Document:

exv10w1

 

EXHIBIT 10.1

AMENDMENT TO ASSET PURCHASE AGREEMENT

     This Amendment to Asset Purchase Agreement (the “Amendment”), dated as of November 1,
2005, is made by and among CAL DIVE INTERNATIONAL, INC., a Minnesota corporation (“CDI” or
the “Buyer”), and STOLT OFFSHORE INC., a Louisiana corporation, S & H DIVING LLC, a
Louisiana limited liability company and SCS SHIPPING LIMITED, an Isle of Man company (collectively,
the “Sellers”). Buyer and Sellers are sometimes referred to herein individually as a
“Party” and collectively as the “Parties.” Unless otherwise specified, capitalized
terms used herein shall have the meaning specified in the Asset Purchase Agreement (as defined
below).

     WHEREAS, the Parties entered into that certain Asset Purchase Agreement dated as of April 11,
2005 (the “Asset Purchase Agreement”); and

     WHEREAS, because of the delay resulting from complying with the requirements of the HSR Act,
the Parties desire to amend the Asset Purchase Agreement as set forth herein;

     NOW, THEREFORE, for a good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and subject to the terms and conditions as herein provided, the Parties agree
as follows:

     1. The introductory paragraph of the Asset Purchase Agreement is hereby modified to include “SCS
SHIPPING LIMITED, an Isle of Man company” as one of the Sellers. By its execution of this
Amendment, SCS SHIPPING LIMITED hereby adopts and ratifies all terms and conditions of the Asset
Purchase Agreement, except as otherwise hereby amended by this Amendment.

     2. Section 1.1 of the Asset Purchase Agreement is hereby amended and restated to define
“Closing” and “Closing Date” as follows:

     “Closing” shall mean the consummation of the IMR Closing, DLB 801 Closing, and SEAWAY
KESTREL Closing, respectively, as indicated by the context of the relevant provision, and shall
apply with respect to that portion of the Subject Assets as is being sold to Buyer at such Closing,
with each such Closing each effective as of the date specified herein.

     “Closing Date” shall mean the date on which each of the IMR Closing, DLB 801 Closing,
and SEAWAY KESTREL Closing occurs, respectively, as indicated by the context of the relevant
provision, and shall apply with respect to that portion of the Subject Assets as is being sold to
Buyer on such date.

     3. Section 1.1 of the Asset Purchase Agreement is hereby amended to add the following definitions:

     “DLB 801” shall mean the vessel of that name as such vessel is more particularly
described in Exhibit A.

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     “DLB 801 Closing” shall mean the closing of the sale of the DLB 801.

     “Effective Time” shall mean the effective time of a particular Closing as more
particularly described in Section 9.1(a) with respect to the IMR Vessel Closing; Section 9.1(b)
with respect to the SEAWAY KESTREL Closing; and Section 9.1(c) with respect to the DLB 801
Closing.

     “IMR Closing” shall mean the closing of all of the transactions contemplated by this
Agreement other than the transactions contemplated by the SEAWAY KESTREL Closing and the DLB 801
Closing.

     “IMR Vessels” shall mean the American Diver, American Star, American Liberty, American
Victory, American Constitution, American Triumph and Seaway Defender, all as more particularly
described in Exhibit A.

     “SEAWAY KESTREL” shall mean the vessel of that name as such vessel is more
particularly described in Exhibit A.

     “SEAWAY KESTREL Closing” shall mean the closing of the sale of the SEAWAY KESTREL.

     “Vessels” shall mean the vessels described in Exhibit A and Defender ROV described in
Exhibit A-1; provided, however, that when the context of the Agreement imposes obligations with
respect to the Vessels, e.g., Section 5.6 and Section 9.2(d), and such obligations are not
customarily imposed with respect to a remote operated vehicle (“ROV”), then such
obligations shall not apply to the Defender ROV.

     4. Section 2.1 of the Asset Purchase Agreement is hereby amended and restated in its entirety as
follows:

     2.1 There shall be three separate and independent Closings: the IMR Closing;
the SEAWAY KESTREL Closing; and the DLB 801 Closing. At each such Closing, Sellers
shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase,
acquire and accept from Sellers, all of Sellers’ rights, title and interests in and
to the following described Subject Assets:

	 	(a)	 	IMR Closing: the IMR Vessels together with the
Vessel-Related Equipment for the IMR Vessels described in Exhibit B and
Exhibit B-1; the diving equipment including the portable SAT diving
system described in Exhibit C; the real property and leases (the
“Assigned Leases”) described in Exhibit D; and the machinery,
apparatus, furniture and fixtures, materials, supplies, inventory, and
other equipment described in Exhibit E.

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	 	(b)	 	SEAWAY KESTREL Closing: the SEAWAY KESTREL together
with the Vessel-Related Equipment for the SEAWAY KESTREL described in
Exhibit B and Exhibit B-1.
	 
	 	(c)	 	DLB 801 Closing: the DLB 801 together with the
Vessel-Related Equipment for the SEAWAY KESTREL described in Exhibit B
and Exhibit B-1.

     5. Section 4.1 of the Asset Purchase Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:

     4.1 (a) The total purchase price (“Purchase Price”) to be paid to
Sellers by Buyer for the Subject Assets shall be One Hundred Twenty-Two Million Nine
Hundred Twenty-Seven Thousand and No/100 United States Dollars ($122,927,000 USD),
as adjusted pursuant to Section 4.2 below, which Purchase Price will be allocated
and paid in accordance with Schedule 4.5.

     (b) The Purchase Price shall be adjusted pursuant to Section 4.2. Such Purchase
Price adjustment shall be made for each respective Closing; provided, however, that
it is understood and agreed that the foregoing Purchase Price has already been
adjusted with respect to the Subject Assets sold and conveyed at the IMR Closing.

     (c) As part of the settlement with the Antitrust Division of the Department of
Justice pursuant to the HSR Act, Buyer has agreed to sell the Seaway Defender. With
respect to the net proceeds from the sale of the Seaway DEFENDER (and its
Vessel-Related Equipment), it is understood and agreed that Buyer shall retain the
first $7,000,000 USD of such net sales proceeds and the proceeds in excess of
$7,000,000 USD shall be shared equally between Buyer and Sellers; provided, however,
that if the SEAWAY DEFENDER is sold with the Defender ROV, this sharing of proceeds
shall not apply as to that part of the purchase price allocated in good faith by the
purchaser to the Defender ROV and related equipment. If the Defender ROV is sold
separately from the SEAWAY DEFENDER, this Section 4.1(c) shall likewise not apply to
such sale. Buyer will pay any such amount to Sellers within one business day of
Buyer’s receipt of such proceeds.

     6. Section 4.2 of the Asset Purchase Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:

     4.2 The Purchase Price shall be adjusted based upon the condition of the Subject
Assets made a part of the DLB 801 Closing and the SEAWAY KESTREL Closing from the
date this Agreement is executed through each respective Closing Date. The baseline
for the condition of the SEAWAY KESTREL shall be the report of Matthews Daniels, a
copy of which is attached hereto as Exhibit 4.2B, and for the DLB 801 shall be the
report of Poseidon

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Maritime, a copy of which is attached hereto as Exhibit 4.2C. Buyer and Sellers
shall cause these reports to be updated within seven (7) days of the DLB 801 Closing
Date or the SEAWAY KESTREL Closing Date, as the case may be, by Buyer personnel and
if on the respective Closing Date there are any Subject Assets (made a part of such
Closing) that are damaged, missing, or otherwise inoperable (ordinary wear and tear
excepted, and excluding matters covered by Section 4.4), which were not damaged,
missing, or otherwise inoperable (ordinary wear and tear excepted) on the date of
the relevant report (an “Adjustment Item”), and which, with respect to the
Subject Assets made a part of the SEAWAY KESTREL Closing and/or the DLB 801 Closing,
in aggregate exceed Five Hundred Thousand and No/100 United States Dollars ($500,000
USD), then the Purchase Price shall be adjusted downward dollar for dollar based on
the value of such Adjustment Items from the first dollar, provided that at the later
to occur of such Closings credit on a dollar for dollar basis will be given for the
adjustment, if any, to the Purchase Price effected at the first of such Closings. If
there is any dispute between the Parties as to any Adjustment Item, such dispute
shall be submitted to Matthews Daniels for resolution. Matthews Daniels shall make
its decision concerning any such dispute by the Closing Date or as soon thereafter
as possible and such decision shall be binding on the Parties. Notwithstanding
anything contained herein to the contrary, it is understood and agreed that the
Purchase Price has been adjusted for any and all potential Adjustment Items with
respect to Subject Assets sold and conveyed at the IMR Closing.

     7. Attached hereto as Schedule 4.5 is the allocation of the Purchase Price referenced in Section
4.5 of the Asset Purchase Agreement.

     8. Section 5.6 of the Asset Purchase Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:

     5.6 All Vessels (other than the DLB 801, with respect to which Buyer
acknowledges that its class certificate extension will expire on November 30, 2005
and requires a dry dock pursuant to the terms of Section 10.5.) are in Class without
outstanding recommendations from the relevant Classification Society or, if not
classed, have Certificates of Inspection from the U.S. Coast Guard which are in full
force and effect.

     9. Section 7.1 of the Asset Purchase Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:

     7.1 (a) Effective as of immediately prior to the Effective Time of the IMR
Closing, Sellers will terminate the employment of all of their IMR Vessels offshore
employees who are compensated on either a hourly or day rate basis (“IMR
Offshore Employees”). The Parties agree that the term “IMR Offshore Employees”
includes all foreigners on board the IMR Vessels who have been hired through crewing
agencies. Buyer hereby agrees that it will as promptly as practicable after the
date hereof, but in any event at least five (5) days before the

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Effective Time of the IMR Closing, offer employment to all of the IMR Offshore
Employees, to be effective as of the Effective Time of the IMR Closing.

     (b) Effective as of immediately prior to the Effective Time of the SEAWAY
KESTREL Closing, Sellers will terminate the employment of all of their SEAWAY
KESTREL offshore employees who are compensated on a salaried, hourly or day rate
basis (“Kestrel Offshore Employees”). The Parties agree that the term
“Kestrel Offshore Employees” will not include foreigners on board the SEAWAY
KESTREL who have been hired through crewing agencies, and that Sellers will be
responsible for demobilizing all such crew members with the exception of any of such
crew members who are essential for the sailing operation or as required by law.
Buyer hereby agrees that within ten (10) days after execution of this Amendment, it
will offer employment (either directly or through Buyer’s crewing agency) to all of
the SEAWAY KESTREL Offshore Employees, to be effective as of the Effective Time of
the SEAWAY KESTREL Closing and such essential foreign crew as mutually determined by
the Class Certificate for such vessel and by Buyer and Sellers.

     (c) Effective as of immediately prior to the Effective Time of the DLB 801
Closing, Sellers will terminate the employment of all of their DLB 801 offshore
employees who are compensated on either a hourly or day rate basis (“DLB 801
Offshore Employees”). The Parties agree that the term “DLB 801 Offshore
Employees” will not include foreigners on board the DLB 801 who have been hired
through crewing agencies, and that Sellers will be responsible for demobilizing all
such crew members with the exception of any of such crew members who are essential
for the towing operation or as required by law. Buyer hereby agrees that within
twenty-one (21) days after execution of this Amendment, it will offer employment
(either directly or through Buyer’s crewing agency) to all of the DLB 801 Offshore
Employees, to be effective as of the Effective Time of the DLB 801 Closing and such
essential foreign crew as mutually determined by the Class Certificate for such
vessel and by Buyer and Sellers.

     (d) As promptly as practicable after the date hereof, but in any event at least
five (5) days before the IMR Closing, Buyer shall offer employment to a majority of
Sellers’ other employees who are listed on Exhibit G attached hereto (“Other
Employees”). All of the IMR Offshore Employees, SEAWAY KESTREL Offshore
Employees, DLB 801 Offshore Employees and Other Employees who accept employment with
Buyer shall be employed by Buyer on terms as to salary and insurance benefits
substantially equivalent to those presently provided by Sellers.

     (e) Sellers have made and will make no other representation or warranty or any
other statement or communication regarding Buyer’s right, ability, plan or intention
to employ any employee of Sellers or the terms and conditions upon which any such
employee may be employed by Buyer or its

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Affiliates, and will not make any such representations, warranties, statements
or communications during the period beginning on the date hereof and ending on the
respective Closing Date; provided, however, that Sellers and Buyer shall agree with
respect to managing communications with respect to SEAWAY KESTREL and DLB 801 to the
respective crews. Sellers shall pay in full all compensation, bonuses, accrued
severance, and other payments that may result from the termination of employment by
Sellers of any employee(s) of Sellers and any compensation due such employees up to
and including the Closing Date. Sellers shall provide Buyer a list of those
employees terminated by Sellers on or before the Closing Date and shall confirm to
Buyer in writing the communication of said terminations. Buyer or its designee
shall be responsible for and shall assume any and all costs, obligations or
liabilities directly related to the termination by Buyer or Buyer’s designee of any
former employee of Seller who is hired by Buyer or Buyer’s designee on or after the
Closing Date. After the Closing Date, Buyer shall provide to employees of Sellers
hired by Buyer the seniority such persons had as Seller’s employees, for purposes of
determining employee benefits, including health insurance and benefit plans of every
kind, and such newly hired employees shall be entitled to participate in all
employee benefits (including health insurance) immediately upon the Closing Date,
with no waiting period prior to participation, if allowed by applicable laws and
regulations. Neither Buyer nor its designee is, or shall be deemed to be, a
successor employer to Sellers with respect to any employee benefit plans or programs
of Seller or its Affiliates, and no plan or program adopted or maintained by Buyer
or its designee after the Closing Date is or shall be deemed to be a “successor
plan,” as such term is defined in ERISA or the Code, of any such plan or benefit
program of Sellers or their Affiliates.

     10. Section 9.1 of the Asset Purchase Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:

     9.1 Upon the terms and subject to the satisfaction of the conditions set forth in
this Agreement, each Closing, i.e., the IMR Closing, the SEAWAY KESTREL Closing and
the DLB 801 Closing, shall take place at the Houston offices of Fulbright & Jaworski
L.L.P., at 1:00 p.m. (or such other time as Buyer and Sellers may mutually agree),
on the respective Closing Date, or at such other location as Sellers and Buyer may
agree in writing, as follows:

	 	(a)	 	The IMR Closing shall occur on October 31, 2005, but
shall be effective as of 12:01 a.m. (Central time) on October 30, 2005.
	 
	 	(b)	 	The SEAWAY KESTREL Closing will occur once the Captain
of the vessel gives notice that she has reached international waters
and will be effective as of such time; provided that if such location
is reached at a time of day when the Parties are unable to achieve the
Closing on such date, then the Closing will occur on the following
business day, and provided further that it is understood

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and agreed that the Effective Time of the SEAWAY KESTREL Closing
will occur on or before 2200 hours (local time) of March 6, 2006.
Sellers will provide Buyer at least seven calendar days notice of
when the SEAWAY KESTREL Closing is likely to occur.

	 	(c)	 	The DLB 801 Closing will occur once the Superintendent
of the DLB 801 gives notice that the vessel has reached international
waters and will be effective as of such time; provided that if such
location is reached at a time of day when the Parties are unable to
achieve the Closing on such date, then the Closing will occur on the
following business day, and provided further that the DLB 801 Closing
will occur on or before will occur on or before 2200 hours (local time)
of January 31, 2006. Sellers will provide Buyer at least seven
calendar days notice of when the DLB 801 Closing is likely to occur.

     11. Section 9.2(d) of the Asset Purchase Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:

	 	(d)	 	Confirmation of Class free of any outstanding
recommendations, issued within ten (10) days prior to delivery for each
Vessel at the Closing or, if such Vessel is not classed, a copy of its
current U.S. Coast Guard Certificate of Inspection, except for the DLB
801, with respect to which Buyer acknowledges that its class
certificate extension will expire on November 30, 2005 and requires a
dry dock pursuant to the terms of Section 10.5.

     12. Section 9.4 of the Asset Purchase Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:

     9.4 At the Closing, the Parties shall also, subject to the conditions set forth
herein, enter into a subcontract with respect to the SEAWAY DEFENDER (the
“Vessel Agreement”), the form of which is attached hereto as Exhibit J.

     13. Section 9.5 of the Asset Purchase Agreement is hereby deleted in its entirety and the following
substituted in lieu thereof:

     9.5 Upon the Effective Time of each Closing (as determined in accordance with
Section 9.1), (i) title, ownership and possession of such Subject Assets shall pass
to Buyer; (ii) Buyer shall take possession of such Subject Assets wherever they are
located; and (iii) ownership, risk of loss, and all other attributes of ownership
with respect to such Subject Assets, shall pass to Buyer.

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     14. Section 10.5 of the Asset Purchase Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:

     10.5 Buyer shall be responsible for the drydocking of the DLB 801 following the
Closing Date. Sellers shall at the DLB 801 Closing shall pay to Buyer free of bank
charges to the account designated by Buyer and notified to Sellers at least two (2)
business days prior to such Closing Date an amount equal to USD $2,500,000, less
reimbursement of drydocking related costs as agreed between Sellers and Buyer in
writing, for Buyer’s assumption of the responsibility for the drydocking.

     15. Attached hereto as Exhibit 10.6 is the agreement referenced in Section 10.6 of the Asset
Purchase Agreement.

     16. Section 11.1 of the Asset Purchase Agreement is hereby deleted in its entirety and the
following substituted in lieu thereof:

     11.1 Anything herein to the contrary notwithstanding, this Agreement and the
transactions contemplated by this Agreement may be terminated at any time before the
last of the Closings by mutual consent in writing of Buyer and Sellers.

     17. Attached hereto is Exhibit A-1 which is incorporated into and made part of the Agreement.

     18. Exhibit K and Exhibit L are hereby deleted.

     18. Miscellaneous.

     (a) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Any disputes arising as a result of
this Amendment will be brought in the state or federal courts located in Houston, Texas. The
Parties waive trial by jury.

     (b) Except as hereby amended, the Asset Purchase Agreement shall remain in full force and
effect as originally written.

[The rest of this page is intentionally left blank.]

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     IN WITNESS WHEREOF, each of the Parties hereto has caused this Amendment to be executed by its
duly authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	BUYER:

CAL DIVE INTERNATIONAL, INC.

 	 
	 	By:  	/s/ MARTIN R. FERRON
 	 
	 	 	Name:  	Martin R. Ferron 	 
	 	 	Title:  	President 	 
	 
	 	SELLERS:

STOLT OFFSHORE INC.

 	 
	 	By:  	/s/ ARJUN RAMCHANDANI
 	 
	 	 	Name:  	Arjun Ramchandani 	 
	 	 	Title:  	Attorney-in-Fact 	 
	 
	 	S & H DIVING LLC

 	 
	 	By:  	/s/ ARJUN RAMCHANDANI
 	 
	 	 	Name:  	Arjun Ramchandani 	 
	 	 	Title:  	Attorney-in-Fact 	 
	 
	 	SCS SHIPPING LIMITED

 	 
	 	By:  	/s/ ARJUN RAMCHANDANI
 	 
	 	 	Name:  	Arjun Ramchandani 	 
	 	 	Title:  	Attorney-in-Fact 	 
	 

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9exv10w3

 

Exhibit 10.3

WARRANT

TO PURCHASE COMMON UNITS

OF

ENSOURCE ENERGY INCOME FUND LP

     This Warrant to Purchase Common Units
(this “Warrant”) is issued                
          
               , 2005 by
Ensource Energy Income Fund LP, a Delaware limited partnership (the “Partnership”), to Ensource
Energy Partners, LP, a Delaware limited partnership (the “Holder”).

     1. Issuance of Warrant; Term. In consideration of the sum of FIFTY THOUSAND DOLLARS
($50,000), the Partnership hereby grants to Holder, subject to the provisions hereinafter set
forth, the right to purchase One Million (1,000,000) common units representing limited partner
interests of the Partnership (the “Common Units”). The Common Units issuable upon exercise of this
Warrant are hereinafter referred to as the “Units.” This Warrant shall be immediately exercisable
on the date of issuance and shall expire on the tenth anniversary of
the date hereof.

     2. Exercise Price. The exercise price per unit for which all or any of the Units may
be purchased pursuant to the terms of this Warrant shall be equal to $36.40 (the “Exercise Price”),
subject to adjustments as set forth in Section 5 below.

     3. Exercise.

          (a) This Warrant may be exercised by Holder, from time to time, in whole or in part, upon
delivery of written notice of intent to the Partnership at the address of the Partnership set forth
underneath its signature below or such other address as the Partnership shall designate in written
notice to Holder, together with this Warrant and payment (in the manner described in Section 3(b)
below) for the aggregate Exercise Price of the Units so purchased. Upon exercise of this Warrant as
aforesaid, the Partnership shall as promptly as practicable either (i) execute and deliver to
Holder a certificate or certificates for the total number of whole Units for which this Warrant is
being exercised in such names and denominations as are requested by Holder or (ii) deliver the
total number of whole Units for which this Warrant is being exercised by book-entry transfer
through the Depository Trust Company to Holder in such names and denominations as are requested by
Holder. If this Warrant shall be exercised with respect to less than all of the Units, Holder
shall be entitled to receive a new Warrant covering the number of Units in respect of which this
Warrant shall not have been exercised, which new Warrant shall in all other respects be identical
to this Warrant.

          (b) Payment for the Units to be purchased upon exercise of this Warrant may be made at the
election of the Holder by the delivery of a certified or cashier’s check payable to the Partnership
for the aggregate Exercise Price of the Units to be purchased.

     4. Covenant. The Partnership covenants and agrees that all Units which may be issued
upon exercise of this Warrant will, upon issuance and payment therefor, be legally and validly
issued and outstanding, fully paid and nonassessable.

     5. Certain Adjustments.

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          5.1 Capital Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time there shall be a capital reorganization (other than a combination or subdivision of Common
Units otherwise provided for herein), a unit exchange (subject to and duly approved by the Board of
Directors of the general partner of the Partnership) or a merger or consolidation of the
Partnership with or into another partnership, or the sale of the Partnership’s properties and
assets as, or substantially as, an entirety to any other person, then, as a part of such
reorganization, unit exchange, merger, consolidation or sale, lawful provision shall be made so
that Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the
period specified in this Warrant and upon payment of the Exercise Price, the number of Units or
other securities or property of the Partnership or the successor partnership resulting from such
reorganization, unit exchange, merger, consolidation or sale, to which Holder would have been
entitled under the provisions of the agreement in such reorganization, unit exchange, merger,
consolidation or sale if this Warrant had been exercised immediately before that reorganization,
unit exchange, merger, consolidation or sale. In any such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Partnership’s general partner) shall be
made in the application of the provisions of this Warrant with respect to the rights and interests
of Holder after the reorganization, unit exchange, merger, consolidation or sale to the end that
the provisions of this Warrant (including adjustment of the Exercise Price then in effect and the
number of the Units) shall be applicable after that event, as near as reasonably may be, in
relation to any Units or other property deliverable after that event upon exercise of this Warrant.

          5.2 Splits and Subdivisions. If the Partnership at any time or from time to time
fixes a record date for the effectuation of a split or subdivision of the outstanding Units of
Common Units or the determination of the holders of Common Units entitled to receive a dividend or
other distribution payable in additional Units of Common Units or other securities or rights
convertible into, or entitling the holder thereof to receive directly or indirectly, additional
Units of Common Units (hereinafter referred to as the “Common Units Equivalents”) without payment
of any consideration by such holder for the additional Units of Common Units or Common Units
Equivalents, then, as of such record date (or the date of such distribution, split or subdivision
if no record date is fixed), the Exercise Price shall (i) in the case of a split or subdivision, be
appropriately decreased and the number of the Units shall be appropriately increased in proportion
to such increase of outstanding Units and (ii) in the case of a dividend or other distribution, the
holder of the Warrant shall have the right to acquire without additional consideration, upon
exercise of the Warrant, such property or cash as would have been distributed in respect of the
Units of Common Units for which the Warrant was exercisable had such Units of Common Units been
outstanding on the date of such distribution.

          5.3 Combination of Units. If the number of Units of Common Units outstanding at any
time after the date hereof is decreased by a combination or reverse unit split of the outstanding
Units of Common Units, then the Exercise Price shall be appropriately
increased and the number of the Units shall be appropriately decreased in proportion to such
decrease in outstanding Units.

          5.4 Adjustments for Other Distributions. In the event the Partnership shall declare a
distribution payable in securities of other persons, evidences of indebtedness issued by the
Partnership or other persons, assets (excluding cash dividends) or options or rights not referred
to in Section 5.2, upon exercise of this Warrant, Holder shall be entitled to a

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proportionate share
of any such distribution as though Holder was the holder of the number of Units of Common Units of
the Partnership into which this Warrant may be exercised as of the record date fixed for the
determination of the holders of Common Units of the Partnership entitled to receive such
distribution.

          5.5 Certificate as to Adjustments. In the case of each adjustment or readjustment of
the Exercise Price pursuant to this Section 5, the Partnership will promptly compute such
adjustment or readjustment in accordance with the terms hereof and cause a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based to be delivered to Holder. The Partnership will, upon the written request at
any time of Holder, furnish or cause to be furnished to Holder a certificate setting forth:

               (a) Such adjustment and readjustments;

               (b) The Exercise Price at the time in effect; and

               (c) The number of Units and the amount, if any, of other property at the time receivable upon
the exercise of the Warrant.

          5.6 Notices of Record Date, etc. In the event of:

          (a) Any taking by the Partnership of a record of the holders of any class of securities of the
Partnership for the purpose of determining the holders thereof who are entitled to receive any
dividends or other distribution, or any right to subscribe for, purchase or otherwise acquire any
Units of any class or any other securities or property, or to receive any other right; or

          (b) Any capital reorganization of the Partnership, any reclassification or recapitalization of
the Partnership or any transfer of all or substantially all of the assets of the Partnership to any
other person or any consolidation, unit exchange or merger involving the Partnership; or

          (c) Any voluntary or involuntary dissolution, liquidation or winding up of the Partnership;

the Partnership will mail to Holder at least 20 days prior to the earliest of the foregoing dates,
a notice specifying:

                         (i) The date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend, distribution or right;
or

                         (ii) The date on which any such reorganization, reclassification, transfer,
consolidation, unit exchange, merger, dissolution, liquidation or winding up is expected to
become effective and the record date for determining unit holders entitled to vote thereon.

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     6. Reservation of Common Units. The Partnership shall at all times reserve and keep
available out of its authorized but unissued Units of Common Units, solely for the purpose of
effecting the exercise of this Warrant, such number of its Units of Common Units as shall from time
to time be sufficient to effect the exercise of this Warrant, and if at any time the number of
authorized but unissued Units of Common Units shall not be sufficient to effect the exercise of the
entire Warrant, in addition to such other remedies as shall be available to the holder of this
Warrant, the Partnership will use commercially reasonable efforts to take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but unissued Units of
Common Units to such number of Units as shall be sufficient for such purpose.

     7. Split-Up, Combination and Exchange. Subject to and limited by the provisions of
Section 4(a) hereof, this Warrant may be split up, combined or exchanged for another Warrant or
Warrants containing the same terms and entitling the Holder to purchase a like aggregate number of
Units. If the Holder desires to split up, combine or exchange this Warrant, the Holder shall make
such request in writing delivered to the Partnership and shall surrender to the Partnership this
Warrant and any other Warrants to be so split up, combined or exchanged. Upon any such surrender
for a split-up, combination or exchange, the Partnership shall execute and deliver to the Holder a
Warrant or Warrants, as the case may be, as so requested. The Partnership shall not be required to
effect any split-up, combination or exchange which will result in the issuance of a Warrant that
would entitle the Holder to purchase upon exercise a fraction of a unit of Common Units or a
fractional Warrant. The Partnership may require such Holder to pay a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any split-up, combination or
exchange of Warrants.

     8. Transfer Restrictions. This Warrant, and all rights hereunder, are not
transferable, in whole or in part, to any Person (as defined below); provided, however, that this
Warrant may be transferred, in whole or in part, to an “affiliate” (as hereinafter defined) of the
Holder. In no event may this Warrant or the Units be transferred to a transferee that is not
eligible to receive a transfer of Units of Common Units. As used herein, the term “affiliate”
means any individual, partnership, joint venture, corporation, limited liability company,
association, trust, unincorporated organization, government or agency or subdivision thereof or any
other entity (each, a “Person”), directly or indirectly controlling, controlled by or under common
control with the Holder. “Control” means possessing, directly or indirectly, the power to direct
or cause the direction of the management and policies of such Person or the Holder, as applicable,
whether through the ownership of voting securities, by contract or otherwise.

     9. Successors and Assigns. All of the covenants and provisions of this Warrant shall
bind and inure to the benefit of the Partnership’s successors and assigns, and the heirs, legatees,
devisees, executors, administrators, personal and legal representatives, and successors and
permitted assigns of Holder.

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     10. Governing Law; Submission to Jurisdiction and Venue. This Warrant shall be
governed by and construed in accordance with the laws, and not the laws of conflicts, of the State
of Delaware. The Holder hereby consents and agrees to submit (i) to the jurisdiction of the
District Court of the State of Texas located in Harris County or of the United States District
Court for the Southern District of Texas for any action or proceeding brought by the Partnership
arising under this Warrant and (ii) to the venue of such action or proceeding in such courts.

[SIGNATURE PAGE FOLLOWS]

	 	 	 	 	 	 	 
	 	 	ENSOURCE ENERGY INCOME FUND LP
	 
	 	 	 	 	 	 
	 	 	By: ENSOURCE ENERGY PARTNERS, LP,
	 	 	its general partner
	 
	 	 	 	 	 	 
	 	 	By: ENSOURCE ENERGY COMPANY LLC,
	 	 	its general partner
	 
	 	 	 	 	 	 
	 

	 	By: 
	 	 	 	 
	 

	 	 	 	 	 
	 	 	Name: Scott. W. Smith
	 	 	Title: President
	 
	 	 	 	 	 	 
	 	 	Address:
	 	 	7500 San Felipe, Suite 440
	 	 	Houston, Texas 77063

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