Document:

exv10w5

 

Exhibit
10.5

SUBSCRIPTION AGREEMENT

     This SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of May 1, 2006, is entered into by
and among Ensource Energy, LLC, a Delaware limited liability company (the “Company”), Lehman
Brothers Inc. (“Lehman”), The Ospraie Fund L.P. (“OF”), Ospraie Special Opportunities L.P. (“OSO”),
and Ospraie Special Opportunities (Offshore) Master Alternative LLC (“OSO Offshore”; and together
with OS and OSO, “Ospraie”), RTR Energy Fund I, LP (“RTR”), Scott W. Smith, Marshall M. Eubank,
George K. Hickox, Jr., Jon C. Hughes, Loren B. Singletary and J. Thomas Eubank (collectively, the
“Individual Investors”). Each of Lehman, Ospraie, RTR and each of the Individual Investors are
referred to herein individually as an “Investor” and together as the “Investors.”

RECITALS

     WHEREAS, the Company was formed effective March 21, 2006 by the filing on such date of the
Certificate of Formation with the Secretary of State of the State of Delaware;

     WHEREAS, the Company desires to issue and sell Membership Interests (as defined herein) to the
Investors on terms and conditions set forth herein;

     WHEREAS, in connection with the issuance of the Membership Interests, the Members (as defined
herein) desire to enter into the LLC Agreement (as defined herein);

     WHEREAS, the Company is the general partner of Ensource Energy Income Fund LP, a Delaware limited
partnership (the “Fund”);

     WHEREAS, the Company will contribute the proceeds from the issuance and sale of the Membership
Interests to the Fund, in part, as consideration for (i) the issuance to the Company of a class of
partnership interests of the Fund designated as “subordinated units” (the “Fund Subordinated
Units”) and a class of partnership interests of the Fund designated as “common units” (the “Fund
Common Units”); (ii) the 1% general partnership interest in the Fund; (iii) the incentive
distribution rights in the Fund; and (iv) the purchase of the Warrants (as defined in the
Prospectus);

     WHEREAS, the Fund has made an offer (the “Tender Offer”), pursuant to a registration statement on
Form S-4 (Registration No. 333-126068) as filed with the SEC on November 17, 2005 (the
“Registration Statement”) and that certain prospectus dated November 21, 2005 (the “Prospectus”)
and any prospectus supplement thereto (each a “Prospectus Supplement), for the exchange of
depositary units (the “Depositary Units”) of
Eastern American Natural Gas Trust (the “Trusty”); and

     WHEREAS, the Fund will use a portion of the proceeds received from the
Company to fund a portion of the Tender Offer;

     NOW, THEREFORE, in consideration of the foregoing premises and the covenants hereinafter contained,
the parties hereto, intending to be legally bound, hereby agree as follows:

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ARTICLE 1

DEFINITIONS

     SECTION 1.01 Definitions. As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):

     Affiliate: with respect to any Person, which, directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with the Person specified.
For the purpose of this definition, the terms “controls or is controlled by, or is under common
control” shall mean the possession, directly or indirectly, of the power to direct or cause
direction of management or policies (whether through ownership of securities or any membership or
partnership or other interest, by contract or otherwise) of a Person.

     Advance Indemnification Payment: as defined in Section 6.11.

     Agreement: as defined in the preamble hereto.

     Amended Registration Statement: as defined in Section 6.03.

     Associates: with respect to any Person, any officer, director or employee of such Person and
such officer’s, director’s or employee’s spouse, heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries.

     Benefit Plan: at a particular time, any employee benefit plan that is covered by ERISA and in
respect of which a Transaction Party or a Commonly Controlled Entity is (or, if such Benefit Plan
were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

     Closing: as defined in Section 2.04.

     Closing Date: as defined in Section 2.04.

     Code: the Internal Revenue Code of 1986, as amended from time to time, the regulations thereunder
and publicly available interpretations thereof.

     Commonly Controlled Entity: an entity, whether or not incorporated, that is under common control
with the Company within the meaning of Section 4001 of ERISA or is part of a group that includes
the Company and that is treated as a single employer under Section 414 of the Code.

     Company: as defined in the preamble hereto.

     Constituent Documents: collectively, the certificates of formation of the Company and the Fund, the
Existing LLC Agreement, the LLC Agreement and the Fund Partnership Agreement, in each case,
together with all amendments, corrections and supplements thereto.

     Damages: as defined in Section 6.11.

     Defensible Title: good and indefeasible title, free and clear of all Liens other than Permitted
Liens.

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     Depositary Units: as defined in the recitals hereto.

     Employment Agreements: those certain Employment Agreements to be executed concurrently herewith,
between the Company and each of Scott W. Smith and Marshall M. Eubank, respectively, in each case,
in form and substance acceptable to the Institutional Investors.

     ERISA: the Employee Retirement Income Security Act of 1974, as amended from time to time and the
rules and regulations promulgated thereunder.

     Exchange Act: the Securities Exchange Act of 1934, as amended.

     Existing LLC Agreement: that certain Limited Liability Company Agreement of the Company dated as of
April 24, 2006.

     Filed Fund SEC Report: as defined in Section 3.07(b).

     Fund: as defined in the recitals.

     Fund Common Units: as defined in the recitals.

     Fund Partnership Agreement: that certain Agreement of Limited Partnership of the Fund, as amended,
in form and substance acceptable to the Institutional Investors.

     Fund SEC Reports: as defined in Section 3.07(b).

     Fund Subordinated Units: as defined in the recitals.

     GAAP: as defined in Section 3.07(b).

     Governmental Entity: any court or tribunal in any jurisdiction (domestic or foreign) or any
governmental or regulatory body, agency, department, commission, board, bureau or other authority
or instrumentality (domestic or foreign).

     Indemnified Party: as defined in Section 6.11.

     Institutional Investors: collectively, Lehman and Ospraie.

     Investor(s): as defined in the preamble hereto.

     Investor Board Designees: Messrs. J. Robert Chambers, Richard G. Zepernick, Jr. and John Duryea.

     Law: any statute, law, rule or regulation or any judgment, order, writ, injunction or decree of any
Governmental Entity.

     Lien: any mortgage; lien (statutory or other); other security agreement, arrangement or interest;
hypothecation, pledge or other deposit arrangement; assignment; charge; levy; executory seizure;
attachment; garnishment; encumbrance (including any easement, exception, reservation or limitation,
right of way, and the like); conditional sale, title retention, voting agreement or other similar
agreement, arrangement, device or restriction; preemptive or similar right;
the filing of any financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction;

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restriction on sale, transfer, assignment, disposition or other alienation; or any option, equity,
claim or right of or obligation to any other Person of whatever kind and character; provided,
however, that the term “Lien” shall not include any of the foregoing to the extent created by this
Agreement or any other Transaction Document.

     LLC Agreement: that certain Amended and Restated Limited Liability Company Agreement of the Company
to be entered into concurrently with the Closing.

     Management Investor: as defined in Article IV.

     Material Adverse Change: a material adverse change in any of (a) the business, operations, assets,
liabilities, properties, financial condition or results of operations of the Company, Fund or the
Trust or (b) the legality, validity or enforceability of this Agreement or any of the other
Transaction Documents or the rights or remedies of the Investors hereunder or thereunder.

     Material Adverse Effect: an effect that results in or causes, or could reasonably be expected to
result in or cause, a Material Adverse Change.

     Member: as defined in the LLC Agreement.

     Membership Interest: as defined in the LLC Agreement.

     Merger: the merger the Company intends to effect after consummation of the Tender Offer in which
the Trust will either (i) be merged with and into the Fund and the Fund will be the surviving
entity or (ii) alternatively, be merged with and into a newly formed wholly owned subsidiary of the
Fund in which the Trust will be the surviving entity.

     Merger Agreement: the merger agreement pursuant to which the Fund will effect the Merger, in form
and substance acceptable to the Institutional Investors.

     Merger Documents: collectively, the Merger Agreement and each other agreement, instrument or other
document made, executed or delivered in connection with the Merger.

     Multiemployer Plan: a Benefit Plan that is a multiemployer plan as defined in Section 4001(a)(3)of
ERISA.

     Officer’s Certificate: a certificate signed in the name of the Company, by the Chief Executive
Officer of the Company.

     Person: an individual, corporation, trust, partnership, limited liability company, joint venture,
unincorporated organization, government body or any agency or political subdivision thereof, or any
other entity.

     Prospectus Supplement: as defined in the recitals hereto.

     Proceedings: all proceedings, actions, claims, suits, investigations and inquiries by or before any
arbitrator or Governmental Entity.

     Prospectus: as defined in the recitals hereto.

     Purchase: as defined in Section 2.01.

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     Purchase Price: as defined in Section 2.03(a).

     Registration Statement: as defined in the recitals.

     Schedule TO: as defined in Section 3.07(b).

     SEC: the United States Securities and Exchange Commission.

     Securities Act: the Securities Act of 1933, as amended.

     Single Employer Plan: any Benefit Plan that is covered by Title IV of ERISA, but which is not a
Multiemployer Plan.

     Subsidiary: as to any Person, a corporation, partnership, limited liability company or other entity
of which shares of stock or other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of such corporation,
partnership, limited liability company or other entity are at the time owned, or the management of
which is otherwise controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.

     Tax Affiliate: with respect to any Person, (a) any Subsidiary of such Person, and (b) any Affiliate
of such Person with which such Person files or is eligible to file consolidated, combined or
unitary tax returns.

     Tax Returns: as defined in Section 3.16.

     Tender Offer: as defined in the recitals hereto.

     Tender Offer Documents: collectively, the Registration Statement, the Amended Registration
Statement, the Prospectus, each Prospectus Supplement, and each other agreement, instrument,
certificate or other document made, executed or delivered in connection with the Tender Offer, as
the same may be amended in accordance herewith.

     Third Point: Third Point Partners LP and Third Point Partners Qualified LP.

     Third Point Agreements: collectively, the Third Point Purchase Agreement and that certain
Participation Agreement dated as of May 1, 2006 between the Company and Third Point.

     Third Point Purchase Agreement: that certain Common Unit Purchase Agreement, dated as of May 1,
2006, including the exhibits and schedules thereto, between the Fund and Third Point, in form and
substance acceptable to the Institutional Investors.

     Third Point Used Commitment Amount: an amount equal to $71,500,000.

     Transactions: the transactions contemplated by this Agreement and each of the Transaction
Documents.

     Transaction Documents: collectively, each of this Agreement, the LLC Agreement, the Employment
Agreements, the Third Point Agreements, the Fund Partnership Agreement and the Tender Offer Documents.

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     Transaction
Parties: collectively, the Company and the Fund. 

     Trust: as defined in the recitals
hereto.

     Trust Agreement: the Second Amended and Restated Trust Agreement of Eastern American Natural Gas
Trust dated January 1, 1993 among Eastern American Energy Corporation, Bank of Montreal Trust
Company and Wilmington Trust Company.

     Trust SEC Report: as defined in Article IV.

     Underlying Properties: the approximately 671 producing gas wells located in Western Virginia and
Pennsylvania owned by Eastern American Energy Corporation.

ARTICLE II.

PURCHASE AND SALE OF MEMBERSHIP INTERESTS

     SECTION
2.01 Purchase and Sale of Membership Interests. (a) On the Closing Date
and upon the terms and subject to the conditions hereof, each Investor, severally and not jointly,
hereby subscribes for and agrees to purchase from the Company (the “Purchase”), and the Company
agrees to issue and sell to each of the Investors, in exchange for the initial capital
contribution, a Membership Interest with the Sharing Ratio set forth opposite such Investor’s name
below:

	 	 	 	 	 	 	 	 	 
	 	 	Initial Capital	 	 	 	 
	Investor:	 	Contribution:	 	 	Sharing Ratio:	 
	Lehman Brothers Inc.
	 	$	18,700,000	 	 	 	46.75000	%
	OF
	 	$	13,090,000	 	 	 	32.72500	%
	OSO
	 	$	3,814,800	 	 	 	9.53700	%
	OSO Offshore
	 	$	1,795,200	 	 	 	4.48800	%
	Scott W. Smith
	 	$	600,000	 	 	 	1.50000	%
	Loren B. Singletary
	 	$	350,000	 	 	 	0.87500	%
	J. Thomas Eubank
	 	$	250,000	 	 	 	0.62500	%
	Jon C. Hughes
	 	$	250,000	 	 	 	0.62500	%
	Marshall M. Eubank
	 	$	400,000	 	 	 	1.00000	%
	George K. Hickox, Jr.
	 	$	500,000	 	 	 	1.25000	%
	RTR Fund I, LP
	 	$	250,000	 	 	 	0.62500	%
	 
	 	 	 	 	 	 
	Total:
	 	$	40,000,000	 	 	 	100.00000	%

     (b) If one or more of the Investors fails to timely purchase all of the Membership Interest
such Investor is entitled to purchase (such Membership Interest, the “Additional Securities”), the
Company shall, prior to the Closing, offer the Additional Securities to each of the Institutional
Investors on a pro rata basis based on their Sharing Ratios. If an Institutional Investor does not
wish to purchase Additional Securities, the other Institutional Investor may purchase such
Additional Securities. If any such Institutional Investor subscribes for and purchases any
Additional Securities, such Institutional Investor’s Sharing Ratio set forth in Section 2.01 shall
be adjusted accordingly.

     SECTION 2.02 Conditions Precedent to the Obligations of each Investor. Each Investor’s
obligation to purchase Membership Interests hereunder on the Closing Date is subject to the

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satisfaction (or waiver by each of Lehman and Ospraie) on or before the Closing Date, of the
conditions contained in this Section 2.02:

     (a) The representations and warranties of the Company contained in Article III and Article IV
of this Agreement and of the Management Investors in Article IV shall be true and correct in all
respects at and as of the Closing Date, as if made at and as of such date (except that
representations and warranties made as of a specific date need be true only as of that date);

     (b) Each Investor shall have received an Officer’s Certificate, dated the Closing Date in the
form attached hereto as Exhibit A, attaching (i) true, correct and complete copies of each
of the Constituent Documents and (ii) with respect to each Transaction Party, certificates of good
standing of the appropriate officials of the jurisdiction of formation of each Transaction Party
and of each state or other jurisdiction in which each Transaction Party is qualified to transact
business, and is transacting business, except those other jurisdictions where the failure to be so
qualified would not have a Material Adverse Effect;

     (c) The Investors shall have received, true and correct copies, certified as to authenticity
by the Company, of the validly executed and delivered (i) Third Point Agreements, (ii) Employment
Agreements and (iii) Fund Partnership Agreement;

     (d) Concurrently with the consummation of the Purchases hereunder, Third Point shall have
purchased that number of Fund Common Units equal to product of (a) a fraction, of which (i) the
numerator is 71.5 and (ii) the denominator is 91.5, times (b) the number of Depositary Units
validly tendered in the Tender Offer and accepted by the Company for cash consideration not to
exceed $31 per Depositary Unit, rounded to the nearest whole number of Depositary Units;

     (e) Concurrently with the consummation of the Purchases hereunder, the Company and each of
the Investors shall have executed and delivered the LLC Agreement;

     (f) (i) There shall be no Proceedings pending or, to the Company’s knowledge threatened,
against or affecting any Transaction Party or the Trust or any of their respective properties or
rights, or any of their respective Affiliates, Associates, officers or managers, before any
Governmental Entity which (A) seeks to restrain, enjoin or prevent the consummation of the
transactions contemplated by any Transaction Document or (B) questions the validity or legality of
any such transaction and (ii) to the Company’s knowledge there shall be no valid basis for any such
Proceeding;

     (g) The Investors shall have received the executed legal opinion of Andrews Kurth LLP,
counsel to the Company with respect to such matters and in form satisfactory to the Institutional
Investors;

     (h) Since December 31, 2005, no event or circumstance having a Material Adverse Effect shall
have occurred and shall be continuing;

     (i) Each Transaction Party shall have performed and complied in all material respects with
all agreements, covenants and conditions contained in each Transaction Document which are required
to be performed or complied with by such Person prior to or on the Closing Date;

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     (j) The Institutional Investors shall have completed a satisfactory due diligence review of
the business prospects of the Company, the Fund, the Trust and Ensource Reserves Management LLC,
including tax, legal and accounting issues;

     (k) There shall have been validly tendered and not properly withdrawn prior to the expiration
of the Tender Offer, as amended, that number of Depositary Units representing at least a majority
of the total voting power of all of the outstanding trust units immediately prior to the expiration
of the Tender Offer for a cash purchase price not in excess of $31 per share and/or for exchange
with Fund Common Units; and

     (1) The Institutional Investors shall have received such additional approvals, opinions and
documents as such Persons may have reasonably requested.

     (m) The Company shall have obtained director and officer liability insurance with a financially
sound and reputable insurance company with such coverage and in such amounts satisfactory to the
Institutional Investors in their sole discretion.

     (n) The Company shall have been duly and validly elected or otherwise appointed the sole
general partner of the Fund.

     SECTION 2.03 Closing Conditions of the Company. The Company’s obligation to issue and
sell the Membership Interests to be issued and sold and by it hereunder on the Closing Date is
subject to the satisfaction or waiver, on or before the Closing Date, of the conditions contained
in this Section 2.03:

     (a) The Investors shall deliver to the Company an aggregate purchase price equal to
$40,000,000 (the “Purchase Price”), by wire transfer or by such other method as may be reasonably
acceptable to the Company, in immediately available funds. Such amounts shall be paid to the
account of the Company as shall have been designated in writing a reasonable time in advance to the
Investors by the Company;

     (b) The representations and warranties of the Investors contained in this Agreement shall be
true and correct in all respects at and as of the Closing Date, as if made at and as of such date
(except that representations and warranties made as of a specific date need be true only as of that
date); and

     (c) The Investors shall have performed in all material respects all of their respective
obligations under this Agreement required to be performed by them on or prior to the Closing Date.

     SECTION 2.04 Closing: Termination.

     (a) Subject to the prior or concurrent satisfaction or waiver of each of the conditions set
forth in Sections 2.02 and 2.03, the closing for the Purchase (the “Closing”) shall take place at
10:00 A.M., New York City time, on the third Business Day following the satisfaction or waiver of all closing conditions to the obligations of
the Parties to consummate the Purchase (other than conditions with respect to actions the
respective Parties will take at the Closing itself), or such other date as the Institutional
Investors and the Company agree in writing (the “Closing Date”) at the offices of Akin, Gump,
Strauss, Hauer & Feld LLP or at such other time as may be agreed upon among the Company and the

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Institutional Investors. Each Investor shall deliver its portion of the aggregate Purchase Price to
the Company by wire transfer of immediately available funds to such account as the Company shall
designate prior to the Closing Date.

     (b) This Agreement may be terminated by any party hereto if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement) on or before 120 days after the date hereof.

ARTICLE II.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     SECTION 3.01 The Company represents and warrants to each Investor that as of the date
hereof, and after giving effect to consummation of the Transactions:

	 	(a)	 	Organization, Qualifications and Corporate Power

          (i) The Company is a limited liability company, and the Fund is a limited partnership, in
each case, duly organized, validly existing and in good standing under the laws of the State of
Delaware and each is duly licensed or qualified to transact business as a foreign corporation and
is in good standing in each jurisdiction in which the nature of the business transacted by it or
the character of the properties owned or leased by it requires such licensing or qualification.
Each Transaction Party has full power and authority to own and hold its properties and to carry on
its business as now conducted and as proposed to be conducted, to execute, deliver and perform this
Agreement and each Transaction Document and to issue, sell and deliver the Membership Interests.

          (ii) Except as set forth on Schedule 3.01, none of the Transaction Parties (A) owns of record
or beneficially, directly or indirectly, any shares of capital stock or ecurities exercisable or
exchangeable for, or convertible into capital stock of any other entity or any participating
interest in any partnership, joint venture or other non-corporate business enterprise or (B)
controls, directly or indirectly, any other Person.

     SECTION
3.02 Authorization; No Conflict; No Violation.

     (a) The execution and delivery of this Agreement and each of the other Transaction Documents
by each of the Transaction Parties party thereto, and performance of their respective obligations
hereunder or thereunder:

     (i) have been duly authorized by all requisite action of each of the applicable Transaction
Parties;

     (ii) will not (A) result in a violation of any law, rule or regulation, or any order,
injunction, judgment or decree of any Governmental Entity, (B) conflict with, result in a breach
of, or constitute (or, with due notice or lapse of time or both, would constitute) a default under,
or give rise to any right of termination, acceleration or cancellation under, any indenture, agreement, contract, license, arrangement,
understanding, evidence of indebtedness, note, lease or other instrument to which

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any Transaction Party or any of its properties or assets is bound, (C) result in the creation
or imposition of any Lien upon any Transaction Party or any of the Transaction Parties’ respective
properties or assets or (D) require any consent, approval, notification, waiver or other similar
action from any third party; and

     (iii) do not require any Transaction Party to obtain any consent, approval or action of, or
make any filing with or give any notice to, any Person or Governmental Authority.

     (b) No provision of this Agreement or any Transaction Document violates, conflicts with,
results in a breach of or constitutes (or, with due notice or lapse of time or both, would
constitute) a default by any other Person under any indenture, agreement, contract, license,
arrangement, understanding, evidence of indebtedness, note, lease or other instrument to which any
Transaction Party is party.

     SECTION 3.03 Consents and Approvals. Subject to the accuracy of the representations and
warranties of the Investors set forth in Article V, no registration or filing with, or consent or
approval of or other action by, any Governmental Entity or any third party is or will be necessary
for the Company’s valid execution, delivery and performance of this Agreement, any other
Transaction Document or the issuance, sale and delivery of the Membership Interests, other than
those (i) which have previously been obtained or made or (ii) those which are required to be made
under federal or state securities laws, which will be obtained or made, and will be effective
within the time periods required by law.

     SECTION 3.04 Validity. This Agreement and each Transaction Document have been duly
executed and delivered by the applicable Transaction Party and constitutes the legal, valid and
binding obligation of such Persons, enforceable against such Persons in accordance with their
respective terms, except to the extent limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application related to the enforcement of
creditors’ rights generally and (ii) general principles of equity, and except that enforcement of
rights to indemnification and contribution contained therein may be limited by applicable federal
or state laws or the public policy underlying such laws, regardless of whether enforcement is
considered in a proceeding in equity or at law.

     SECTION 3.05 Securities of the Company.

     (a) Schedule 3.05 sets forth the list of the members, the initial capital contribution
and Sharing Ratio (as such term is defined in the LLC Agreement) of each member of the Company
after giving effect to the purchase of Membership Interests hereunder. Except as set forth in the
Employment Agreements, the Company does not have outstanding any securities convertible into or
exchangeable for Membership Interests or any other securities of the Company nor does it have
outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, Membership Interests or any other securities of the Company or
securities convertible into or exchangeable for Membership Interests or any other securities of the
Company.

     (b) The Membership Interests have been duly authorized and, when issued in accordance with
this Agreement, will be duly and validly issued, and will be free and clear

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of all Liens, other than Liens created by the Investors and restrictions on transfer imposed
by the LLC Agreement, the Securities Act and applicable state securities laws.

     (c) Except as set forth in the LLC Agreement, there are no voting trusts or agreements,
pledge agreements, buy-sell agreements, rights of first refusal, preemptive rights or other similar
rights or proxies relating to any of the Company’s securities, or agreements relating to the
issuance, sale, redemption, transfer or other disposition of the Company’s securities.

      SECTION 3.06 No Operations or Business. Prior to the Closing, the Company has had no
operations or business, incurred no debt or liability, other than ordinary formation expenses, and
has no assets except for $1,000 as initial formation capital. Except as set forth on Schedule 3.06,
prior to the Closing, the Company has not entered into any agreements or contracts and has no
present intention to enter into any contracts or agreements other than this Agreement and the
Transaction Documents to which it is a party.

      SECTION 3.07 Tender Offer.

     (a) The negotiations and preparations of documents related to the Tender Offer and all
actions taken by the Fund or its Affiliates or representatives in connection therewith, including
all due diligence on the units of the Trust being exchanged thereunder (the “Depositary Units”),
have been in good faith and performed in a reasonably prudent and customary manner for a
transaction of comparable size and complexity. All documents or information related to the Tender
Offer that would be material to the Investors’ investment decision with respect to its investment
in the Fund, including, but not limited to, the Prospectus, each Prospectus Supplement, any
amendments thereto, have been delivered or made available to the Investors and are true and
accurate in all material respect as to the date on which such document or information was prepared
and do not omit to state any material fact necessary to make such information not misleading in
light of the circumstances under which such document or information were prepared; provided
however, that as to any document or report not prepared by the Company or the Fund, or any of their
respective Affiliates or any document or report summarizing information furnished to the Company,
the Fund or their respective Affiliates (provided such information is accurately summarized), the
sole representation herein is that the document or report has been delivered to the Investors and
that none of the Company, the Fund or any of their respective Affiliates has any knowledge of any
material untrue statement contained therein or any omission to state a material fact contained
therein. The Tender Offer shall be in accordance with the terms and conditions of the documents
delivered to the Investors.

     (b) The Company has caused the Fund to furnish or make available to the Investors, via its
EDGAR filings with the SEC, true and complete copies of the Fund’s (i) Registration Statement, (ii)
Schedule TO relating to the Tender Offer (File No. 005-81162) (the “Schedule TO”) and (iii) all
other reports filed with or registration statements declared effective by the SEC which are all of the documents (other than
preliminary material) that the Company was required to file with the SEC (the documents referred to
in clauses (i) through (iii), together with all accompanying exhibits and all information
incorporated therein by reference, being referred to herein collectively as the “Fund SEC
Reports”). The Fund has timely made all filings and furnishings with the SEC pursuant to the
Exchange Act during the 12 months preceding the date of this Agreement. As of their respective
dates, the

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Fund SEC Reports were duly filed with or furnished to the SEC and complied in all material respects
with the requirements of the Sarbanes-Oxley Act, the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations promulgated by the SEC and the New York Stock Exchange
thereunder applicable to such Fund SEC Reports. Except to the extent that information contained in
any Fund SEC Report filed or furnished with the SEC and made publicly available prior to or
concurrent with the date of this Agreement (a “Filed Fund SEC Report”) has been revised or
superseded by a later Filed Fund SEC Report, as of their respective dates, none of the Filed Fund
SEC Reports contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited consolidated financial
statements included in the Filed Fund SEC Reports comply in all material respects with applicable
accounting requirements of the Securities Act or the Exchange Act and with the published rules and
regulations of the SEC with respect thereto. The financial statements of the Fund and the Company
(including the schedules and notes thereto) included in the Fund’s SEC Reports (i) have been
prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a
consistent basis and (ii) present fairly, in all material respects the financial position of the
Fund and the Company as at the dates thereof and the results of its operations and cash flow for
the periods then ended, except that the unaudited financial statements may not be in accordance
with GAAP because of the absence of footnotes normally contained therein and are subject to normal
year-end audit adjustments.

      SECTION 3.08 Registration Statement and Prospectus.

     (a) The Company has caused the Fund to prepare the Registration Statement in conformity with
the requirements of the Securities Act and the rules and regulations of the SEC thereunder and to
file such Registration Statement with the SEC under the Securities Act. The Registration Statement,
which shall be deemed to include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, has been declared effective by the SEC under the
Securities Act and no post-effective amendment to the Registration Statement has been filed as of
the date of this Agreement.

     (b) The SEC has not issued an order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus relating to the Tender Offer nor instituted proceedings for that
purpose. Neither the Registration Statement nor any amendment thereto, nor the Prospectus,
contains, as the case may be, any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading.

      SECTION
3.09 Litigation; Compliance with Law. There is no (i) action, suit, claim,
proceeding or investigation pending or, to the Company’s knowledge, threatened, against or
affecting any Transaction Party or its properties or assets or any of its Affiliates or Associates,
at law or in equity, or before or by any Governmental Authority, (ii) arbitration proceeding pending or, to the Company’s knowledge,
threatened, against or affecting any Transaction Party or its properties or assets or (iii)
governmental inquiry pending or, to the Company’s knowledge, threatened, against or affecting any
Transaction Party or its properties or assets (including any inquiry as to any Transaction Party’s
qualification to hold or receive any license or permit), and, to the Company’s knowledge, there is
no basis for any of the foregoing. No Transaction Party is in

12

 

default with respect to any order, writ, judgment, injunction or decree known to or served upon
such Person of any Governmental Authority.

     SECTION 3.10 Offering of the Membership Interests. Assuming the accuracy of the
Investors’ representations and warranties set forth in Article V, the Company has complied in all
respects with all applicable federal and state securities laws in connection with the offer,
issuance and sale of the Membership Interests. Neither the Company nor any Person acting on its
behalf has taken or will take any other action (including any offer, issuance or sale of any
security of the Company under circumstances which might require the integration of such security
with the Membership Interests under the Securities Act or the rules and regulations of the SEC
promulgated thereunder), in either case so as to subject the offering, issuance or sale of the
Membership Interests to the registration provisions of the Securities Act. Neither the Company nor
any Person acting on its behalf has offered the Membership Interests to any Person by means of
general or public solicitation or general or public advertising, such as by newspaper or magazine
advertisements, by broadcast media, or at any seminar or meeting whose attendees were solicited by
such means.

     SECTION 3.11 Insurance. Each Transaction Party and its respective properties are insured
in such amounts, against such losses and with such insurers as are prudent when considered in light
of the nature of the properties and business such Person as now conducted and as presently
contemplated to be conducted after giving effect to consummation of the Transactions. No notice of
any termination or threatened termination of any of such policies has been received by any
Transaction Party and such policies are in full force and effect.

     SECTION 3.12 Brokers; Financial Advisors. No agent, broker, investment banker, finder,
financial advisor or other Person is or will be entitled to any broker’s or finder’s fee or any
other commission or similar fee in connection with the transactions contemplated by this Agreement
or the other Transaction Documents, and no Person is entitled to any fee or commission or like
payment in respect thereof based in any way on agreements, arrangements or understandings made by
or on the Company’s behalf.

     SECTION 3.13 Investment Company Act. The Company is not, nor is it directly or indirectly
controlled by or acting on behalf of, any Person that is an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.

     SECTION 3.14 Registration Rights. Except as set forth in the Fund Partnership Agreement,
the LLC Agreement and the Third Point Agreements, no Person has demand or other rights to cause any
Transaction Party to file any registration statement under the Securities Act relating to any
securities of any Transaction Party or any right to participate in any such registration statement,
including piggyback registration rights.

     SECTION 3.15 Books and Records. The books of account, ledgers, order books,
records and documents of each Transaction Party accurately and completely reflect in accordance
with usual and customary prudent business practices all material information relating to such
Person’s business, the location and collection of such Person’s assets and the nature of all
transactions giving rise to such Person’s obligations and accounts receivable.

     SECTION 3.16 Taxes. Each Transaction Party has filed or caused to be filed all federal,
state and other material tax returns, reports and statements
(collectively, “Tax Returns”) that are
required to be filed by any either or any of their respective Tax Affiliates with the appropriate

13

 

Governmental Authorities in all jurisdictions in which such Tax Returns are required to be filed;
all such Tax Returns are true and correct in all material respects and correctly reflect the facts
regarding the income, business, assets, operations, activities, status or other matters of such
Person and any other information required to be shown thereon; each Transaction Party has paid,
prior to the date on which any fine, penalty, interest, late charge or loss may be added thereto
for non-payment thereof, all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by or otherwise due and payable to any Governmental Authority
(other than any the amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of such Person); no tax Lien has been filed against the property of any
Transaction Party; and, to the best knowledge of the Company, no claim is being asserted, with
respect to any such tax, fee or other charge. No Tax Return is under audit or examination by any
Governmental Authority and no notice of such an audit or examination or any assertion of any claim
for taxes has been given or made by any Governmental Authority. Proper and accurate amounts have
been withheld by each Transaction Party and each of their respective Tax Affiliates from their
respective employees for all periods in full and complete compliance with the tax, social security
and unemployment withholding provisions of applicable requirements of Law and such withholdings
have been timely paid to the respective Governmental Authorities. There are no tax sharing
agreements or similar arrangements with respect to or involving any entity in any Transaction
Party. From its inception and immediately after the Closing, the Company has been and will be
classified as a partnership for federal income tax purposes.

     SECTION 3.17 ERISA. No Reportable Event nor an “accumulated funding deficiency” (within
the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred with respect to any
Transaction Party during the five-year period prior to the date on which this representation is
made or deemed made with respect to any Benefit Plan, and each Benefit Plan has complied in all
material respects with the applicable provisions of ERISA and the Code. No termination of a Single
Employer Plan of a Transaction Party has occurred, and no Lien in favor of the PBGC or a Benefit
Plan has arisen, during such period. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Benefit Plans) of the Company did not,
as of the last annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Benefit Plan allocable to such accrued benefits
by a material amount. Neither the Transaction Parties nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither the Transaction Parties nor any
Commonly Controlled Entity would become subject to any material liability under ERISA if such
Transaction Party or any such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in reorganization or insolvent.

     SECTION 3.18 Ownership of Property. Each Transaction Party has Defensible Title to all of
its properties which constitute, for applicable state law purposes, “real” or “immovable” property,
or an interest therein, and good and indefeasible title to all of the properties which constitute,
for applicable state law purposes, “personal” or “movable” property.

     SECTION 3.19 Transactions with Affiliates. Except as set forth on the Schedule 3.19 or as
contemplated by the Transaction Documents, no Transaction Party is a party to any agreement

14

 

with any of its respective partners, directors, officers, trustees or members or any Affiliate or
family member of any of the foregoing under which it: (i) leases any real or personal property
(either to or from such Person), (ii) licenses technology (either to or from such Person), (iii) is
obligated to purchase any tangible or intangible asset from or sell such asset to such Person, (iv)
purchases products or services from such Person or (v) has borrowed money from or lent money to
such Person. No Transaction Party employs as an employee or engages as a consultant any family
member of any of such Person’s managers, directors, officers, trustees or partners. To the best
knowledge of the Company, there exist no agreements among the partners or members, as the case may
be, of any Transaction Party to act in concert with respect to their voting or holding of
partnership or membership interests, as applicable.

     SECTION 3.20 Disclosure. The Company has disclosed or made available to the Investors all
facts material to the Company’s business, operations, assets, liabilities, prospects, properties,
condition (financial or otherwise) and results of operations. None of this Agreement, any
Transaction Document, any Schedule or Exhibit to any such agreement, or any other statements,
documents or certificates made or delivered in connection herewith or therewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make the statements
contained herein and therein not misleading in light of the circumstances under which such
statements were made. There is no fact that the Company has not disclosed to the Investors and of
which the Company is aware which has resulted in, or, insofar as the Company can reasonably
anticipate, could be reasonably expected to result in, a Material Adverse Change. The financial
projections and other estimates provided to the Investors were prepared by the Company and on
assumptions of fact and opinion as to future events which the Company, at the date of the issuance
of such financial projections and other estimates, believed to be reasonable and which the Company
currently believes are reasonable. As of the date hereof, no facts have come to the Company’s
attention that would, in its opinion, require the Company to revise or amplify the assumptions
underlying such projections and other estimates or the conclusions derived therefrom.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MANAGEMENT

INVESTORS

     Each of Scott W. Smith and Marshall M. Eubank in their respective capacities as Members of
the Company (each, a “Management Investor”) and the Company, jointly and severally, represents and
warrants to each Investor that as of the date hereof, and after giving effect to the consummation
of the Transactions, that to each of the Management Investor’s knowledge and the Company’s
knowledge, in each case, based solely on their respective review of the Trust’s Annual Report on
Form 10-K for the year ended December 31, 2005 as filed with the SEC on March 16, 2006 (the “Trust SEC Report”).

     (a) the Trust is a statutory trust validly existing and in good standing under the laws of
the State of Delaware. True and complete copies of the Trust’s certificate of trust and the Trust
Agreement have been made available to the Investors through the Trust’s filings with the SEC;

     (b) the Trust does not have any Subsidiaries;

     (c) the authorized capital of the Trust consists of 5,900,000 trust units, of which as of
March 16, 2006 (the most recent date as of which the Trust has made publicly

15

 

available such information) 5,880,100 trust units were on deposit with a depositary and were
evidenced by the Depositary Units, each of which evidences a trust unit and l/50th of a $1,000 face
amount stripped-interest U.S. treasury bond maturing May 13, 2013;

     (d) the trust units of the Trust evidenced by the Depositary Units have been duly and validly
issued by the Trust and are fully paid in accordance with the Trust Agreement and are
non-assessable;

     (e) there is no trust security, depositary unit or any other security of the Trust issuable
upon conversion or exchange of any security of the Trust nor are there any rights, options or
warrants outstanding or other agreements to acquire trust interests, depositary units or any other
security, nor is the Trust contractually obligated to purchase, redeem or otherwise acquire any of
its outstanding securities;

     (f) no securityholder of the Trust or other Person is entitled to any preemptive or similar
rights to subscribe for trust securities, depositary units or any other securities of the Trust;

     (g) the execution and delivery by the Trust of the Merger Agreement, the Merger and the
performance by the Trust of its obligations under the Merger Agreement and the consummation of the
transactions contemplated thereby do not require the Trust to obtain any consent, approval or
action of, or make any filing with or give any notice to, any Person or Governmental Entity other
than the holders of the Depositary Units;

     (h) subject to the matters described in Schedule 3.6(b) of the Third Point Purchase
Agreement, the execution and delivery of the Merger Agreement (assuming that the Trust is the
surviving entity of the Merger as contemplated pursuant to the form of Merger Agreement included as
Exhibit 10.7 to the Registration Statement), and the fulfillment of the terms thereof by the Trust,
will not result in a breach of any of the terms, conditions or provisions of, or constitute a
default under, or permit the acceleration of rights under or termination of, (i) any contract,
agreement, instrument, commitment or other arrangement to which the Trust is a party or by which it
is bound or to which its properties, assets or businesses are subject, (ii) the Trust’s certificate
of trust or the Trust Agreement or (iii) any rule or regulation of any Governmental Entity having
jurisdiction over the Trust or over its properties or businesses;

     (i) the Trust has timely made all filings and furnishings with the SEC pursuant to the
Exchange Act during the 12 months preceding the date of this Agreement and as of its date, the
Trust SEC Report has been duly filed with or furnished to the SEC;

     (j) the financial statements of the Trust (including the schedules and notes thereto)
included in Trust SEC Report have not been prepared in accordance with GAAP as the financial
statements of the Trust differ from financial statements prepared in accordance with GAAP due to the following (a) certain cash reserves may be established
for contingencies which were not accrued in the financial statements, (b) amortization of the “Net
Profits Interests” in gas properties is charged directly to the Trust corpus and (c) the sale of
the “Net Profits Interests” is reflected in the Statements of Distributable Income as cash proceeds
to the Trust applied on a consistent basis;

16

 

     (k) since December 31, 2005, there has been no (i) Material Adverse Change or Material
Adverse Effect with respect to the Trust, (ii) issuance of trust units of the Trust, Depositary
Units or other securities or options, warrants or rights to acquire securities of the Trust, (iii)
declaration, setting aside or payment of any dividend or other distribution with respect to the
Depositary Units or other securities of the Trust, except as disclosed under the caption
“Distributions and Income Computations” of the Trust SEC Report, (iv) material loss, destruction or
damage to any property of the Trust or the Underlying Properties, whether or not insured, (v)
acceleration or prepayment of any indebtedness for borrowed money or the refunding of any such
indebtedness, except in the ordinary course of business or that is not material to the business of
the Trust, (vi) loan or extension of credit to any officer, trustee or employee of the Trust, or
(vii) acquisition or disposition of any material assets, including without limitation the
Underlying Properties (or any contract or arrangement therefor), or any other material transaction
by the Trust otherwise than for fair value in the ordinary course of business;

     (l) there is no legal action, suit or arbitration by any Person, or other legal,
administrative or governmental (whether federal, state, local or foreign) investigation, inquiry or
proceeding pending or, to the best of each of the Management Investor’s knowledge and the Company’s
knowledge threatened, against or materially or adversely affecting the Trust or its properties,
assets or business. Neither any Management Investor nor the Company is aware of any fact which
might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or
other proceeding. The Trust is not subject to any order, writ, judgment, injunction, decree,
determination or award of any Governmental Entity;

     (m) the Trust does not have any employees and the Trust has never had any employees or been
subject to any collective bargaining agreement;

     (n) (i) subject to the disclosure in Item 1A of the Trust SEC Report under the captions “Risk
Factors — The legal status of the Net Profits Interests under some circumstances is unclear” and
“Risk Factors — The Net Profits Interests are subject to any defects in Eastern American’s rights
to the Underlying Properties,” the Trust has good title to its over-riding royalty interests
described under the caption “NOT Properties — Net Profits Interests” in the Prospectus and (ii)
such over-riding royalty interests are the only material real properties owned by the Trust; and

     (o) the Trust is not a party to any material agreement with any of its Affiliates.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

     Each Investor, in connection with purchases of Membership Interests hereunder, severally but
not jointly, represents and warrants solely with respect to itself to the Company and to the other
Investors as of the Closing Date that:

     SECTION 5.01 Investment Matters.

     (a) Such Investor is acquiring the Membership Interests solely for its beneficial account,
for investment purposes, and not with a view to, or for resale in connection with, any distribution
of Membership Interests in violation of applicable securities laws;

17

 

     (b) Such Investor understands that the Membership Interests have not been registered under
the Securities Act or any state securities laws by reason of specific exemptions under the
provisions thereof, the availability of which depend in part upon the bona fide nature of its
investment intent and upon the accuracy of its representations made in this Article V;

     (c) Such Investor understands that the Company is relying in part upon the representations
and agreements contained in this Article V for the purpose of determining whether the offer, sale
and issuance of the Membership Interests meets the requirements for such exemptions;

     (d) Such Investor is an “accredited investor” as defined in Rule 501 (a) under the Securities
Act;

     (e) Such Investor has such knowledge, skill and experience in business, financial and
investment matters that it is capable of evaluating the merits and risks of an investment in
Membership Interests to which it is subscribing;

     (f) Such Investor understands that the Membership Interests will be “restricted securities”
under applicable federal securities laws and that the Securities Act and the rules of the SEC
provide in substance that it may dispose of the Securities only pursuant to an effective
registration statement under the Securities Act or an exemption therefrom; and

     (g) Such Investor has been furnished by the Company with all information (or provided access
to all information) regarding the business and financial condition of the Company, its expected
plans for future business activities, the attributes of the Membership Interests for which such
Investor is subscribing and the merits and risks of an investment in such Membership Interests
which it has requested or otherwise needs to evaluate the investment in such Membership Interests;
that in making the proposed investment decision, such Investor is relying solely on such
information, the representations, warranties and agreements of each other Investor and on
investigations made by it and its representatives; and that the offer to sell the Membership
Interests hereunder was communicated to such Investor in such a manner that it was able to ask
questions of and receive answers from the management of the Company concerning the terms and
conditions of the proposed transaction and that at no time was it presented with or solicited by or
through any leaflet, public promotional meeting, television advertisement or any other form of
general or public advertising or solicitation.

SECTION
5.02 Authority.

     (a) Such Investor has full power and authority to enter into and perform its obligations
under this Agreement; and

     (b) This Agreement has been duly authorized, executed and delivered by a Person authorized to
do so, constitutes the legal, valid and binding obligation of such Investor and, except as may be affected (i) by bankruptcy, insolvency, moratorium,
reorganization and other similar laws and judicial decisions affecting the rights of creditors
generally and (ii) by general principles of equity and public policy (regardless of whether
considered at law or in equity), is enforceable against such Investor in accordance with its terms.

18

 

     SECTION 5.03 No Conflicts. The execution, delivery and performance by such Investor of
this Agreement and the consummation by such Investor of the transactions contemplated hereby will
not, without the giving of notice or the lapse of time, or both, (i) violate any provision of Law
to which such Investor is subject, or (ii) with respect to any Investor which is not a natural
person, conflict with, or result in a breach or default under, any term or condition of its
certificate of incorporation, bylaws, partnership agreement or other organizational document, as
applicable, or any agreement or other instrument to which such Investor is a party or by which such
Investor is bound.

ARTICLE VI.

COVENANTS

     SECTION 6.01 General Partner Contribution. Prior to or concurrently with the
Closing, the Company shall contribute the following amounts to the Fund for use by the Fund for the
following the specific purposes: (a) $500,000 to purchase the Warrants (as defined in the
Prospectus), (b) $19,500,000 to purchase (i) Fund Subordinated Units at a price not to exceed $31
per Fund Subordinated Unit, (ii) the 1% general partnership interest in the Fund and (iii) the
incentive distribution rights in the Fund and (c) an aggregate amount (subject to a maximum amount
of $20,000,000) to purchase Fund Common Units, at price equal to the price at which the Fund
tenders for the purchase of Depositary Units (not to exceed $31 per
Fund Common Unit) on a pari passu basis with Third Point such that the number of Fund Common Units purchased will equal the
number of Depositary Units validly tendered in the Tender Offer and accepted by the Fund for cash
consideration.

     SECTION 6.02 Covenants Pending Closing. Pending the Closing, the Company will not, and
will not permit any other Transaction Party to, without the Institutional Investors’ prior written
consent, take any action which would result in any of the representations or warranties contained
in this Agreement not being true at and as of the time immediately after such action, or in any of
the covenants contained in this Agreement becoming incapable of performance. The Company will
promptly advise the Investors of any action or event of which it becomes aware which has the effect
of making incorrect any of such representations or warranties or which has the effect of rendering
any of such covenants incapable of performance.

     SECTION 6.03 Fund Securities Filings. The Company shall cause the Fund, no later than 15
days following the execution of this Agreement, (i) to file a post-effective amendment to the
Registration Statement in a form required by the Securities Act and otherwise acceptable to the
Institutional Investors, together with any exhibits required to be filed therewith (the “Amended
Registration Statement”); (ii) to file an amendment to the Schedule TO in a form required by the
Exchange Act and otherwise acceptable to the Institutional Investors, together with any exhibits
required to be filed therewith. Thereafter, the Company shall cause the Fund to timely file any
filings and notices required by the SEC or the National Association of Securities Dealers, Inc.
with respect to the transactions contemplated by the Registration Statement, as amended and the
Schedule TO, as amended, in each case in form and substance acceptable to the Institutional Investors.

     SECTION 6.04 Consents and Approvals. From and after the date hereof, the Company shall
use its best efforts to obtain as promptly as practicable any consent or approval of any Person,
including, without limitation, any regulatory authority, Governmental Entity required in connection

19

 

with the transactions contemplated by this Agreement, any other Transaction Document or the
consummation of the Transactions.

     SECTION 6.05 Investor Consents. Unless expressly contemplated by the Amended Registration
Statement or any Transaction Document, prior to the Closing, the Company shall not, and shall not
permit any Transaction Party to, without the prior written consent of the Institutional Investors:

     (a) amend or modify any Transaction Document;

     (b) make any payments to any member of the Company, including, without limitation any
dividends or distributions;

     (c) authorize or effect the issuance by the Company of any membership interests
(including any convertible or exchangeable security or any option or warrant to acquire partnership
interests);

     (d) authorize or effect any change in senior management of any Transaction Party or in
the compensation thereof or amend any employment agreement or arrangement related to any member of
senior management;

     (e) approve or effect any changes in the Company’s accounting methods or policies other
than as required by GAAP, or change the auditors of any Transaction Party; and

     (f) authorize or effect any (i) sale, lease, transfer or other disposition of any
assets, (ii) purchase or acquisition of any assets, (iii) the incurrence of any indebtedness or
guaranties with respect to the same, (iv) merger, consolidation, winding up or dissolution, (v)
employment or other compensation arrangements or (vi) or otherwise enter into any material
agreements or effect any material transaction.

     SECTION 6.06 Appointment of Investor Board Designees. Immediately following, and in any
event not later than one day after, the consummation of the Tender Offer, the Investor Board
Designees shall be duly appointed to the Company’s Board of Managers or similar governing entity.

     SECTION 6.07 Merger. The Company will cause the Fund to use its best efforts to effect
the Merger as soon as reasonably practical following the Closing Date.

     SECTION 6.08 Internal Accounting Controls. As promptly as practicable following the
Closing, and in any event within 30 days thereafter, the Company will establish a system of
internal accounting controls sufficient, in the judgment of the management of the Company, to
provide reasonable assurance 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 generally accepted accounting principles
and to maintain asset accountability; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

20

 

     SECTION 6.09 Further Assurances. The Company and the each of the Investors
covenants and agrees to cooperate and use all commercially reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement and the other
Transaction Documents, including cooperating fully with the other parties to obtain all approvals
that may be necessary or which may be reasonably requested by the Company or the Investors to
consummate the transactions contemplated by this Agreement and the other Transaction Documents. In
case at any time after the date hereof any commercially reasonable further action is reasonably
necessary or desirable to carry out the purposes of this Agreement, the parties hereto shall take
all such reasonably necessary action. The Institutional Investors shall not be required to expend
material funds in connection with their obligations under this Section 6.09.

     SECTION 6.10 Public Disclosures. Any public announcements regarding the terms of
this Agreement or the other Transaction Documents or the transactions contemplated hereby and
thereby, or the financial performance of the Company shall be made only with the consent of the
Institutional Investors, which consent shall not be unreasonably withheld or delayed. To the extent
an Institutional Investor is required to issue a public announcement by applicable law or stock
exchange regulations, such Institutional Investor shall allow the other Institutional Investor
reasonable time to comment on such release or statement in advance of its issuance.

     SECTION 6.1l Indemnity.

     (a) The Company agrees to indemnify, defend and hold harmless the
Investors (and their partners (and each officer and director thereof), directors,
managers,
officers, members, stockholders, employees, Affiliates, agents and permitted assigns)
(each
an “Indemnified Party”) from and against any and all losses, claims, liabilities,
damages,
deficiencies, costs or expenses (including interest, penalties, reasonable attorneys’
and
experts’ fees, disbursements and related charges and any costs or expenses that an
indemnified party incurs to enforce its right to indemnification or in connection with
investigating, defending or preparing to defend any action, proceeding or claim) of any
nature whatsoever, whether actual or consequential, at the time they are incurred
(collectively, “Damages”), asserted against, imposed upon, or incurred by any
Indemnified
Party, directly or indirectly, by reason of any inaccuracy in or breach of any
representations,
warranties, covenants or agreements of the Company contained in this Agreement or any
other Transaction Document or in any certificate, instrument or document delivered
hereunder or thereunder.

     (b) Promptly after receipt by the Indemnified Party under this Section 6.11 of
notice of any claim or the commencement of any action, or after an Indemnified Party
otherwise becoming aware of facts or circumstances giving rise to any Damages, such
Indemnified Party shall, if a claim in respect thereof is to be made against an
indemnifying
party under such section, give written notice to the indemnifying party of the
commencement thereof, but the failure to so notify the indemnifying party shall not
relieve it
of any liability that it may have to any Indemnified Party except to the extent the
indemnifying party reasonably demonstrates that the defense of, or the limitation of
liability
in connection with, such action is materially prejudiced thereby. In case any such
action
shall be brought against an Indemnified Party and the Indemnified Party shall give
written
notice to the indemnifying party of the commencement thereof, the indemnifying party
shall
be entitled to participate therein and, to the extent that it may elect, to assume the
defense

21

 

thereof with counsel reasonably satisfactory to such Indemnified Party. If the indemnifying
party elects to assume the defense of such action, the Indemnified Party shall have the
right to employ separate counsel at its own expense and to participate in the defense
thereof. If the indemnifying party elects not to assume (or fails to assume) the defense of
such action, the Indemnified Party shall be entitled to assume the defense of such action
with counsel of its own choice, at the expense of the indemnifying party. In such event,
upon written notice by the Indemnified Party requesting advance payment of a stated amount
for its reasonable defense costs and expenses, the indemnifying party shall advance payment
for such reasonable defense costs and expenses (the “Advance Indemnification Payment”) to
the Indemnified Party. In the event that the Indemnified Party’s actual defense costs and
expenses exceed the amount of the Advance Indemnification Payment, then upon written request
by the Indemnified Party, the indemnifying party shall reimburse the Indemnified Party for
such difference; in the event that the Advance Indemnification Payment exceeds the
Indemnified Party’s actual costs and expenses, the Indemnified Party shall promptly remit
payment of such difference to the indemnifying party. If the action is asserted against both
the indemnifying party and the Indemnified Party and, in the reasonable judgment of the
Indemnified Party, there is a conflict of interests that renders it inappropriate for the
same counsel to represent both the indemnifying party and the Indemnified Party or any
Affiliate or associate thereof, the indemnifying party shall be responsible for paying for
separate counsel retained by the Indemnified Party for the Indemnified Party to the extent
the Indemnified Party would otherwise be entitled to indemnification under this section;
provided however, that if there is more than one Indemnified Party, the indemnifying party
shall not be responsible for paying for more than one separate firm of attorneys to
represent the Indemnified Parties, regardless of the number of Indemnified Parties. If the
indemnifying party elects to assume the defense of such action, (i) no compromise or
settlement thereof may be affected by the indemnifying party without the Indemnified Party’s
written consent (which shall not be unreasonably withheld) unless the sole relief provided
is monetary damages that are paid in full by the indemnifying party and (ii) the Indemnified
Party shall have no liability or obligations with respect to any compromise or settlement
thereof affected without its written consent (which shall not be unreasonably withheld).

     (c) The provisions of this Section 6.11 shall not limit or impair any right or
remedy arising from breach of this Agreement or any Transaction Document. In addition to any
other remedy provided by law, injunctive relief may be obtained to enjoin the breach, or
threatened breach, of any provision of this Agreement or any Transaction Document and each
party hereto shall be entitled to specific performance by the others of their obligations
hereunder and thereunder. All remedies, either under this Agreement or any Transaction
Document, by law or as may otherwise be afforded to the Investors or the Company, as the
case may be, shall be cumulative.

     SECTION 6.12 Expenses. Each Investor hereby agrees to bear its proportionate share
(determined by reference to its Sharing Ratio) of the reasonable costs, expenses and disbursements
incurred by the Company, any Investor and/or any of their respective Affiliates at any time on or
after March 1, 2006 in connection with the negotiation, preparation and execution of this Agreement
and the other Transaction Documents, subject to a maximum amount equal to its proportionate share
of $1,000,000 (the “Transaction Expenses”). Each Investor shall be responsible for its
proportionate share of the Transaction Expenses regardless of whether the Closing shall occur. At
any time prior to the Closing Date, upon receipt of a written request from

22

 

the Company accompanied by supporting documentation reasonably acceptable to the Institutional
Investors, each Investor shall promptly, and in any event within 10 days, pay all or such requested
portion of its proportionate share of the Transactions Expenses incurred as of the date of such
request. Following the Closing, the Company shall promptly, and in any event within 10 days, pay or
reimburse each Investor or any of their respective Affiliates for the Transaction Expenses paid by
it pursuant to this Section 6.12 and for all other out-of-pocket expenses it has incurred in
connection with its consideration of an investment in the Company, due diligence of the Company,
the negotiation, preparation and execution of this Agreement and the other Transaction Documents
and the consummation of the transactions hereunder and thereunder.

ARTICLE VII.

MISCELLANEOUS

     SECTION 7.01 Survival of Agreements. All covenants, agreements, representations and
warranties made in this Agreement or any of the other Transaction Documents or any certificate or
instrument delivered to the Investors pursuant to or in connection with this Agreement or any of
the other Transaction Documents shall survive the execution and delivery of this Agreement and all
of the other Transaction Documents, the issuance, sale and delivery of the Membership Interests,
and all statements contained in any certificate or other instrument delivered by the Company
hereunder or thereunder or in connection herewith or therewith shall be deemed to constitute
representations and warranties made by the Company.

     SECTION 7.02 Parties in Interest. No party may assign any rights or obligations
under this Agreement except (i) that any Institutional Investor may assign and/or delegate any
portion or all of its rights and obligations under this Agreement to any affiliated fund and (ii)
with the express consent of the Institutional Investors (a “Permitted Assignment”). Upon any
Permitted Assignment, the references in this Agreement to an Investor shall also apply to any such
assignee and all representations, warranties, covenants and agreements contained in this Agreement
or any other Transaction Document by or on behalf of the parties hereto shall bind and inure to the
benefit of such assignees whether so expressed or not. Nothing in this Agreement shall create or be
deemed to create any third-party beneficiary rights in any Person not a party to this Agreement
except as provided herein. Whether or not any express assignment has been made, the provisions of
this Agreement which are for the benefit of any Investor as a purchaser or holder of Membership
Interests are also for the benefit of and enforceable by any subsequent holder of such Membership
Interests who acquires at least 50% of the Membership Interests of an Investor to the same extent
they would have been enforceable by such Investor.

     SECTION 7.03 Notices. Any notice, request, demand or other communication required or
permitted to be given to a party hereto pursuant to the provisions of this Agreement will be in
writing and will be effective and deemed given under this Agreement on the earliest of: (a) the
date of personal delivery, (b) the date of transmission by facsimile, with confirmed transmission
and receipt, (c) one day after deposit with a nationally-recognized courier or overnight service
such as Federal Express, or (d) five days after mailing via certified mail, return receipt
requested. All notices not delivered personally or by facsimile will be sent with postage and other
charges prepaid and properly addressed to the party to be notified at the address set forth for
such party below or, with respect to the Individual Investors, as specified on the signature pages
hereof:

23

 

     If to the Company:

	 	 	 	 	 
	 	 	Ensource Energy, LLC
	 	 	7500 San Felipe, Suite 440
	 	 	Houston, Texas 77063
	 

	 	Attention:
	 	Scott W. Smith
	 

	 	 	 	Marshall M. Eubank
	 

	 	Facsimile:
	 	(713) 659-1799
	 
	 	 	 	 
	with a copy to (which shall not constitute notice):
	 
	 	 	 	 
	 	 	Andrews Kurth LLP
	 	 	 00 Travis, Suite 4200
	 	 	Houston, Texas 77002
	 

	 	Attention:
	 	James V. Baird
	 

	 	Facsimile:
	 	(713) 238-7120
	 
	 	 	 	 
	If to Lehman, to the care of:
	 
	 	 	 	 
	 	 	Lehman Brothers Inc.
	 	 	600 Travis Street, Suite 7200
	 	 	Houston, Texas 77002
	 

	 	Attention:
	 	J. Robert Chambers
	 

	 	Facsimile:
	 	(713) 236-3912
	 
	 	 	 	 
	with a copy to (which shall not constitute notice):
	 
	 	 	 	 
	 	 	Akin Gump Strauss Hauer & Feld LLP
	 	 	1111 Louisiana Street, Suite 4400
	 	 	Houston, Texas 77002
	 

	 	Attention:
	 	J. Michael Chambers
	 

	 	Facsimile:
	 	(713) 236-0822
	 
	 	 	 	 
	If to Ospraie, to the care of:
	 
	 	 	 	 
	 	 	The Ospraie Fund L.P.
	 	 	Ospraie Special Opportunities L.P.
	 	 	Ospraie Special Opportunities (Offshore) Master Alternative LLC
	 	 	c/o Ospraie Management, LLC
	 	 	320 Park Avenue, 27th Floor
	 	 	New York, New York 10022
	 

	 	Attn:
	 	John Duryea
	 

	 	Facsimile:
	 	(212) 980-3796
	 
	 	 	 	 
	with a copy to (which shall not constitute notice):
	 
	 	 	 	 
	 	 	Schulte Roth & Zabel LLP
	 	 	919 Third Avenue
	 	 	New York, New York 10022
	 

	 	Attn:
	 	Robert Goldstein
	 

	 	Facsimile:
	 	(212) 593-5955

24

 

If to any other Investor, to the address for such Investor set forth
on the signature page of this Agreement.

Any party hereto (and such party’s permitted assigns) may change such party’s address for receipt
of future notices hereunder by giving written notice to the Company and the other parties hereto.

     SECTION 7.04 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE.

     SECTION 7.05 Submission To Jurisdiction; Waivers. The Company and each Investor
hereby knowingly, voluntarily and intentionally irrevocably and unconditionally:

     (a) submits for itself and its property in any legal action or proceeding relating to
this Agreement and the other Transaction Documents to which it is a party (whether for
claims sounding in contract or in tort), or for recognition and enforcement of any
judgment
in respect thereof, to the non exclusive general jurisdiction of the courts of the
State of New
York, the courts of the United States of America for the Southern District of New York,
and
appellate courts from any thereof;

     (b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any such
action
or proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;

     (c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially
similar form of mail), postage prepaid, to the address as set forth in Section 7.03 or
at such
other address of which the parties hereto shall have been notified pursuant thereto;

     (d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other
jurisdiction;
and

     (e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.

     SECTION 7.06 WAIVER OF JURY TRIAL. THE COMPANY AND EACH OF THE INVESTORS HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN (IN EACH CASE, WHETHER FOR CLAIMS SOUNDING IN CONTRACT OR IN TORT).

     SECTION 7.07 Entire Agreement. This Agreement and the other Transaction Documents,
together with the certificates, documents, instruments and writings that are delivered

25

 

pursuant thereto, constitute the entire agreement and understanding of the parties hereto in
respect of the subject matter hereof or the transactions contemplated hereby and supersedes all
prior understandings, agreements, or representations by or among such parties, written or oral, to
the extent they relate in any way to the subject matter hereof or the transactions contemplated
hereby.

     SECTION 7.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which together will constitute
one and the same instrument.

     SECTION 7.09 Amendments and Waivers. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of each of the Company, Lehman
and Ospraie. No action taken pursuant to this Agreement, including any investigation by or on
behalf of any party hereto, shall be deemed to constitute a waiver by the party taking such action
of compliance with any representation, warranty, covenant or agreement contained herein. The waiver
by any party hereto of a breach of any provision of this Agreement shall not operate or be
construed as a further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any party hereto to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of such right, power or remedy by such party preclude any other or
further exercise thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by Law.

     SECTION 7.10 Severability. The provisions of this Agreement will be deemed severable
and the invalidity or unenforceability of any provision hereof will not affect the validity or
enforceability of the other provisions hereof; provided that if any provision of this Agreement, as
applied to any party hereto or to any circumstance, is adjudged by a court, governmental body,
arbitrator or mediator not to be enforceable in accordance with its terms, the parties hereto agree
that the court, governmental body, arbitrator or mediator making such determination will have the
power to modify the provision in a manner consistent with its objectives such that it is
enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision
will then be enforceable and will be enforced.

     SECTION 7.11 Titles and Subtitles. The article and section headings contained in
this Agreement are inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.

     SECTION 7.12 No Reliance. Each of the Investors acknowledges that they are not
relying upon any Person, other than the Company and its officers and directors (acting in their
capacity as representatives of the Company), in deciding to invest and in making its investment in
the Company.

     SECTION 7.13 Construction. The parties hereto have jointly participated in the
negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation
arises, this Agreement will be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof will arise favoring or disfavoring any party hereto because of the
authorship of any provision of this Agreement. Any reference to any federal, state, local or
foreign law will also be deemed to refer to such law as amended and all rules and regulations
promulgated thereunder, unless the context otherwise requires. The words “including,” “includes”
and “include” shall be deemed to be followed by “without limitation.” Pronouns in masculine,
feminine and

26

 

neuter genders will be construed to include any other gender, and words in the singular form will
be construed to include the plural and vice versa, unless the context otherwise requires. The words
“this Agreement,” herein, “hereof,” “hereby,” “hereunder” and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties
hereto intend that each representation, warranty and covenant contained herein will have
independent significance. If any party hereto has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels of specificity)
which such party hereto has breached, will not detract from or mitigate the fact that such party
hereto is in breach of the first representation, warranty or covenant.

     SECTION 7.14 Remedies. The parties hereto shall have all remedies for breach of this
Agreement available to them as provided by law or equity. Notwithstanding the foregoing, in no
event shall the parties hereto have a right to consequential, indirect, special, incidental,
exemplary or punitive damages.

     SECTION 7.15 Incorporation of Exhibits, Annexes and Schedules. The exhibits, annexes
and schedules identified in this Agreement are incorporated herein by reference and made a part
hereof.

[Signature Page to Follow]

27

 

     IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement as of
the day and year first above written.

	 	 	 	 	 	 	 
	 	 	ENSOURCE ENERGY, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Scott W. Smith	 	 
	 

	 	 	 	 

Scott W. Smith
	 	 
	 

	 	 	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	LEHMAN BROTHERS INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Robert Chambers	 	 
	 

	 	 	 	 

J. Robert Chambers
	 	 
	 

	 	 	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	THE OSPRAIE FUND, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Ospraie Group, LLC, its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dwight Anderson	 	 
	 

	 	 	 	 

Dwight Anderson
	 	 
	 

	 	 	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	OSPRAIE SPECIAL OPPORTUNITIES L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Ospraie Associates, LLC, its General Partner	 	 
	 

	 	By:
	 	Ospraie Group, LLC, its Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dwight Anderson	 	 
	 

	 	 	 	 

Dwight Anderson
	 	 
	 

	 	 	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	OSPRAIE SPECIAL OPPORTUNITIES
 (OFFSHORE) MASTER
ALTERNATIVE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Ospraie Associates, LLC, its Managing Member	 	 
	 

	 	By:
	 	Ospraie Group, LLC, its Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dwight Anderson	 	 
	 

	 	 	 	 

Dwight Anderson
	 	 
	 

	 	 	 	Managing Member	 	 

[Signature Page to Subscription Agreement]

 

 

	 	 	 	 	 	 	 
	 	 	RTR FUND I, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	RTR Fund GP, LLC, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John G. Redford	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

	 	 	 	 	 	 	 
	 

	 	Address:
	 	1616 Voss	 	 
	 

	 	 	 	Houston, Texas 77057	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:
	 	(713) 622-2266	 	 
	 
	 	 	 	 	 	 
	 	 	SCOTT W. SMITH	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Scott W. Smith	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	7500 San Felipe, Suite 440	 	 
	 

	 	 	 	Houston, Texas 77063	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:
	 	(713) 659-1799	 	 
	 
	 	 	 	 	 	 
	 	 	MARSHALL M. EUBANK	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Marshall M. Eubank	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	7500 San Felipe, Suite 440	 	 
	 

	 	 	 	Houston, Texas 77063	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:
	 	(713) 659-1799	 	 
	 
	 	 	 	 	 	 
	 	 	GEORGE K. HICKOX, JR.	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ George K. Hickox, Jr.	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	1629 Locust St.	 	 
	 

	 	 	 	Philadelphia, Pennsylvania 19013	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:
	 	(212) 546-1401	 	 

[Signature Page to Subscription Agreement]

 

 

	 	 	 	 	 	 	 
	 	 	JON C. HUGHES	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Jon C. Hughes	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	475 17th Street	 	 
	 

	 	 	 	Denver, Colorado 80202	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:
	 	(303) 292-1904	 	 
	 
	 	 	 	 	 	 
	 	 	LOREN B. SINGLETARY	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Loren B. Singletary	 	 
	 	 	 
 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	6234 Sugar Hill	 	 
	 

	 	 	 	Houston, Texas 77057	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:
	 	(713) 659-1799	 	 
	 
	 	 	 	 	 	 
	 	 	J .THOMAS EUBANK	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ J. Thomas Eubank	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	c/o Baker Botts LLP	 	 
	 

	 	 	 	910 Louisiana	 	 
	 

	 	 	 	Houston, Texas 77002-4995	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:
	 	(713) 229-2888	 	 

[Signature Page to Subscription Agreement]exv10w6

 

Exhibit 10.6

 

 

COMMON UNIT PURCHASE AGREEMENT

by and among

THIRD POINT PARTNERS LP

THIRD POINT PARTNERS QUALIFIED, L.P.

and

ENSOURCE ENERGY INCOME FUND LP

Dated
as of May 1, 2006

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	SECTION 1.	 	AUTHORIZATION OF COMMON UNITS	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	SECTION 2.	 	PURCHASE AND SALE OF COMMON UNITS	 	 	1	 
	 
	 	2.1.	 	Issuance of Common Units	 	 	1	 
	 
	 	2.2.	 	Calculation of Purchase Price	 	 	2	 
	 
	 	2.3.	 	Use of Proceeds	 	 	2	 
	 
	 	2.4.	 	Put Premium	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	SECTION 3.	 	REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP	 	 	2	 
	 
	 	3.1.	 	Organization	 	 	2	 
	 
	 	3.2.	 	Subsidiaries	 	 	3	 
	 
	 	3.3.	 	Capitalization	 	 	3	 
	 
	 	3.4.	 	Partnership Proceedings, etc.	 	 	4	 
	 
	 	3.5.	 	Consents and Approvals	 	 	4	 
	 
	 	3.6.	 	Absence of Defaults, Conflicts, etc.	 	 	5	 
	 
	 	3.7.	 	Reports and Financial Statements	 	 	5	 
	 
	 	3.8.	 	Absence of Certain Developments	 	 	6	 
	 
	 	3.9.	 	Compliance with Law	 	 	7	 
	 
	 	3.10.	 	Litigation	 	 	8	 
	 
	 	3.11.	 	Absence of Undisclosed Liabilities	 	 	8	 
	 
	 	3.12.	 	Employees	 	 	8	 
	 
	 	3.13.	 	Tax Matters	 	 	8	 
	 
	 	3.14.	 	Employee Benefit Plans	 	 	9	 
	 
	 	3.15.	 	Intellectual Property	 	 	9	 
	 
	 	3.16.	 	Title to Property and Assets	 	 	10	 
	 
	 	3.17.	 	Condition of Properties	 	 	10	 
	 
	 	3.18.	 	Insurance	 	 	10	 
	 
	 	3.19.	 	Environmental Matters	 	 	10	 
	 
	 	3.20.	 	Transactions with Related Parties	 	 	10	 
	 
	 	3.21.	 	Registration Statement and Prospectus	 	 	11	 
	 
	 	3.22.	 	Registration Rights	 	 	11	 
	 
	 	3.23.	 	Material Non-Public Information	 	 	11	 
	 
	 	3.24.	 	Purchased Units Registration	 	 	11	 
	 
	 	3.25.	 	Brokerage	 	 	12	 
	 
	 	3.26.	 	Listing	 	 	12	 
	 
	 	3.27.	 	Reporting Status	 	 	12	 
	 
	 	3.28.	 	No Manipulation of Common Units	 	 	12	 
	 
	 	3.29.	 	Accountants	 	 	12	 
	 
	 	3.30.	 	Internal Accounting Controls	 	 	12	 
	 
	 	3.31.	 	Investment Company	 	 	12	 
	 
	 	3.32.	 	Material Facts	 	 	12	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	SECTION 4.	 	REPRESENTATIONS AND WARRANTIES OF THE INVESTORS	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	SECTION 5.	 	COVENANTS OF THE PARTIES	 	 	14	 
	 
	 	5.1.	 	Covenants Pending Closing	 	 	14	 
	 
	 	5.2.	 	Securities Law Disclosure; Publicity	 	 	14	 
	 
	 	5.3.	 	Resale of Securities	 	 	15	 
	 
	 	5.4.	 	Consents and Approvals; Hart-Scott Filings	 	 	15	 
	 
	 	5.5.	 	Investor Consents	 	 	15	 
	 
	 	5.6.	 	Takeover Statute	 	 	16	 
	 
	 	5.7.	 	No Solicitation	 	 	17	 
	 
	 	5.8.	 	Registration Rights	 	 	17	 
	 
	 	5.9.	 	Registration and Listing	 	 	18	 
	 
	 	5.10.	 	Administration Fee	 	 	18	 
	 
	 	5.11.	 	Merger	 	 	18	 
	 
	 	5.12.	 	Further Assurances	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	SECTION 6.	 	INDEMNIFICATION	 	 	19	 
	 
	 	6.1.	 	Indemnification by the Partnership	 	 	19	 
	 
	 	6.2.	 	Indemnification by the Investors	 	 	20	 
	 
	 	6.3.	 	Indemnification Procedures	 	 	21	 
	 
	 	6.4.	 	Contribution	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	SECTION 7.	 	INVESTORS’ CLOSING CONDITIONS	 	 	22	 
	 
	 	7.1.	 	Representations and Warranties	 	 	22	 
	 
	 	7.2.	 	Compliance with Agreement	 	 	22	 
	 
	 	7.3.	 	General Partner’s Certificate	 	 	22	 
	 
	 	7.4.	 	Injunction	 	 	22	 
	 
	 	7.5.	 	Consents and Approvals	 	 	23	 
	 
	 	7.6.	 	Counsel’s Opinion	 	 	23	 
	 
	 	7.7.	 	Partnership Agreement	 	 	23	 
	 
	 	7.8.	 	Adverse Development	 	 	23	 
	 
	 	7.9.	 	Expiration and Closing of Tender Offer	 	 	23	 
	 
	 	7.10.	 	Stop Orders	 	 	23	 
	 
	 	7.11.	 	Listing of the Common Units	 	 	23	 
	 
	 	7.12.	 	General Partner Contribution	 	 	24	 
	 
	 	7.13.	 	Participation Rights Agreement	 	 	24	 
	 
	 	7.14.	 	Secretary’s Certificate	 	 	24	 
	 
	 	7.15.	 	Approval of Proceedings	 	 	24	 
	 
	 	7.16.	 	Employment Agreements	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	SECTION 8.	 	PARTNERSHIP CLOSING CONDITIONS	 	 	25	 
	 
	 	8.1.	 	Representations and Warranties	 	 	25	 
	 
	 	8.2.	 	Compliance with Agreement	 	 	25	 
	 
	 	8.3.	 	Officer’s Certificate	 	 	25	 
	 
	 	8.4.	 	Injunction	 	 	25	 
	 
	 	8.5.	 	Consents and Approvals	 	 	25	 
	 
	 	8.6.	 	Approval of Proceedings	 	 	26	 

(ii)

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	8.7.	 	Consents and Approvals	 	 	26	 
	 
	 	8.8.	 	Expiration and Closing of Tender Offer	 	 	26	 
	 
	 	8.9.	 	Stop Orders	 	 	26	 
	 
	 	8.10.	 	Listing of the Common Units	 	 	26	 
	 
	 	8.11.	 	General Partner Contribution	 	 	26	 
	 
	 	 	 	 	 	 	 	 
	SECTION 9.	 	INTERPRETATION OF THIS AGREEMENT	 	 	27	 
	 
	 	9.1.	 	Terms Defined	 	 	27	 
	 
	 	9.2.	 	Accounting Principles	 	 	31	 
	 
	 	9.3.	 	Directly or Indirectly	 	 	32	 
	 
	 	9.4.	 	Governing Law	 	 	32	 
	 
	 	9.5.	 	Paragraph and Section Headings	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	SECTION 10.	 	MISCELLANEOUS	 	 	32	 
	 
	 	10.1.	 	Notices	 	 	32	 
	 
	 	10.2.	 	Expenses and Taxes	 	 	33	 
	 
	 	10.3.	 	Reproduction of Documents	 	 	33	 
	 
	 	10.4.	 	Termination and Survival	 	 	33	 
	 
	 	10.5.	 	Successors and Assigns	 	 	34	 
	 
	 	10.6.	 	Limitation on Enforcement of Remedies	 	 	34	 
	 
	 	10.7.	 	Entire Agreement; Amendment and Waiver	 	 	34	 
	 
	 	10.8.	 	Severability	 	 	35	 
	 
	 	10.9.	 	Counterparts	 	 	35	 

(iii)

 

	 	 	 
	EXHIBIT A

	 	Amended Agreement of Limited Partnership
	EXHIBIT B

	 	Partnership’s Disclosure Schedule
	EXHIBIT C

	 	Registration Rights Procedures
	EXHIBIT D

	 	Form of Opinion of Counsel to the Partnership
	EXHIBIT E

	 	Form of Participation Rights Agreement
	Schedule 2.1

	 	Investors

(iv)

 

COMMON UNIT PURCHASE AGREEMENT

     COMMON
UNIT PURCHASE AGREEMENT, dated as of May 1, 2006 (this “Agreement”), by and
among Third Point Partners LP and Third Point Partners Qualified, L.P. (collectively, the
“Investors”) and Ensource Energy Income Fund LP, a Delaware limited partnership (the
“Partnership”). Any capitalized term used herein but not defined shall have the meaning
assigned to them in Section 9.

SECTION 1. AUTHORIZATION OF COMMON UNITS

     As of the Closing Date, the Partnership will have authorized and created a class of limited
partner interests designated as its “Common Units” (the “Common Units”). The terms,
limitations and relative rights and preferences of the Common Units are set forth in the Amended
Agreement of Limited Partnership of the Partnership, a copy of which is attached hereto as
Exhibit A (the “Partnership Agreement”).

SECTION 2. PURCHASE AND SALE OF COMMON UNITS

     2.1. Issuance of Common Units

     (a) Subject to the terms and conditions set forth in this Agreement and in reliance upon the
Partnership’s and the Investors’ respective representations, warranties and covenants set forth
below, on the Closing Date the Partnership shall sell to the Investors, and the Investors shall
purchase from the Partnership, the number of Common Units (such Common Units shall be collectively
referred to as the “Purchased Units”) set forth opposite their respective names on
Schedule 2.1 under the heading “Closing” with the number and the aggregate cash purchase
price (each, a “Purchase Price”) of such Purchased Units being determined in accordance
with Section 2.2 of this Agreement. Such sales and purchases shall be effected on the Closing Date
by the Partnership executing and delivering to each of the Investors, duly registered in such
Investor’s name or in the name of its nominee or other designee designated in writing to the
Partnership at least one day prior to the Closing Date, duly executed certificates evidencing the
Purchased Units being purchased by it, against delivery by each of the Investors to the Partnership
of the Purchase Price by wire transfer of immediately available funds to such account as the
Partnership shall designate prior to the Closing Date. The Partnership acknowledges and agrees
that the agreement set forth herein to sell Common Units to each Investor and the agreement of each
Investor set forth herein to purchase Common Units from the Partnership shall each constitute a
separate agreement, and the sale of Common Units to each Investor on the terms and subject to the
conditions set forth herein shall constitute a separate sale.

     (b) The closing of such sales and purchases (the “Closing”) shall take place at 10:00
A.M., New York City time, on the second Business Day following the satisfaction or waiver of all
closing conditions, or such other date as the Investors and the Partnership agree in writing (the
“Closing Date”), at the offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New
York, New York, or such other location as the Investors and the Partnership shall mutually select.

 

 

     2.2. Calculation of Purchase Price

     On the Closing Date, the Partnership will issue such number of Common Units to the Investors
as is equal in the aggregate to the Used Commitment Amount divided by the per share Tender Offer
Purchase Price at a Purchase Price per Purchased Unit which shall be equal to the per share Tender
Offer Purchase Price. In no event shall the Partnership issue any Common Units to any Person prior
to the effectiveness of the Resale Registration Statement at a purchase price less than the
Purchase Price.

     2.3. Use of Proceeds

     The aggregate Purchase Price received by the Partnership from the issuance and sale of the
Purchased Units shall be used by the Partnership solely to pay the Tender Offer Purchase Price for
Depositary Units accepted by the Partnership for cash consideration in the Tender Offer, as
specified in the Tender Offer Documents in effect at the Closing, with the number of Depositary
Units to be so paid for with the Purchase Price to be equal to the number of Purchased Units issued
at the Closing.

     2.4. Put Premium

     Not later than two Business Days following the Closing Date, the Partnership shall pay to the
Investors by wire transfer of immediately available funds to such account or accounts as the
Investors shall designate prior to or on the Closing Date, an amount equal to 7.0% of the Used
Commitment Amount (the “Put Premium”). Notwithstanding the foregoing, the Put Premium
payable to the Investors shall not be less than $1,750,000. The Partnership and the Investors
agree (i) to treat the Investors’ obligation to purchase the Common Units under this Agreement as
an option to purchase property within the meaning of Section 1234 of the Code and (ii) that the Put
Premium is being paid to the Investors in exchange for issuing such an option.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP

     Except as set forth on the Partnership’s Disclosure Schedule delivered concurrently with the
execution and delivery of this Agreement (the “Partnership’s Disclosure Schedule”), the
Partnership represents and warrants to the Investors that:

     3.1. Organization

     (a) The Partnership is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Delaware. The Partnership has delivered to the Investors
true and complete copies of its Organizational Documents.

     (b) The Partnership has all requisite power and authority to own its properties and to carry
on its business as now conducted. The Partnership has filed all necessary documents to qualify to
do business as a foreign limited partnership in, and the Partnership is in good standing under, the
laws of each jurisdiction in which the conduct of the Partnership’s business as now conducted and
as presently contemplated to be conducted or the nature of the property owned requires such
qualification, except where the failure to so qualify would not reasonably be expected to have a
material adverse effect on the business, properties, assets, liabilities,

- 2 -

 

prospects, profits, results of operations or condition (financial or otherwise) of the
Partnership taken as a whole (a “Partnership Material Adverse Effect”).

     (c) To the Partnership’s knowledge based solely on its review of the NGT Annual Report on Form
10-K for the year ended December 31, 2005 as filed with the SEC on March 16, 2006 (“NGT SEC
Report”), Eastern American Natural Gas Trust (“NGT”) is a statutory trust validly existing
and in good standing under the laws of the State of Delaware. True and complete copies of NGT’s
Organizational Documents have been made available to the Investors through NGT’s filings with the
SEC.

     3.2. Subsidiaries

     (a) The Partnership does not have any subsidiaries or any interests or investments in any
partnership, trust or other legal entity, provided that if the Tender Offer is successfully
completed the Partnership will own Depositary Units and NGT may become a wholly owned subsidiary of
the Partnership. To the Partnership’s knowledge based solely on its review of the NGT SEC Report,
NGT does not have any subsidiaries.

     3.3. Capitalization

     (a) Set forth on the Partnership’s Disclosure Schedule is a true, complete and correct list of
the partners of the Partnership and their respective partnership interests in the Partnership (the
“Partnership Interests”). The Partnership Interests represent, in the aggregate, 100% of
the authorized and outstanding partnership interests of the Partnership.

     (b) To the Partnership’s knowledge based solely upon its review of the NGT SEC Report, except
as set forth in Schedule 3.3(b), authorized capital of NGT consists of 5,900,000 trust units, of
which as of February 26, 2005 (the most recent date as of which NGT has made publicly available
such information), 5,900,000 trust units were on deposit with the depositary and were evidenced by
the depositary units (the “Depositary Units”), each of which evidences a trust unit and
1/50th of a $1,000 face amount stripped-interest U.S. treasury bond maturing May 13, 2013.

     (c) All of the outstanding Partnership Interests have been duly and validly issued and are
fully paid and non-assessable, and were issued in accordance with the registration or qualification
requirements of the Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom, free and clear of all Encumbrances (other than restrictions on transfer under
applicable securities law). Upon the issuance, sale and delivery as contemplated by this
Agreement, the Purchased Units will be duly authorized, validly issued, fully paid and
non-assessable, free of all preemptive or similar rights (except to the extent set forth in Section
17-607 of the Delaware Revised Uniform Limited Partnership Act), and entitled to the rights
described in the Partnership Agreement, free and clear of all Encumbrances (other than restrictions
on transfer under applicable securities law). To the Partnership’s knowledge based solely on its
review of the NGT SEC Report, the NGT trust units evidenced by the Depositary Units have been duly
and validly issued by NGT and are fully paid in accordance with the NGT Trust Agreement and
non-assessable.

- 3 -

 

     (d) Except as set forth in the Partnership’s Disclosure Schedule and except for Common Units
subject to issuance pursuant to the Tender Offer and, if consummated, the Merger, on the Closing
Date there will be no partnership interest or any other security of the Partnership issuable upon
conversion or exchange of any security of the Partnership nor are there any rights, options or
warrants outstanding or other agreements to acquire partnership interests or any other security,
nor is the Partnership contractually obligated to purchase, redeem or otherwise acquire any of its
outstanding securities. To the Partnership’s knowledge, no partner of the Partnership or other
Person is entitled to any preemptive or similar rights to subscribe for partnership interests of
the Partnership.

     (e) To the Partnership’s knowledge based solely upon its review of the NGT SEC Report, there
is no trust security, depositary unit or any other security of NGT issuable upon conversion or
exchange of any security of NGT nor are there any rights, options or warrants outstanding or other
agreements to acquire trust interests, depositary units or any other security, nor is NGT
contractually obligated to purchase, redeem or otherwise acquire any of its outstanding securities.
To the Partnership’s knowledge based solely upon its review of the NGT SEC Report, no security
holder of NGT or other Person is entitled to any preemptive or similar rights to subscribe for
trust securities, depositary units or any other securities of NGT.

     3.4. Partnership Proceedings, etc.

     The Partnership has authorized the execution, delivery, and performance of the Tender Offer
Documents, this Agreement, the Merger Agreement and the Transaction Documents to which it is a
party and each of the transactions and agreements contemplated hereby and thereby. No other
partnership action (including limited partner approval) is necessary to authorize such execution,
delivery and performance of the Merger Agreement and the Transaction Documents to which it is a
party, and upon such execution and delivery, each of the Merger Agreement and the Transaction
Documents to which it is a party shall constitute the valid and binding obligation of the
Partnership, enforceable against the Partnership in accordance with its terms, except (i) that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies. The
Partnership has authorized the issuance, sale and delivery of the Purchased Units in accordance
with this Agreement.

     3.5. Consents and Approvals

     (a) The consummation of the Tender Offer and the Merger, the execution and delivery by the
Partnership of this Agreement, the Merger Agreement and the Transaction Documents to which it is a
party, the performance by the Partnership of its obligations hereunder and thereunder and the
consummation by the Partnership of the transactions contemplated hereby and thereby do not require
the Partnership to obtain any consent, approval or action of, or make any filing with or give any
notice to, any Person or Governmental Authority; provided that (i) the Tender Offer is subject to
filings with, and the review of, the SEC and (ii) consummation of the Merger is subject to (a) the
execution of the Merger Agreement by the trustee of NGT, (b) the approval of the Merger Agreement
by the vote of not less than a majority of the holders of NGT

- 4 -

 

Depositary Units and (c) filings of the certificate or articles of merger with the Secretary
of State of Delaware.

     (b) To the Partnership’s knowledge based solely on its review of the NGT SEC Report, the
execution and delivery by NGT of the Merger Agreement, the Merger and the performance by NGT of its
obligations under the Merger Agreement and the consummation of the transactions contemplated
thereby do not require NGT to obtain any consent, approval or action of, or make any filing with or
give any notice to, any Person or Governmental Authority.

     3.6. Absence of Defaults, Conflicts, etc.

     (a) The consummation of the Tender Offer, the execution and delivery of this Agreement, the
Merger Agreement and the Transaction Documents do not, and the fulfillment of the terms hereof and
thereof by the Partnership, the Merger and the issuance, sale and delivery of the Purchased Units
will not, result in a breach of any of the terms, conditions or provisions of, or constitute a
default under, or permit the acceleration of rights under or termination of, (i) any contract,
agreement, instrument, commitment or other arrangement to which the Partnership is a party or by
which it is bound or to which its properties, assets or businesses are subject, (ii) the
Organizational Documents of the Partnership or (iii) any rule or regulation of any Governmental
Authority having jurisdiction over the Partnership or over its properties or businesses, except in
the case of clauses (i) and (iii) for such breaches, defaults, violations, rights of acceleration
or termination that would not be reasonably expected to have a Partnership Material Adverse Effect.

     (b) To the Partnership’s knowledge based solely on its review of the NGT SEC Report and
subject to the matter described in Schedule 3.6(b), the execution and delivery of the Merger
Agreement (assuming that NGT is the surviving entity of the Merger as contemplated pursuant to the
form of Merger Agreement included as Exhibit 10.7 to the Registration Statement), and the
fulfillment of the terms thereof by NGT, will not result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or permit the acceleration of rights
under or termination of, (i) any contract, agreement, instrument, commitment or other arrangement
to which NGT is a party or by which it is bound or to which its properties, assets or businesses
are subject, (ii) the Organizational Documents of NGT or (iii) any rule or regulation of any
Governmental Authority having jurisdiction over NGT or over its properties or businesses, except in
the case of clauses (i) and (iii) for such breaches, defaults, violations, rights of acceleration
or termination that would not be reasonably expected to have a NGT Material Adverse Effect.

     3.7. Reports and Financial Statements

     (a) The Partnership has furnished or made available to the Investors, via its EDGAR filings
with the SEC, true and complete copies of the Partnership’s (i) Registration Statement on Form S-4
(Registration No. 333-126068) dated November 21, 2005, (ii) Schedule TO relating to the Tender
Offer (File No. 005-81162) (the “Schedule TO”) and (iii) all other reports filed with or
registration statements declared effective by the SEC which are all the documents (other than
preliminary material) that the Partnership was required to file with the SEC (the documents
referred to in clauses (i) through (iii), together with all accompanying exhibits and all

- 5 -

 

information incorporated therein by reference, being referred to herein collectively as the
“Partnership SEC Reports”). The Partnership has timely made all filings and furnishings
with the SEC pursuant to the Exchange Act during the 12 months preceding the date of this
Agreement. As of their respective dates, the Partnership SEC Reports were duly filed with or
furnished to the SEC and complied in all material respects with the requirements of the
Sarbanes-Oxley Act, the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations promulgated by the SEC and the New York Stock Exchange thereunder applicable to such
Partnership SEC Reports. Except to the extent that information contained in any Partnership SEC
Report filed or furnished with the SEC and made publicly available prior to the date of this
Agreement (a “Filed Partnership SEC Report”) has been revised or superseded by a later
Filed Partnership SEC Report, as of their respective dates, none of the Filed Partnership SEC
Reports contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial statements of the
Partnership and its General Partner included in the Filed Partnership SEC Reports comply in all
material respects with applicable accounting requirements of the Securities Act or the Exchange Act
and with the published rules and regulations of the SEC with respect thereto. The historical
financial statements of the Partnership and the General Partner (including the schedules and notes
thereto) included in the Partnership’s SEC Reports (i) have been prepared in all material respects
in accordance with generally accepted accounting principles (“GAAP”) applied on a
consistent basis and (ii) present fairly, in all material respects the financial position of the
Partnership and the General Partner as at the dates thereof and the results of its operations and
cash flow for the periods then ended, except that the unaudited financial statements may not be in
accordance with GAAP because of the absence of footnotes normally contained therein and are subject
to normal year-end audit adjustments.

     (b) To the Partnership’s knowledge based solely on its review of the NGT SEC Report, (i) NGT
has timely made all filings and furnishings with the SEC pursuant to the Exchange Act during the 12
months preceding the date of this Agreement and (ii) as of its date, the NGT SEC Report has been
duly filed with or furnished to the SEC. To the Partnership’s knowledge based solely on its review
of the NGT SEC Report, the financial statements of NGT (including the schedules and notes thereto)
included in the NGT SEC Report have not been prepared in accordance with GAAP as the financial
statements of NGT differ from financial statements prepared in accordance with GAAP due to the
following: (a) certain cash reserves may be established for contingencies which were not accrued
in the financial statements; (b) amortization of the Net Profits Interests in gas properties is
charged directly to the Trust Corpus and (c) the sale of the Net Profits Interests is reflected in
the Statements of Distributable Income as cash proceeds to the Trust applied on a consistent basis.

     3.8. Absence of Certain Developments

     (a) Since December 31, 2005, there has been no (i) Partnership Material Adverse Effect, (ii)
declaration, setting aside or payment of any dividend or other distribution with respect to the
partnership interests of the Partnership, (iii) issuance of partnership interests or options,
warrants or rights to acquire partnership interests, (iv) material loss, destruction or damage to
any property of the Partnership, whether or not insured, (v) acceleration or prepayment of any
indebtedness for borrowed money or the refunding of any such indebtedness, except in the

- 6 -

 

ordinary course of business or that is not material to the business of the Partnership, (vi)
loan or extension of credit to any officer or employee of the Partnership, or (vii) acquisition or
disposition of any material assets (or any contract or arrangement therefor), or any other material
transaction by the Partnership otherwise than for fair value in the ordinary course of business.

     (b) To the Partnership’s knowledge based solely on its review of the NGT SEC Report, since
December 31, 2005, there has been no (i) NGT Material Adverse Effect, (ii) issuance of NGT trust
units, Depositary Units or other securities or options, warrants or rights to acquire securities of
NGT, (iii) declaration, setting aside or payment of any dividend or other distribution with respect
to the Depositary Units or other securities of NGT, except as disclosed under the caption “
Distributions and Income Computations” in the NGT SEC Report, (iv) material loss, destruction or
damage to any property of NGT or the Underlying Properties, whether or not insured, (v)
acceleration or prepayment of any indebtedness for borrowed money or the refunding of any such
indebtedness, except in the ordinary course of business or that is not material to the business of
NGT, (vi) loan or extension of credit to any officer, trustee or employee of NGT or (vii)
acquisition or disposition of any material assets, including without limitation the Underlying
Properties (or any contract or arrangement therefor), or any other material transaction by NGT
otherwise than for fair value in the ordinary course of business.

     3.9. Compliance with Law

     (a) The Partnership is not in violation of any laws, ordinances, governmental rules or
regulations to which it is subject, except for such violations that would not be reasonably
expected to have a Partnership Material Adverse Effect.

     (b) The Partnership has all licenses, permits, franchises or other authorizations of a
Governmental Authority necessary for the ownership of its respective property or to the conduct of
its respective business as now conducted and as presently contemplated to be conducted, which if
violated or not obtained would reasonably be expected to have a Partnership Material Adverse
Effect. The Partnership has been denied any application for any such licenses, permits, franchises
or other governmental authorizations necessary to its business. There has not been, and there is
no proceeding pending, served or, to the Partnership’s knowledge, threatened to suspend, revoke or
limit such license, and there is no circumstance that exists which with notice or passage of time
or both, will result in such revocation, suspension or limitation.

     (c) Neither the Partnership nor, to the Partnership’s knowledge (after reasonable inquiry of
the General Partner’s officers and directors), any of the officers, directors, employees, agents or
other representatives of the Partnership or any other business entity or enterprise with which the
Partnership is or has been affiliated or associated, has, directly or indirectly, taken any action
prohibited by Section 30A of the Exchange Act.

     (d) The Partnership is in material compliance with and is taking all action required for the
Partnership to remain in material compliance with all provisions of the Sarbanes-Oxley Act and the
rules and regulations promulgated thereunder and all provisions of the New York Stock Exchange, in
each case as to which the Partnership is required to be in compliance.

- 7 -

 

     3.10. Litigation

     There is no legal action, suit or arbitration by any Person, or other legal, administrative or
governmental (whether federal, state, local or foreign) investigation, inquiry or proceeding
pending or, to the best of the Partnership’s knowledge threatened, against or materially or
adversely affecting (a) the Partnership or its properties, assets or business or (b) to the
Partnership’s knowledge based solely on the NGT SEC Report, NGT or its properties, assets or
business. The Partnership is not aware of any fact which might result in or form the basis for any
such action, suit, arbitration, investigation, inquiry or other proceeding. Neither the
Partnership nor, to the Partnership’s knowledge based solely on its review of the NGT SEC Report,
NGT is subject to any order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority.

     3.11. Absence of Undisclosed Liabilities

     Except as disclosed in the Filed Partnership SEC Reports, subsequent to the respective dates
as of which such information is given in the Filed Partnership SEC Reports, as applicable, the
Partnership has not incurred any liability or obligation, direct or contingent, or entered into any
transaction, not in the ordinary course of business, that is material to the Partnership taken as a
whole and there has not been any change in (A) the partners’ capital accounts or (B) material
increase in the short-term or long-term debt of the Partnership taken as a whole.

     3.12. Employees

     The Partnership does not have any employees. The Partnership has never had any employees or
been subject to any collective bargaining agreement. To the Partnership’s knowledge based solely
on its review of the NGT SEC Report, NGT does not have any employees.

     3.13. Tax Matters

     (a) The Partnership (i) has timely filed or prior to the Closing will timely file in correct
form all income Tax Returns and other material Tax Returns required to be filed by it; (ii) has
maintained all required records with respect to any liability for Taxes, regardless of whether such
liability has been previously assessed in whole or in part or is assessed in whole or in part after
the date of this Agreement; and (iii) has timely paid or has made appropriate provision for on its
balance sheet (in accordance with U.S. GAAP) all material Taxes whether or not shown to be due on
or with respect to such Tax Returns or claimed to be due from it by any Governmental Authority with
respect to any liability for Taxes. Since its inception, the Partnership has not incurred any
material liability for Taxes (other than in the ordinary course of business) which have not been
paid or which are not reflected on the Partnership’s December 31, 2005 balance sheet. There are no
Liens with respect to Taxes upon any of the properties or assets, real, personal or mixed, tangible
or intangible, of the Partnership or, to the knowledge of the Partnership, upon Common Units,
except for current Taxes not yet due. The Partnership has made available to the Investors complete
copies of all federal, state and foreign Tax Returns of the Partnership.

- 8 -

 

     (b) Neither the Internal Revenue Service (“Service”) nor any other Taxing authority
has examined the Tax Returns of the Partnership since its inception or otherwise notified it in
writing that it is or may be examining its Tax situation. No deficiencies, penalties or interest
have been asserted by the Service or other Taxing authority in respect of the Partnership, and no
reserves for such liabilities have been established on the Partnership balance sheets.

     (c) There are no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax Returns required to be filed by the Partnership.

     (d) The Partnership is not subject to any joint venture, partnership or other arrangement or
contract which is treated as a partnership for U.S. federal income Tax purposes.

     (e) There are no Tax sharing agreements or similar arrangements to which the Partnership is a
party.

     (f) From its inception and immediately after the Closing, the Partnership has been and will be
classified as a partnership for federal income Tax purposes.

     3.14. Employee Benefit Plans

     All material plans, contracts, bonuses, commissions, profit-sharing, savings, stock options,
insurance, deferred compensation, or other similar fringe or employee benefits covering or, that
after the Tender Offer is consummated is expected to cover former or current employees of the
Partnership or under which the Partnership or the General Partner has any obligation or liability
(the “Benefit Arrangements”) are and have been, or will be, administered in all material
respects in compliance with their terms and with the requirements of applicable law. No payments
have been made by the Partnership or the General Partner to current or former employees pursuant to
the Benefit Arrangements. The General Partner will enter into employment agreements with Scott W.
Smith and Marshall Eubank.

     3.15. Intellectual Property

     The Partnership owns all right, title and interest in and to, or has valid and enforceable
licenses to use, all Partnership Intellectual Property, which represents all intellectual property
rights necessary to the conduct of its business as now conducted and as presently contemplated to
be conducted. To the Partnership’s knowledge, there are no conflicts with or infringements of any
Intellectual Property by any third party. Neither the Partnership Intellectual Property nor the
conduct of the business of the Partnership as now conducted or as presently contemplated conflicts
with or infringes or will conflict with or infringe any intellectual property or other proprietary
right of any third party. There is no claim, suit, action or proceeding pending or, to the
knowledge of the Partnership, threatened against the Partnership: (i) alleging any such conflict
or infringement with any third party’s intellectual property or other proprietary rights; or (ii)
challenging the Partnership’s ownership or use of, or the validity or enforceability of any
Partnership Intellectual Property. The Partnership does not own any patents, or have any
registrations and applications for Intellectual Property.

- 9 -

 

     3.16. Title to Property and Assets

     (a) The Partnership has good title to its properties and assets and good title to its
leasehold estates, in each case subject to no Encumbrance, other than or resulting from (i) Taxes
which have not yet become delinquent and (ii) minor Encumbrances which do not in any case
materially detract from the value of the property subject thereto or materially impair the
operations of the Partnership as now conducted and as presently contemplated to be conducted and
which have not arisen otherwise than in the ordinary course of business. The Partnership does not
own any real property.

     (b) To the Partnership’s knowledge based solely on its review of the NGT SEC Report, (i)
subject to the disclosure in Item 1A of the NGT SEC Report under the captions “Risk Factors – The
legal status of the Net Profits Interests under some circumstances is unclear” and “Risk Factors –
The Net Profits Interests are subject to any defects in Eastern American’s rights to the Underlying
Properties,” NGT has good title to its over-riding royalty interests described under the caption
“NGT Properties – Net Profits Interests” in the Prospectus and (ii) such over-riding royalty
interests are the only material real properties owned by NGT.

     3.17. Condition of Properties

     The property, assets and operations of the Partnership comply in all material respects with
all applicable ordinances, regulations and laws.

     3.18. Insurance

     The Partnership and its properties are insured in such amounts, against such losses and with
such insurers as are prudent when considered in light of the nature of the properties and business
of the Partnership as now conducted. No notice of any termination or threatened termination of any
of such policies has been received by the Partnership and such policies are in full force and
effect.

     3.19. Environmental Matters

     The Partnership does not own or operate any physical assets and has never owned or operated
any physical assets.

     3.20. Transactions with Related Parties

     Except as set forth on Schedule 3.20 of the Partnership’s Disclosure Schedule, the Partnership
is not a party to any agreement with any of its respective partners, directors, officers, trustees
or members or any Affiliate or family member of any of the foregoing under which it: (i) leases
any real or personal property (either to or from such Person), (ii) licenses technology (either to
or from such Person), (iii) is obligated to purchase any tangible or intangible asset from or sell
such asset to such Person, (iv) purchases products or services from such Person or (v) has borrowed
money from or lent money to such Person. To the knowledge of the Partnership and except as set
forth in the partnership agreement of the General Partner, as amended (which partnership agreement
is to be replaced by an operating agreement when the General Partner is converted into a limited
liability company), there exist no agreements among the partners of the

- 10 -

 

Partnership to act in concert with respect to their voting or holding of Partnership
interests. To the Partnership’s knowledge based solely upon its review of the NGT SEC Report, NGT
is not a party to any material agreement with any of its Affiliates.

     3.21. Registration Statement and Prospectus

     (a) A registration statement on Form S-4 (File No. 333-126068) (the “Registration
Statement”) with respect to the Tender Offer has been prepared by the Partnership in conformity
in all material respects with the requirements of the Securities Act and the rules and regulations
of the SEC thereunder and has been filed with the SEC under the Securities Act. The Registration
Statement has been declared effective by the SEC under the Securities Act and no post-effective
amendment to the Registration Statement has been filed as of the date of this Agreement. The form
of the prospectus filed by the Partnership with the SEC pursuant to its Rule 424(b) and dated
November 21, 2005 is herein referred to as the “Prospectus.” Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is herein referred to
as a “Preliminary Prospectus.”

     (b) The SEC has not issued an order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus relating to the Tender Offer nor instituted proceedings for that
purpose. The Registration Statement and the Prospectus which is required to be stated therein in
order to make the statements therein not materially misleading, and in all material respects
conform to the requirements of the Securities Act and the rules and regulations of the SEC
thereunder. Neither the Registration Statement nor any amendment thereto, nor the Prospectus,
contains, as the case may be, any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading.

     3.22. Registration Rights

     Except as disclosed in Schedule 3.22 of the Partnership’s Disclosure Schedule, the Filed
Partnership SEC Reports and pursuant to this Agreement, the Partnership will not, as of the Closing
Date, be under any obligation to register any of its outstanding securities, or any of its
securities that may be issued subsequently, under the Securities Act.

     3.23. Material Non-Public Information

     The Partnership confirms that it has not provided any of the Investors or its agents or
counsel with any information that constitutes or might constitute material non-public information
with respect to the Partnership as of the Closing Date. The Partnership understands and confirms
that the Investors shall be relying on the foregoing representations in effecting transactions in
the securities of the Partnership.

     3.24. Purchased Units Registration

     The issuance and sale of the Purchased Units will be included among the Common Units
registered on the Registration Statement.

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     3.25. Brokerage

     There are no claims for brokerage commissions or finder’s fees or similar compensation in
connection with the transactions contemplated by this Agreement, the Tender Offer (except as
described in the Prospectus), the Merger or the Merger Agreement based on any arrangement made by
or on behalf of the Partnership and the Partnership agrees to indemnify and hold the Investors
harmless against any costs or damages incurred as a result of any such claim.

     3.26. Listing

     The Common Units have been approved for listing on the New York Stock Exchange, subject only
to official notice of issuance. Application will be made to list the Common Units for trading on
the Nasdaq, and prior to commencing the amended Tender Offer, the Common Units will be approved for
listing on the Nasdaq subject to notice of issuance.

     3.27. Reporting Status

     The Partnership is currently eligible to register the resale of Common Units in a secondary
offering on a registration statement on Form S-1 under the Securities Act.

     3.28. No Manipulation of Common Units

     The Partnership has not taken and will not take any action outside the ordinary course of
business designed to or that might reasonably be expected to cause or result in unlawful
manipulation of the price of the Common Units to facilitate the sale or resale of the Common Units.

     3.29. Accountants

     Hein & Associates LLP has advised the Partnership that it is, and to the best knowledge of the
Partnership it is, an independent accountant as required by the Sarbanes-Oxley Act, the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder.

     3.30. Investment Company

     (a) The Partnership is not an “investment company” or an “affiliate person” of, or “promoter”
or “principal underwriter” for an investment company, within the meaning of the Investment Company
Act of 1940, as amended.

     3.31. Material Facts

     This Agreement, the exhibits furnished contemporaneously herewith and the other agreements,
documents, certificates or written statements furnished to the Investors (including the Partnership
SEC Reports) by or on behalf of the Partnership in connection with the transactions contemplated
hereby, do not (taken as a whole) contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements contained therein or herein with respect to the
transactions contemplated hereby, in light of the circumstances in which they were made, not
misleading, provided that no representation is made herein by the

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Partnership with respect to the accuracy or adequacy of disclosures made by NGT in the NGT SEC
Report.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

     Each of the Investors severally represents and warrants to the Partnership as follows:

     (a) It is acquiring the Purchased Units for its own account for investment and not with a view
towards the resale, transfer or distribution thereof (other than with respect to a transfer to an
Affiliate thereof), nor with any present intention of distributing the Purchased Units, but
subject, nevertheless, to any requirement of law that the disposition of the Investors’ property
shall at all times be within the Investors’ control, and without prejudice to the Investors’ right
at all times to sell or otherwise dispose of all or any part of such securities under a
registration under the Securities Act or under an exemption from said registration available under
the Securities Act.

     (b) It has full power and legal right to execute and deliver the Transaction Documents to
which it is a party and to perform its obligations thereunder.

     (c) It is a validly existing corporation, limited liability company or limited partnership,
duly organized under the laws of its jurisdiction of organization.

     (d) It has taken all action necessary for the authorization, execution, delivery, and
performance of the Transaction Documents to which it is a party and its obligations thereunder,
and, upon execution and delivery by the Partnership, the Transaction Documents to which it is a
party shall constitute the valid and binding obligation of such Investor, enforceable against such
Investor in accordance with its terms, except that such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights and general principles of equity.

     (e) There are no claims for brokerage commissions or finder’s fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any arrangement made by or
on behalf of such Investor and such Investor agrees to indemnify and hold the Partnership and the
other Investors harmless against any costs or damages incurred as a result of any such claim.

     (f) It has such knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of its investment in the Partnership as contemplated by this
Agreement, and is able to bear the economic risk of such investment for an indefinite period of
time. It has been furnished access to such information and documents as it has requested and has
been afforded an opportunity to ask questions of and receive answers from representatives of the
Partnership concerning the terms and conditions of this Agreement and the purchase of the Purchased
Units contemplated hereby.

     (g) It is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.

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SECTION 5. COVENANTS OF THE PARTIES

     5.1. Covenants Pending Closing

     Pending the Closing, the Partnership will not, without the Investors’ prior written consent,
take any action which would result in any of the representations or warranties contained in this
Agreement not being true at and as of the time immediately after such action, or in any of the
covenants contained in this Agreement becoming incapable of performance. The Partnership will
promptly advise the Investors of any action or event of which it becomes aware which has the effect
of making incorrect any of such representations or warranties or which has the effect of rendering
any of such covenants incapable of performance. Without limiting the foregoing, the Partnership
shall not, without the prior written consent of the Investors (which shall not be unreasonably
withheld, conditioned or delayed), (i) file or prepare any amendment, supplement or revision to the
Registration Statement or Prospectus; (ii) file or prepare any new registration statement relating
to the Common Units; or (iii) amend the Schedule TO or Tender Offer Documents. Notwithstanding the
foregoing, the Partnership shall be entitled to make such filings as contemplated by Section 5.2 of
this Agreement.

     5.2. Securities Law Disclosure; Publicity

     (a) The Partnership shall, no later than 15 days following the execution of this Agreement,
(i) file a supplement to the Prospectus or a post-effective amendment to the Registration Statement
substantially in the form determined by counsel to the Partnership and Willkie, Farr & Gallagher
LLP, designated counsel of the Investors, to be necessary or appropriate and in a form required by
the Securities Act, together with any exhibits required to be filed therewith (the “Amended
Registration Statement”); (ii) file an amendment to the Schedule TO in the form determined by
counsel to the Partnership and Willkie, Farr & Gallagher LLP, designated counsel of the Investors,
to be necessary or appropriate and in a form required by the Exchange Act, together with any
exhibits required to be filed therewith. Thereafter, the Partnership shall timely file any filings
and notices required by the SEC or the NASD with respect to the transactions contemplated by the
Registration Statement, as amended and the Schedule TO, as amended.

     (b) The Partnership shall, at or prior to 8:30 a.m., Eastern Daylight Time, on the first day
following the Closing Date on which regular way trading of the Common Units occurs on the national
securities exchange on which the Common Units are listed for trading, (i) issue a press release
reasonably acceptable to the Investors disclosing the transactions contemplated hereby, and (ii)
file a Current Report on Form 8-K with the SEC (the “8-K Filing”) describing the
transactions contemplated hereby and including this Agreement as an exhibit hereto, in the form
required by the Exchange Act. Thereafter, the Partnership shall timely file any filings and
notices required by the SEC or the NASD with respect to the transactions contemplated hereby.

     (c) Notwithstanding the foregoing, neither the Partnership nor the Investor shall publicly
disclose the name of any party to this Agreement, or include the name of any party hereto in any
filing with the SEC (other than pursuant to the Registration Statement and exhibits to the 8-K
Filing and other periodic filings made by the Partnership under the Exchange Act) or the NASD
(other than pursuant to an application for the listing of the Shares on the NYSE or

- 14 -

 

Nasdaq), without the prior written consent of such other party, except to the extent such
disclosure is required by law or NASD regulations, in which case the Investor or the Partnership
shall provide the other party with reasonable prior notice of such proposed disclosure.

     5.3. Resale of Securities

     Each Investor covenants that it will not sell or otherwise transfer the Purchased Units except
pursuant to an effective registration under the Securities Act or in a transaction which, in the
opinion of counsel reasonably satisfactory to the Partnership, qualifies as an exempt transaction
under the Securities Act and the rules and regulations promulgated thereunder.

     Until the Purchased Units are registered pursuant to Section 5.8 hereof, each Investor
acknowledges and agrees that the certificates evidencing the Purchased Units will bear the
following legend reflecting the foregoing restrictions on the transfer of such securities:

“The securities evidenced hereby may not be transferred except pursuant to
an effective registration under the Act or in a transaction which, in the
opinion of counsel reasonably satisfactory to the Partnership, qualifies as
an exempt transaction under the Act and the rules and regulations
promulgated thereunder.”

     5.4. Consents and Approvals; Hart-Scott Filings

     (a) From and after the date hereof, the Partnership shall use its best efforts to obtain as
promptly as practicable any consent or approval of any Person, including any regulatory authority,
required in connection with the transactions contemplated by this Agreement, the Tender Offer
Documents and the Merger Agreement, including without limitation the consent of each Person set
forth in Section 3.5 of the Partnership’s Disclosure Schedule. No vote of the limited partners of
the Partnership is necessary to authorize the transactions contemplated hereby.

     (b) The Partnership and the Investor will promptly prepare and file, or cause to be prepared
and filed, any notification or response to any request for additional information required to be
filed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder with respect to the acquisition of the Purchased Units.

     5.5. Investor Consents

     Unless expressly contemplated by this Agreement or the Amended Registration Statement, from
and after the date hereof until the Resale Registration Statement becomes effective, the
Partnership shall not, without the prior written consent of the Investors (which will not be
unreasonably withheld, conditioned or delayed):

     (a) amend or modify its Partnership Agreement or Employment Agreements;

     (b) take any action that adversely alters or changes the rights, preferences or privileges of
the Common Units or any rights of the Investors, including, without limitation, the

- 15 -

 

creation, authorization or issuance of shares of any class or series of capital stock having
voting rights, rights as to dividends or rights upon liquidation that are senior or prior to the
Common Units;

     (c) make any payments to any Partner, including, without limitation any dividends or
distributions, other than reimbursement of costs and expenses and payments of cash distributions as
contemplated in the Partnership Agreement;

     (d) authorize or effect the issuance by the Partnership of any partnership interests
(including any convertible or exchangeable security or any option or warrant to acquire partnership
interests), other than the securities referred to in Schedule 3.3(d);

     (e) authorize or effect (i) any sale, lease, transfer or other disposition of all or
substantially all of the assets of the Partnership; (ii) any merger or consolidation or other
reorganization of the Partnership with or into another entity (other than pursuant to the Merger
Agreement), (iii) the acquisition by the Partnership of another entity by means of a purchase of
all or substantially all of the capital stock or assets of such entity (other than pursuant to the
Merger Agreement) or (iv) a liquidation, winding up, dissolution or adoption of any plan for the
same;

     (f) other than net profits interests that may be purchased by the Partnership from Ensource
Reserves Management, LLC, enter into any transaction, other than employment agreements on a basis
consistent with past practice, with any officer, director or beneficial owner of five percent (5%)
or more of the Partnership Interests of the Partnership or any Affiliate of any of the foregoing;

     (g) authorize or effect any change in senior management of the Partnership or in the
compensation thereof or amend any employment agreement or arrangement related to any member of
senior management;

     (h) approve or effect any changes in the Partnership’s accounting methods or policies other
than as required by U.S. generally accepted accounting principles, or change the auditors of the
Company or any subsidiary;

     (i) authorize or effect any sale, lease, transfer or other disposition of any of the
Partnership’s or any subsidiary’s assets in excess of $50,000;

     5.6. Takeover Statute

     If any Takeover Statute shall become applicable to the transactions contemplated hereby,
including without limitation any takeover provision under the laws of the State of Delaware, the
Partnership shall grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby.

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     5.7. No Solicitation

     (a) Following the execution and delivery of this Agreement, the Partnership shall not, nor
shall it authorize or permit any officer, director or employee of, or any investment banker,
attorney or other advisor, agent or representative of the Partnership (collectively,
“Partnership Representatives”) to, directly or indirectly, solicit any offers, bids or
indications of interest, or initiate negotiations or discussions with any person other than the
Investors with respect to the financing of the Partnership, whether debt or equity, or the sale,
license or other transfer by the Partnership of any material assets of the Partnership, or the
sale, merger, consolidation, recapitalization or other reorganization of the Partnership (each, a
“Competing Transaction Proposal”), (ii) enter into any agreement, agreement in principle,
letter of intent or similar arrangement (whether or not legally binding) relating to a Competing
Transaction Proposal; (iii) furnish, or authorize any Partnership Representative to furnish, any
confidential information or draft agreement concerning a Competing Transaction Proposal to any
party; or (iv) participate in any discussions or negotiations regarding, or take any other action
intended to facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Competing Transaction Proposal.

     (b) Following the execution and delivery of this Agreement, the Partnership shall not: (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to the Investor, the
approval or recommendation of the Investment by the General Partner or the Board of Directors of
the General Partner; (ii) approve or cause the Partnership to enter into any letter of intent,
agreement in principle or any legally binding acquisition agreement or similar agreement relating
to any Competing Transaction Proposal; or (iii) approve or recommend, or propose to publicly
approve or recommend, any Competing Transaction Proposal.

     (c) Following the execution and delivery of this Agreement, the Partnership shall advise the
Investors orally and in writing of any Competing Transaction Proposal as promptly as practicable
following receipt thereof. Such notification shall include the terms and conditions of such
Competing Transaction Proposal, and the identity of the person making it. Upon receipt of any such
Competing Transaction Proposal, the Partnership shall advise such third party in writing that until
this Agreement is terminated in accordance with its terms the Partnership will not evaluate or
pursue any Competing Transaction Proposal.

     (d) The Partnership shall immediately cease, and shall cause any party acting on its behalf to
cease, and cause to be terminated any existing discussions or negotiations with any third party
conducted heretofore with respect to any of the foregoing and shall request any such parties in
possession of confidential information about the Partnership that was furnished by or on behalf of
the Partnership to return or destroy all such information in the possession of any such party or in
the possession of any agent or advisor of any such party.

     5.8. Registration Rights

     The Partnership shall file a registration statement (the “Resale Registration
Statement”) covering the Purchased Units on behalf of the Investors and its Affiliates and any
subsequent transferee with the SEC. Such Resale Registration Statement will be filed as soon as
practicable after the first to occur of (a) the Closing Date but in no event later than 30 days
thereafter and

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     (b) the date the meeting of holders of NGT trust units is held to approve the Merger if the
Merger is not approved at that meeting but in no event later than 30 days thereafter. The
Partnership will use its reasonable best efforts to cause the Resale Registration Statement to
become effective within 60 days after such filing. The expenses of the preparation and filing of
the Resale Registration Statement shall be borne by the Partnership, but any underwriting discount
and commission, agent’s or broker’s fee or similar charge shall be the responsibility of the seller
thereof. Upon filing the Resale Registration Statement, the Partnership will use its commercially
reasonable efforts to keep the Resale Registration Statement effective with the SEC at all times
until the Investor or any transferee who would require such registration to effect a sale of the
Common Units no longer holds the Common Units or can effect a sale of the Common Units pursuant to
Rule 144(k) under the Securities Act, whichever is sooner. Provisions relating to the registration
rights discussed in this Section 5.8 are set forth in Exhibit C hereto.

     5.9. Registration and Listing

     (a) So long as the Investors Own any Purchased Units, the Partnership will cause the Common
Units to continue at all times to be registered under Section 12(g) of the Exchange Act, will
comply in all respects with its reporting and filing obligations under the Exchange Act, and will
not take any action or file any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such reporting and filing obligations.

     (b) On the Closing Date, the Common Units shall have been approved for listing or admitted to
trading on the NYSE or Nasdaq, subject only to official notice of issuance.

     (c) So long as the Investors Own any Purchased Units, the Partnership shall continue the
listing or trading of the Common Units on the NYSE or Nasdaq or one of the other Approved Markets
and comply in all material respects with the Partnership’s reporting, filing and other obligations
under the bylaws or rules of the Approved Market on which the Common Units is then listed or
admitted to trading.

     5.10. Administration Fee

     On each anniversary of the Closing Date, provided that on such anniversary the Investors Own
at least 500,000 Common Units (subject to appropriate adjustment in such number for unit splits,
dividends, reclassifications and the like that occur after the Closing) the Partnership shall pay
to the Investors by wire transfer of immediately available funds to such account as the Investors
shall designate an administration fee of $50,000.

     5.11. Merger

     Promptly after the Closing (and in any event not later than 10 business days after the
Closing), the Partnership will exercise its right under the NGT trust agreement as an owner of more
than 10% of NGT’s trust units to call a special meeting of NGT’s trust unitholders to approve the
Merger and will use its commercially reasonable efforts to cause the NGT trustee to execute the
Merger Agreement and submit same for approval by the holders of NGT trust units. If the
Partnership breaches its obligations under this Section 5.11 and such breach continues unabated for
more than 10 days after written notice thereof is furnished to the Partnership (a “Merger
Default”), the Partnership will pay liquidated damages to the Investors in the amount of

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2% of the Purchase Price paid by the Investors to the Partnership for Purchased Units (less
any Purchased Units sold or transferred by the Investors prior to the incurrence of such liquidated
damages) for every 30-day period (or portion thereof) the Merger Default continues. Such
liquidated damages will accrue daily and be payable to the Investors on demand by wire transfer of
immediately available funds or by federal funds check by the Partnership.

     Internal Accounting Controls. As promptly as practicable following the Closing, and in any
event within 30 days thereafter, the Partnership will establish a system of internal accounting
controls sufficient, in the judgment of the management of the Board of Directors of the General
Partner, to provide reasonable assurance 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 generally accepted accounting
principles and to maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.

     5.12. Further Assurances

     Each of the parties shall execute such documents and other papers and take such further
actions as may be reasonably required or desirable to carry out the provisions hereof and the
transactions contemplated hereby. The Partnership shall use its reasonable best efforts to fulfill
or obtain the fulfillment of the conditions to the Closing as promptly as practicable.

SECTION 6. INDEMNIFICATION

     6.1. Indemnification by the Partnership

     The Partnership agrees that from and after the Closing it will indemnify and hold harmless
each Investor, the partners, members, officers and directors of each Investor and each person, if
any, who controls such Investor within the meaning of the Securities Act or the Exchange Act, from
and against any losses, claims, damages or liabilities to which they may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any breach of this Agreement by
the Partnership, any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, as originally filed or any amendment thereof or any related Preliminary
Prospectus or the Prospectus, or in any supplement thereto or amendment thereof, the Resale
Registration Statement or any subsequent registration statement, preliminary prospectus, or
prospectus filed pursuant to the Resale Registration Statement, or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading or arise out of
any failure by the Partnership to fulfill any undertaking included in the Registration Statement,
as originally filed or any amendment thereof, or any related Preliminary Prospectus or the
Prospectus or in any supplement thereto or amendment thereof, or the Resale Registration Statement,
and the Partnership will, as incurred, reimburse such Investor, partner, member, officer, director
or controlling person for any reasonable legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such

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action, proceeding or claim; provided, however, that the Partnership shall not be liable in
any such case to the extent that such loss, claim, damage or liability (collectively,
“Damage”) arises out of, or is based upon, an untrue statement or omission or alleged
untrue statement or omission made in such Registration Statement, Preliminary Prospectus or the
Prospectus, or in any supplement thereto or amendment thereof, or any Resale Registration
Statement, in reliance upon and in conformity with written information furnished to the Partnership
by or on behalf of such Investor, partner, member, officer, director or controlling person
specifically for use in preparation of the Registration Statement, Preliminary Prospectus or the
Prospectus or any Resale Registration Statement, or any breach of this Agreement by such Investor;
and provided further, however, that the Partnership shall not be liable to any Investor of
Registrable Securities (or any partner, member, officer, director or controlling person of such
Investor) to the extent that any such Damage is caused by an untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus if either (i) (A) such
Investor failed to send or deliver a copy of the final prospectus with or prior to the delivery of
written confirmation of the sale by such Investor to the person asserting the claim from which such
Damage resulted and (B) the final prospectus corrected such untrue statement or omission prior to
the delivery of written confirmation of the sale by such Investor to the person asserting such
claim, (ii) (X) such untrue statement or omission is corrected in an amendment or supplement to the
prospectus and (Y) having previously been furnished by or on behalf of the Partnership with copies
of the prospectus as so amended or supplemented, such Investor thereafter fails to deliver such
prospectus as so amended or supplemented, with or prior to the delivery of written confirmation of
the sale of Registrable Securities to the person asserting the claim from which such Damage
resulted or (iii) such Investor sold Registrable Securities in violation of such Investor’s
covenants contained in Exhibit C of this Agreement.

     6.2. Indemnification by the Investors

     Each Investor, severally and not jointly, agrees that from and after the Closing it will
indemnify and hold harmless the Partnership (and each person, if any, who controls the Partnership
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, each
officer and each director of the Partnership), from and against any losses, claims, damages or
liabilities to which the Partnership (or any such officer, director or controlling person) may
become subject (under the Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, any
breach of this Agreement by such Investor or any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, Preliminary Prospectus or the Prospectus, or
in any Resale Registration Statement, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading in each case, on the effective date
thereof, if, and to the extent, such untrue statement or omission or alleged untrue statement or
omission was made in reliance upon and in conformity with written information furnished by or on
behalf of such Investor specifically for use in preparation of the Registration Statement,
Preliminary Prospectus or the Prospectus, or in any supplement thereto or amendment thereof, or any
Resale Registration Statement, and such Investor will reimburse the Partnership (and each of its
officers, directors or controlling persons) for any reasonable legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action, proceeding or claim;
provided, however, that in no event shall any

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indemnity under this Section 6.2 be greater in amount than the dollar amount of 0.5% of the
net proceeds (net of the amount of any damages such Investor has otherwise been required to pay by
reason of such untrue statement or omission or alleged untrue statement or omission) received by
such Investor upon the sale of the Registrable Securities included in the Resale Registration
Statement, giving rise to such indemnification obligation.

     6.3. Indemnification Procedures

     (a) Promptly after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an indemnifying person pursuant
to this Section 6.3(a), such indemnified person shall notify the indemnifying person in writing of
such claim or of the commencement of such action, and, subject to the provisions hereinafter
stated, in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person shall be entitled to
participate therein, and, to the extent that it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person. After notice from the indemnifying
person to such indemnified person of its election to assume the defense thereof, such indemnifying
person shall not be liable to such indemnified person for any legal expenses subsequently incurred
by such indemnified person in connection with the defense thereof; provided, however, that if there
exists or shall exist a conflict of interest that would make it inappropriate in the reasonable
judgment (based on the advice of counsel) of the indemnified person for the same counsel to
represent both the indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such
indemnifying person; provided further that (i) no indemnifying person shall be responsible for the
fees and expense of more than one separate counsel for all indemnified parties and (ii) if the
indemnifying party elects to assume the defense of such claim or action, the indemnified party
shall not settle an action without the consent of the indemnifying party, The indemnifying party
shall not settle an action without the consent of the indemnified party, which consent shall not be
unreasonably withheld.

     (b) If after proper notice of a claim or the commencement of any action against the
indemnified party, the indemnifying party does not choose to participate, then the indemnified
party shall assume the defense thereof, and upon written notice by the indemnified party requesting
advance payment of a stated amount for its reasonable defense costs and expenses, the indemnifying
party shall advance payment for such reasonable defense costs and expenses (the “Advance
Indemnification Payment”) to the indemnified party. In the event that the indemnified party’s
actual defense costs and expenses exceed the amount of the Advance Indemnification Payment, then
upon written request by the indemnified party, the indemnifying party shall reimburse the
indemnified party for such difference; in the event that the Advance Indemnification Payment
exceeds the indemnified party’s actual costs and expenses, the indemnified party shall promptly
remit payment of such difference to the indemnifying party.

     6.4. Contribution

     If the indemnification provided for in this Section 6 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages
or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified

- 21 -

 

party thereunder, shall to the extent permitted by applicable law contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other, as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by an Investor hereunder be
greater in amount than the dollar amount of the net proceeds (net of the amount of any damages such
Investor has otherwise been required to pay by reason of such untrue statement or omission or
alleged untrue statement or omission) received by such Investor upon the sale of the Purchased
Units or Registrable Securities, as applicable included in the Registration Statement, Preliminary
Prospectus or the Prospectus, or in any supplement thereto or amendment thereof, or any Resale
Registration Statement, giving rise to such indemnification obligation.

SECTION 7. INVESTORS’ CLOSING CONDITIONS

     The obligation of the Investors to purchase and pay for the Purchased Units on the Closing
Date, as provided in Section 2 hereof, shall be subject to the performance by the Partnership of
its agreements theretofore to be performed hereunder and to the satisfaction, prior thereto or
concurrently therewith, of the following further conditions:

     7.1. Representations and Warranties

     All representations and warranties made by the Partnership in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as if again made by the Partnership
on and as of such date (except for such representations and warranties (a) qualified by materiality
or Material Adverse Effect which shall be true and correct in all respects and (b) made as of a
certain date which shall be true and correct as of such date).

     7.2. Compliance with Agreement

     The Partnership shall have performed and complied in all material respects with all
agreements, covenants and conditions contained in this Agreement which are required to be performed
or complied with by the Partnership prior to or on the Closing Date.

     7.3. General Partner’s Certificate

     Each of the Investors shall have received a certificate, dated the Closing Date, signed by the
General Partner, certifying that the conditions specified in the foregoing Sections 7.1, 7.2, 7.4
and 7.8 hereof have been fulfilled.

     7.4. Injunction

     There shall be no effective injunction, writ, preliminary restraining order or any order of
any nature issued by a court of competent jurisdiction directing that the transactions provided for
herein and in the Transaction Documents or any of them not be consummated as herein provided.

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     7.5. Consents and Approvals

     The Partnership shall have obtained all consents, permits, waivers and other authorizations
which are necessary or appropriate for the transactions contemplated by this Agreement and the
Transaction Documents, including but not limited to the requisite written consent of the General
Partner, to the transactions contemplated by this Agreement and the Transaction Documents.

     7.6. Counsel’s Opinion

     The Investors shall have received from the Partnership’s counsel, Andrews Kurth LLP, an
opinion, dated the Closing Date, substantially in the form of Exhibit D hereto.

     7.7. Partnership Agreement

     Prior to the Closing, the General Partner and each Person who is then a limited partner shall
have executed and delivered to the Investors the Partnership Agreement.

     7.8. Adverse Development

     There shall have been no developments in the business of the Partnership or NGT which would be
reasonably likely to have either a Partnership Material Adverse Effect or a NGT Material Adverse
Effect, including without limitation that NGT shall not have entered into or effectuated any
agreement or transaction with any Person contemplating a merger or acquisition with respect to NGT
or otherwise having the effect of causing a termination or liquidation of NGT.

     7.9. Expiration and Closing of Tender Offer

     There shall have been validly tendered and not properly withdrawn prior to the expiration of
the Tender Offer, as amended, that number of Depositary Units representing at least a majority of
the total voting power of all of the outstanding trust units immediately prior to the expiration of
the Tender Offer in consideration for a corresponding number of Common Units of the Partnership and
a pro rata portion of the special cash distribution described in the Prospectus (the “Exchange
Consideration”) or cash consideration not in excess of $31.00, without interest, per Depositary
Unit (the “Tender Offer Purchase Price”), or a combination thereof.

     7.10. Stop Orders

     No stop order or suspension of trading shall been imposed by the national securities exchange
on which the Common Units are to be listed for trading upon notice of issuance, the SEC or any
other governmental regulatory body with respect to public trading in the Common Units.

     7.11. Listing of the Common Units

     In connection with the issuance of the Common Units and the transactions contemplated hereby,
Common Units shall be authorized for listing or admitted to trading on the NYSE or

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Nasdaq without any requirement for the Partnership under applicable rules of such national
securities exchange to obtain common unitholder approval, subject to official notice of issuance.

     7.12. General Partner Contribution

     The General Partner shall have contributed, or concurrently with the Closing shall contribute,
to the Partnership in cash or immediately available funds the sum of the following: (such sum, the
“General Partner Contribution”):

     (a) $500,000, which shall be contributed in consideration for the Warrants (as defined in the
Prospectus);

     (b) $19.5 million, which shall be the aggregate consideration paid for (i) the Subordinated
Units (as defined in the Prospectus), (or an amount equal to the Tender Offer Purchase Price per
Subordinated Unit) and (ii) the 1% general partner interest and the incentive distribution rights
in the Partnership; and

     (c) up to the remaining $20.0 million to purchase Common Units at the Tender Offer Purchase
Price per Common Unit on a pari passu basis with the Investors, such that the Purchased Units and
such Common Units will equal the number of Depositary Units validly tendered in the Tender Offer
and accepted by the Partnership for cash consideration.

     7.13. Participation Rights Agreement

     The General Partner and the Investors shall have executed the Participation Rights Agreement
the form of which is attached as Exhibit E hereto (the “Participation Rights
Agreement”).

     7.14. Secretary’s Certificate

     Each Investor shall have received a certificate, dated the Closing Date, of the Secretary of
the Partnership attaching: (i) a true and complete copy of the Partnership Agreement, with all
amendments thereto; (ii) a certificate from the Secretary of State of the State of Delaware as to
the good standing of the Partnership; and (iii) certificates of good standing from the appropriate
officials of the jurisdictions in each state in which the Partnership is then qualified to do
business as a foreign corporation.

     7.15. Approval of Proceedings

     All proceedings to be taken in connection with the transactions contemplated by this
Agreement, and all documents incident thereto, shall be satisfactory in form and substance to the
Investors and its special counsel, Willkie Farr & Gallagher LLP. The Investors shall have received
copies of all documents or other evidence which they and Willkie Farr & Gallagher LLP may
reasonably request in connection with such transactions and of all records of corporate proceedings
in connection therewith in form and substance reasonably satisfactory to the Investors and Willkie
Farr & Gallagher LLP.

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     7.16. Employment Agreements

     The General Partner shall have entered into employment agreements with Scott W. Smith and
Marshall M. Eubank as further described in Section 3.20 of the Partnership’s Disclosure Schedule.

SECTION 8. PARTNERSHIP CLOSING CONDITIONS

     The obligation of the Partnership to issue and deliver the Purchased Units on the Closing
Date, as provided in Section 2 hereof, shall be subject to the performance by the Investors of
their agreements theretofore to be performed hereunder and to the satisfaction, prior thereto or
concurrently therewith, of the following further conditions:

     8.1. Representations and Warranties

     All representations and warranties made by the Investors in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as if again made by the Partnership
on and as of such date (except for such representations and warranties (a) qualified by materiality
which shall be true and correct in all respects and (b) made as of a certain date which shall be
true and correct as of such date).

     8.2. Compliance with Agreement

     The Investors shall have performed and complied in all material respects with all agreements,
covenants and conditions contained in this Agreement which are required to be performed or complied
with by it prior to or on the Closing Date.

     8.3. Officer’s Certificate

     The Partnership shall have received a certificate, dated the Closing Date, signed by each
Investor (or a duly authorized officer thereof), certifying that the conditions specified in the
foregoing Sections 8.1 and 8.2 hereof have been fulfilled.

     8.4. Injunction

     There shall be no effective injunction, writ, preliminary restraining order or any order of
any nature issued by a court of competent jurisdiction directing that the transactions provided for
herein and in the Transaction Documents or any of them not be consummated as herein provided.

     8.5. Consents and Approvals

     The Partnership shall have obtained all consents, permits, waivers and other authorizations
which are necessary or appropriate for the transactions contemplated by this Agreement and the
Transaction Documents, including but not limited to the requisite written consent of the General
Partner, to the transactions contemplated by this Agreement and the Transaction Documents.

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     8.6. Approval of Proceedings

     All proceedings to be taken in connection with the transactions contemplated by this
Agreement, and all documents incident thereto, shall be satisfactory in form and substance to the
Partnership and its counsel; and the Partnership shall have received copies of all documents or
other evidence which it and its counsel may request in connection with such transactions in form
and substance satisfactory to the Partnership and its counsel.

     8.7. Consents and Approvals

     The Partnership shall have obtained all consents, permits, waivers and other authorizations
which are necessary or appropriate for the transactions contemplated by this Agreement and the
Transaction Documents.

     8.8. Expiration and Closing of Tender Offer

     There shall have been validly tendered and not properly withdrawn prior to the expiration of
the Tender Offer, as amended, that number of Depositary Units representing at least a majority of
the total voting power of all of the outstanding trust units immediately prior to the expiration of
the Tender Offer in consideration for a corresponding number of Common Units of the Partnership and
a pro rata portion of the special cash distribution described in the Prospectus (the “Exchange
Consideration”) or the Tender Offer Purchase Price, without interest, or a combination thereof.

     8.9. Stop Orders

     No stop order or suspension of trading shall been imposed by the national securities exchange
on which the Common Units are to be listed for trading upon notice of issuance, the SEC or any
other governmental regulatory body with respect to public trading in the Common Units.

     8.10. Listing of the Common Units

     In connection with the issuance of the Common Units and the transactions contemplated hereby,
Common Units shall be authorized for listing or admitted to trading on the NYSE or Nasdaq without
any requirement for the Partnership under applicable rules of such national securities exchange to
obtain common unitholder approval, subject to official notice of issuance.

     8.11. General Partner Contribution

     The General Partner shall have contributed, or concurrently with the Closing shall contribute,
to the Partnership in cash or immediately available funds the sum of the following: (such sum, the
“General Partner Contribution”):

     (a) $500,000, which shall be contributed in consideration for the Warrants (as defined in the
Prospectus);

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     (b) $19.5 million, which shall be the aggregate consideration paid for (i) the Subordinated
Units (as defined in the Prospectus), (or an amount equal to the Tender Offer Purchase Price per
Subordinated Unit) and (ii) the 1% general partner interest and the incentive distribution rights
in the Partnership; and

     (c) up to the remaining $20.0 million to purchase Common Units at the Tender Offer Purchase
Price per Common Unit on a pari passu basis with the Investors, such that the Purchased Units and
such Common Units will equal the number of Depositary Units validly tendered in the Tender Offer
and accepted by the Partnership for cash consideration.

SECTION 9. INTERPRETATION OF THIS AGREEMENT

     9.1. Terms Defined

     As used in this Agreement, the following terms have the respective meanings set forth below or
set forth in the Section hereof following such term:

     Advance Indemnification Payment: shall have the meaning set forth in Section 6.3(b).

     Affiliate: shall mean any Person or entity, directly or indirectly controlling,
controlled by or under common control with such Person or entity.

     Agreement: shall have the meaning set forth in the Preamble.

     Amended Registration Statement: shall have the meaning set forth in Section 5.2.

     Approved Markets: shall mean the Nasdaq Stock Market (including the Nasdaq National
Market, Nasdaq Global Select Market, Nasdaq Global Market, Nasdaq Capital Market and Nasdaq Small
Cap Market), the New York Stock Exchange or the American Stock Exchange.

     Benefit Arrangement: shall have the meaning set forth in Section 3.14.

     Business Day: shall mean a day other than a Saturday, Sunday or other day on which
banks in the State of New York are required or authorized to close.

     Closing: shall have the meaning set forth in Section 2.1(b).

     Closing Date: shall have the meaning set forth in Section 2.1(b).

     Code: shall mean the Internal Revenue Code of 1986, as amended.

     Common Units: shall have the meaning set forth in Section 1.

     Competing Transaction Proposal: shall have the meaning set forth in Section 5.7(a).

     Damage: has the meaning set forth in Section 6.1.

     Depositary Units: shall have the meaning set forth in Section 3.3(b).

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     8-K Filing: shall have the meaning set forth in Section 5.2.

     Employment Agreements: shall have the meaning set forth in Section 7.16

     Encumbrances: shall mean any lien (statutory or other), security interest, mortgage,
covenant, pledge, assignment adverse claim, title defect, assessment, lease, levy, charge or other
encumbrance of any kind, or conditional sale contract, sale-leaseback, financing lease, title
retention contract or other contract to give any of the preceding.

     Exchange Act: shall mean the Securities Exchange Act of 1934, as amended.

     Filed Partnership SEC Report: shall have the meaning set forth in Section 3.7(a).

     GAAP: shall have the meaning set forth in Section 3.7(a).

     General Partner: shall mean Ensource Energy, L.L.C., a Delaware limited liability
company.

     General Partner Contribution: shall have the meaning set forth in Section 7.12.

     Governmental Authority: shall mean any federal, state, local or foreign court,
governmental, regulatory or other public body, agency or authority (including self-regulatory
organizations), domestic or foreign.

     Investment: shall mean the purchase of the Purchased Units by the Investors in
accordance with the terms of this Agreement.

     Investors: shall have the meaning set forth in the Preamble.

     Merger: the merger the Partnership intends to effect after consummation of the Tender
Offer in which NGT will either (i) be merged with and into the Partnership and the Partnership will
be the surviving entity or (ii) alternatively, be merged with and into a newly formed wholly owned
subsidiary of the Partnership in which NGT will be the surviving entity.

     Merger Agreement: shall mean the form of Merger Agreement included as Exhibit 10.5 or
10.7 to the Registration Statement.

     Merger Default: shall have the meaning set forth in Section 5.11.

     NASD: shall mean the National Association of Securities Dealers, Inc.

     NGT: shall have the meaning set forth in Section 3.1(c).

     NGT Material Adverse Effect: shall mean a material adverse effect on the business,
properties, assets, liabilities, profits, results of operations or condition (financial or
otherwise) of NGT taken as a whole.

     NGT SEC Report: shall have the meaning set forth in Section 3.1(c).

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     NGT Trust Agreement: shall meant that Second Amended and Restated Trust Agreement of
Eastern American Natural Gas Trust among Eastern American Energy Corporation, Bank of Montreal
Trust Company and Wilmington Trust Company, dated as of January 1, 1993.

     NYSE: shall mean the New York Stock Exchange, Inc.

     Organizational Documents: shall mean the certificate of formation, certificate of
incorporation, certificate of trust, trust agreement, limited liability company agreement, by-laws
or other formation or governing documents of a particular entity, as amended through the date
hereof.

     Owns, Own, Owned: shall mean the aggregate beneficial ownership,
within the meaning of Rule 13d-3 under the Exchange Act, of the Investors and any of their
Affiliates, its current or former members and Affiliates thereof.

     Participation Rights Agreement: shall have the meaning set forth in Section 7.13.

     Partnership: shall have the meaning set forth in the Preamble.

     Partnership Agreement: shall have the meaning set forth in Section 1.

     Partnership Interests: shall have the meaning set forth in Section 3.3(a).

     Partnership Intellectual Property: shall mean all of the following, owned, used or
held for use in the business of the Partnership: (i) trademarks and service marks (registered or
unregistered), trade dress, product configurations, trade names and other names and slogans
embodying business or product goodwill or indications of origin, applications or registrations in
any jurisdiction pertaining to the foregoing and goodwill associated therewith; (ii) inventions,
discoveries, improvements, ideas, know-how, formula methodology, processes, technology, computer
programs and software (including password unprotected interpretive code or source code, object
code, development documentation, programming tools, drawings, specifications and data) and
applications, registrations and patents in any jurisdiction pertaining to the foregoing, including
re-issues, continuations, divisions, continuations-in-part, renewals or extensions; (iii) trade
secrets, including confidential and other non-public information, and the right in any jurisdiction
to limit the use or disclosure thereof; (iv) copyrights in writings, designs, software programs and
software, mask works or other works, applications or registrations in any jurisdiction for the
foregoing and moral rights related thereto; (v) databases and database rights; (vi) Internet Web
sites, domain names and applications and registrations pertaining thereto and all intellectual
property used in connection with or contained in all versions of the Web sites of the Partnership;
(vii) licenses, immunities, covenants not to sue and the like relating to the foregoing; (viii)
books and records describing or used in connection with the foregoing; and (ix) claims or causes of
action arising out of or related to past, present or future infringement or misappropriation of the
foregoing.

     Partnership Material Adverse Effect: shall have the meaning set forth in Section
3.1(b).

     Partnership Representatives: shall have the meaning set forth in Section 5.7(a).

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     Partnership SEC Reports: shall have the meaning set forth in Section 3.7(a).

     Partnership’s Disclosure Schedule: shall have the meaning set forth in Section 3.

     Person: shall mean an individual, partnership, joint-stock company, corporation,
limited liability company, trust or unincorporated organization, and a foreign, federal, state or
local government or agency or political subdivision thereof.

     Preliminary Prospectus: shall have the meaning set forth in Section 3.21(a).

     Prospectus: shall have the meaning set forth in Section 3.21(a).

     Purchase Price: shall have the meaning set forth in Section 2.1(a).

     Purchased Units: shall have the meaning set forth in Section 2.1(a).

     Put Premium: shall have the meaning set forth in Section 2.4.

     Registrable Securities: shall mean those Purchased Units covered by the Resale
Registration Statement.

     Registration Statement: shall have the meaning set forth in Section 3.21(a).

     Resale Registration Statement: shall have the meaning set forth in Section 5.8.

     Schedule TO: shall have the meaning set forth in Section 3.7.

     SEC: shall mean the Securities and Exchange Commission.

     Securities Act: shall mean the Securities Act of 1933, as amended.

     Service: shall have the meaning set forth in Section 3.13(b).

     Stock Option Plan: shall mean the Long-Term Incentive Plan described under the caption
“Management — Long-Term Incentive Plan” in the Prospectus.

     Subsidiary: shall mean, with respect to any Person, any corporation, association or
other business entity of which more than 50% of the total voting power of shares of stock or other
equity interest entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereto is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination
thereof.

     Takeover Statute: shall mean any partnership or corporate takeover provision under
laws of the State of Delaware or any other state or federal “fair price,” “moratorium,” “control
share acquisition” or other similar antitakeover statute or regulation.

     Tax, or Taxes as the context may require, include (whether federal, state or
foreign): (i) any income, alternative or add-on minimum tax, gross income, gross receipts,
franchise,

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profits, sales, use, ad valorem, business license, withholding, payroll, employment, excise,
stamp, transfer, recording, occupation, premium, property, value added, custom duty, severance,
windfall profit or license tax, governmental fee, including estimated taxes relating to any of the
foregoing, or other similar tax or other like assessment or charge of similar kind whatsoever
together with any interest and other penalty, addition to tax or additional amount imposed by any
Governmental Authority responsible for the imposition of any such Tax; or (ii) any liability of a
Person for the payment of any taxes, interest, penalty, addition to tax or like additional amount
resulting from the application of Treas. Reg. § 1.1502-6 or comparable provisions of any
Governmental Authority in respect of a consolidated or combined return.

     Tax Return: shall mean any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with or submitted to, or
required to be filed with or submitted to, any governmental authority in connection with the
determination, assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any law relating to any Tax.

     Tender Offer: shall mean the Offer to Purchase for Cash or Exchange made by the
Partnership pursuant to and described in the Registration Statement and the Schedule TO in effect
at the time of the Closing, and as amended as contemplated by this Agreement.

     Tender Offer Documents: shall mean the documents relating to the Tender Offer
required to be filed as exhibits to the Schedule TO as in existence on the date of this Agreement
and as amended to conform to the terms of the Tender Offer as contemplated by this Agreement.

     Tender Offer Purchase Price: shall have the meaning set forth in Section 7.9.

     Transaction Documents: shall mean the Partnership Agreement and any other contract,
certificate or consent to be executed and/or delivered at the Closing.

     Underlying Properties: shall mean the 650 producing gas wells and 65 proved
development well locations located in Western Virginia and Pennsylvania owned by Eastern American
Energy Corporation.

     Used Commitment Amount: shall mean the cash amount to be paid at the Closing by the
Investors necessary for the Partnership to pay an aggregate Tender Offer Purchase Price not to
exceed $91,500,000, and shall be determined to be equal to the product of (a) the product of $31.00
times the number of Depositary Units accepted in the Tender Offer for the Tender Offer Purchase
Price, times (b) a fraction of which (i) the numerator is 71.5 and (ii) the denominator is 91.5,
rounded to the nearest whole number, but in no event shall the Used Commitment Amount exceed
$71,500,000.

     9.2. Accounting Principles

     Where the character or amount of any asset or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, this shall be done in

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accordance with U.S. GAAP at the time in effect, to the extent applicable, except where such
principles are inconsistent with the requirements of this Agreement.

     9.3. Directly or Indirectly

     Where any provision in this Agreement refers to action to be taken by any Person, or which
such Person is prohibited from taking, such provision shall be applicable whether such action is
taken directly or indirectly by such Person.

     9.4. Governing Law

     This Agreement shall be governed by and construed in accordance with the laws of the State of
New York (without giving effect to the choice of law principles thereof) which are applicable to
contracts made and to be performed entirely within such State. The parties hereto hereby
irrevocably submit to the jurisdiction of any United States Federal court sitting in the City and
County of New York over any action or proceeding arising out of or relating to this Agreement or
any agreement contemplated hereby, and the parties hereto hereby irrevocably agree that all claims
in respect of such action or proceeding may be heard and determined in such Federal court. The
parties hereto further waive any objection to venue in such City and County and any objection to an
action or proceeding in such City and County on the basis of a non-convenient forum and further
agree that any action or proceeding brought against any other party hereto shall be brought only in
the United States Federal courts sitting in the City and County of New York.

     9.5. Paragraph and Section Headings

     The headings of the sections and subsections of this Agreement are inserted for convenience
only and shall not be deemed to constitute a part hereof.

SECTION 10. MISCELLANEOUS

     10.1. Notices

     All notices and other communications required or permitted hereunder shall be in writing,
shall be effective when given, and shall in any event be deemed to be given upon receipt or, if
earlier, (i) five days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (ii) upon delivery, if delivered by
hand or by facsimile (confirmation received), and (iii) one business day after the business day of
deposit with Federal Express or similar overnight courier, freight prepaid and shall be addressed:

     1. if to an Investor, at the information set forth under the Investor’s name on
Schedule 2.1 or at such other address as the Investor may have furnished the
Partnership in writing, with a copy (which shall not constitute notice) to Holly K.
Youngwood, Esq. at Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New
York 10019 (facsimile: (212) 728-9222);

     2. if to the Partnership, at Ensource Energy Income Fund, L.P., c/o Ensource
Energy, LLC, 7500 San Felipe, Suite 440, Houston, Texas 77063,

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(facsimile: (713) 659-1799) marked for the attention of the President, or at
such other address as it may have furnished the Investors in writing, with a copy
(which shall not constitute notice) to Andrews Kurth LLP, 4200 JPMorgan Chase Tower,
600 Travis Street, Houston, Texas 77002, Attention: G. Michael O’Leary (facsimile:
(713) 220-4285); or

     3. at such other address as a party may designate by 10 days’ written notice to
the other party pursuant to the provisions hereto.

     10.2. Expenses and Taxes

     (a) The Partnership shall reimburse the Investors, upon request by the Investors not earlier
than fifteen Business Days after execution of this Agreement, and again not earlier than fifteen
Business Days after the Closing, in an amount not to exceed $150,000 in the aggregate, all of the
Investors’ out-of-pocket fees and expenses incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the transactions contemplated hereby,
including, without limitation, the fees and expenses of the Investors’ attorneys, accountants and
consultants employed in connection with the Investors’ consideration, negotiation and consummation
of the transactions contemplated hereby, Investors’ due diligence on the Partnership and any
documentation relating to the transactions contemplated hereby, provided that such request shall be
accompanied by reasonable supporting documentation.

     (b) The Partnership will pay, and save and hold each Investor harmless from any and all
liabilities (including interest and penalties) with respect to, or resulting from any delay or
failure in paying, stamp and other taxes (other than income taxes), if any, which may be payable or
determined to be payable on the execution and delivery or acquisition of the Purchased Units.

     10.3. Reproduction of Documents

     This Agreement and all documents relating thereto, including, without limitation, (i)
consents, waivers and modifications which may hereafter be executed, (ii) documents received by
each of the Investors pursuant hereto and (iii) financial statements, certificates and other
information previously or hereafter furnished to each Investor, may be reproduced by each Investor
by a photographic, photostatic, microfilm, microcard, miniature photographic or other similar
process and each Investor may destroy any original document so reproduced. All parties hereto
agree and stipulate that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the original is in existence
and whether or not such reproduction was made by each Investor in the regular course of business)
and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.

     10.4. Termination and Survival

     (a) All warranties, representations, and covenants made by the Investors or the Partnership
herein or in any certificate or other instrument delivered by the Investors or the Partnership
under this Agreement shall be considered to have been relied upon by the Partnership or the
Investors, as the case may be, and shall survive all deliveries to the Investors of the Purchased
Units, or payment to the Partnership for such Purchased Units, regardless of any

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investigation made by the Partnership or by the Investors, as the case may be, or on behalf of
the Partnership or the Investors. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Investors and the Partnership hereunder.

     (b) Notwithstanding anything to the contrary contained herein, this Agreement may be
terminated at any time (i) by mutual consent of the Partnership and the Investors; (ii) by either
the Partnership or the Investors if the Closing shall not have occurred on or prior to 120 days
following execution of the Agreement (the “Termination Date”) (unless such date is extended
by mutual written consent); (iii) by the Investors, for any material breach of this Agreement by
the Partnership if such breach continues unabated for 15 days after written notice thereof is
furnished by the Investors to the Partnership and (iv) by the Partnership, for any material breach
of this Agreement by the Investors if such breach continues unabated for 15 days after written
notice thereof is furnished by the Partnership to the Investors. In the event of termination
pursuant to this Section 10.4, this Agreement shall become null and void and have no effect, with
no liability on the part of the Partnership or the Investors, or their members, partners,
directors, officers, agents or stockholders, with respect to this Agreement, except for the (i)
liability of the Partnership for expenses pursuant to Section 10.2 and (ii) subject to the
foregoing sentence, liability for any breach of any representation, warranty or covenant contained
in this Agreement.

     10.5. Successors and Assigns

     This Agreement shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties; provided, no party shall assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other party hereto;
provided, however, that the Investors may assign their respective rights and/or to delegate all or
any part of its obligations hereunder in whole or in part in their sole discretion to one or more
of their respective Affiliates or to any financial institution , but in such event the Investors
shall remain fully liable for the performance of all such obligations in the manner prescribed in
this Agreement.

     10.6. Limitation on Enforcement of Remedies

     The Partnership hereby agrees that it will not assert against the limited partners of any
members of any Investor any claim it may have under this Agreement by reason of any failure or
alleged failure by such Investor to meet its obligations hereunder.

     10.7. Entire Agreement; Amendment and Waiver

     This Agreement, the Partnership’s Disclosure Schedule and the Transaction Documents constitute
the entire understandings of the parties hereto and supersede all prior and contemporaneous
agreements or understandings with respect to the subject matter hereof among such parties. This
Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and
only with) the written consent of the Partnership and each of the Investors.

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     10.8. Severability

     In the event that any part or parts of this Agreement shall be held illegal or unenforceable
by any court or administrative body of competent jurisdiction, such determination shall not affect
the remaining provisions of this Agreement which shall remain in full force and effect.

     10.9. Counterparts

     This Agreement may be executed in one or more counterparts (including by facsimile), each of
which shall be deemed an original and all of which together shall be considered one and the same
agreement.

[Remainder of Page Intentionally Left Blank.]

- 35 -

 

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set
forth above.

	 	 	 	 	 
	 	 	ENSOURCE ENERGY INCOME FUND LP
	 
	 	 	 	 
	 

	 	By:	 	/s/ Scott W. Smith
	 

	 	 	 	 
	 

	 	 	 	Name: Scott W. Smith
	 

	 	 	 	Title: President of Ensource
Energy Company LLC,

as General Partner of Ensource Energy Partners, LP,
as General
Partner of Ensource Energy Income Fund LP

	 
	 	 	 	 
	 	 	INVESTORS:
	 
	 	 	 	 
	 	 	THIRD POINT PARTNERS LP
	 
	 	 	 	 
	 

	 	By:
	 	Third Point Advisors L.L.C., its general partner
	 
	 	 	 	 
	 

	 	By:	 	/s/ Justin Nadler
	 

	 	 	 	 
	 

	 	 	 	Name: Justin Nadler
	 

	 	 	 	Title: Authorized signatory
	 
	 	 	 	 
	 	 	THIRD POINT PARTNERS QUALIFIED, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	Third Point Advisors L.L.C., its general partner
	 
	 	 	 	 
	 

	 	By:	 	/s/ Justin Nadler
	 

	 	 	 	 
	 

	 	 	 	Name: Justin Nadler
	 

	 	 	 	Title: Authorized signatory

 

 

SCHEDULE 2.1

THE INVESTORS

	 	 	 
	Investor	 	Common Units
	Third Point Partners LP
	 	 
	390 Park Avenue, 19th Floor
	 	 
	New York, NY 10022
	 	 
	Attention: Justin Nadler
	 	 
	Facsimile: 212-224-7401
	 	 
	 
	 	 
	Third Point Partners Qualified LP
	 	 
	390 Park Avenue, 19th Floor
	 	 
	New York, NY 10022
	 	 
	Attention: Justin Nadler
	 	 
	Facsimile: 212-224-7401
	 	 
	 
	 	 
	Total:

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