Document:

Exhibit 10.5

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of May 14, 2013, by and between Emerge Energy Services LP, a Delaware limited partnership (the “Partnership”), AEC Resources LLC, a Delaware limited liability company (“AEC”), Ted W. Beneski, an individual (“Beneski”), Superior Silica Resources LLC, a Delaware limited liability company (“SSR” and, together with AEC and Beneski, the “Insight Holders”), Kayne Anderson Energy Development Company, a Maryland corporation (“KED”),  and LBC Sub V, LLC, a Delaware limited liability company (“LBC”).

 

WHEREAS, in connection with the Partnership’s initial public offering and the transactions related thereto, the Partnership has agreed to provide the registration and other rights set forth in this Agreement for the benefit of the Insight Holders, KED and LBC.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party hereto, the parties hereby agree as follows:

 

ARTICLE I.

 

DEFINITIONS

 

Section 1.01                             Definitions.  Capitalized terms used herein without definition shall have the meanings given to them in the First Amended and Restated Agreement of Limited Partnership of the Partnership dated May 14, 2013, as amended from time to time.  The terms set forth below are used herein as so defined:

 

“Adverse Effect” has the meaning given to such term in Section 2.03(b).

 

“AEC” has the meaning given to such term in the introductory paragraph.

 

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

 

“Agreement” has the meaning given to such term in the introductory paragraph.

 

“Beneski” has the meaning given to such term in the introductory paragraph.

 

“Commission” has the meaning given to such term in Section 1.02.

 

“Common Units” means common units representing limited partner interests in the Partnership.

 

“Effectiveness Period” has the meaning given to such term in Section 2.01.

 

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“General Partner” means Emerge Energy Services GP LLC, the general partner of the Partnership, or any successor general partner of the Partnership.

 

“Holder” means the record holder of any Registrable Securities.

 

“Insight Holders” has the meaning given to such term in the introductory paragraph.

 

“KED” has the meaning given to such term in the introductory paragraph.

 

“LBC” has the meaning given to such term in the introductory paragraph.

 

“Losses” has the meaning given to such term in Section 2.08(a) of this Agreement.

 

“Managing Underwriter” means, with respect to any Underwritten Offering, the book-running lead manager of such Underwritten Offering.

 

“Partnership” has the meaning given to such term in the introductory paragraph.

 

“Person” means any individual, corporation, partnership, voluntary association, partnership, joint venture, trust, limited liability partnership, unincorporated organization, government or any agency, instrumentality or political subdivision thereof, or any other form of entity.

 

“Piggyback Notice” has the meaning given to such term in Section 2.03(a).

 

“Piggyback Registration” has the meaning given to such term in Section 2.03(a).

 

“Primary Offering” has the meaning given to such term in Section 2.02(b).

 

“Primary Units” has the meaning given to such term in Section 2.02(b).

 

“Redemptee” has the meaning given to such term in Section 2.02(b).

 

“Redemption” has the meaning given to such term in Section 2.02(b).

 

“Redemption Demand Notice” has the meaning given to such term in Section 2.02(b).

 

“Registrable Securities” means the aggregate number of Common Units issued (or issuable) to the Insight Holders, KED and LBC in connection with the completion of the Partnership’s initial public offering, which Registrable Securities are subject to the rights provided herein until such rights terminate pursuant to the provisions hereof.

 

“Registration Expenses” has the meaning given to such term in Section 2.07(b).

 

“Secondary Offering” has the meaning given to such term in Section 2.02(a).

 

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“Secondary Offering Demand Notice” has the meaning given to such term in Section 2.02(a).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Selling Agent” has the meaning given to such term in Section 2.02(b).

 

“Selling Expenses” has the meaning given to such term in Section 2.07(b).

 

“Selling Holder” means a Holder who is selling Registrable Securities pursuant to a registration statement.

 

“Shelf Registration Statement” has the meaning given to such term in Section 2.01.

 

“SSR” has the meaning given to such term in the introductory paragraph.

 

“Underwritten Offering” means an offering in which Common Units are sold to an underwriter on a firm commitment basis for reoffering to the public or an offering that is a “bought deal” with one or more investment banks.

 

Section 1.02                             Registrable Securities.  Any Registrable Security will cease to be a Registrable Security (a) at the time a registration statement covering such Registrable Security has been declared effective by the Securities and Exchange Commission (the “Commission”), or otherwise has become effective, and such Registrable Security has been sold or disposed of pursuant to such registration statement; (b) at the time such Registrable Security has been disposed of pursuant to Rule 144 (or any similar provision then in effect) under the Securities Act; (c) with respect to Registrable Securities held by the Insight Holders or their transferees in accordance with Section 2.10, 10 years after Emerge Energy Services Holdings LLC, a Delaware limited liability company, ceases to be an Affiliate of the General Partner; (d) if such Registrable Security is held by the Partnership or one of its subsidiaries; (e) at the time such Registrable Security has been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of such securities; or (f) if such Registrable Security has been sold in a private transaction in which the transferor’s rights under this Agreement are assigned to the transferee and such transferee is not an Affiliate of the General Partner, two years following the transfer of such Registrable Security to such transferee.

 

ARTICLE II.

 

REGISTRATION RIGHTS

 

Section 2.01                             Shelf Registration.  No later than July 1, 2014, the Partnership shall prepare and file with the Commission a registration statement under the Securities Act providing for the resale of the Registrable Securities as permitted by Rule 415 of the Securities Act with respect to all of the Holders’ or their permitted transferee’s Registrable Securities (the “Shelf Registration Statement”).  The Partnership shall use its commercially reasonable efforts to cause the Shelf Registration Statement to be declared effective by the Commission as soon as reasonably practicable after the initial filing of the Shelf Registration Statement.  The Shelf Registration Statement shall provide for the resale pursuant to any method or combination of

 

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methods legally available to, and requested by, the Holders of any and all Registrable Securities covered by such Shelf Registration Statement.  The Partnership shall use its commercially reasonable efforts to cause the Shelf Registration Statement filed pursuant to this Section 2.01 to be continuously effective, supplemented and amended to the extent necessary to ensure that it is available for the resale of all Registrable Securities by the Holders until all Registrable Securities covered by such Shelf Registration Statement have ceased to be Registrable Securities (the “Effectiveness Period”).  The Shelf Registration Statement when effective (and the documents incorporated therein by reference) shall comply as to form with all applicable requirements of the Securities Act and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  As soon as practicable following the date that the Shelf Registration Statement becomes effective, but in any event within two (2) Business Days of such date, the Partnership shall provide the Holders with written notice of the effectiveness of the Shelf Registration Statement.  Once a Holder’s Registrable Securities become eligible for resale without restriction and without the need for current public information pursuant to any section of Rule 144 (or any similar provision then in effect) under the Securities Act, assuming the Holder of such Registrable Securities is not an affiliate (as defined in Rule 144(a)(1) under the Securities Act) of the Partnership, such Holder may, at any time, request that the Partnership take such steps as are reasonably necessary to deregister such Holder’s Common Units and in connection therewith, such Holder’s rights under this Agreement shall all be terminated, including specifically but not limited to the right to demand an Underwritten Offering and the right to participate in a Piggyback Registration and further such Holder shall no longer be subject to any obligations under this Agreement, including specifically but not limited to the obligation to enter into letter agreements with underwriters pursuant to Section 2.12.

 

Section 2.02                             Underwritten and Redemptive Offerings.

 

(a)                                 Request for a Secondary Offering.  If one or more Insight Holders collectively or KED or LBC owns at least 5.0% of the outstanding Common Units of the Partnership and elect to dispose of Registrable Securities having a market price, based on the last sales price of the Common Units as of the trading date prior to the date of demand, of at least $25.0 million (subject to adjustment pursuant to Section 3.04) the Partnership shall, upon the written request (a “Secondary Offering Demand Notice”) by such Holder or Holders, retain underwriters in order to permit such Holders to effect such sale through an Underwritten Offering (a “Secondary Offering”).  The obligation of the Partnership to retain underwriters shall include the preparation and entry into an underwriting agreement, in customary form, with the Managing Underwriter or underwriters, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.08 and taking all reasonable actions as requested by the Managing Underwriter or underwriters to expedite or facilitate the disposition of such Registrable Securities, including causing its management to participate in a “roadshow” or similar marketing efforts.

 

(b)                                 Request for Equity-Financed Redemption.  In lieu of a Secondary Offering pursuant to Section 2.02(a), the Partnership, upon the written request (the “Redemption Demand Notice”) by one or more Insight Holders collectively or KED or LBC (the “Redemptees”), shall use commercially reasonable efforts to undertake an equity financing consisting of (i) a public offering (including an Underwritten Offering), (ii) a private placement or (iii) a combination of

 

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each (a “Primary Offering”), in each case, of an equal number of Common Units (the “Primary Units”).  The net proceeds (after Registration Expenses but before Selling Expenses) of such Primary Offering will be used to redeem from each Redemptee the number of Registrable Securities specified in each Redemptee’s Redemption Demand Notice (the “Redemption”).  The obligation of the Partnership to undertake the Primary Offering shall include the preparation and filing of an offering document, such as an offering memorandum or registration statement, as applicable, and as well as the preparation and execution of a purchase agreement or underwriting agreement in customary form, which shall include, among other provisions, indemnities to the effect and to the extent provided in Section 2.08 and taking all reasonable actions as are requested by the Managing Underwriter or underwriters or placement agent (as applicable, the “Selling Agent”), or, if no Selling Agent, the Redemptees, to expedite or facilitate the disposition of Primary Units, including causing its management to participate in a “roadshow” or similar marketing efforts.

 

(c)                                  Limitation on Primary Offerings.  In no event shall the Partnership be required hereunder to participate in more than an aggregate of two Primary Offerings or Secondary Offerings in any 12-month period.

 

(d)                                 General Procedures.  In connection with any Primary Offering or Secondary Offering under this Agreement, the Partnership shall be entitled to select the Selling Agent, if any.  In connection with any Primary Offering under this Agreement, the Partnership shall be obligated to enter into an underwriting agreement or purchase agreement, as applicable, that contains such representations, covenants, indemnities and other rights and obligations as are customary.

 

(e)                                  Withdrawal.  If any (i) Selling Holder disapproves of the terms of a Secondary Offering or (ii) Redemptee disapproves of the terms of a Primary Offering, such Person may elect to withdraw its request that the Partnership undertake such offering by written notice to the Partnership; provided, however, that such withdrawal must be made at a time prior to the time of pricing of such offering.  No such withdrawal shall affect the Partnership’s obligation to pay Registration Expenses, if applicable.

 

Section 2.03                             Piggyback Rights.

 

(a)                                 Participation.  So long as a Holder has Registrable Securities, if the Partnership proposes to file, whether for its own account or for the account of the Holders:  (1) a shelf registration statement (other than the Shelf Registration Statement contemplated by Section 2.01) or (2) a registration statement other than a shelf registration statement (other than a registration statement on Form S-4 or S-8 or any successor forms thereto) including a registration statement for a Secondary Offering or a Primary Offering as contemplated by Section 2.02(a) or Section 2.02(b), respectively, (each of (1) and (2), a “Piggyback Registration”), then the Partnership shall give prompt written notice (a “Piggyback Notice”) (including notice by electronic mail) to each Holder holding at least $5.0 million of the then-outstanding Registrable Securities (based on the last sales price of the Common Units as of the trading date prior to the time of such registration) regarding such proposed registration, and such notice shall offer such Holders the opportunity to include in such Piggyback Registration:  (x) such number of Registrable Securities as each such Holder may request, or (y) a number of Primary Units in order to effect a Redemption of

 

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Registrable Securities as such Holder may request.  Each Piggyback Notice shall specify, at a minimum, the number and type of securities proposed to be registered, the proposed date of filing of such Piggyback Registration with the Commission, the proposed means of distribution, the proposed Managing Underwriter or underwriters (if any and if known) and a good faith estimate by the Partnership of the proposed minimum offering price of such securities.  Each such Holder shall make such request in writing to the Partnership (including by electronic mail) within five (5) business days (or one (1) business day in connection with any overnight or bought Underwritten Offering) after the receipt of any such Piggyback Notice, which request shall specify the number of Registrable Securities intended to be disposed of by such Holder or the number of Registrable Securities such Holder intends to have redeemed by the Partnership, and, subject to the terms and conditions of this Agreement, the Partnership shall use its reasonable best efforts to include in such Piggyback Registration all Registrable Securities held by such Holders and/or a number Primary Units required to effect a Redemption of the Registrable Securities requested by such Holders; provided, that if, at any time after giving written notice of its intention to register equity securities and prior to the effective date of the registration statement filed in connection with such registration, the Partnership shall determine for any reason not to register such equity securities, the Partnership may, at its election, give written notice of such determination within five business days thereof to each Holder of Registrable Securities and, thereupon, shall not be obligated to register any Registrable Securities or Primary Units in connection with such registration (but shall nevertheless pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of the Holders of Registrable Securities that a registration be effected under Section 2.01 or Section 2.02.

 

(b)                                 Priority.  If in connection with an Underwritten Offering pursuant to Section 2.02 or this Section 2.03, the Managing Underwriter shall advise the Partnership that, in its reasonable opinion, the number of securities requested and otherwise proposed to be included in such Underwritten Offering exceeds the number which can be sold in such offering without an adverse effect on the price, timing or distribution of the securities to be offered (an “Adverse Effect”), then in the case of any such registration pursuant to Section 2.02 or this Section 2.03, the Partnership shall include in such registration the number of Registrable Securities that such Managing Underwriter advises the Partnership can be sold without having such Adverse Effect, with such number to be allocated

 

(A)                               first, the securities the Partnership proposes to sell (other than to effect a Redemption pursuant to Section 2.03(b)(B) or Section 2.03(b)(C)),

 

(B)                               second, the Registrable Securities requested to be included in such registration by KED and the number of Primary Units required to effect a Redemption of KED’s Common Units, if requested by KED,

 

(C)                               third, the Registrable Securities requested to be included in such registration by the Insight Holders and LBC, pro rata, and the number of Primary Units required to effect a Redemption of the Insight Holders’ Common Units or LBC’s Common Units, if requested by the Insight Holders or LBC respectively, pro rata among the Redemptees, and

 

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(D)                               fourth, pro rata among any other holder of securities of the Partnership having rights of registration.

 

Section 2.04                             Delay Rights.  If the General Partner determines that the Partnership’s compliance with its obligations under this Article II would be materially detrimental to the Partnership and its partners because such registration would (a) materially interfere with a significant acquisition, reorganization, financing or other similar transaction involving the Partnership, (b) require premature disclosure of material information that the Partnership has a bona fide business purpose for preserving as confidential or (c) render the Partnership unable to comply with applicable securities laws, then the Partnership shall have the right to postpone compliance with its obligations under this Article II until such time that, in the General Partner’s determination, compliance would not be materially detrimental to the Partnership and its partners.

 

Section 2.05                             Sale Procedures.  In connection with its obligations under this Article II, the Partnership will, as expeditiously as possible:

 

(a)                                 prepare and file with the Commission such amendments and supplements to the Shelf Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Shelf Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities or Primary Units covered by such Shelf Registration Statement, as applicable;

 

(b)                                 if a prospectus supplement, offering memorandum or similar marketing document will be used in connection with the marketing of a Primary Offering or Secondary Offering and the Selling Agent notifies the Partnership in writing that, in the sole judgment of such Selling Agent, inclusion of detailed information in such prospectus supplement is of material importance to the success of such offering, the Partnership shall use its commercially reasonable efforts to include such information in such prospectus supplement, offering memorandum or similar marketing document;

 

(c)                                  furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing the Shelf Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission) or use of a similar marketing instrument, and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing the Shelf Registration Statement or such other registration statement or supplement or amendment thereto or use of a similar marketing instrument, and (ii) such number of copies of the Shelf Registration Statement or such other registration statement and the prospectus included therein and any supplements and amendments thereto or similar marketing instrument as such Persons may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by the Shelf Registration Statement or other registration statement;

 

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(d)                                 if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by the Shelf Registration Statement or the Primary Units covered by any other registration statement contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Primary Offering or Secondary Offering, the Selling Agent, shall reasonably request; provided, however, that the Partnership will not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action that would subject it to general service of process in any jurisdiction where it is not then so subject;

 

(e)                                  promptly notify each Selling Holder and each Selling Agent, at any time when a prospectus is required to be delivered under the Securities Act, of (i) the filing of the Shelf Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to the such Shelf Registration Statement or any other registration statement contemplated by this Agreement or any post-effective amendment thereto, when the same has become effective; and (ii) any written comments from the Commission with respect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to the Shelf Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement thereto;

 

(f)                                   immediately notify each Selling Holder and/or the Selling Agent, at any time when a prospectus is required to be delivered under the Securities Act, of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in such Shelf Registration Statement or any other registration statement contemplated by this Agreement or any post-effective amendment thereto, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus contained therein, in the light of the circumstances under which a statement is made); (ii) the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by the Partnership of any notification with respect to the suspension of the qualification of any Registrable Securities or Primary Units, as applicable, for sale under the applicable securities or blue sky laws of any jurisdiction.  Following the provision of such notice, the Partnership agrees to, as promptly as practicable, amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other reasonable action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;

 

(g)                                  upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to any offering of Registrable Securities;

 

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(h)                                 in the case of an Underwritten Offering, Primary Offering or Secondary Offering, furnish upon request, (i) an opinion of counsel for the Partnership dated the date of the closing under the underwriting agreement or purchase agreement, as applicable and (ii) a “cold comfort” letter, dated the pricing date of such offering (to the extent available) and a letter of like kind dated the date of the closing under the underwriting agreement or purchase agreement, as applicable, in each case, signed by the independent public accountants who have certified the Partnership’s financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the “cold comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus and any prospectus supplement included therein) as have been customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to the underwriters or placement agents in public offerings or private placements, as applicable, of securities by the Partnership and such other matters as the Selling Agent or Selling Holders, as applicable, may reasonably request;

 

(i)                                     otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

 

(j)                                    make available to the appropriate representatives of the Selling Agent or Selling Holders, as applicable, access to such information and Partnership personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act;

 

(k)                                 cause all Registrable Securities or Primary Units, as applicable, registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by the Partnership are then listed;

 

(l)                                     use its commercially reasonable efforts to cause the Registrable Securities or Primary Units, as applicable, to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Partnership to enable the Selling Holders to consummate the disposition of the Registrable Securities or to enable the Partnership to consummate the disposition of the Primary Units;

 

(m)                             provide a transfer agent and registrar for all Registrable Securities or Primary Units, as applicable, covered by the Shelf Registration Statement or any other registration statement contemplated by this Agreement not later than the effective date of such registration statement; and

 

(n)                                 enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the Selling Agent, if any, in order to expedite or facilitate the disposition of the Registrable Securities or the Primary Units, as applicable.

 

Each Selling Holder, upon receipt of notice from the Partnership of the happening of any event of the kind described in subsection (f) of this Section 2.05, shall forthwith discontinue disposition of the Registrable Securities by means of a prospectus or prospectus supplement until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus

 

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contemplated by subsection (f) of this Section 2.05 or until it is advised in writing by the Partnership that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings incorporated by reference in the prospectus.

 

Section 2.06                             Cooperation by Holders.  The Partnership shall have no obligation to include in a registration statement pursuant to Section 2.01, a Secondary Offering pursuant to Section 2.02(a) or in a Piggyback Registration pursuant to Section 2.03(a), Registrable Securities of a Selling Holder who has failed to timely furnish such information that, in the opinion of counsel to the Partnership, is reasonably required in order for a registration statement or prospectus supplement, as applicable, to comply with the Securities Act.

 

Section 2.07                             Expenses.

 

(a)                                 Expenses.  The Partnership will pay all reasonable Registration Expenses of the Shelf Registration Statement, Underwritten Offering, Primary Offering or Secondary Offering, regardless of whether any sale of Registrable Securities or Primary Units is consummated.  Each Selling Holder shall pay all Selling Expenses in connection with any sale of its Registrable Securities hereunder.  In addition, except as otherwise provided in Section 2.08, the Partnership shall not be responsible for legal fees incurred by Holders in connection with the exercise of such Holders’ rights hereunder.

 

(b)                                 Certain Definitions.  “Registration Expenses” means all expenses incident to the Partnership’s performance under or compliance with this Agreement to effect the registration of Registrable Securities or Primary Units on the Shelf Registration Statement or any other registration statement contemplated by this Agreement pursuant to Section 2.01 or Section 2.03 and/or in connection with a Primary Offering or Secondary Offering pursuant to Section 2.02, and the disposition of such Registrable Securities or Primary Units, as applicable, including, without limitation, all registration, filing, securities exchange listing and securities exchange fees, all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws, fees of the Financial Industry Regulatory Authority, fees of transfer agents and registrars, all word processing, duplicating and printing expenses, any transfer taxes and the fees and disbursements of counsel and independent public accountants for the Partnership, including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance.  “Selling Expenses” means all underwriting discounts and selling commissions or placement agency fees applicable to the sale of Registrable Securities, or, with respect to a Redemption pursuant Section 2.02(b), a reduction in the price at which Registrable Securities are redeemed by the Partnership equal to the underwriting, fees, discounts, commissions or placement agency fees applicable to the sale of Primary Units.

 

Section 2.08                             Indemnification.

 

(a)                                 By the Partnership.

 

(i) In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Partnership will indemnify and hold harmless each Selling Holder participating therein, its directors, officers, employees and agents, and each Person, if any, who controls such Selling Holder within the meaning of the

 

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Securities Act and the Exchange Act, and its directors, officers, employees or agents, against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or several, to which such Selling Holder, director, officer, employee, agent or controlling Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus, in light of the circumstances under which such statement is made) contained in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, prospectus supplement, free writing prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, and will reimburse each such Selling Holder, its directors, officers, employee and agents, and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings as such expenses are incurred; provided, however, that the Partnership will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder, its directors, officers, employees and agents or such controlling Person in writing specifically for use in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, or prospectus or any amendment or supplement thereto, as applicable.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder or any such directors, officers, employees agents or controlling Person, and shall survive the transfer of such securities by such Selling Holder.

 

(ii)                                  In the event of a Primary Offering pursuant to Section 2.02(a) or a Primary Offering effected through a Piggyback Registration pursuant to Section 2.03(a), the Partnership will indemnify and hold harmless each Redemptee, its directors, officers, employees and agents, and each Person, if any, who controls such Redemptee within the meaning of the Securities Act and the Exchange Act, and its directors, officers, employees or agents, against any Losses, joint or several, to which such Selling Holder, director, officer, employee, agent or controlling Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus, in the light of the circumstances under which such statement is made) contained in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus or prospectus supplement, free writing prospectus or final prospectus or prospectus supplement contained therein, any offering memorandum, or similar marketing document, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a

 

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prospectus, in the light of the circumstances under which they were made) not misleading, and will reimburse each such Redemptee, its directors, officers, employee and agents, and each such controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings as such expenses are incurred; provided, however, that the Partnership will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Redemptee, its directors, officers, employees and agents or such controlling Person in writing specifically for use in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, prospectus, offering memorandum, or similar marketing document, or any amendment or supplement thereto, as applicable.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Redemptee or any such directors, officers, employees agents or controlling Person, and shall survive the sale of Primary Units by the Partnership.

 

(b)                                 By Each Holder.

 

(i) Each Selling Holder agrees severally and not jointly to indemnify and hold harmless the Partnership, its directors, officers, employees and agents and each Person, if any, who controls the Partnership within the meaning of the Securities Act or of the Exchange Act, and its directors, officers, employees and agents, to the same extent as the foregoing indemnity from the Partnership to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in the Shelf Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, prospectus supplement, free writing prospectus or final prospectus contained therein, or any amendment or supplement thereto; provided, however, that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification.

 

(ii)                                  Each Redemptee agrees severally and not jointly to indemnify and hold harmless the Partnership, its directors, officers, employees and agents and each Person, if any, who controls the Partnership within the meaning of the Securities Act or of the Exchange Act, and its directors, officers, employees and agents, to the same extent as the foregoing indemnity from the Partnership to the Redemptee, but only with respect to information regarding such Redemptee furnished in writing by or on behalf of such Redemptee expressly for inclusion in any registration statement contemplated by this Agreement, any preliminary prospectus, prospectus supplement, free writing prospectus or final prospectus contained therein, offering memorandum, or similar marketing document relating to the Primary Units, or any amendment or supplement thereto; provided, however, that the liability of each Redemptee shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses) received by such Redemptee from its pro rata share of the Redemption.

 

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(c)                                  Notice.  Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission to so notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified party other than under this Section 2.08.  In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof.  The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.08 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to assume the defense or employ counsel reasonably acceptable to the indemnified party or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred.  Notwithstanding any other provision of this Agreement, no indemnified party shall settle any action brought against it with respect to which such indemnified party is entitled to indemnification hereunder without the consent of the indemnifying party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, the indemnifying party and further, no indemnifying party shall settle any action brought against any indemnified party with respect to which such indemnified party is entitled to indemnification hereunder without the consent of such indemnified party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, the indemnified party.

 

(d)                                 Contribution.  If the indemnification provided for in this Section 2.08 is held by a court or government agency of competent jurisdiction to be unavailable to any indemnified party or is insufficient to hold them harmless in respect of any Losses, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of such indemnified party on the other in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations; provided, however, that in no event shall the Selling Holder or Redemptee, as applicable, be required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of Selling Expenses) received by such Selling Holder or Redemptee from the sale of Registrable Securities or Redemption following a Primary Offering giving rise to such indemnification.  The relative fault of the indemnifying party on the one hand and the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged

 

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omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to herein.  The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss that is the subject of this paragraph.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of fraudulent misrepresentation.

 

(e)                                  Other Indemnification.  The provisions of this Section 2.08 shall be in addition to any other rights to indemnification or contribution that an indemnified party may have pursuant to law, equity, contract or otherwise.

 

Section 2.09                             Rule 144 Reporting.  With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, the Partnership agrees to use its commercially reasonable efforts to:

 

(a)                                 make and keep public information regarding the Partnership available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times from and after the date hereof;

 

(b)                                 file with the Commission in a timely manner all reports and other documents required of the Partnership under the Exchange Act at all times from and after the date hereof; and

 

(c)                                  so long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request a copy of the most recent annual or quarterly report of the Partnership, and such other reports and documents so filed as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.

 

Section 2.10                             Transfer or Assignment of Registration Rights.  The rights to cause the Partnership to register Registrable Securities or to undertake a Primary Offering granted to a Holder by the Partnership under this Article II may be transferred or assigned by such Holder to one or more transferee(s) or assignee(s) of such Registrable Securities; provided, however, that (a) unless such transferee or assignee is an Affiliate of the Holder, each such transferee or assignee holds Registrable Securities representing at least $5.0 million of Registrable Securities (based on the last sales price of the Common Units as of the trading date prior to the time of such assignment), subject to adjustment pursuant to Section 3.04, (b) the Partnership is given written notice prior to any said transfer or assignment, stating the name and address of each such transferee and identifying the Registrable Securities with respect to which such registration rights are being transferred or assigned, and (c) each such transferee agrees to be bound by this Agreement.

 

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Section 2.11                             Limitation on Subsequent Registration Rights.  From and after the date hereof, the Partnership shall not enter into any agreement with any current or future holder of any securities of the Partnership that would allow such current or future holder to require the Partnership to include securities in any registration statement filed by the Partnership on a basis that would reduce or limit the rights of the Holders of Registrable Securities hereunder or otherwise on terms more favorable in the aggregate to such other holders than this Agreement.

 

Section 2.12                             Restrictions on Public Sale by Holders of Registrable Securities.  Each Holder who, along with its Affiliates, holds at least five percent of the then-outstanding Common Units agrees to enter into a customary letter agreement with underwriters providing such Holder will not effect any public sale or distribution of the Registrable Securities during the 90 calendar day period beginning on the date of a prospectus or prospectus supplement filed with the Commission with respect to the pricing of an Underwritten Offering, provided that (i) the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the Partnership or the officers, directors or any other unitholder of the Partnership on whom a restriction is imposed; and (ii) the restrictions set forth in this Section 2.12 shall not apply to any Registrable Securities that are otherwise sold in connection with an Underwritten Offering pursuant to this Agreement.

 

ARTICLE III.

 

MISCELLANEOUS

 

Section 3.01                             Communications.  All notices and other communications provided for or permitted hereunder shall be made in writing by electronic mail, courier service or personal delivery:

 

(a)                                 if to any of the Insight Holders:

 

1400 Civic Place, Suite 250
 Southlake, Texas 76092 
 Attn:  Chief Financial Officer
 Facsimile:  (817) 488-7739

Email:  kslaton@insightequity.com

 

(b)                                 if to KED:

 

Kayne Anderson Energy Development Company
 717 Texas Avenue

Suite 3100

Houston, TX 77002

Attn:  Ron Logan
 Facsimile: (713) 655-7359

Email:  rlogan@kaynecapital.com

 

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with a copy (which shall not constitute notice) to:

 

Baker Botts L.L.P.

98 San Jacinto Blvd., Suite 1500

Austin, TX  78701

Attn:  Laura L. Tyson

Facsimile:  (512) 322-8377

Email:  laura.tyson@bakerbotts.com

 

(c)                                  if to LBC:

 

LBC Sub V, LLC

2929 Arch Street, Suite 1550

Philadelphia, PA 19104

Attn:  Nathaniel R. Cohen

Facsimile:  (215) 609-3343

Email: ncohen@lbccredit.com

 

with a copy (which shall not constitute notice) to:

 

Proskauer Rose LLP

Eleven Times Square

New York, NY 10036-8299

Attn: Bruce L. Lieb

Facsimile: (212) 969-2900

Email: blieb@proskauer.com

 

(d)                                 if to a transferee of any Holder, to such Holder at the address provided pursuant to Section 2.10; and

 

(e)                                  if to the Partnership:

 

Emerge Energy Services LP
 1400 Civic Place, Suite 250
 Southlake, Texas 76092
 Attn:  Chief Financial Officer
 Facsimile:  (817) 488-7739

 

All such notices and communications shall be deemed to have been received at the time delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or sent via electronic mail; and when actually received, if sent by courier service or any other means.

 

Section 3.02                             Successor and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein.

 

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Section 3.03                             Assignment of Rights.  All or any portion of the rights and obligations of the Holders under this Agreement may be transferred or assigned by the Holders in accordance with Section 2.10 hereof.

 

Section 3.04                             Recapitalization, Exchanges, Etc. Affecting the Registrable Securities.  The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all securities of the Partnership or any successor or assign of the Partnership (whether by merger, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, splits, recapitalizations, pro rata distributions and the like occurring after the date of this Agreement.

 

Section 3.05                             Specific Performance.  Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each party, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief.  The existence of this right will not preclude any such party from pursuing any other rights and remedies at law or in equity that such party may have.

 

Section 3.06                             Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.

 

Section 3.07                             Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

Section 3.08                             Governing Law.  The laws of the State of New York shall govern this Agreement.

 

Section 3.09                             Severability of Provisions.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

 

Section 3.10                             Scope of Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by the Partnership set forth herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

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Section 3.11                             Amendment.  This Agreement may be amended only by means of a written amendment signed by the Partnership and the Holders of a majority of the then outstanding Registrable Securities; provided, however, that no such amendment shall materially and adversely affect the rights of any Holder hereunder without the consent of such Holder.

 

Section 3.12                             No Presumption.  If any claim is made by a party relating to any conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.

 

Section 3.13                             Aggregation of Registrable Securities.  All Registrable Securities held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

 

Section 3.14                             Obligations Limited to Parties to Agreement.  Each of the parties hereto covenants, agrees and acknowledges that no Person other than the Partnership and the Holders shall have any obligation hereunder and that, notwithstanding that one or more of the Holders may be a corporation, partnership or limited liability company, no recourse under this Agreement or under any documents or instruments delivered in connection herewith or therewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the Holders or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise by incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the Holders or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any obligations of the Holders under this Agreement or any documents or instruments delivered in connection herewith or therewith or for any claim based on, in respect of or by reason of such obligation or its creation, except in each case for any assignee of the Holders hereunder.

 

Section 3.15                             Independent Nature of Purchaser’s Obligations.  The obligations of each Holder under this Agreement are several and not joint with the obligations of any other Holder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder under this Agreement.  Nothing contained herein, and no action taken by any Holder pursuant thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement.  Each Holder shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose.

 

Section 3.16                             Interpretation.  All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same

 

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may be amended, supplemented and otherwise modified from time to time, unless otherwise specified.  The word “including” shall mean “including but not limited to.” Whenever any determination, consent or approval is to be made or given by the Holders under this Agreement, such action shall be in the Holders’ sole discretion unless otherwise specified.

 

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.

 

	
 
    	
INSIGHT   OWNERS
    
	
 
    	
 
    
	
 
    	
AEC   RESOURCES LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ted W. Beneski
    
	
 
    	
Name:
    	
Ted   W. Beneski
    
	
 
    	
Title:
    	
Vice   Chairman of the Board
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Ted W. Beneski
    
	
 
    	
TED   W. BENESKI
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SUPERIOR   SILICA RESOURCES LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ted W. Beneski
    
	
 
    	
 
    	
Ted   W. Beneski
    
	
 
    	
 
    	
Chairman   of the Board
    
				

 

Signature Page to Registration Rights Agreement

 

 

	
 
    	
KED
    
	
 
    	
 
    
	
 
    	
KAYNE   ANDERSON ENERGY DEVELOPMENT COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Kevin McCarthy
    
	
 
    	
Name:
    	
Kevin   McCarthy
    
	
 
    	
Title:
    	
CEO
    

 

Signature Page to Registration Rights Agreement

 

 

	
 
    	
LBC
    
	
 
    	
 
    
	
 
    	
LBC   SUB V, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Nathaniel R. Cohen
    
	
 
    	
Name:
    	
Nathaniel   R. Cohen
    
	
 
    	
Title:
    	
Executive   Vice President
    

 

Signature Page to Registration Rights Agreement

 

 

	
 
    	
THE   PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
EMERGE   ENERGY SERVICES LP
    
	
 
    	
 
    
	
 
    	
By:
    	
EMERGE   ENERGY SERVICES GP, LLC, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Ted W. Beneski
    
	
 
    	
 
    	
Name:
    	
Ted   W. Beneski
    
	
 
    	
 
    	
Title:
    	
Chairman   of the Board
    

 

Signature Page to Registration Rights AgreementExhibit 10.6

 

Administrative Services Agreement

 

This ADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”) is made and entered into as of May 14, 2013 (the “Effective Date”), by and among Insight Equity Management Company LLC, a Delaware limited liability company (“Service Provider”), Emerge Energy Services LP, a Delaware limited partnership (together with its subsidiaries, the “Partnership”), and Emerge Energy Services GP LLC, a Delaware limited liability company and the general partner of the Partnership (the “General Partner,” and together with the Partnership, the “Company”). Service Provider, the Partnership and the General Partner are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

WHEREAS, the Company desires to retain Service Provider to provide certain general and administrative services to the Company, and Service Provider is willing to provide such general and administrative services to the Company, upon the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

 

1. Retention of Service Provider; Services. The Company hereby retains Service Provider, and Service Provider hereby agrees, to provide to the Company (i) certain Employees (as defined below) who will perform executive officer functions for the benefit of the General Partner and (ii) certain general and administrative support services that the Company determines are reasonable and necessary to operate its business (the “Services”), which include, without limitation, the services described on Schedule A hereto.  The Parties agree that the Services shall be provided by the employees of Service Provider listed on Schedule B hereto or their replacements (the “Employees”), or third party providers hired by Service Provider.  The Parties further agree that the Company may amend or modify Schedule A and Schedule B with 10 days’ notice to Service Provider, provided, however, that Service Provider shall not be required to provide any type, level or amount of Services that would impose an undue burden on Service Provider.

 

2. Relationship of the Parties. At no time shall the Employees, any independent contractors engaged by Service Provider and/or the employees of any such independent contractors be considered employees of the Company. Service Provider shall be responsible for complying with all federal, state and local labor and tax laws and regulations with respect to Employees. This Agreement is not one of agency between Service Provider and the Company, but one in which Service Provider is engaged to provide general oversight and administration support services as an independent contractor. All employment arrangements are therefore solely Service Provider’s concern, and the Company shall not have any liability with respect thereto except as otherwise expressly set forth herein.

 

 

3. Duties of Service Provider.

 

3.1 Service Provider will perform, or cause to be performed, the Services hereunder with not less than the degree of care, skill and diligence with which it performs or would perform similar services for itself consistent with past practices (including, without limitation, with respect to the type, quantity, quality and timeliness of such services). If Service Provider is required to engage third parties to perform one or more of the Services required hereunder, Service Provider shall use all commercially reasonable efforts to cause such third parties to deliver such Services in a competent and timely fashion.

 

3.2 Service Provider shall maintain books, records, documents and other written evidence, consistent with its normal accounting procedures and practices, sufficient to accurately, completely and properly reflect the performance of the Services hereunder and the amounts due in accordance with any provision of this Agreement.

 

4. Term.

 

4.1 Unless terminated earlier pursuant to Section 4.2, this Agreement will commence as of the Effective Date and shall continue in full force and effect until such time as the Service Provider, together with its affiliated investment funds and controlling equity owners, own directly or indirectly less than 51% of the equity interests of General Partner.

 

4.2 Notwithstanding Section 4.1, this Agreement will terminate upon (i) the mutual agreement of the General Partner and the Service Provider, (ii) the final distribution or liquidation of the Partnership or its subsidiaries, or (iii) the sale of control of the Partnership, whether by sale, merger, reorganization, consolidation or otherwise, to a third party.

 

5. Compensation.

 

5.1 Reimbursement of Expenses. As consideration for the performance of the Services, the Company shall reimburse Service Provider for the following expenses incurred by Service Provider (collectively, the “Expenses”):

 

5.1.1 An amount per month (prorated for any partial month) equal to one-twelfth (1/12) of the amount set forth opposite each Employee’s name on Schedule B (which amount will be subject to adjustment on an annual basis by the Board of Directors of the General Partner).

 

5.1.2 An amount equal to the product of (i) $290 and (ii) the number of hours of legal services provided by the Service Provider’s General Counsel or other member of its in-house legal department.

 

5.1.3 An amount equal to the actual travel and expenses incurred by Service Provider’s employees, including without limitation the Employees, and any other costs and expenses incurred by Service Provider in providing the Services.

 

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5.2 Payment. Service Provider will deliver a monthly invoice (the “Invoice”) to the Company as soon as practicable following the end of each month for the Expenses payable to Service Provider under Section 5.1 hereof for the month or the period last ended or, in the case of expiration or termination, all unbilled Expenses. The Company shall pay the Invoice within ten days of receipt of such Invoice; provided, however, that if there is a dispute between the Parties regarding any Invoice, they shall cooperate amicably to promptly determine the correct amount of Expenses payable to Service Provider. Interest at the rate of 12% per annum, compounded monthly, will accrue and will be payable with respect to any amounts due and not paid by the Company until such amounts, and any interest thereon, have been paid.

 

5.3 Form of Payment. Each cash payment made pursuant to this Agreement will be paid by wire transfer of immediately available federal funds to such account as Service Provider may specify to the Company in writing prior to such payment.

 

6. Non-Disclosure of Confidential Information. Service Provider shall maintain the confidentiality of all Confidential Information (as defined below); provided, however, that Service Provider may disclose such Confidential Information (i) to its affiliates to the extent deemed by Service Provider to be reasonably necessary or desirable to enable it to perform the Services; (ii) in any judicial or alternative dispute resolution proceeding to resolve disputes between Service Provider and the General Partner or the Partnership arising hereunder; (iii) to the extent disclosure is legally required under applicable laws (including applicable securities and tax laws); provided, however, that, to the fullest extent permitted by law, prior to making any legally required disclosures in any judicial, regulatory or dispute resolution proceeding, Service Provider shall, if requested by the General Partner, seek a protective order or other relief to prevent or reduce the scope of such disclosure; (iv) if authorized by the General Partner; and (v) to the extent such Confidential Information becomes publicly available other than through a breach by Service Provider of its obligations arising under this Section 6. Service Provider acknowledges and agrees that (i) the Confidential Information is being furnished to it for the sole and exclusive purpose of enabling it to perform the Services and (ii) the Confidential Information may not be used by it for any other purpose.  As used in this Agreement, the term “Confidential Information” means all information (i) furnished to Service Provider or its representatives by or on behalf of the General Partner or (ii) prepared by or at the direction of the General Partner (in each case irrespective of the form of communication and whether such information is furnished before, on or after the date hereof), and all analyses, compilations, data, studies, notes, interpretations, memoranda or other documents prepared by Service Provider or its representatives containing or based in whole or in part on any such furnished information.

 

7. Exculpation and Indemnification.

 

7.1 Indemnity. To the fullest extent permitted by law, the Company shall indemnify and hold harmless Service Provider and its representatives against all actions, proceedings, claims, demands or liabilities which may be brought against them due to this Agreement including, without limitation, all actions, proceedings, claims, demands or liabilities brought under the environmental laws of any jurisdiction, and against and in respect of all costs and expenses (including legal costs and expenses on a full indemnity basis) they may suffer or incur due to defending or settling same, provided, however, that such indemnity shall exclude any or all

 

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losses, actions, proceedings, claims, demands, costs, damages, expenses and liabilities whatsoever which may be caused by or due to the bad faith, fraud, gross negligence or willful misconduct of Service Provider or its representatives.

 

7.2 NO CONSEQUENTIAL DAMAGES.  TO THE FULLEST EXTENT PERMITTED BY LAW, NEITHER SERVICE PROVIDER NOR ANY OF ITS AFFILIATES OR REPRESENTATIVES SHALL BE LIABLE FOR INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY THE COMPANY, OR FOR PUNITIVE DAMAGES, WITH RESPECT TO ANY TERM OR THE SUBJECT MATTER OF THIS AGREEMENT, EVEN IF INFORMED OF THE POSSIBILITY THEREOF IN ADVANCE. THIS LIMITATION APPLIES TO ALL CAUSES OF ACTION, INCLUDING, WITHOUT LIMITATION, BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, FRAUD, MISREPRESENTATION AND OTHER TORTS.

 

7.3 Rights of Indemnification; Survival. The rights of indemnification provided in this Section 7 shall be in addition to any rights to which a party entitled to indemnification under Section 7.1 may otherwise be entitled by contract or as a matter of law, and shall extend to each of such party’s heirs, successors and assigns. The provisions of this Section 7 shall survive the termination of this Agreement.

 

8. Assignment. No Party may assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of the other Parties.

 

9. Choice of Law. Except as set forth below, this Agreement shall be construed and interpreted, and the rights of the Parties shall be governed by, the internal laws of the State of Delaware, without giving effect to conflicts of laws rules and principles that require the application of the laws of any other jurisdiction.

 

10. Entire Agreement; Amendments and Waivers. This Agreement, together with all Schedules hereto, constitute the entire agreement between the Parties pertaining to the subject matter hereof and supersede all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the Parties, and there are no other warranties, representations or other agreements between the parties in connection with the subject matter hereof. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by all Parties hereto. No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless expressly agreed to in writing by the affected Party.

 

11. References; Headings; Interpretation. All references in this Agreement to Exhibits, Articles, Sections, subsections and other subdivisions refer to the corresponding Exhibits, Articles, Sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections or other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be disregarded in construing the language hereof. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof” and words of similar import refer to

 

4

 

this Agreement as a whole and not to any particular subdivision unless expressly so limited. The words “this Article,” “this Section” and “this subsection” and words of similar import refer only to the Article, Section or subsection hereof in which such words occur. The word “or” is not exclusive, and the word “including” (in its various forms) means “including, without limitation.” Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.

 

12. Notices. Unless otherwise provided herein, any notice, request, consent, instruction or other document to be given hereunder by any Party hereto to another Party hereto shall be in writing and will be deemed given: (a) when received, if delivered personally or by courier; or (b) on the date receipt is acknowledged, if delivered by certified mail, postage prepaid, return receipt requested; or (c) one day after transmission, if sent by facsimile or electronic mail transmission with confirmation of transmission, as follows:

 

If to the General Partner or the Partnership:

 

c/o Emerge Energy Services GP LLC

1400 Civic Place, Suite 250
 Southlake, Texas 76092
 Attn: Vice President
 Fax: (817) 488-7739

 

With a copy (which shall not constitute notice) to:

 

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, TX  77002

Attn: Ryan J. Maierson

Fax: (713) 546-5401

Email: ryan.maierson@lw.com

 

If to Service Provider:

 

Insight Equity Management Company LLC

1400 Civic Place, Suite 250
 Southlake, Texas 76092
 Attn: Warren B. Bonham
 Fax: (817) 488-7739

 

13. Counterparts. This Agreement may be executed in one or more counterparts, including by facsimile and portable document format (.pdf) delivery, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. To the fullest extent permitted by law, the Parties agree and acknowledge that delivery of a signature by facsimile or in .pdf form shall constitute execution by such signatory.

 

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14. Invalidity. In the event that any one or more of the provisions contained in this Agreement or in any other instrument referred to herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument, and such invalid, illegal or unenforceable provision shall be interpreted so as to give the maximum effect of such provision allowable by law.

 

15. Additional Documents. Each of the Parties hereto agree to execute any document or documents that may be requested from time to time by the other Party to implement or complete such Party’s obligations pursuant to this Agreement and to otherwise cooperate fully with such other Party in connection with the performance of such Party’s obligations under this Agreement.

 

16. Successors and Assigns. Except as herein otherwise specifically provided, this Agreement shall be binding and inure to the benefit of the Parties and their successors and permitted assigns.

 

17. No Third-Party Beneficiaries. This Agreement is solely for the benefit of the Parties hereto and their successors and assigns permitted under this Agreement, and no provisions of this Agreement shall be deemed to confer upon any other persons any remedy, claim, liability, reimbursement, cause of action or other right except as expressly provided herein.

 

18. No Presumption Against Any Party. The Parties intend that neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any Party, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each of the Parties and their counsel and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all Parties hereto.

 

19. Specific Performance. The Parties acknowledge and agree that any Party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, the Parties agree that any Party shall be entitled to seek an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof as set forth in Section 20.

 

20. Arbitration.

 

20.1 Any dispute, controversy or claim arising out of, connected with, or relating to this Agreement, including without limitation any dispute as to the existence, validity, construction, interpretation, negotiation, performance, breach, termination or enforceability of this Agreement (a “Dispute”) shall be resolved by final and binding arbitration before a single independent and impartial arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) then in effect. The AAA Optional Rules for Emergency Measures of Protection shall also apply. If the Parties are unable to agree on a mutually acceptable arbitrator within 15 days of the submission of the Dispute to arbitration, the arbitrator shall be appointed by the AAA. The Parties acknowledge that arbitration is intended to be a more expeditious and

 

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less expensive method of dispute resolution than court litigation. The award of the arbitrator shall be in writing and provide reasons for the award. The arbitrator must certify in the award that such award conforms to the terms and conditions set forth in this Agreement, including that such award has been rendered in accordance with the applicable governing law. The arbitrator shall have the authority to assess the costs and expenses of the arbitration proceeding (including the fees and expenses of the arbitrator and the AAA) against any or all of the Parties. The arbitrator shall also have the authority to award reasonable attorneys’ fees and expenses to the prevailing Party. The place of arbitration shall be Dallas, Texas unless another location is mutually agreed upon by the Parties to such arbitration. The award of the arbitrator shall be binding on the Parties, and the award may, but need not, be entered as judgment in a court of competent jurisdiction. This agreement to arbitrate shall not preclude the Parties from engaging in parallel voluntary, non-binding settlement efforts including mediation.

 

20.2 The Parties undertake to keep confidential all awards in their arbitration, together with all materials in the proceedings created for the purpose of the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain, save and to the extent that disclosure may be required of a Party by legal duty, to protect or pursue a legal right or to enforce or challenge an award in legal proceedings before a court or other judicial authority.

 

20.3 Arbitration shall be the exclusive dispute resolution mechanism hereunder; provided that nothing contained in this Section 20 shall limit any party’s right to bring (i) an application to enforce this agreement to arbitrate, (ii) actions seeking to enforce an arbitration award or (iii) actions seeking injunctive or other similar relief in the event of a breach or threatened breach of any of the provisions of this Agreement (or any other agreement contemplated hereby). The specifically enumerated judicial proceedings shall not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate and, each party irrevocably and unconditionally (and without limitation, to the fullest extent permitted by law): (i) submits to and accepts, for itself and in respect of its assets, generally and unconditionally the non-exclusive jurisdiction of the courts located in Dallas County, Texas of the United States and the State of Texas, (ii) waives any objection it may have now or in the future that such action or proceeding has been brought in an inconvenient forum, (iii) agrees that in any such action or proceeding it will not raise, rely on or claim any immunity (including, without limitation, from suit, judgment, attachment before judgment or otherwise, execution or other enforcement), (iv) waives any right of immunity which it has or its assets may have at any time, and (v) consents generally to the giving of any relief or the issue of any process in connection with any such action or proceeding including, without limitation, the making, enforcement or execution of any order or judgment against any of its property. Notwithstanding any provision of this Agreement to the contrary, this Section 20.3 shall be construed to the maximum extent possible to comply with the laws of the State of Delaware, including the Uniform Arbitration Act (10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Section 20.3, including any rules of the AAA, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable law, such invalidity shall not invalidate all of this Section 20.3. In that case, this Section 20.3 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act or other applicable law, and, in the event such term

 

7

 

or provision cannot be so limited, this Section 20.3 shall be construed to omit such invalid or unenforceable provision. IN ENTERING INTO THE ARBITRATION PROVISION OF THIS SECTION 20, EACH PARTY TO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL, INCLUDING ANY RIGHTS TO A TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT REFERENCED HEREIN OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.

 

[Signature Page Follows]

 

8

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the day and year first written above.

 

 

	
 
    	
EMERGE   ENERGY SERVICES LP
    
	
 
    	
 
    
	
 
    	
By:   Emerge Energy Services GP LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ted W. Beneski
    
	
 
    	
 
    	
Name:   Ted W. Beneski
    
	
 
    	
 
    	
Title:   Chairman of the Board
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EMERGE   ENERGY SERVICES GP LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ted W. Beneski
    
	
 
    	
 
    	
Name:   Ted W. Beneski
    
	
 
    	
 
    	
Title:   Chairman of the Board
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INSIGHT   EQUITY MANAGEMENT COMPANY LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ted W. Beneski
    
	
 
    	
 
    	
Name:   Ted W. Beneski
    
	
 
    	
 
    	
Title:   Chairman of the Board
    

 

[Signature Page to Administrative Services Agreement]

 

 

SCHEDULE A

 

Description of Services

 

	
Acquisition   Services and Evaluation
    
	
Administrative
    
	
Consulting
    
	
Corporate   Finance
    
	
Financial,   Planning and Analysis
    
	
Legal
    
	
Management
    
	
Risk   Management
    
	
Travel
    

 

 

SCHEDULE B

 

Employees

 

	
Name
    	
 
    	
Amount Allocated to Company
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Warren Bonham
    	
 
    	
$
    	
194,300

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