issuable upon
the conversion, exercise or exchange thereof or otherwise pursuant to the terms
thereof is less than the Applicable Price, then such Common Units shall be
deemed to be outstanding and to have been issued and sold by the Partnership at
the time of the issuance or sale of such Convertible Securities for such price
per unit.  For the purposes of this Section 2(b)(ii), the “lowest price per unit
for which one Common Units is issuable upon the conversion, exercise or exchange
thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the
lower of (x) the sum of the lowest amounts of consideration (if any) received or
receivable by the Partnership with respect to one Common Units upon the issuance
or sale of the Convertible Security and upon conversion, exercise or exchange of
such Convertible Security or otherwise pursuant to the terms thereof and (y) the
lowest conversion price set forth in such Convertible Security for which one
Common Units is issuable upon conversion, exercise or exchange thereof or
otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or
payable to the holder of such Convertible Security (or any other Person) upon
the issuance or sale of such Convertible Security plus the value of any other
consideration received or receivable by, or benefit conferred on, the holder of
such Convertible Security (or any other Person).  Except as contemplated below,
no further adjustment of the Exercise Price shall be made upon the actual
issuance of such Common Units upon conversion, exercise or exchange of such
Convertible Securities or otherwise pursuant to the terms thereof, and if any
such issuance or sale of such Convertible Securities is made upon exercise of
any Options for which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 2(b), except as contemplated below,
no further adjustment of the Exercise Price shall be made by reason of such
issuance or sale.

 

(iii)                               Change in Option Price or Rate of
Conversion.  If the purchase or exercise price provided for in any Options, the
additional consideration, if any, payable upon the issue, conversion, exercise
or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for Common Units
increases or decreases at any time (other than proportional changes in
conversion or exercise prices, as applicable, in connection with an event
referred to in Section 2(a)), the Exercise Price in effect at the time of such
increase or decrease shall be adjusted to the Exercise Price which would have
been in effect at such time had such Options or Convertible Securities provided
for such increased or decreased purchase

 

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price, additional consideration or increased or decreased conversion rate, as
the case may be, at the time initially granted, issued or sold.  For purposes of
this Section 2(b)(iii), if the terms of any Option or Convertible Security that
was outstanding as of the Subscription Date are increased or decreased in the
manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Units deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such increase or decrease.  No adjustment pursuant to this
Section 2(b) shall be made if such adjustment would result in an increase of the
Exercise Price then in effect.

 

(iv)                              Calculation of Consideration Received.  If any
Option and/or Convertible Security and/or Adjustment Right is issued in
connection with the issuance or sale or deemed issuance or sale of any other
securities of the Partnership (as determined by the Holder, the “Primary
Security”, and such Option and/or Convertible Security and/or Adjustment Right,
the “Secondary Securities”), together comprising one integrated transaction, (or
one or more transactions if such issuances or sales or deemed issuances or sales
of securities of the Partnership either (A) have at least one investor or
purchaser in common, (B) are consummated in reasonable proximity to each other
and/or (C) are consummated under the same plan of financing) the aggregate
consideration per Common Units with respect to such Primary Security shall be
deemed to be equal to the difference of (x) the lowest price per unit for which
one Common Units was issued (or was deemed to be issued pursuant to
Section 2(b)(i) or 2(b)(ii) above, as applicable) in such integrated transaction
solely with respect to such Primary Security, minus (y) with respect to such
Secondary Securities, the sum of (I) the Black Scholes Consideration Value of
each such Option, if any, (II) the fair market value (as determined by the
Holder in good faith) or the Black Scholes Consideration Value, as applicable,
of such Adjustment Right, if any, and (III) the fair market value (as determined
by the Holder) of such Convertible Security, if any, in each case, as determined
on a per unit basis in accordance with this Section 2(b)(iv).  If any Common
Units, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor (for the
purpose of determining the consideration paid for such Common Units, Option or
Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the net amount of
consideration received by the Partnership therefor.  If any Common Units,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of such consideration received by the Partnership (for the
purpose of determining the consideration paid for such Common Units, Option or
Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be the fair value of such consideration,
except where such consideration consists of publicly traded securities, in which
case the amount of consideration received by the Partnership for such securities
will be the arithmetic average of the VWAPs of such security for each of the
five (5) Trading Days immediately preceding the date of receipt.  If any Common
Units, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Partnership is
the surviving entity, the amount of consideration therefor (for the purpose of
determining the consideration paid for such Common Units, Option or Convertible
Security, but not for

 

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the purpose of the calculation of the Black Scholes Consideration Value) will be
deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Units, Options or
Convertible Securities (as the case may be).  The fair value of any
consideration other than cash or publicly traded securities will be determined
jointly by the Partnership and the Holder.  If such parties are unable to reach
agreement within ten (10) days after the occurrence of an event requiring
valuation (the “Valuation Event”), the fair value of such consideration will be
determined within five (5) Trading Days after the tenth (10th) day following
such Valuation Event by an independent, reputable appraiser jointly selected by
the Partnership and the Holder.  The determination of such appraiser shall be
final and binding upon all parties absent manifest error and the fees and
expenses of such appraiser shall be borne by the Partnership.

 

(v)           Record Date.  If the Partnership takes a record of the holders of
Common Units for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Units, Options or in Convertible Securities
or (B) to subscribe for or purchase Common Units, Options or Convertible
Securities, then such record date will be deemed to be the date of the issuance
or sale of the Common Units deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase (as the case may
be).

 

(c)           Number of Warrant Units.  Simultaneously with any adjustment to
the Exercise Price pursuant to this Section 2(a), the number of Warrant Units
that may be purchased upon exercise of this Warrant shall be increased or
decreased proportionately, so that after such adjustment the aggregate Exercise
Price payable hereunder for the adjusted number of Warrant Units shall be the
same as the aggregate Exercise Price in effect immediately prior to such
adjustment (without regard to any limitations on exercise contained herein).

 

(d)           Holder’s Right of Alternative Exercise Price Following Issuance of
Certain Options or Convertible Securities.  In addition to and not in limitation
of the other provisions of this Section 2, if at any time the Series A Preferred
Units remain outstanding the Partnership in any manner issues or sells or enters
into any agreement to issue or sell, any Common Units, Options or Convertible
Securities (any such securities, “Variable Price Securities”) after the
Subscription Date that are issuable pursuant to such agreement or convertible
into or exchangeable or exercisable for Common Units at a price which varies or
may vary with the market price of the Common Units, including by way of one or
more reset(s) to a fixed price, but exclusive of such formulations reflecting
customary anti-dilution provisions (such as unit splits, unit combinations, unit
dividends and similar transactions) (each of the formulations for such variable
price being herein referred to as, the “Variable Price”), the Partnership shall
provide written notice thereof via facsimile and overnight courier to the Holder
on the date of such agreement and the issuance of such Convertible Securities or
Options.  From and after the date the Partnership enters into such agreement or
issues any such Variable Price Securities until such time as no Series A
Preferred Units remain outstanding, the Holder shall have the right, but not the
obligation, in its sole discretion to substitute the Variable Price for the
Exercise Price upon exercise of this Warrant by designating in the Exercise
Notice delivered upon any exercise of

 

11

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this Warrant that solely for purposes of such exercise the Holder is relying on
the Variable Price rather than the Exercise Price then in effect.  The Holder’s
election to rely on a Variable Price for a particular exercise of this Warrant
shall not obligate the Holder to rely on a Variable Price for any future
exercises of this Warrant.

 

(e)           Other Events.  In the event that the Partnership (or any
Subsidiary (as defined in the Securities Purchase Agreement)) shall take any
action to which the provisions hereof are not strictly applicable, or, if
applicable, would not operate to protect the Holder from dilution or if any
event occurs of the type contemplated by the provisions of this Section 2 but
not expressly provided for by such provisions (including, without limitation,
the granting of unit appreciation rights, phantom unit rights or other rights
with equity features), then the Partnership’s board of directors shall in good
faith determine and implement an appropriate adjustment in the Exercise Price
and the number of Warrant Units (if applicable) so as to protect the rights of
the Holder, provided that no such adjustment pursuant to this Section 2(e) will
increase the Exercise Price or decrease the number of Warrant Units as otherwise
determined pursuant to this Section 2, provided further that if the Holder does
not accept such adjustments as appropriately protecting its interests hereunder
against such dilution, then the Partnership’s board of directors and the Holder
shall agree, in good faith, upon an independent investment bank of nationally
recognized standing to make such appropriate adjustments, whose determination
shall be final and binding absent manifest error and whose fees and expenses
shall be borne by the Partnership.

 

(f)            Calculations.  All calculations under this Section 2 shall be
made by rounding to the nearest cent or the nearest 1/100th of a unit, as
applicable.  The number of Common Units outstanding at any given time shall not
include units owned or held by or for the account of the Partnership, and the
disposition of any such units shall be considered an issuance or sale of Common
Units.

 

(g)           Voluntary Adjustment By Partnership.  The Partnership may at any
time during the term of this Warrant, with the prior written consent of the
Required Holders (as defined in the Securities Purchase Agreement), reduce the
then current Exercise Price to any amount and for any period of time deemed
appropriate by the board of directors of the Partnership.

 

3.             RIGHTS UPON DISTRIBUTION OF ASSETS.  In addition to any
adjustments pursuant to Section 2 above, if the Partnership shall declare or
make any dividend or other distribution of its assets (or rights to acquire its
assets) to holders of Common Units, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, units or other
securities, property, options, evidence of indebtedness or any other assets by
way of a dividend, spin off, reclassification, corporate rearrangement, scheme
of arrangement or other similar transaction (a “Distribution”), at any time
after the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of Common
Units acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on which a
record is taken for such Distribution, or, if no such record is taken, the date
as of which the record holders of Common Units are to be determined for the
participation in such Distribution (provided, however, that to the extent that
the Holder’s right to participate in any such Distribution would result in the
Holder and the other Attribution Parties exceeding the

 

12

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Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to the extent of the Maximum Percentage (and shall not be entitled
to beneficial ownership of such Common Units as a result of such Distribution
(and beneficial ownership) to the extent of any such excess) and the portion of
such Distribution shall be held in abeyance for the benefit of the Holder until
such time or times, if ever, as its right thereto would not result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage, at which
time or times the Holder shall be granted such Distribution (and any
Distributions declared or made on such initial Distribution or on any subsequent
Distribution held similarly in abeyance) to the same extent as if there had been
no such limitation).

 

4.             PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)           Purchase Rights.  In addition to any adjustments pursuant to
Section 2 above, if at any time the Partnership grants, issues or sells any
Options, Convertible Securities or rights to purchase units, warrants,
securities or other property pro rata to the record holders of any class of
Common Units (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the
number of Common Units acquirable upon complete exercise of this Warrant
(without regard to any limitations or restrictions on exercise of this Warrant,
including without limitation, the Maximum Percentage) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of Common Units are to be determined for the grant, issuance or sale of such
Purchase Rights (provided, however, that to the extent that the Holder’s right
to participate in any such Purchase Right would result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Purchase Right to the extent of the
Maximum Percentage (and shall not be entitled to beneficial ownership of such
Common Units as a result of such Purchase Right (and beneficial ownership) to
the extent of any such excess) and such Purchase Right to such extent shall be
held in abeyance for the benefit of the Holder until such time or times, if
ever, as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right held
similarly in abeyance) to the same extent as if there had been no such
limitation).

 

(b)           Fundamental Transaction.  If after the date hereof the Partnership
shall enter into or become a party to a Fundamental Transaction, then, and in
the case of each such transaction, proper provision shall be made so that upon
the basis and the terms and in the manner provided in this Warrant, the Holder,
upon the exercise hereof at any time after the consummation of such transaction,
shall be entitled to receive (after giving effect to the payment of the
aggregate Exercise Price in effect at the time of such consummation) for all
Warrant Units issuable upon such exercise immediately prior to such
consummation), in lieu of the Warrant Units issuable upon such exercise prior to
such consummation, the greatest amount of cash, securities or other property to
which such Holder would actually have been entitled as an equity holder upon
such consummation if such Holder had exercised the rights represented by this
Warrant immediately

 

13

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prior thereto, subject to adjustments (subsequent to such consummation) as
nearly equivalent as possible to the adjustments provided for in Section 2.

 

(c)           Black Scholes Value.  Notwithstanding the foregoing and the
provisions of Section 4(b) above, at the request of the Holder delivered at any
time commencing on the earliest to occur of (x) the public disclosure of any
Fundamental Transaction, (y) the consummation of any Fundamental Transaction and
(z) the Holder first becoming aware of any Fundamental Transaction through the
date that is ninety (90) days after the public disclosure of the consummation of
such Fundamental Transaction by the Partnership pursuant to a Current Report on
Form 8-K filed with the SEC, the Partnership or the Successor Entity (as the
case may be) shall purchase this Warrant from the Holder on the date of such
request by paying to the Holder cash in an amount equal to the Black Scholes
Value.  Payment of such amounts shall be made by the Partnership (or at the
Partnership’s direction) to the Holder on or prior to the later of (x) the
second (2nd) Trading Day after the date of such request and (y) the date of
consummation of such Fundamental Transaction. Notwithstanding the foregoing,
payments made under this Section 4(c) shall not be duplicative of payments made
under Section 4(b) above.

 

(d)           Application.  The provisions of this Section 4 shall apply
similarly and equally to successive Fundamental Transactions and shall be
applied as if this Warrant (and any such subsequent warrants) were fully
exercisable and without regard to any limitations on the exercise of this
Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to units or other
securities registered under the 1934 Act and thereafter receivable upon exercise
of this Warrant (or any such other warrant)).

 

5.             NONCIRCUMVENTION.  The Partnership hereby covenants and agrees
that the Partnership will not, by amendment of its Limited Partnership Agreement
or through any reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issuance or sale of securities, or any other
voluntary action,  avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, and will at all times in good faith carry out all
the provisions of this Warrant and take all action as may be required to protect
the rights of the Holder.  Without limiting the generality of the foregoing, the
Partnership (a) shall not increase the par value of any Common Units receivable
upon the exercise of this Warrant above the Exercise Price then in effect, and
(b) shall take all such actions as may be necessary or appropriate in order that
the Partnership may validly and legally issue fully paid and non-assessable
Common Units upon the exercise of this Warrant.

 

6.             WARRANT HOLDER NOT DEEMED A UNITHOLDER.  Except as otherwise
specifically provided herein, the Holder, solely in its capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of units of the Partnership for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in its
capacity as the Holder of this Warrant, any of the rights of a unitholder of the
Partnership or any right to vote, give or withhold consent to any corporate
action (whether any reorganization, issue of units, reclassification of units,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance to
the Holder of the Warrant Units which it is then entitled to receive upon the
due exercise of this Warrant.  In addition, nothing contained in this Warrant
shall be

 

14

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construed as imposing any liabilities on the Holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a unitholder of the
Partnership, whether such liabilities are asserted by the Partnership or by
creditors of the Partnership.  Notwithstanding this Section 6, the Partnership
shall provide the Holder with copies of the same notices and other information
given to the unitholders of the Partnership generally, contemporaneously with
the giving thereof to the unitholders.

 

7.             REISSUANCE OF WARRANTS.

 

(a)           Transfer of Warrant.  If this Warrant is to be transferred, the
Holder shall surrender this Warrant to the Partnership, whereupon the
Partnership will forthwith issue and deliver upon the order of the Holder a new
Warrant (in accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Units being transferred
by the Holder and, if less than the total number of Warrant Units then
underlying this Warrant is being transferred, a new Warrant (in accordance with
Section 7(d)) to the Holder representing the right to purchase the number of
Warrant Units not being transferred.

 

(b)           Lost, Stolen or Mutilated Warrant.  Upon receipt by the
Partnership of evidence reasonably satisfactory to the Partnership of the loss,
theft, destruction or mutilation of this Warrant (as to which a written
certification and the indemnification contemplated below shall suffice as such
evidence), and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Partnership in customary and
reasonable form and, in the case of mutilation, upon surrender and cancellation
of this Warrant, the Partnership shall execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant Units then underlying this Warrant.

 

(c)           Exchangeable for Multiple Warrants.  This Warrant is exchangeable,
upon the surrender hereof by the Holder at the principal office of the
Partnership, for a new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Units
then underlying this Warrant, and each such new Warrant will represent the right
to purchase such portion of such Warrant Units as is designated by the Holder at
the time of such surrender; provided, however, no warrants for fractional Common
Units shall be given.

 

(d)           Issuance of New Warrants.  Whenever the Partnership is required to
issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated
on the face of such new Warrant, the right to purchase the Warrant Units then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Warrant Units designated by the Holder
which, when added to the number of Common Units underlying the other new
Warrants issued in connection with such issuance, does not exceed the number of
Warrant Units then underlying this Warrant), (iii) shall have an issuance date,
as indicated on the face of such new Warrant which is the same as the Issuance
Date, and (iv) shall have the same rights and conditions as this Warrant.

 

8.             NOTICES.  Whenever notice is required to be given under this
Warrant, unless otherwise provided herein, such notice shall be given in
accordance with Section 9(f) of the Securities

 

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Purchase Agreement.  The Partnership shall provide the Holder with prompt
written notice of all actions taken pursuant to this Warrant (other than the
issuance of Common Units upon exercise in accordance with the terms hereof),
including in reasonable detail a description of such action and the reason
therefor.  Without limiting the generality of the foregoing, the Partnership
will give written notice to the Holder (i) immediately upon each adjustment of
the Exercise Price and the number of Warrant Units, setting forth in reasonable
detail, and certifying, the calculation of such adjustment(s), (ii) at least
fifteen (15) days prior to the date on which the Partnership closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Units, (B) with respect to any grants, issuances or sales of any Options,
Convertible Securities or rights to purchase units, warrants, securities or
other property to holders of Common Units or (C) for determining rights to vote
with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder, and
(iii) at least fifteen (15) Trading Days prior to the consummation of any
Fundamental Transaction.  To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the
Partnership or any of its Subsidiaries, the Partnership shall simultaneously
file such notice with the SEC (as defined in the Securities Purchase Agreement)
pursuant to a Current Report on Form 8-K.  If the Partnership or any of its
Subsidiaries provides material non-public information to the Holder that is not
simultaneously filed in a Current Report on Form 8-K and the Holder has not
agreed to receive such material non-public information, the Partnership hereby
covenants and agrees that the Holder shall not have any duty of confidentiality
to the Partnership, any of its Subsidiaries or any of their respective officers,
directors, employees, affiliates or agents with respect to, or a duty to any of
the foregoing not to trade on the basis of, such material non-public
information. It is expressly understood and agreed that the time of execution
specified by the Holder in each Exercise Notice shall be definitive and may not
be disputed or challenged by the Partnership.

 

9.             AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
provisions of this Warrant (other than Section 1(f)) may be amended and the
Partnership may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Partnership has obtained the
written consent of the Holder.  No waiver shall be effective unless it is in
writing and signed by an authorized representative of the waiving party.

 

10.          SEVERABILITY.  If any provision of this Warrant is prohibited by
law or otherwise determined to be invalid or unenforceable by a court of
competent jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of
this Warrant so long as this Warrant as so modified continues to express,
without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties. 
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

16

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11.          GOVERNING LAW.  This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of Delaware, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Delaware.  The Partnership and the Holder
each hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to the Partnership or the Holder at the address set forth in
Section 9(f) of the Securities Purchase Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.  The
Partnership and the Holder each hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein thereby (except for any disputes arising under the Limited Partnership
Agreement and the LP Amendment, which shall be adjudicated exclusively in state
court in the State of Delaware), and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law. 
Nothing contained herein shall be deemed or operate to preclude the Holder from
bringing suit or taking other legal action against the Partnership in any other
jurisdiction to collect on the Partnership’s obligations to the Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court ruling in favor of the Holder.  THE
PARTNERSHIP AND THE HOLDER EACH HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

12.          CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly
drafted by the Partnership and the Holder and shall not be construed against any
Person as the drafter hereof.  The headings of this Warrant are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Warrant.  Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as
defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder.

 

13.          DISPUTE RESOLUTION.

 

(a)           Submission to Dispute Resolution.

 

(i)            In the case of a dispute relating to the Exercise Price, the
Closing Sale Price, Black Scholes Consideration Value, Black Scholes Value or
fair market value or the arithmetic calculation of the number of Warrant Units
(as the case may be) (including, without limitation, a dispute relating to the
determination of any of the foregoing), the Partnership or the Holder (as the
case may be) shall submit the dispute to

 

17

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the other party via facsimile (A) if by the Partnership, within two (2) Business
Days after the occurrence of the circumstances giving rise to such dispute or
(B) if by the Holder, at any time after the Holder learned of the circumstances
giving rise to such dispute.  If the Holder and the Partnership are unable to
promptly resolve such dispute relating to such Exercise Price, such Closing Sale
Price, such Black Scholes Consideration Value, Black Scholes Value or such fair
market value or such arithmetic calculation of the number of Warrant Units (as
the case may be), at any time after the second (2nd) Business Day following such
initial notice by the Partnership or the Holder (as the case may be) of such
dispute to the Partnership or the Holder (as the case may be), then the Holder
may, at its sole option, select an independent, reputable investment bank to
resolve such dispute.

 

(ii)           The Holder and the Partnership shall each deliver to such
investment bank (A) a copy of the initial dispute submission so delivered in
accordance with the first sentence of this Section 13 and (B) written
documentation supporting its position with respect to such dispute, in each
case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day
immediately following the date on which the Holder selected such investment bank
(the “Dispute Submission Deadline”) (the documents referred to in the
immediately preceding clauses (A) and (B) are collectively referred to herein as
the “Required Dispute Documentation”) (it being understood and agreed that if
either the Holder or the Partnership fails to so deliver all of the Required
Dispute Documentation by the Dispute Submission Deadline, then the party who
fails to so submit all of the Required Dispute Documentation shall no longer be
entitled to (and hereby waives its right to) deliver or submit any written
documentation or other support to such investment bank with respect to such
dispute and such investment bank shall resolve such dispute based solely on the
Required Dispute Documentation that was delivered to such investment bank prior
to the Dispute Submission Deadline). Unless otherwise agreed to in writing by
both the Partnership and the Holder or otherwise requested by such investment
bank, neither the Partnership nor the Holder shall be entitled to deliver or
submit any written documentation or other support to such investment bank in
connection with such dispute (other than the Required Dispute Documentation).

 

(iii)          The Partnership and the Holder shall cause such investment bank
to determine the resolution of such dispute and notify the Partnership and the
Holder of such resolution no later than ten (10) Business Days immediately
following the Dispute Submission Deadline. The fees and expenses of such
investment bank shall be borne solely by the Partnership, and such investment
bank’s resolution of such dispute shall be final and binding upon all parties
absent manifest error.

 

(b)           Miscellaneous.  The Partnership expressly acknowledges and agrees
that (i) this Section 13 constitutes an agreement to arbitrate between the
Partnership and the Holder (and constitutes an arbitration agreement) under the
rules then in effect under § 7501, et seq. of the New York Civil Practice Law
and Rules (“CPLR”) and that the Holder is authorized to apply for an order to
compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with
this Section 13, (ii) a dispute relating to the Exercise Price includes, without
limitation, disputes as to (A) whether an issuance or sale or deemed issuance or
sale of Common Units occurred under Section 2(b), (B) the consideration per unit
at which an issuance or deemed issuance of

 

18

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Common Units occurred, (C) whether any issuance or sale or deemed issuance or
sale of Common Units was an issuance or sale or deemed issuance or sale of
Excluded Securities, (D) whether an agreement, instrument, security or the like
constitutes and Option or Convertible Security and (E) whether a Dilutive
Issuance occurred, (iii) the terms of this Warrant and each other applicable
Transaction Document shall serve as the basis for the selected investment bank’s
resolution of the applicable dispute, such investment bank shall be entitled
(and is hereby expressly authorized) to make all findings, determinations and
the like that such investment bank determines are required to be made by such
investment bank in connection with its resolution of such dispute (including,
without limitation, determining (A) whether an issuance or sale or deemed
issuance or sale of Common Units occurred under Section 2(b), (B) the
consideration per unit at which an issuance or deemed issuance of Common Units
occurred, (C) whether any issuance or sale or deemed issuance or sale of Common
Units was an issuance or sale or deemed issuance or sale of Excluded Securities,
(D) whether an agreement, instrument, security or the like constitutes and
Option or Convertible Security and (E) whether a Dilutive Issuance occurred) and
in resolving such dispute such investment bank shall apply such findings,
determinations and the like to the terms of this Warrant and any other
applicable Transaction Documents, (iv) the Holder (and only the Holder), in its
sole discretion, shall have the right to submit any dispute described in this
Section 13 to any state or federal court sitting in The City of New York,
Borough of Manhattan in lieu of utilizing the procedures set forth in this
Section 13 and (v) nothing in this Section 13 shall limit the Holder from
obtaining any injunctive relief or other equitable remedies (including, without
limitation, with respect to any matters described in this Section 13).

 

14.          REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant and the other
Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue actual and consequential damages for any failure
by the Partnership to comply with the terms of this Warrant.  The Partnership
covenants to the Holder that there shall be no characterization concerning this
instrument other than as expressly provided herein.  Amounts set forth or
provided for herein with respect to payments, exercises and the like (and the
computation thereof) shall be the amounts to be received by the Holder and shall
not, except as expressly provided herein, be subject to any other obligation of
the Partnership (or the performance thereof).  The Partnership acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to the
Holder and that the remedy at law for any such breach may be inadequate.  The
Partnership therefore agrees that, in the event of any such breach or threatened
breach, the holder of this Warrant shall be entitled, in addition to all other
available remedies, to specific performance and/or temporary, preliminary and
permanent injunctive or other equitable relief from any court of competent
jurisdiction in any such case without the necessity of proving actual damages
and without posting a bond or other security.  The Partnership shall provide all
information and documentation to the Holder that is requested by the Holder to
enable the Holder to confirm the Partnership’s compliance with the terms and
conditions of this Warrant (including, without limitation, compliance with
Section 2 hereof).  The issuance of units and certificates for units as
contemplated hereby upon the exercise of this Warrant shall be made without
charge to the Holder or such units for any issuance tax or other costs in
respect thereof.

 

19

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15.          PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this
Warrant is placed in the hands of an attorney for collection or enforcement or
is collected or enforced through any legal proceeding or the holder otherwise
takes action to collect amounts due under this Warrant or to enforce the
provisions of this Warrant or (b) there occurs any bankruptcy, reorganization,
receivership of the Partnership or other proceedings affecting Partnership
creditors’ rights and involving a claim under this Warrant, then the Partnership
shall pay the costs incurred by the Holder for such collection, enforcement or
action or in connection with such bankruptcy, reorganization, receivership or
other proceeding, including, without limitation, attorneys’ fees and
disbursements.

 

16.          TRANSFER.  This Warrant may be offered for sale, sold, transferred
or assigned without the consent of the Partnership, except as may otherwise be
required by Section 2(g) of the Securities Purchase Agreement.

 

17.          CERTAIN DEFINITIONS.  For purposes of this Warrant, the following
terms shall have the following meanings:

 

(a)           “1933 Act” means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

 

(b)           “1934 Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.

 

(c)           “Adjustment Right” means any right granted with respect to any
securities issued in connection with, or with respect to, any issuance or sale
(or deemed issuance or sale in accordance with Section 2) of Common Units (other
than rights of the type described in Section 3 and 4 hereof) that could result
in a decrease in the net consideration received by the Partnership in connection
with, or with respect to, such securities (including, without limitation, any
cash settlement rights, cash adjustment or other similar rights).

 

(d)           “Affiliate” means, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition
that “control” of a Person means the power directly or indirectly either to vote
10% or more of the units having ordinary voting power for the election of
directors of such Person or direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.

 

(e)           “Approved Unit Plan” means any employee benefit plan which has
been approved by the board of directors of the Partnership prior to or
subsequent to the date hereof pursuant to which Common Units and standard
options to purchase Common Units may be issued to any employee, officer or
director for services provided to the Partnership in their capacity as such.

 

(f)            “Attribution Parties” means, collectively, the following Persons
and entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect

 

20

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Affiliates of the Holder or any of the foregoing, (iii) any Person acting or who
could be deemed to be acting as a Group together with the Holder or any of the
foregoing and (iv) any other Persons whose beneficial ownership of the
Partnership’s Common Units would or could be aggregated with the Holder’s and
the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. 
For clarity, the purpose of the foregoing is to subject collectively the Holder
and all other Attribution Parties to the Maximum Percentage.

 

(g)           “Black Scholes Consideration Value” means the value of the
applicable Option, Convertible Security or Adjustment Right (as the case may be)
as of the date of issuance thereof calculated using the Black Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an
underlying price per unit equal to the Closing Sale Price of the Common Units on
the Trading Day immediately preceding the public announcement of the execution
of definitive documents with respect to the issuance of such Option or
Convertible Security (as the case may be), (ii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of such Option, Convertible Security or Adjustment Right (as the case may be) as
of the date of issuance of such Option, Convertible Security or Adjustment Right
(as the case may be), (iii) a zero cost of borrow and (iv) an expected
volatility equal to the greater of 100% and the 30 day volatility obtained from
the “HVT” function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the date of issuance of such
Option, Convertible Security or Adjustment Right (as the case may be).

 

(h)           “Black Scholes Value” means the value of the unexercised portion
of this Warrant remaining on the date of the Holder’s request pursuant to
Section 4(c)(i), which value is calculated using the Black Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an
underlying price per unit equal to the greater of (1) the highest Closing Sale
Price of the Common Units during the period beginning on the Trading Day
immediately preceding the announcement of the applicable Fundamental Transaction
(or the consummation of the applicable Fundamental Transaction, if earlier) and
ending on the Trading Day of the Holder’s request pursuant to
Section 4(c)(i) and (2) the sum of the price per unit being offered in cash in
the applicable Fundamental Transaction (if any) plus the value of the non-cash
consideration being offered in the applicable Fundamental Transaction (if any),
(ii) a strike price equal to the Exercise Price in effect on the date of the
Holder’s request pursuant to Section 4(c)(i), (iii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the greater of
(1) the remaining term of this Warrant as of the date of the Holder’s request
pursuant to Section 4(c)(i) and (2) the remaining term of this Warrant as of the
date of consummation of the applicable Fundamental Transaction or as of the date
of the Holder’s request pursuant to Section 4(c)(i) if such request is prior to
the date of the consummation of the applicable Fundamental Transaction, (iv) a
zero cost of borrow and (v) an expected volatility equal to the greater of 100%
and the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (A) the public disclosure of the
applicable Fundamental Transaction, (B) the consummation of the applicable
Fundamental Transaction and (C) the date on which the Holder first became aware
of the applicable Fundamental Transaction.

 

(i)            “Bloomberg” means Bloomberg, L.P.

 

21

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(j)                                    “Business Day” means any day other than
Saturday, Sunday or other day on which commercial banks in The City of New York
are authorized or required by law to remain closed.

 

(k)                                 “Closing Sale Price” means, for any security
as of any date, the last closing trade price for such security on the Principal
Market, as reported by Bloomberg, or, if the Principal Market begins to operate
on an extended hours basis and does not designate the closing trade price, then
the last trade price of such security prior to 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last trade price of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing does
not apply, the last trade price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg, or,
if no last trade price is reported for such security by Bloomberg, the average
of the ask prices of any market makers for such security as reported in the
“pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC).  If the
Closing Sale Price cannot be calculated for a security on a particular date on
any of the foregoing bases, the Closing Sale Price of such security on such date
shall be the fair market value as mutually determined by the Partnership and the
Holder.  If the Partnership and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 13.  All such determinations shall be
appropriately adjusted for any unit dividend, unit split, unit combination or
other similar transaction during such period.

 

(l)                                     “Common Units” means (i) the
Partnership’s common units, no par value per unit, and (ii) any units or other
securities into which such common units shall have been changed or any units or
other securities resulting from a reclassification of such common units.

 

(m)                             “Common Units Deemed Outstanding” means, at any
given time, the number of Common Units outstanding at such time, plus the number
of Common Units deemed to be outstanding pursuant to Sections 2(b)(i) and
2(b)(ii) hereof regardless of whether the Options or Convertible Securities are
actually exercisable at such time, but excluding any Common Stock owned or held
by or for the account of the Partnership or issuable upon exercise of the SPA
Warrants.

 

(n)                                 “Convertible Securities” means any unit or
other security (other than Options) that is at any time and under any
circumstances, directly or indirectly, convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any
Common Units.

 

(o)                                 “Eligible Market” means the NYSE MKT, the
Nasdaq Global Select Market, the Nasdaq Global Market or the Principal Market.

 

(p)                                 “Excluded Securities” means (i) Common Units
or standard options to purchase Common Units issued to directors, officers or
employees of the Partnership for services rendered to the Partnership in their
capacity as such pursuant to an Approved Unit Plan (as defined above), provided
that (A) all such issuances (taking into account the Common Units issuable upon
exercise of such options) after the Subscription Date pursuant to this clause
(i) do not, in

 

22

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the aggregate, exceed more than 5% of the Common Units issued and outstanding
immediately prior to the Subscription Date and (B) the exercise price of any
such options is not lowered, none of such options are amended to increase the
number of units issuable thereunder and none of the terms or conditions of any
such options are otherwise materially changed in any manner that adversely
affects any of the Buyers; (ii) Common Units issued upon the conversion or
exercise of Convertible Securities (other than standard options to purchase
Common Units issued pursuant to an Approved Unit Plan that are covered by clause
(i) above) issued prior to the Subscription Date, provided that the conversion
price of any such Convertible Securities (other than standard options to
purchase Common Units issued pursuant to an Approved Unit Plan that are covered
by clause (i) above) is not lowered, none of such Convertible Securities (other
than standard options to purchase Common Units issued pursuant to an Approved
Unit Plan that are covered by clause (i) above) are amended to increase the
number of units issuable thereunder and none of the terms or conditions of any
such Convertible Securities (other than standard options to purchase Common
Units issued pursuant to an Approved Unit Plan that are covered by clause
(i) above) are otherwise materially changed in any manner that adversely affects
any of the Buyers; (iii) the Common Units issuable upon conversion of the
Series A Preferred Units or otherwise pursuant to the terms of the LP Amendment
(as defined in the Securities Purchase Agreement); provided, that the terms of
the LP Amendment are not amended, modified or changed on or after the
Subscription Date (other than antidilution adjustments pursuant to the terms
thereof in effect as of the Subscription Date) and (iv) the Common Units
issuable upon exercise of the SPA Warrants; provided, that the terms of the SPA
Warrant are not amended, modified or changed on or after the Subscription Date
(other than antidilution adjustments pursuant to the terms thereof in effect as
of the Subscription Date).

 

(q)                                 “Expiration Date” means the date that is the
sixth (6th) anniversary of the Issuance Date or, if such date falls on a day
other than a Trading Day or on which trading does not take place on the
Principal Market (a “Holiday”), the next date that is not a Holiday.

 

(r)                                    “Fundamental Transaction” means (A) that
the Partnership shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, (i) consolidate or
merge with or into (whether or not the Partnership is the surviving corporation)
another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of the
Partnership or any of its “significant subsidiaries” (as defined in Rule 1-02 of
Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or
more Subject Entities to make, or allow the Partnership to be subject to or have
its Common Units be subject to or party to one or more Subject Entities making,
a purchase, tender or exchange offer that is accepted by the holders of at least
either (x) 50% of the outstanding Common Units, (y) 50% of the outstanding
Common Units calculated as if any Common Units held by all Subject Entities
making or party to, or Affiliated with any Subject Entities making or party to,
such purchase, tender or exchange offer were not outstanding; or (z) such number
of Common Units such that all Subject Entities making or party to, or Affiliated
with any Subject Entity making or party to, such purchase, tender or exchange
offer, become collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding Common Units, or
(iv) consummate a unit or stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby

 

23

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all such Subject Entities, individually or in the aggregate, acquire, either
(x) at least 50% of the outstanding Common Units, (y) at least 50% of the
outstanding Common Units calculated as if any Common Units held by all the
Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such unit or stock purchase agreement or other business
combination were not outstanding; or (z) such number of Common Units such that
the Subject Entities become collectively the beneficial owners (as defined in
Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding Common Units,
or (v) reorganize, recapitalize or reclassify its Common Units, (B) that the
Partnership shall, directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, allow any Subject
Entity individually or the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding Common Units, merger,
consolidation, business combination, reorganization, recapitalization, spin-off,
scheme of arrangement, reorganization, recapitalization or reclassification or
otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate
ordinary voting power represented by issued and outstanding Common Units, (y) at
least 50% of the aggregate ordinary voting power represented by issued and
outstanding Common Units not held by all such Subject Entities as of the date of
this Warrant calculated as if any Common Units held by all such Subject Entities
were not outstanding, or (z) a percentage of the aggregate ordinary voting power
represented by issued and outstanding Common Units or other equity securities of
the Partnership sufficient to allow such Subject Entities to effect a statutory
short form merger or other transaction requiring other unitholders of the
Partnership to surrender their Common Units without approval of the unitholders
of the Partnership or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, the
issuance of or the entering into any other instrument or transaction structured
in a manner to circumvent, or that circumvents, the intent of this definition in
which case this definition shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this definition to the
extent necessary to correct this definition or any portion of this definition
which may be defective or inconsistent with the intended treatment of such
instrument or transaction.

 

(s)                                   “Group” means a “group” as that term is
used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.

 

(t)                                    “Options” means any rights, warrants or
options to subscribe for or purchase Common Units or Convertible Securities.

 

(u)                                 “Parent Entity” of a Person means an entity
that, directly or indirectly, controls the applicable Person and whose common
stock or equivalent equity security is quoted or listed on an Eligible Market,
or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of
consummation of the Fundamental Transaction.

 

(v)                                 “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity or a government or any department
or agency thereof.

 

(w)                               “Principal Market” means The New York Stock
Exchange.

 

24

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(x)                                 “Registration Rights Agreement” means that
certain registration rights agreement, dated as of the Closing Date, by and
among the Partnership and the initial holders of the Notes relating to, among
other things, the registration of the resale of the Common Units issuable upon
conversion of the Series A Preferred Units (as defined in the Securities
Purchase Agreement) or otherwise pursuant to the terms of the  LP Amendment (as
defined in the Securities Purchase Agreement) and exercise of the SPA Warrants,
as may be amended from time to time.

 

(y)                                 “SEC” means the United States Securities and
Exchange Commission or the successor thereto.

 

(z)                                  “Series A Preferred Units” shall have the
meaning as set forth in the Securities Purchase Agreement.

 

(aa)                          “Subject Entity” means any Person, Persons or
Group or any Affiliate or associate of any such Person, Persons or Group.

 

(bb)                          “Successor Entity” means the Person (or, if so
elected by the Holder, the Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or the Person (or, if so elected by the Holder, the
Parent Entity) with which such Fundamental Transaction shall have been entered
into.

 

(cc)                            “Trading Day” means, as applicable, (x) with
respect to all price or trading volume determinations relating to the Common
Units, any day on which the Common Units is traded on the Principal Market, or,
if the Principal Market is not the principal trading market for the Common
Units, then on the principal securities exchange or securities market on which
the Common Units is then traded, provided that “Trading Day” shall not include
any day on which the Common Units is scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Common Units is suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time) unless such day is otherwise designated as a Trading Day in
writing by the Holder or (y) with respect to all determinations other than price
or trading volume determinations relating to the Common Units, any day on which
The New York Stock Exchange (or any successor thereto) is open for trading of
securities.

 

(dd)                          “VWAP” means, for any security as of any date, the
dollar volume-weighted average price for such security on the Principal Market
(or, if the Principal Market is not the principal trading market for such
security, then on the principal securities exchange or securities market on
which such security is then traded) during the period beginning at 9:30:01 a.m.,
New York time, and ending at 4:00:00 p.m., New York time, as reported by
Bloomberg through its “HP” function (set to weighted average) or, if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such

 

25

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security as reported in the “pink sheets” by OTC Markets Group Inc. (formerly
Pink Sheets LLC).  If the VWAP cannot be calculated for such security on such
date on any of the foregoing bases, the VWAP of such security on such date shall
be the fair market value as mutually determined by the Partnership and the
Holder.  If the Partnership and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 13.  All such determinations shall be
appropriately adjusted for any unit dividend, unit split, unit combination,
recapitalization or other similar transaction during such period.

 

[signature page follows]

 

26

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IN WITNESS WHEREOF, the Partnership has caused this Warrant to Purchase Common
Units to be duly executed as of the Issuance Date set out above.

 

 

 

EMERGE ENERGY SERVICES LP

 

 

 

By:

EMERGE ENERGY SERVICES GP LLC,

 

 

its general partner

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

EMERGE ENERGY SERVICES LP

 

The undersigned holder hereby elects to exercise the Warrant to Purchase Common
Units No.         (the “Warrant”) of Emerge Energy Services LP, a Delaware
limited partnership (the “Partnership”) as specified below.  Capitalized terms
used herein and not otherwise defined shall have the respective meanings set
forth in the Warrant.

 

1.                                      Form of Exercise Price.  The Holder
intends that payment of the Aggregate Exercise Price shall be made as:

 

o                                    a “Cash Exercise” with respect to
                  Warrant Units; and/or

 

o                                    a “Cashless Exercise” with respect to
                Warrant Units.

 

In the event that the Holder has elected a Cashless Exercise with respect to
some or all of the Warrant Units to be issued pursuant hereto, the Holder hereby
represents and warrants that (i) this Exercise Notice was executed by the Holder
at            [a.m.][p.m.] on the date set forth below

 

2.                                      Payment of Exercise Price.  In the event
that the Holder has elected a Cash Exercise with respect to some or all of the
Warrant Units to be issued pursuant hereto, the Holder shall pay the Aggregate
Exercise Price in the sum of $                    to the Partnership in
accordance with the terms of the Warrant.

 

3.                                      Delivery of Warrant Units.  The
Partnership shall deliver to Holder, or its designee or agent as specified
below,            Common Units in accordance with the terms of the Warrant. 
Delivery shall be made to Holder, or for its benefit, as follows:

 

o                                    Check here if requesting delivery as a
certificate to the following name and to the following address:

 

Issue to:

 

 

 

¨                                    Check here if requesting delivery by
Deposit/Withdrawal at Custodian as follows:

 

DTC Participant:

 

DTC Number:

 

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Account Number:

 

 

Date:                 ,

 

 

 

Name of Registered Holder

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

Tax ID:

 

 

 

 

 

Facsimile:

 

 

 

 

 

E-mail Address:

 

 

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EXHIBIT B

 

ACKNOWLEDGMENT

 

The Partnership hereby acknowledges this Exercise Notice and hereby directs
               to issue the above indicated number of Common Units in accordance
with the Transfer Agent Instructions dated          , 201 , from the Partnership
and acknowledged and agreed to by                .

 

 

 

EMERGE ENERGY SERVICES LP

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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Exhibit C

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of August   ,
2016, is by and between EMERGE ENERGY SERVICES LP, a Delaware limited
partnership with offices located at 180 State Street, Suite 225, Southlake,
Texas 76092 (the “Partnership”), and SIG STRATEGIC INVESTMENTS, LLLP (the
“Buyer”).

 

RECITALS

 

A.                                    In connection with the Securities Purchase
Agreement by and among the parties hereto, dated as of August   , 2016 (the
“Securities Purchase Agreement”), the Partnership has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Buyer (i) the Series A Preferred Units (as defined in the Securities
Purchase Agreement), which will be convertible into Conversion Units (as defined
in the Securities Purchase Agreement) in accordance with the terms of the LP
Amendment (as defined in the Securities Purchase Agreement) and (ii) the
Warrants (as defined in the Securities Purchase Agreement) which will be
exercisable to purchase Warrant Units (as defined in the Securities Purchase
Agreement) in accordance with the terms of the Warrants.

 

B.                                    To induce the Buyer to consummate the
transactions contemplated by the Securities Purchase Agreement, the Partnership
has agreed to provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “1933 Act”), and applicable state
securities laws.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Partnership and the Buyer
hereby agree as follows:

 

1.                                      Definitions.

 

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.  As used in
this Agreement, the following terms shall have the following meanings:

 

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

 

(b)                                 “Business Day” means any day other than a
Saturday, Sunday or any other day on which commercial banks in New York, New
York are authorized or required by law to remain closed.

 

(c)                                  “Closing Date” shall have the meaning set
forth in the Securities Purchase Agreement.

 

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(d)                                 “Effective Date” means the date that the
applicable Registration Statement has been declared effective by the SEC.

 

(e)                                  “Effectiveness Deadline” means (i) with
respect to the initial Registration Statement required to be filed pursuant to
Section 2(a), the earlier of the (A) 120th calendar day after the Closing Date
and (B) 2nd Business Day after the date the Partnership is notified (orally or
in writing, whichever is earlier) by the SEC that such Registration Statement
will not be reviewed or will not be subject to further review and (ii) with
respect to any additional Registration Statements that may be required to be
filed by the Partnership pursuant to this Agreement, the earlier of the
(A) 120th calendar day following the date on which the Partnership was required
to file such additional Registration Statement and (B) 2nd Business Day after
the date the Partnership is notified (orally or in writing, whichever is
earlier) by the SEC that such Registration Statement will not be reviewed or
will not be subject to further review.

 

(f)                                   “Holder” means the Buyer or any Affiliate
of the Buyer for so long as the Buyer or such Affiliate is a record holder of
any Registrable Securities.

 

(g)                                  “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization or a government or any department or agency thereof.

 

(h)                                 “register,” “registered,” and “registration”
refer to a registration effected by preparing and filing one or more
Registration Statements in compliance with the 1933 Act and pursuant to Rule 415
and the declaration of effectiveness of such Registration Statement(s) by the
SEC.

 

(i)                                     “Registrable Securities” means (i) the
Conversion Units, (ii) the Warrant Units beneficially owned by the Buyer or an
Affiliate of the Buyer and (iii) any units or other securities of the
Partnership issued or issuable with respect each of (i) and (ii), including,
without limitation, (1) as a result of any unit split, unit dividend,
recapitalization, exchange or similar event or otherwise and (2) units of the
Partnership into which the Common Units (as defined in the Warrants) are
converted or exchanged and shares of capital stock or other security of a
Successor Entity (as defined in the Warrants) into which the Common Units are
converted or exchanged, in each case, without regard to any limitations on
conversion of the Series A Preferred Units or exercise of the Warrants.

 

(j)                                    “Registration Statement” means a
registration statement or registration statements of the Partnership filed under
the 1933 Act covering Registrable Securities.

 

(k)                                 “Required Registration Amount” means the sum
of (i) 125% of the maximum number of Conversion Units issuable upon conversion
of the Series A Preferred Units as of the Closing Date (without taking into
account any limitations on the conversion of the Series A Preferred Units set
forth in the LP Agreement) and (ii) the maximum number of Warrant Units issued
and issuable pursuant to the Warrants immediately preceding the applicable date
of determination (without taking into account any limitations on the exercise of
the Warrants set forth therein), all subject to adjustment as provided in
Section 2(b) and/or Section 2(d).

 

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(l)                                     “Rule 144” means Rule 144 promulgated by
the SEC under the 1933 Act, as such rule may be amended from time to time, or
any other similar or successor rule or regulation of the SEC that may at any
time permit the Holder to sell securities of the Partnership to the public
without registration.

 

(m)                             “Rule 415” means Rule 415 promulgated by the SEC
under the 1933 Act, as such rule may be amended from time to time, or any other
similar or successor rule or regulation of the SEC providing for offering
securities on a continuous or delayed basis.

 

(n)                                 “SEC” means the United States Securities and
Exchange Commission or any successor thereto.

 

2.                                      Registration.

 

(a)                                 Mandatory Registration.  The Partnership
shall prepare and, as soon as commercially practicable, file with the SEC an
initial Registration Statement on Form S-1 covering the resale of all of the
Registrable Securities, provided that such initial Registration Statement shall
register for resale at least the number of Common Units equal to the Required
Registration Amount as of the date such Registration Statement is initially
filed with the SEC.  Such initial Registration Statement, and each other
Registration Statement required to be filed pursuant to the terms of this
Agreement, shall contain the “Selling Unitholders” and “Plan of Distribution”
sections in substantially the form attached hereto as Exhibit B.  The
Partnership shall use its commercially reasonable efforts to have such initial
Registration Statement, and each other Registration Statement required to be
filed pursuant to the terms of this Agreement, declared effective by the SEC as
soon as practicable, but in no event later than the applicable Effectiveness
Deadline for such Registration Statement.

 

(b)                                 Sufficient Number of Units Registered.  In
the event the number of units available under any Registration Statement is
insufficient to cover all of the Registrable Securities required to be covered
by such Registration Statement, the Partnership shall amend such Registration
Statement (if permissible), or file with the SEC a new Registration Statement
(on the short form available therefor, if applicable), or both, so as to cover
at least the Required Registration Amount as of the Trading Day immediately
preceding the date of the filing of such amendment or new Registration
Statement, in each case, as soon as practicable, but in any event not later than
fifteen (15) days after the necessity therefor arises (but taking account of any
Staff position with respect to the date on which the Staff will permit such
amendment to the Registration Statement and/or such new Registration Statement
(as the case may be) to be filed with the SEC).  The Partnership shall use its
commercially reasonable efforts to cause such amendment to such Registration
Statement and/or such new Registration Statement (as the case may be) to become
effective as soon as practicable following the filing thereof with the SEC, but
in no event later than the applicable Effectiveness Deadline for such
Registration Statement.  For purposes of the foregoing provision, the number of
units available under a Registration Statement shall be deemed “insufficient to
cover all of the Registrable Securities” if at any time during the Registration
Period (as defined below) the number of Common Units available for resale under
the applicable Registration Statement is less than the product determined by
multiplying (i) the Required Registration Amount as of such time by (ii) 0.90. 
The calculation set forth in the foregoing sentence shall be made without regard
to any limitations on exercise of the Warrants

 

3

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(and such calculation shall assume that the Warrants are then fully exercisable
for Common Units at the then-prevailing applicable Exercise Price).

 

(c)                                  Effect of Failure to Obtain and Maintain
Effectiveness of any Registration Statement.  If (i) a Registration Statement
covering the resale of all of the Registrable Securities required to be covered
thereby (disregarding any reduction pursuant to Section 2(d)) and required to be
filed by the Partnership pursuant to this Agreement is not declared effective by
the SEC on or before the Effectiveness Deadline for such Registration Statement
(an “Effectiveness Failure”) (it being understood that if on the Business Day
immediately following the Effective Date for such Registration Statement the
Partnership shall not have filed a “final” prospectus for such Registration
Statement with the SEC under Rule 424(b) in accordance with
Section 3(b) (whether or not such a prospectus is technically required by such
rule), the Partnership shall be deemed to not have satisfied this clause
(i)(B) and such event shall be deemed to be an Effectiveness Failure),
(ii) other than during an Allowable Grace Period (as defined below), on any day
after the Effective Date of a Registration Statement sales of all of the
Registrable Securities required to be included on such Registration Statement
(disregarding any reduction pursuant to Section 2(d)) cannot be made pursuant to
such Registration Statement (including, without limitation, because of a failure
to keep such Registration Statement effective, a failure to disclose such
information as is necessary for sales to be made pursuant to such Registration
Statement, a suspension or delisting of (or a failure to timely list) the Common
Units on the Principal Market (as defined in the Securities Purchase Agreement),
or a failure to register a sufficient number of Common Units or by reason of a
stop order) or the prospectus contained therein is not available for use for any
reason (a “Maintenance Failure”), or (iii) if after the six month anniversary of
the Closing Date a Registration Statement is not effective for any reason or the
prospectus contained therein is not available for use for any reason, and either
(x) the Partnership fails for any reason to satisfy the requirements of
Rule 144(c)(1), including, without limitation, the failure to satisfy the
current public information requirement under Rule 144(c) or (y) the Partnership
has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer
in the future, and the Partnership shall fail to satisfy any condition set forth
in Rule 144(i)(2) (a “Current Public Information Failure”) as a result of which
the Holder is unable to sell Registrable Securities without restriction under
Rule 144 (including, without limitation, volume restrictions), then, as partial
relief for the damages to the Holder by reason of any such delay in, or
reduction of, its ability to sell the underlying Common Units (which remedy
shall not be exclusive of any other remedies available at law or in equity), the
Partnership shall pay to the Holder of Registrable Securities relating to such
Registration Statement an amount in cash equal to one percent (1%) of the
aggregate Purchase Price (as such term is defined in the Securities Purchase
Agreement):  (1) on the date of such Effectiveness Failure, Maintenance Failure
or Current Public Information Failure, as applicable, and (2) on every thirty
(30) day anniversary of (I) an Effectiveness Failure until such Effectiveness
Failure is cured; (II) a Maintenance Failure until such Maintenance Failure is
cured; and (III) a Current Public Information Failure until the earlier of
(i) the date such Current Public Information Failure is cured and (ii) such time
that such public information is no longer required pursuant to Rule 144 (in each
case, pro rated for periods totaling less than thirty (30) days).  The payments
to which a Holder shall be entitled pursuant to this Section 2(c) are referred
to herein as “Registration Delay Payments.”  Following the initial Registration
Delay Payment for any particular event or failure (which shall be paid on the
date of such event or failure, as set forth above), without limiting the
foregoing, if an event or failure giving rise to the Registration Delay Payments
is cured prior to any thirty (30)

 

4

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day anniversary of such event or failure, then such Registration Delay Payment
shall be made on the third (3rd) Business Day after such cure.  In the event the
Partnership fails to make Registration Delay Payments in a timely manner in
accordance with the foregoing, such Registration Delay Payments shall bear
interest at the rate of one percent (1%) per month (prorated for partial months)
until paid in full.  Notwithstanding the foregoing, (i) no Registration Delay
Payments shall be owed to the Holder (other than with respect to a Maintenance
Failure resulting from a suspension or delisting of (or a failure to timely
list) the Common Units on the Principal Market) with respect to any period
during which all of the Holder’s Registrable Securities may be sold by the
Holder without restriction under Rule 144 (including, without limitation, volume
restrictions) and without the need for current public information required by
Rule 144(c)(1) (or Rule 144(i)(2), if applicable) and (ii) no Registration Delay
Payments shall be owed to the Holder to the extent the Holder shall have
received Registration Delay Payments in excess of 10% of the aggregate Purchase
Price of the Holder. For the avoidance of doubt, no more than one Registration
Delay Payment shall be payable by the Partnership at any given time,
notwithstanding that more than one failure giving rise to a Registration Delay
Payment shall have occurred and is continuing (e.g., an Effectiveness Failure
and a Current Public Information Failure continuing simultaneously); provided
that Registration Delay Payments shall continue in accordance with this
Section 2(c) until all failures giving rise to such payments are cured.

 

(d)                                 Offering.  Notwithstanding anything to the
contrary contained in this Agreement, in the event the staff of the SEC (the
“Staff”) or the SEC seeks to characterize any offering pursuant to a
Registration Statement filed pursuant to this Agreement as constituting
an offering of securities by, or on behalf of, the Partnership, or in any other
manner, such that the Staff or the SEC do not permit such Registration Statement
to become effective and used for resales in a manner that does not constitute
such an offering and that permits the continuous resale at the market by the
Holder without being named therein as an “underwriter,” then the Partnership
shall reduce the number of units to be included in such Registration Statement
by the Holder until such time as the Staff and the SEC shall so permit such
Registration Statement to become effective as aforesaid.  In making such
reduction, the Partnership shall reduce the number of units to be included by
the Holder .  In addition, in the event that the Staff or the SEC requires the
Holder to be specifically identified as an “underwriter” in order to permit such
Registration Statement to become effective, and the Holder does not consent to
being so named as an underwriter in such Registration Statement, then the
Partnership shall reduce the total number of Registrable Securities to be
registered on behalf of the Holder, until such time as the Staff or the SEC does
not require such identification or until the Holder accepts such identification
and the manner thereof.  Any reduction pursuant to this paragraph will first
reduce all Registrable Securities other than those issued pursuant to the
Securities Purchase Agreement. In the event of any reduction in Registrable
Securities pursuant to this paragraph, the Holder shall have the right to
require, upon delivery of a written request to the Partnership signed by the
Holder, the Partnership to file a registration statement within twenty (20) days
of such request (subject to any restrictions imposed by Rule 415 or required by
the Staff or the SEC) for resale by the Holder, and the Partnership shall
following such request use its commercially reasonable efforts to cause to be
and keep effective such registration statement in the same manner as otherwise
contemplated in this Agreement for registration statements hereunder, in each
case until such time as: (i) all Registrable Securities held by the Holder have
been registered and sold pursuant to an effective Registration Statement in a
manner acceptable to the Holder or (ii) all Registrable Securities may be resold
by the Holder without restriction (including, without limitation, volume

 

5

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limitations) pursuant to Rule 144 (taking account of any Staff position with
respect to “affiliate” status) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or
(iii) the Holder agrees to be named as an underwriter in any such Registration
Statement in a manner acceptable to the Holder as to all Registrable Securities
held by the Holder and that have not theretofore been included in a Registration
Statement under this Agreement (it being understood that the special demand
right under this sentence may be exercised by the Holder multiple times and with
respect to limited amounts of Registrable Securities in order to permit the
resale thereof by the Holder as contemplated above).

 

(e)                                  Piggyback Registrations.  Without limiting
any obligation of the Partnership hereunder or under the Securities Purchase
Agreement, if there is not an effective Registration Statement covering all of
the Registrable Securities or the prospectus contained therein is not available
for use and the Partnership shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the 1933 Act (an “Offering”) of any of its equity
securities (other than on Form S-4 or Form S-8 (each as promulgated under the
1933 Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with the Partnership’s unit option or other
employee benefit plans), then the Partnership shall deliver to the Holder a
written notice of such determination and, if within fifteen (15) days after the
date of the delivery of such notice, the Holder shall so request in writing, the
Partnership shall include in such registration statement all or any part of such
Registrable Securities the Holder requests to be registered; provided, however,
the Partnership shall not be required to register any Registrable Securities
pursuant to this Section 2(e) that are eligible for resale pursuant to Rule 144
without restriction (including, without limitation, volume restrictions) and
without the need for current public information required by Rule 144(c)(1) (or
Rule 144(i)(2), if applicable) or that are the subject of a then-effective
Registration Statement. If, in connection with an Offering, the primary managing
underwriter of such Offering shall advise the Partnership that, in its
reasonable opinion, the number of securities requested and otherwise proposed to
be included in such Offering exceeds the number which can be sold in such
offering without an adverse effect on the price, timing or distribution of the
securities to be offered (an “Adverse Effect”), then the Partnership shall
include in such Offering the number of Common Units that such primary managing
underwriter advises the Partnership can be sold without having such Adverse
Effect, with such number to be allocated (i) first to the Partnership and
(ii) second, and if any, the number of included Registrable Securities that, in
the opinion of such primary managing underwriter, can be sold without having
such Adverse Effect.

 

(f)                                   Registration Rights of Other Securities.
So long as any Registrable Securities remain outstanding, Partnership shall not
cause a registration statement relating to the resale of the Partnership’s
equity securities that does not register any Registrable Securities to be
declared effective by the SEC prior to the Effective Date.

 

3.                                      Related Obligations.

 

The Partnership shall use its commercially reasonable efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof, and, pursuant thereto, the Partnership shall have
the following obligations:

 

6

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(a)                                 The Partnership shall promptly prepare and
file with the SEC a Registration Statement with respect to all the Registrable
Securities and use its commercially reasonable efforts to cause such
Registration Statement to become effective as soon as practicable after such
filing (but in no event later than the Effectiveness Deadline).  Subject to
Allowable Grace Periods, the Partnership shall keep each Registration Statement
effective (and the prospectus contained therein available for use) pursuant to
Rule 415 for resales by the Holder on a delayed or continuous basis at
then-prevailing market prices (and not fixed prices) at all times until the
earlier of (i) the date as of which the Holder may sell all of the Registrable
Securities required to be covered by such Registration Statement (disregarding
any reduction pursuant to Section 2(d)) without restriction pursuant to Rule 144
(including, without limitation, volume restrictions) and without the need for
current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if
applicable) or (ii) the date on which the Holder shall have sold all of the
Registrable Securities covered by such Registration Statement (the “Registration
Period”).  Notwithstanding anything to the contrary contained in this Agreement,
the Partnership shall ensure that, when filed and at all times while effective,
each Registration Statement (including, without limitation, all amendments and
supplements thereto) and the prospectus (including, without limitation, all
amendments and supplements thereto) used in connection with such Registration
Statement (1) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein, or necessary to make the
statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading and (2) will disclose
(whether directly or through incorporation by reference to other SEC filings to
the extent permitted) all material information regarding the Partnership and its
securities.  The Partnership shall submit to the SEC, within one (1) Business
Day after the later of the date that the Partnership learns that no review of a
particular Registration Statement will be made by the Staff or that the Staff
has no further comments on a particular Registration Statement (as the case may
be), a request for acceleration of effectiveness of such Registration Statement
to a time and date not later than forty-eight (48) hours after the submission of
such request.  The Partnership shall respond in writing to comments made by the
SEC in respect of a Registration Statement as soon as practicable, but in no
event later than fifteen (15) days after the receipt of comments by or notice
from the SEC that an amendment is required in order for a Registration Statement
to be declared effective.

 

(b)                                 Subject to Section 3(r) of this Agreement,
the Partnership shall prepare and file with the SEC such amendments (including,
without limitation, post-effective amendments) and supplements to each
Registration Statement and the prospectus used in connection with each such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep each such
Registration Statement effective at all times during the Registration Period for
such Registration Statement, and, during such period, comply with the provisions
of the 1933 Act with respect to the disposition of all Registrable Securities of
the Partnership required to be covered by such Registration Statement until such
time as all of such Registrable Securities shall have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement; provided, however, by 8:30
a.m. (New York time) on the Business Day immediately following each Effective
Date, the Partnership shall file with the SEC in accordance with
Rule 424(b) under the 1933 Act the final prospectus to be used in connection
with sales pursuant to the applicable Registration Statement (whether or not
such a prospectus is technically required by such rule).  In the case of
amendments and supplements to any Registration Statement which

 

7

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are required to be filed pursuant to this Agreement (including, without
limitation, pursuant to this Section 3(b)) by reason of the Partnership filing a
report on Form 10-Q or Form 10-K or any analogous report under the Securities
Exchange Act of 1934, as amended (the “1934 Act”), the Partnership shall, if
permitted under the applicable rules and regulations of the SEC, have
incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the 1934 Act report is filed which created the requirement for
the Partnership to amend or supplement such Registration Statement.

 

(c)                                  The Partnership shall, during the
Registration Period, (A) permit legal counsel for the Holder to review and
comment upon (i) each Registration Statement at least three (3) Business Days
prior to its filing with the SEC and (ii) all amendments and supplements to each
such Registration Statement (including, without limitation, the prospectus
contained therein) within a reasonable number of days prior to their filing with
the SEC, and (B) not file any Registration Statement or amendment or supplement
thereto in a form to which legal counsel for the Holder reasonably objects. The
Partnership shall promptly furnish to legal counsel for the Holder, without
charge, copies of any correspondence from the SEC or the Staff to the
Partnership or its representatives relating to each Registration Statement,
provided that such correspondence shall not contain any material, non-public
information regarding the Partnership or any of its Subsidiaries (as defined in
the Securities Purchase Agreement). The Partnership shall reasonably cooperate
with legal counsel for the Holder in performing the Partnership’s obligations
pursuant to this Section 3.

 

(d)                                 The Partnership shall promptly furnish to
the Holder whose Registrable Securities are included in any Registration
Statement, without charge, (i) after the same is prepared and filed with the
SEC, an electronic copy of each Registration Statement and any amendment(s) and
supplement(s) thereto, including, without limitation, financial statements and
schedules, all documents incorporated therein by reference, if requested by the
Holder, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of each Registration Statement, an electronic copy of the
prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as the Holder may reasonably
request from time to time) and (iii) such other documents, including, without
limitation, copies of any preliminary or final prospectus, as the Holder may
reasonably request from time to time in order to facilitate the disposition of
the Registrable Securities owned by the Holder.

 

(e)                                  The Partnership shall use its commercially
reasonable efforts to (i) register and qualify, unless an exemption from
registration and qualification applies, the resale by the Holder of the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of all applicable jurisdictions in the United
States, (ii) prepare and file in those jurisdictions, such amendments
(including, without limitation, post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, the Partnership shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y)

 

8

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subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction.  The Partnership
shall promptly notify the Holder and legal counsel for the Holder of the receipt
by the Partnership of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

 

(f)                                   The Partnership shall notify the Holder
and legal counsel for the Holder in writing of the happening of any event, as
promptly as practicable after becoming aware of such event, as a result of which
the prospectus included in a Registration Statement, as then in effect, may
include an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading
(provided that in no event shall such notice contain any material, non-public
information regarding the Partnership or any of its Subsidiaries), and, subject
to Section 3(r), promptly prepare a supplement or amendment to such Registration
Statement and such prospectus contained therein to correct such untrue statement
or omission and deliver an electronic copy of such supplement or amendment to
the Holder and legal counsel for the Holder. The Partnership shall also promptly
notify the Holder and legal counsel for the Holder in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to the Holder
and legal counsel for the Holder by e-mail on the same day of such effectiveness
and by overnight mail), and when the Partnership receives written notice from
the SEC that a Registration Statement or any post-effective amendment will be
reviewed by the SEC, (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or related
information, (iii) of the Partnership’s reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate; and
(iv) of the receipt of any request by the SEC or any other federal or state
governmental authority for any additional information relating to the
Registration Statement or any amendment or supplement thereto or any related
prospectus.  The Partnership shall respond as promptly as practicable to any
comments received from the SEC with respect to each Registration Statement or
any amendment thereto (it being understood and agreed that the Partnership’s
response to any such comments shall be delivered to the SEC no later than
fifteen (15) Business Days after the receipt thereof).

 

(g)                                  The Partnership shall (i) use its
commercially reasonable efforts to prevent the issuance of any stop order or
other suspension of effectiveness of each Registration Statement or the use of
any prospectus contained therein, or the suspension of the qualification, or the
loss of an exemption from qualification, of any of the Registrable Securities
for sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and (ii) notify the Holder and legal counsel for the Holder of the
issuance of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.

 

(h)                                 If the Holder may be required under
applicable securities law to be described in any Registration Statement as an
underwriter and the Holder consents to so being named an underwriter, at the
request of the Holder, the Partnership shall furnish to the Holder, on the date
of the effectiveness of such Registration Statement and thereafter from time to
time on such

 

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dates as the Holder may reasonably request (i) a letter, dated such date, from
the Partnership’s independent certified public accountants in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the Holder, and
(ii) an opinion, dated as of such date, of counsel representing the Partnership
for purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the Holder.

 

(i)                                     If the Holder may be required under
applicable securities law to be described in any Registration Statement as an
underwriter and the Holder consents to so being named an underwriter, upon the
written request of the Holder, the Partnership shall make available for
inspection by (i) the Holder, (ii) legal counsel for the Holder and (iii) one
(1) firm of accountants or other agents retained by the Holder (collectively,
the “Inspectors”), all pertinent financial and other records, and pertinent
partnership documents and properties of the Partnership (collectively, the
“Records”), as shall be reasonably deemed necessary by each Inspector, and cause
the Partnership’s officers, directors and employees to supply all information
which any Inspector may reasonably request; provided, however, each Inspector
shall agree in writing to hold in strict confidence and not to make any
disclosure (except to the Holder) or use of any Record or other information
which the Partnership’s board of directors determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(1) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
under the 1933 Act, (2) the release of such Records is ordered pursuant to a
final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (3) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
Agreement or any other Transaction Document (as defined in the Securities
Purchase Agreement).  The Holder agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the
Partnership and allow the Partnership, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, the
Records deemed confidential.  Nothing herein (or in any other confidentiality
agreement between the Partnership and the Holder, if any) shall be deemed to
limit the Holder’s ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.

 

(j)                                    The Partnership shall hold in confidence
and not make any disclosure of information concerning the Holder provided to the
Partnership unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required to be disclosed in such Registration
Statement pursuant to the 1933 Act, (iii) the release of such information is
ordered pursuant to a subpoena or other final, non-appealable order from a court
or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this Agreement or any other Transaction Document.  The Partnership
agrees that it shall, upon learning that disclosure of such information
concerning the Holder is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to the
Holder and allow the Holder, at the Holder’s expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.

 

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(k)                                 Without limiting any obligation of the
Partnership under the Securities Purchase Agreement, the Partnership shall use
its commercially reasonable efforts either to (i) cause all of the Registrable
Securities covered by each Registration Statement to be listed on each
securities exchange on which securities of the same class or series issued by
the Partnership are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, (ii) secure
designation and quotation of all of the Registrable Securities covered by each
Registration Statement on an Eligible Market (as defined in the Securities
Purchase Agreement), or (iii) if, despite the Partnership’s best efforts to
satisfy the preceding clauses (i) or (ii) the Partnership is unsuccessful in
satisfying the preceding clauses (i) or (ii), without limiting the generality of
the foregoing, to use its best efforts to arrange for at least two market makers
to register with the Financial Industry Regulatory Authority (“FINRA”) as such
with respect to such Registrable Securities.  In addition, the Partnership shall
cooperate with the Holder and any broker or dealer through which the Holder
proposes to sell its Registrable Securities in effecting a filing with FINRA
pursuant to FINRA Rule 5110 as requested by the Holder.  The Partnership shall
pay all fees and expenses in connection with satisfying its obligations under
this Section 3(k).

 

(l)                                     The Partnership shall cooperate with the
Holder of Registrable Securities being offered and, to the extent applicable,
facilitate the timely preparation and delivery of Common Units (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and registered in such names as the Holder
may request.

 

(m)                             If requested by the Holder, the Partnership
shall as soon as practicable after receipt of notice from the Holder and subject
to Section 3(r) hereof, (i) incorporate in a prospectus supplement or
post-effective amendment such information as the Holder reasonably requests to
be included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, 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) 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) supplement or make amendments to any Registration Statement or prospectus
contained therein if reasonably requested by the Holder.

 

(n)                                 The Partnership shall use its commercially
reasonable efforts to cause the Registrable Securities covered by a Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of such
Registrable Securities.

 

(o)                                 The Partnership shall make generally
available to its security holders as soon as reasonably practical, but not later
than ninety (90) days after the close of the period covered thereby, an earnings
statement (in form complying with, and in the manner provided by, the provisions
of Rule 158 under the 1933 Act) covering a twelve-month period beginning not
later than the first day of the Partnership’s fiscal quarter next following the
applicable Effective Date of each Registration Statement.

 

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(p)                                 The Partnership shall otherwise use its best
efforts to comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.

 

(q)                                 Within one (1) Business Day after a
Registration Statement which covers Registrable Securities is declared effective
by the SEC, the Partnership shall deliver, and shall cause legal counsel for the
Partnership to deliver, to the transfer agent for such Registrable Securities
(with copies to the Holder of Registrable Securities included in such
Registration Statement) confirmation that such Registration Statement has been
declared effective by the SEC in the form attached hereto as Exhibit A.

 

(r)                                    Notwithstanding anything to the contrary
herein (but subject to the last sentence of this Section 3(r)), at any time
after the Effective Date of a particular Registration Statement, the Partnership
may delay the disclosure of material, non-public information concerning the
Partnership or any of its Subsidiaries the disclosure of which at the time is
not, in the good faith opinion of the board of directors of the Partnership, in
the best interest of the Partnership and, in the opinion of counsel to the
Partnership, otherwise required (a “Grace Period”), provided that the
Partnership shall promptly notify the Holder in writing of the (i) existence of
material, non-public information giving rise to a Grace Period (provided that in
each such notice the Partnership shall not disclose the content of such
material, non-public information to any of the Holder) and the date on which
such Grace Period will begin and (ii) date on which such Grace Period ends,
provided further that (I) no Grace Period shall exceed ten (10) consecutive days
and during any three hundred sixty five (365) day period all such Grace Periods
shall not exceed an aggregate of sixty (60) days, (II) the first day of any
Grace Period must be at least five (5) Trading Days after the last day of any
prior Grace Period and (III) no Grace Period may exist during the sixty (60)
Trading Day period immediately following the Effective Date of such Registration
Statement (provided that such sixty (60) Trading Day period shall be extended by
the number of Trading Days during such period and any extension thereof
contemplated by this proviso during which such Registration Statement is not
effective or the prospectus contained therein is not available for use) (each,
an “Allowable Grace Period”).  For purposes of determining the length of a Grace
Period above, such Grace Period shall begin on and include the date the Holder
receives the notice referred to in clause (i) above and shall end on and include
the later of the date the Holder receives the notice referred to in clause
(ii) above and the date referred to in such notice.  The provisions of
Section 3(g) hereof shall not be applicable during the period of any Allowable
Grace Period.  Upon expiration of each Grace Period, the Partnership shall again
be bound by the first sentence of Section 3(f) with respect to the information
giving rise thereto unless such material, non-public information is no longer
applicable.  Notwithstanding anything to the contrary contained in this
Section 3(r), the Partnership shall cause its transfer agent to deliver
unlegended Common Units to a transferee of the Holder in accordance with the
terms of the Securities Purchase Agreement in connection with any sale of
Registrable Securities with respect to which the Holder has entered into a
contract for sale, and delivered a copy of the prospectus included as part of
the particular Registration Statement to the extent applicable, prior to the
Holder’s receipt of the notice of a Grace Period and for which the Holder has
not yet settled.

 

(s)                                   The Partnership shall take all other
reasonable actions necessary to expedite and facilitate disposition by the
Holder of its Registrable Securities pursuant to each Registration Statement.

 

12

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(t)                                    Neither the Partnership nor any
Subsidiary or Affiliate thereof shall identify the Holder as an underwriter in
any public disclosure or filing with the SEC, the Principal Market or any
Eligible Market and any Buyer being deemed an underwriter by the SEC shall not
relieve the Partnership of any obligations it has under this Agreement or any
other Transaction Document; provided, however, that the foregoing shall not
prohibit the Partnership from including the disclosure found in the “Plan of
Distribution” section attached hereto as Exhibit B in the Registration
Statement.  Notwithstanding anything herein to the contrary, if the Holder is
required by the SEC to be named as an underwriter in a Registration Statement
and the Holder elects not to be named as an underwriter (or the Partnership is
required by the SEC to reduce the number of Registrable Securities included in
such Registration Statement to remove such requirement by the SEC, if applicable
or, otherwise, and the Holder refuses to permit such Registration to be so
reduced), the Partnership shall not be required to include the Holder’s
Registrable Securities in such Registration Statement hereunder and no
Registration Delay Payments shall accrue with respect to the Holder’s
Registrable Securities.

 

(u)                                 Neither the Partnership nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the Partnership or
any of its Subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Buyer in this Agreement or otherwise
conflicts with the provisions hereof.

 

4.                                      Obligations of the Holder.

 

(a)                                 At least five (5) Business Days prior to the
first anticipated filing date of each Registration Statement, the Partnership
shall notify the Holder in writing of the information the Partnership requires
from each the Holder with respect to such Registration Statement.  It shall be a
condition precedent to the obligations of the Partnership to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of the Holder that the Holder shall furnish to the Partnership such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Partnership may reasonably request.

 

(b)                                 The Holder, by its acceptance of the
Registrable Securities, agrees to cooperate with the Partnership as reasonably
requested by the Partnership in connection with the preparation and filing of
each Registration Statement hereunder, unless the Holder has notified the
Partnership in writing of the Holder’s election to exclude all of the Holder’s
Registrable Securities from such Registration Statement.

 

(c)                                  The Holder agrees that, upon receipt of any
notice from the Partnership of the happening of any event of the kind described
in Section 3(g) or the first sentence of 3(f), the Holder will immediately
discontinue disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until the Holder’s receipt of
the copies of the supplemented or amended prospectus contemplated by
Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no
supplement or amendment is required.  Notwithstanding anything to the contrary
in this Section 4(c), the Partnership shall cause its transfer agent to deliver
unlegended Common Units to a transferee of the Holder in accordance

 

13

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with the terms of the Securities Purchase Agreement in connection with any sale
of Registrable Securities with respect to which the Holder has entered into a
contract for sale prior to the Holder’s receipt of a notice from the Partnership
of the happening of any event of the kind described in Section 3(g) or the first
sentence of Section 3(f) and for which the Holder has not yet settled.

 

(d)                                 The Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the 1933 Act as applicable
to it in connection with sales of Registrable Securities pursuant to a
Registration Statement.

 

5.                                      Expenses of Registration.

 

All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, FINRA filing fees (if any)
and fees and disbursements of counsel for the Partnership shall be paid by the
Partnership.  The Partnership shall reimburse legal counsel for the Holder for
its fees and disbursements in connection with registration, filing or
qualification pursuant to Sections 2 and 3 of this Agreement which amount shall
be limited to $5,000.

 

6.                                      Indemnification.

 

(a)                                 To the fullest extent permitted by law, the
Partnership will, and hereby does, indemnify, hold harmless and defend the
Holder and each of its directors, officers, unitholders, members, partners,
employees, agents, advisors, representatives (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding the
lack of such title or any other title) and each Person, if any, who controls the
Holder within the meaning of the 1933 Act or the 1934 Act and each of the
directors, officers, unitholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding the lack of such title or
any other title) of such controlling Persons (each, an “Indemnified Person”),
against any losses, obligations, claims, damages, liabilities, contingencies,
judgments, fines, penalties, charges, costs (including, without limitation,
court costs, reasonable attorneys’ fees and costs of defense and investigation),
amounts paid in settlement or expenses, joint or several, (collectively,
“Claims”) incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an Indemnified
Person is or may be a party thereto (“Indemnified Damages”), to which any of
them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon:  (i) any untrue statement or alleged untrue statement of a material fact
in a Registration Statement or any post-effective amendment thereto or in any
filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable
Securities are offered, or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final

 

14

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prospectus (as amended or supplemented, if the Partnership files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading or (iii) any violation or alleged violation by the
Partnership of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the foregoing clauses (i) through
(iii) being, collectively, “Violations”).  Subject to Section 6(c), the
Partnership shall reimburse the Indemnified Persons, promptly as such expenses
are incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim.  Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a):  (i) shall not apply
to a Claim by an Indemnified Person arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information furnished in
writing to the Partnership by such Indemnified Person for such Indemnified
Person expressly for use in connection with the preparation of such Registration
Statement or any such amendment thereof or supplement thereto and (ii) shall not
be available to the Holder to the extent such Claim is based on a failure of the
Holder to deliver or to cause to be delivered the prospectus made available by
the Partnership (to the extent applicable), including, without limitation, a
corrected prospectus, if such prospectus or corrected prospectus was timely made
available by the Partnership pursuant to Section 3(d) and then only if, and to
the extent that, following the receipt of the corrected prospectus no grounds
for such Claim would have existed; and (iii) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Partnership, which consent shall not be unreasonably withheld or
delayed.  Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of any of the Registrable Securities by the Holder pursuant to
Section 9.

 

(b)                                 In connection with any Registration
Statement in which the Holder is participating, the Holder agrees to severally
and not jointly indemnify, hold harmless and defend, to the same extent and in
the same manner as is set forth in Section 6(a), the Partnership, each of its
directors, each of its officers who signs the Registration Statement and each
Person, if any, who controls the Partnership within the meaning of the 1933 Act
or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or
are based upon any Violation, in each case, to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Partnership by the Holder expressly for use
in connection with such Registration Statement; and, subject to Section 6(c) and
the below provisos in this Section 6(b), the Holder will reimburse an
Indemnified Party any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Holder, which consent shall not be
unreasonably withheld or delayed, provided further that the Holder shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to the Holder as a result of the
applicable sale of Registrable Securities pursuant to such Registration
Statement.  Such indemnity shall remain in full force

 

15

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and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of any of the Registrable
Securities by the Holder pursuant to Section 9.

 

(c)                                  Promptly after receipt by an Indemnified
Person or Indemnified Party (as the case may be) under this Section 6 of notice
of the commencement of any action or proceeding (including, without limitation,
any governmental action or proceeding) involving a Claim, such Indemnified
Person or Indemnified Party (as the case may be) shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party (as the case may be); provided, however, an Indemnified
Person or Indemnified Party (as the case may be) shall have the right to retain
its own counsel with the fees and expenses of such counsel to be paid by the
indemnifying party if:  (i) the indemnifying party has agreed in writing to pay
such fees and expenses; (ii) the indemnifying party shall have failed promptly
to assume the defense of such Claim and to employ counsel reasonably
satisfactory to such Indemnified Person or Indemnified Party (as the case may
be) in any such Claim; or (iii) the named parties to any such Claim (including,
without limitation, any impleaded parties) include both such Indemnified Person
or Indemnified Party (as the case may be) and the indemnifying party, and such
Indemnified Person or such Indemnified Party (as the case may be) shall have
been advised by counsel that a conflict of interest is likely to exist if the
same counsel were to represent such Indemnified Person or such Indemnified Party
and the indemnifying party (in which case, if such Indemnified Person or such
Indemnified Party (as the case may be) notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, then the indemnifying party shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party), provided further that in the case of clause (iii) above the
indemnifying party shall not be responsible for the reasonable fees and expenses
of more than one (1) separate legal counsel for such Indemnified Person or
Indemnified Party (as the case may be).  The Indemnified Party or Indemnified
Person (as the case may be) shall reasonably cooperate with the indemnifying
party in connection with any negotiation or defense of any such action or Claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party or Indemnified Person
(as the case may be) which relates to such action or Claim.  The indemnifying
party shall keep the Indemnified Party or Indemnified Person (as the case may
be) reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto.  No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided, however, the indemnifying party shall not
unreasonably withhold, delay or condition its consent.  No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person (as the case may be), consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person (as the case may be) of a release from all liability in
respect to such Claim or litigation, and such settlement shall not include any
admission as to fault on the part of the Indemnified Party.  Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person (as the
case may be) with respect to all third parties, firms or corporations relating
to the

 

16

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matter for which indemnification has been made.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any liability to
the Indemnified Person or Indemnified Party (as the case may be) under this
Section 6, except to the extent that the indemnifying party is materially and
adversely prejudiced in its ability to defend such action.

 

(d)                                 The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.

 

(e)                                  The indemnity and contribution agreements
contained herein shall be in addition to (i) any cause of action or similar
right of the Indemnified Party or Indemnified Person against the indemnifying
party or others, and (ii) any liabilities the indemnifying party may be subject
to pursuant to the law.

 

7.                                      Contribution.

 

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however:  (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section 6
of this Agreement, (ii) no Person involved in the sale of Registrable Securities
which Person is guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) in connection with such sale shall be entitled to
contribution from any Person involved in such sale of Registrable Securities who
was not guilty of fraudulent misrepresentation; and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the amount of net
proceeds received by such seller from the applicable sale of such Registrable
Securities pursuant to such Registration Statement.  Notwithstanding the
provisions of this Section 7, the Holder shall not be required to contribute, in
the aggregate, any amount in excess of the amount by which the net proceeds
actually received by the Holder from the applicable sale of the Registrable
Securities subject to the Claim exceeds the amount of any damages that the
Holder has otherwise been required to pay, or would otherwise be required to pay
under Section 6(b), by reason of such untrue or alleged untrue statement or
omission or alleged omission.

 

8.                                      Reports Under the 1934 Act.

 

With a view to making available to the Holder the benefits of Rule 144, the
Partnership agrees from and after the six month anniversary of the Closing Date,
to:

 

(a)                                 make and keep public information available,
as those terms are understood and defined in Rule 144;

 

(b)                                 file with the SEC in a timely manner all
reports and other documents required of the Partnership under the 1933 Act and
the 1934 Act so long as the Partnership remains subject to such requirements (it
being understood and agreed that nothing herein shall limit any obligations of
the Partnership under the Securities Purchase Agreement) and the filing of such
reports and other documents is required for the applicable provisions of
Rule 144; and

 

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(c)                                  furnish to the Holder so long as the Holder
owns Registrable Securities, promptly upon request, (i) a written statement by
the Partnership, if true, that it has complied with the reporting, submission
and posting requirements of Rule 144 and the 1934 Act, (ii) a copy of the most
recent annual or quarterly report of the Partnership and such other reports and
documents so filed by the Partnership with the SEC if such reports are not
publicly available via EDGAR, and (iii) such other information as may be
reasonably requested to permit the Holder to sell such securities pursuant to
Rule 144 without registration.

 

9.                                      Assignment of Registration Rights.

 

All or any portion of the rights under this Agreement shall be automatically
assignable by the Holder to any of its Affiliates if (i) the Holder agrees in
writing with such transferee or assignee (as the case may be) to assign all or
any portion of such rights, and a copy of such agreement is furnished to the
Partnership within a reasonable time after such transfer or assignment (as the
case may be); (ii) the Partnership is, within a reasonable time after such
transfer or assignment (as the case may be), furnished with written notice of
(a) the name and address of such transferee or assignee (as the case may be),
and (b) the securities with respect to which such registration rights are being
transferred or assigned (as the case may be); (iii) immediately following such
transfer or assignment (as the case may be) the further disposition of such
securities by such transferee or assignee (as the case may be) is restricted
under the 1933 Act or applicable state securities laws if so required; (iv) at
or before the time the Partnership receives the written notice contemplated by
clause (ii) of this sentence such transferee or assignee (as the case may be)
agrees in writing with the Partnership to be bound by all of the provisions
contained herein; (v) such transfer or assignment (as the case may be) shall
have been made in accordance with the applicable requirements of the Securities
Purchase Agreement and the Warrants (as the case may be); and (vi) such transfer
or assignment (as the case may be) shall have been conducted in accordance with
all applicable federal and state securities laws.

 

10.                               Amendment of Registration Rights.

 

Provisions of this Agreement may be amended only with the written consent of the
Partnership and the Holder.  Any amendment effected in accordance with this
Section 10 shall be binding upon the Holder and the Partnership, provided that
no such amendment shall be effective to the extent that it (1) applies to less
than all of the holders of Registrable Securities or (2) imposes any obligation
or liability on the Holder without the Holder’s prior written consent (which may
be granted or withheld in the Holder’s sole discretion).  No waiver shall be
effective unless it is in writing and signed by an authorized representative of
the waiving party.

 

11.                               Miscellaneous.

 

(a)                                 Solely for purposes of this Agreement, a
Person is deemed to be a holder of Registrable Securities whenever such Person
owns, or is deemed to own, of record such Registrable Securities.  If the
Partnership receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Partnership
shall act upon the basis of instructions, notice or election received from such
record owner of such Registrable Securities.

 

18

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(b)                                 Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: 
(i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); (iii) with
respect to Section 3(c), by electronic mail (provided confirmation of
transmission is electronically generated and kept on file by the sending party);
or (iv) one (1) Business Day after deposit with a nationally recognized
overnight delivery service with next day delivery specified, in each case,
properly addressed to the party to receive the same.  The addresses and
facsimile numbers for such communications shall be:

 

If to the Partnership:

 

Emerge Energy Services LP
180 State Street, Suite 225
Southlake, Texas 76092
Telephone:  (817) 865-5830
Attention:  Deborah Deibert
E-Mail:  ddeibert@emergelp.com

 

With a copy (for informational purposes only) to:

 

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

Telephone:  (713) 546-5400
Facsimile:  (713) 546-5401
Attention:  Ryan J Maierson
E-Mail:  ryan.maierson@lw.com

 

If to the Transfer Agent:

 

American Stock Transfer & Trust Company, LLC

15455 Dallas Parkway, Suite 600

Addison, TX 75001

Telephone:  (972) 764-2716
Facsimile:  (972) 764-5101
Attention:  William Torre
E-Mail:  wtorre@amstock.com

 

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached to the Securities Purchase Agreement, with a copy (for
informational purposes only) to Kelley Drye & Warren LLP, 101 Park Avenue, New
York, NY 10178, Telephone:  (212) 808-7540, Attention:  Michael A.
Adelstein, Esq., E-mail: madelstein@kelleydrye.com, and copies to any other
Buyer representatives as set forth on the Schedule of Buyers, or to such other
address and/or facsimile number and/or to the attention of such other Person as
the recipient party has specified by written notice given to each other party
five (5) days prior to the effectiveness of such change.  Written confirmation
of receipt (A) given by the recipient of such notice, consent,

 

19

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waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine or electronic mail transmission containing the
time, date, recipient facsimile number or electronic mail address and an image
of the first page of such transmission or (C) provided by a courier or overnight
courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

 

(c)                                  Failure of any party to exercise any right
or remedy under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.  The Partnership
and the Holder acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.  It is
accordingly agreed that each party hereto shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement by
any other party hereto and to enforce specifically the terms and provisions
hereof (without the necessity of showing economic loss and without any bond or
other security being required), this being in addition to any other remedy to
which any party may be entitled by law or equity.

 

(d)                                 All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.

 

(e)                                  If any provision of this Agreement is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair
the respective

 

20

--------------------------------------------------------------------------------

 

expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties. 
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

(f)                                   This Agreement, the other Transaction
Documents, the schedules and exhibits attached hereto and thereto and the
instruments referenced herein and therein constitute the entire agreement among
the parties hereto and thereto solely with respect to the subject matter hereof
and thereof.  There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein and therein.  This Agreement,
the other Transaction Documents, the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein supersede all prior
agreements and understandings among the parties hereto solely with respect to
the subject matter hereof and thereof; provided, however, nothing contained in
this Agreement or any other Transaction Document shall (or shall be deemed to)
(i) have any effect on any agreements the Holder has entered into with the
Partnership or any of its Subsidiaries prior to the date hereof with respect to
any prior investment made by the Holder in the Partnership, (ii) waive, alter,
modify or amend in any respect any obligations of the Partnership or any of its
Subsidiaries or any rights of or benefits to the Holder or any other Person in
any agreement entered into prior to the date hereof between or among the
Partnership and/or any of its Subsidiaries and the Holder and all such
agreements shall continue in full force and effect or (iii) limit any
obligations of the Partnership under any of the other Transaction Documents.

 

(g)                                  Subject to compliance with Section 9 (if
applicable), this Agreement shall inure to the benefit of and be binding upon
the permitted successors and assigns of each of the parties hereto.  This
Agreement is not for the benefit of, nor may any provision hereof be enforced
by, any Person, other than the parties hereto, their respective permitted
successors and assigns and the Persons referred to in Sections 6 and 7 hereof.

 

(h)                                 The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.  Unless the context clearly indicates otherwise, each pronoun
herein shall be deemed to include the masculine, feminine, neuter, singular and
plural forms thereof.  The terms “including,” “includes,” “include” and words of
like import shall be construed broadly as if followed by the words “without
limitation.”  The terms “herein,” “hereunder,” “hereof” and words of like import
refer to this entire Agreement instead of just the provision in which they are
found.

 

(i)                                     This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party.  In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature
page shall create a valid and binding obligation of the party executing (or on
whose behalf such signature is executed) with the same force and effect as if
such signature page were an original thereof.

 

(j)                                    Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates,

 

21

--------------------------------------------------------------------------------

 

instruments and documents as any other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

(k)                                 The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent
and no rules of strict construction will be applied against any party. 
Notwithstanding anything to the contrary set forth in Section 10, terms used in
this Agreement but defined in the other Transaction Documents shall have the
meanings ascribed to such terms on the Closing Date in such other Transaction
Documents unless otherwise consented to in writing by the Holder.

 

(l)                                     This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

 

[signature page follows]

 

22

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Buyer and the Partnership have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

 

 

PARTNERSHIP:

 

 

 

EMERGE ENERGY SERVICES LP

 

 

 

 

By:

EMERGE ENERGY SERVICES GP LLC,

 

 

its general partner

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Buyer and the Partnership have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

 

 

BUYER:

 

 

 

SIG STRATEGIC INVESTMENTS, LLLP

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

[To be provided to Holder.]

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

SELLING UNITHOLDERS

 

The common units being offered by the selling unitholders are those issuable to
the selling unitholders upon conversion of series A preferred units and exercise
of the warrants.  For additional information regarding the issuance of series A
preferred units and the warrants, see “Private Placement of Series A Preferred
Units and Warrants” above.  We are registering the common units in order to
permit the selling unitholders to offer the units for resale from time to time. 
Except for the ownership of the series A preferred units and the warrants issued
pursuant to the Securities Purchase Agreement, the selling unitholders have not
had any material relationship with us within the past three years.

 

The table below lists the selling unitholders and other information regarding
the beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder) of
the common units held by each of the selling unitholders. The second column
lists the number of common units beneficially owned by the selling unitholders,
based on their respective ownership of series A preferred units and warrants, as
of         , 201 , assuming conversion of the series A preferred units and
exercise of the warrants held by each such selling unitholder on that date but
taking account of any limitations on conversion or exercise related thereto.

 

The third column lists the common units being offered by this prospectus by the
selling unitholders and does not take in account any limitations on conversion
of the series A preferred units or exercise of the warrants related thereto.

 

In accordance with the terms of a registration rights agreement with the holders
of the series A preferred units and the warrants, this prospectus generally
covers the resale of the sum of (i) 125% of the maximum number of common units
issuable upon conversion of the series A preferred units (without regard to any
limitations on conversion related thereto) and (ii) the maximum number of common
units issuable upon exercise of the warrants, in each case, determined as if the
outstanding warrants were exercised in full (without regard to any limitations
on exercise contained therein) as of the trading day immediately preceding the
date this registration statement was initially filed with the SEC.  Because the
conversion price of the series A preferred units and the exercise price of the
warrants may be adjusted, the number of units that will actually be issued may
be more or less than the number of units being offered by this prospectus. The
fourth column assumes the sale of all of the units offered by the selling
unitholders pursuant to this prospectus.

 

Under the terms of the series A preferred units and the warrants, a selling
unitholder may not convert the series A preferred units or exercise the warrants
to the extent (but only to the extent) such selling unitholder or any of its
affiliates would beneficially own a number of our common units which would
exceed 4.99%. The number of units in the second column reflects these
limitations. The selling unitholders may sell all, some or none of their units
in this offering.  See “Plan of Distribution.”

 

--------------------------------------------------------------------------------

 

Name of Selling Unitholder

 

Number of Common Units
Owned Prior to Offering

 

Maximum Number of
Common Units to be Sold
Pursuant to this Prospectus

 

Number of Common
Units of Owned After
Offering

 

[HOLDER] (1)

 

 

 

 

 

 

 

[OTHER BUYERS]

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

(1)                                 [                  ]

 

--------------------------------------------------------------------------------

 

PLAN OF DISTRIBUTION

 

We are registering the common units issuable upon conversion of the series A
preferred units and exercise of the warrants to permit the resale of these
common units by the holders of the series A preferred units and warrants from
time to time after the date of this prospectus.  We will not receive any of the
proceeds from the sale by the selling unitholders of the common units.  We will
bear all fees and expenses incident to our obligation to register the common
units.

 

The selling unitholders may sell all or a portion of the common units held by
them and offered hereby from time to time directly or through one or more
underwriters, broker-dealers or agents. If the common units are sold through
underwriters or broker-dealers, the selling unitholders will be responsible for
underwriting discounts or commissions or agent’s commissions. The common units
may be sold in one or more transactions at fixed prices, at prevailing market
prices at the time of the sale, at varying prices determined at the time of sale
or at negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions, pursuant to one or more of the following
methods:

 

·                  on any national securities exchange or quotation service on
which the securities may be listed or quoted at the time of sale;

 

·                  in the over-the-counter market;

 

·                  in transactions otherwise than on these exchanges or systems
or in the over-the-counter market;

 

·                  through the writing or settlement of options, whether such
options are listed on an options exchange or otherwise;

 

·                  ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;

 

·                  block trades in which the broker-dealer will attempt to sell
the units as agent but may position and resell a portion of the block as
principal to facilitate the transaction;

 

·                  purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;

 

·                  an exchange distribution in accordance with the rules of the
applicable exchange;

 

·                  privately negotiated transactions;

 

·                  short sales made after the date the Registration Statement is
declared effective by the SEC;

 

·                  broker-dealers may agree with a selling security holder to
sell a specified number of such units at a stipulated price per unit;

 

·                  a combination of any such methods of sale; and

 

--------------------------------------------------------------------------------

 

·                  any other method permitted pursuant to applicable law.

 

The selling unitholders may also sell common units under Rule 144 promulgated
under the Securities Act of 1933, as amended, if available, rather than under
this prospectus. In addition, the selling unitholders may transfer the common
units by other means not described in this prospectus. If the selling
unitholders effect such transactions by selling common units to or through
underwriters, broker-dealers or agents, such underwriters, broker-dealers or
agents may receive commissions in the form of discounts, concessions or
commissions from the selling unitholders or commissions from purchasers of the
common units for whom they may act as agent or to whom they may sell as
principal (which discounts, concessions or commissions as to particular
underwriters, broker-dealers or agents may be in excess of those customary in
the types of transactions involved). In connection with sales of the common
units or otherwise, the selling unitholders may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the common units
in the course of hedging in positions they assume. The selling unitholders may
also sell common units short and deliver common units covered by this prospectus
to close out short positions and to return borrowed units in connection with
such short sales. The selling unitholders may also loan or pledge common units
to broker-dealers that in turn may sell such units.

 

The selling unitholders may pledge or grant a security interest in some or all
of the warrants or common units owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the common units from time to time pursuant to this prospectus or
any amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending, if necessary, the list of selling
unitholders to include the pledgee, transferee or other successors in interest
as selling unitholders under this prospectus. The selling unitholders also may
transfer and donate the common units in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will be the
selling beneficial owners for purposes of this prospectus.

 

To the extent required by the Securities Act and the rules and regulations
thereunder, the selling unitholders and any broker-dealer participating in the
distribution of the common units may be deemed to be “underwriters” within the
meaning of the Securities Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular
offering of the common units is made, a prospectus supplement, if required, will
be distributed, which will set forth the aggregate amount of common units being
offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling unitholders and any discounts,
commissions or concessions allowed or re-allowed or paid to broker-dealers.

 

Under the securities laws of some states, the common units may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
some states the common units may not be sold unless such units have been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.

 

There can be no assurance that any selling unitholder will sell any or all of
the common units registered pursuant to the registration statement, of which
this prospectus forms a part.

 

--------------------------------------------------------------------------------

 

The selling unitholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, to the extent applicable, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the common units by the
selling unitholders and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged in
the distribution of the common units to engage in market-making activities with
respect to the common units. All of the foregoing may affect the marketability
of the common units and the ability of any person or entity to engage in
market-making activities with respect to the common units.

 

We will pay all expenses of the registration of the common units pursuant to the
registration rights agreement, estimated to be $[     ] in total, including,
without limitation, Securities and Exchange Commission filing fees and expenses
of compliance with state securities or “blue sky” laws; provided, however, a
selling unitholder will pay all underwriting discounts and selling commissions,
if any. We will indemnify the selling unitholders against liabilities, including
some liabilities under the Securities Act in accordance with the registration
rights agreements or the selling unitholders will be entitled to contribution.
We may be indemnified by the selling unitholders against civil liabilities,
including liabilities under the Securities Act that may arise from any written
information furnished to us by the selling unitholder specifically for use in
this prospectus, in accordance with the related registration rights agreements
or we may be entitled to contribution.

 

Once sold under the registration statement, of which this prospectus forms a
part, the common units will be freely tradable in the hands of persons other
than our affiliates.

 

--------------------------------------------------------------------------------

 

EXHIBIT D

 

Due Diligence Questionnaire

(for Potential Investments)

 

This Questionnaire is designed to assist Susquehanna International Group, LLP
(collectively with its affiliated and related entities, “SIG” or the “Firm”) in
the evaluation of its potential investment in Emerge Energy Services L.P. (the
“Company”).  Your answers should be detailed and complete, so please do not
limit your responses to the space provided in this Questionnaire; you are
encouraged to continue your narrative answers on separate paper, which can be
attached to this Questionnaire.  Also, please attach any additional documents,
reports, or explanations that may assist us in reviewing this potential
investment.

 

It is imperative that you provide answers to each and every question, even if
the answer is an explanation of why the question is “not applicable” to you.

 

I.    General Background Information

 

1.              Background Information on Company

 

Today’s date

 

(a)                                 Name of Company

 

(b)                                 Address of Principal Place of Business:

 

 

(c)                                 
Phone:                                                                         Fax:

 

(d)                                 Other Places of Business:

 

 

(e)                                  Nature of Company:

 

o Individual                                                                                                                                                                        
o Limited Liability Company

 

o Partnership                                                                                                                                                                   
o Corporation

 

o Other — please describe:

 

(f)                                   If Company is an entity:

 

Jurisdiction of Organization:

 

Date organized/incorporated:

 

(g)                                  Is the Company registered or licensed to do
business?

 

o Yes                                                                                                            
o No

 

If “Yes,” provide the date(s) and place(s) it was authorized to do business and
identify place of establishment:

 

 

 

C2-1

--------------------------------------------------------------------------------

 

If the Company has a tax license, business license or certificate, or commercial
registration or its equivalent, please provide the
registration/license/certificate number(s) and attach a copy of such
registration/license/certificate, as well as an English language translation of
such registration/license/certificate if not originally in English.

 

 

 

(h)                                 Describe in detail the Company’s business,
along with the country/countries in which business is conducted.

 

 

 

(i)                                     For the work described in (h), does the
Company require payment to a bank account in a country different from the
country in which the work will be performed?

 

o Yes                                                                                                            
o No

 

If “Yes,” please explain why.

 

 

 

(j)                                    Does the Company intend to interact with
Non-U.S. Government in connection with its business?

 

Throughout this document, we define a “Non-U.S. Government Official” to include
the following non-U.S. persons:  (a) any officer or employee of any level or
subdivision of government, governmental department, agency or instrumentality;
(b) any officer or employee of any commercial enterprise that is owned or
controlled by a government, e.g. a state-owned utility company; (c) any officer
or employee of any public international organization, such as the International
Monetary Fund, the European Union or the World Bank; (d) any person acting in an
official capacity for any government, department, agency, enterprise or
organization identified above; (e) any political party or officer thereof; and
(f) any candidate for political office.

 

o Yes                                                                                                            
o No

 

If “Yes,” please describe those interactions, including their purpose and
frequency.

 

 

 

C2-2

--------------------------------------------------------------------------------

 

(k)                                 Is the Company required to make payments or
otherwise provide anything of value (e.g., donations, sponsorships, loans,
travel expenses, gifts, meals, lodging, goodwill, entertainment, “grease” or
facilitating payments, etc.)  to Non-U.S. Government Officials or the family
members of Non-U.S. Government Officials in connection with its business?

 

o Yes                                                                                                            
o No

 

If “Yes,” describe the recipient, purpose, frequency, and amounts of these
anticipated payments, along with how Non-U.S. Government Officials are selected
as recipients of such payments.  Also please note whether the Company will
receive receipts for any such payments and whether the payments are permitted
(if known) under local law.

 

 

 

II.    Additional Information on Company - As Necessary

 

(a)                                 Identify each person or entity having any
financial or ownership interest in the Company, either directly or indirectly. 
Include the names of all individuals and/or entities who act as
shareholders/equity owners of the organization.  If the entity is an entity,
list all partners/owners, nationality, percentage ownerships, and date of
acquisition. The “Percentage Ownership” column must total 100%.

 

 

 

 

 

Percentage

 

Date of

Owner(s)/Partners

 

Nationality

 

Ownership

 

Acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C2-3

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If any of the owners listed above are entities (e.g., corporations,
partnerships, trusts, etc.), list the ultimate individual owners of the
organization here.  Use additional sheets as necessary.

 

 

 

(b)                                 Are any of the persons or entities listed in
response to (a) above a Non-U.S. Government Official or relative of any Non-U.S.
Government Official?

 

o Yes                                                                                                            
o No

 

If “Yes,” list those persons/entities below:

 

 

 

(c)                                  List the individuals who serve on the Board
of Directors of the Company.

 

Name

 

Title

 

Nationality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(d)                                 List the individuals who serve as officers
of the Company.

 

Name

 

Title

 

Nationality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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(e)                                   Do any principals, owners, partners,
directors, officers, employees, or consultants of the Company have a financial
interest in, or are employed by or affiliated with, any other business(es)?

 

o Yes                                                                                                            
o No

 

If “Yes,” for each individual identify the name and location of the other
business(es), the position(s) held, and whether there are relationships of any
kind between the other business(es) and the Firm.  Any such relationships should
be described in detail.

 

 

 

(f)                                   Is any principal, owner, partner,
director, officer, employee, or consultant of the Company currently a Non-U.S.
Government Official, or has any such person formerly been a Non-U.S. Government
Official, or does any such person currently anticipate serving as a Non-U.S.
Government Official?

 

o Yes                                                                                                            
o No

 

If “Yes,” provide the following information for each such person:

 

(i)                                     name of individual;

 

(ii)                                  name of government entity or political
party;

 

(iii)                              the official title of the government position
held, the anticipated position, or the position for which the person is or
intends to be a candidate;

 

(iv)                              official duties and responsibilities;

 

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(v)                                 whether such person has ever interacted or
plans to interact with the Firm in his/her official capacity as a Non-U.S.
Government Official and, if so, the purpose of and circumstances surrounding
those interactions;

 

(vi)                              for positions formerly held, the date of
severance or retirement.

 

 

 

(g)                                   Is or was any member of the immediate
family of any principal, owner, partner, director, officer, employee, or
consultant of the Company a Non-U.S. Government Official, or does any member of
the immediate family of any such person currently anticipate becoming a Non-U.S.
Government Official?  (“Immediate family” includes parents, brothers, sisters,
spouses, children, cousins, nephews, aunts, and uncles.)

 

o Yes

o No

 

If  “Yes,” provide the following information for each such person:

 

(i)                                     name of individual;

 

(ii)                                  relationship to principal, owner, partner,
director, officer, employee, or consultant of the Company;

 

(iii)                               name of government entity or political
party;

 

(iv)                              the official title of the government position
held, the anticipated position, or the position for which the person is or
intends to be a candidate;

 

(v)                                 official duties and responsibilities;

 

(vi)                              whether such person has ever interacted or
plans to interact with the Firm in his/her official capacity as a Non-U.S.
Government Official and, if so, the purpose of and circumstances surrounding
those interactions;

 

(vii)                           for positions formerly held, the date of
severance or retirement.

 

 

 

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(h)                                 Number of employees of the Company:

 

Are all employees located at the principal place of business?

 

o Yes

o No

 

If “No,” list all of the places where employees are located:

 

 

 

(i)                                      Does the Company use non-employee
contractors in connection with its business?

 

o Yes

o No

 

[If “Yes,” the Firm must consider whether the non-employee contractor should
complete a separate Questionnaire.]

 

Also, if “Yes,” provide the following for each such person or entity:

 

(i)                                     name of the subcontractor;

 

(ii)                                  a description of the ownership structure
of the subcontractor;

 

(iii)                               a full description of the work provided by
the subcontractor;

 

(iv)                              whether the subcontractor interacts with
Non-U.S. Government Officials;

 

(v)                                 any relationships between the subcontractor
and any Non-U.S. Government Official s;

 

(vi)                              whether the subcontractor makes payments on
the Company’s behalf.

 

 

 

(j)                                    Describe in detail the Company’s physical
facilities.

 

 

 

(k)                                 Does the Company have its own
anti-corruption compliance policies, procedures, and training materials?

 

o Yes

o No

 

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If “Yes,” attach a copy of the policies and procedures, or provide a reason why
they are not attached.

 

 

(l)                                     Are audited financial statements for the
Company available to the Firm?

 

o Yes

o No

 

If  “Yes,” attach the statements for the past three years.  If “No,” provide an
explanation why audited financial statements will not be provided to the Firm.

 

 

 

(m)                             Identify any government departments, agencies or
instrumentalities (or any consulting group engaged thereby), government-owned or
government-controlled companies, public international organizations, or
political parties that the Company represents, consults with or acts as agent
for or has a partnership, joint venture or other similar relationship with?

 

 

How long has each of these relationships existed and what is the specific
purpose of each relationship?

 

 

 

(n)                                 Describe any past or ongoing government
audits, investigations, indictments, or enforcement actions, or any pending or
threatened proceedings, in any country, that involve allegations of bribery or
corruption.

 

 

 

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(o)                                 Are you aware of any actual or potential
violations of any anti-corruption laws, statutes, or rules, including but not
limited to the U.S. Foreign Corrupt Practices Act, statutes enacted pursuant to
the Organization for Economic Cooperation and Development Convention, or local
anti-corruption statutes?

 

o Yes

o No

 

If “Yes,” please describe.

 

 

 

III. References - As Necessary

 

In contacting the sources listed below, we may inquire into the general business
reputation of the Company, its general financial reputation and history in prior
transactions, payment structure in previous relationships, specific reputational
information with respect to other consultations or affiliations of the Company,
known relationships between the Company and Non-U.S. Government Officials or
important members of the business community, information concerning political
party affiliations, information concerning technical expertise in connection
with the performance of other work and any other matter which may be relevant.

 

(a)                                 Company’s Bank(s):

 

Please provide the name, address and telephone number for each bank which would
be receiving funds from the Firm related to this potential transaction.  Please
also identify an individual contact at that bank.  If Company is already
required to have a separate bank account dedicated to receive payments from only
the Firm, please identify that separate bank account below.

 

1.

 

 

2.

 

(b)                                 Company’s Outside Auditors/Accountants:

 

 

Name and Title of

 

Firm Name, Address

 

individual contact

 

and Telephone Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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(c)                                  Company’s Legal Counsel:

 

 

Name and Title of

 

Firm Name, Address

 

individual contact

 

and Telephone Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(d)                                 Other Clients or Customers of Company

 

If possible, at least one business reference should be a U.S. company for which
the Company is currently providing or has recently provided services:

 

 

Name and Title of

 

Company Name, Address

 

individual contact

 

and Telephone Number

 

 

 

 

1.

 

 

 

 

 

 

 

2.

 

 

 

 

(d)                                 Other Clients or Customers of Company,
continued:

 

 

Name and Title of

 

Company Name, Address

 

individual contact

 

and Telephone Number

 

 

 

 

3.

 

 

 

 

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CERTIFICATION

 

The undersigned, acting as an authorized representative of the Company, hereby
certifies that all information provided herein is true and correct.  The
undersigned further certifies that he/she understands that the completion of
this Questionnaire, while requested by the Firm, in no way (i) authorizes the
Company to act on the Firm’s behalf, (ii) creates a contractual relationship of
any kind, whether express or implied, between the Company and the Firm, or
(iii) creates an expectation on the Company’s part that a transaction may ever
be consummated.

 

By:

 

[g163521ki21i001.gif]SIGN HERE

 

 

Name (printed):

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

 

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