EXHIBIT 10.18
SECOND AMENDMENT TO MANAGEMENT AGREEMENT
This Second Amendment to Management Agreement (this "Amendment"), dated
effective as of the 1st day of March 2001, amends that certain Management
Agreement, dated as of August 3, 1999, but effective as of the Effective Date,
by and between PetroCorp Incorporated, a Texas corporation, and Xxxxxx-Xxxxxxx
Oil Company, a Delaware corporation ("Xxxxxx-Xxxxxxx"), as amended (as amended,
the "Management Agreement"). Except as otherwise specified in this Amendment,
capitalized terms used in this Amendment have the meanings provided in the
Management Agreement.
RECITALS
WHEREAS, the Management Agreement provides that Xxxxxx-Xxxxxxx will
provide certain Services on behalf of PetroCorp Incorporated and its
wholly-owned subsidiaries, both in the United States of America and Canada; and
WHEREAS, from time to time it is necessary for Xxxxxx-Xxxxxxx to retain
on behalf of PetroCorp certain third-party consultants of a type not expressly
contemplated in the Management Agreement; and
WHEREAS, Services performed by Xxxxxx-Xxxxxxx include certain computer
support functions that were formerly outsourced by PetroCorp, including computer
network administration and trouble-shooting ("Computer Support"); and
WHEREAS, Services performed by Xxxxxx-Xxxxxxx include certain tax
functions that were formerly outsourced by PetroCorp, including initial
preparation of domestic tax returns and schedules ("Tax Preparation"); and
WHEREAS, Xxxxxx-Xxxxxxx has determined that performing certain routine
Services on behalf of PetroCorp, including, for example, recordkeeping and
reporting related to PetroCorp's institutional investors, is more complex and
time-intensive than Xxxxxx-Xxxxxxx contemplated when it entered into the
Management Agreement; and
WHEREAS, from time to time Xxxxxx-Xxxxxxx performs certain non-routine
Services on behalf of PetroCorp that either were not formerly performed by
PetroCorp or were formerly outsourced by PetroCorp; and
WHEREAS, the parties desire to amend the Management Agreement (i) to
clarify that, in connection with the performance of Oil and Gas Operations
and/or Administrative Services on behalf of PetroCorp, Xxxxxx-Xxxxxxx may
engage third party consultants to perform functions reasonably necessary to the
conduct of PetroCorp's business, whether or not retention of consultants of that
type is expressly provided for in the Management Agreement; (ii) to provide
additional compensation for certain routine Services rendered in-house by
Xxxxxx-Xxxxxxx, including Tax Preparation, Computer Support, and record-keeping
and reporting with respect to PetroCorp's institutional investors, (iii) to
provide for reimbursement of Xxxxxx-Xxxxxxx for
certain non-routine Services rendered in-house by Xxxxxx-Xxxxxxx that were
previously either not performed by PetroCorp or were performed by third party
consultants on behalf of PetroCorp; and (iv) to eliminate the ORRI Interest and
Back-In in favor of Xxxxxx-Xxxxxxx provided for in the Management Agreement.
A G R E E M E N T
Now, therefore, in consideration of the mutual promises and covenants of
the parties hereto and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereto hereby
agree as follows:
1. Amendment of Section 1.1. Section 1.1 of the Management Agreement is hereby
amended by deleting the following definitions in their entirety:
a. "Back-In";
b. "Geological and Geophysical Costs";
c. "Xxxxxx-Xxxxxxx Compensation";
d. "Land Costs";
e. "New Prospect";
f. "New Prospect on Acquired Lands";
g. "New Prospect on Existing Lands";
h. "ORRI Interest";
i. "Prospect Area";
j. "Prospect Exploration and Development Costs";
k. "Prospect Net Proceeds";
l. "Prospect Payout";
m. "Proved Developed Oil and Gas Reserves";
n. "Proved Undeveloped Reserves";
o. "Proved Oil and Gas Reserves";
p. "Services Fee".
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2. Amendment of Section 2.2(B). Section 2.2(B) of the Management Agreement is
hereby deleted in its entirety and replaced with the following:
"B. Making such arrangements and employing, at the expense and for the
benefit of PetroCorp, such third persons as may from time to time be
reasonably necessary for the conduct of PetroCorp's business, including,
without limitation, accountants, attorneys, banks, transfer agents,
custodians, underwriters, insurance companies and other third persons."
3. Amendment of Section 2.3. Section 2.3 of the Management Agreement is hereby
amended by the addition of new Section 2.3(N) as follows:
"N. Making such arrangements and employing, at the expense and for the
benefit of Petro Corp, such third persons as may from time to time be
reasonably necessary for the conduct of the Oil and Gas Operations
described in 2.3(A)-(M) above."
4. Amendment of Section 3.1. Section 3.1 of the Management Agreement is hereby
deleted in its entirety and replaced with the following:
"3.1 Compensation. Petrocorp shall pay Xxxxxx-Xxxxxxx a monthly fee for the
Services equal to (i) $12,500.00, plus (ii) 100% of the Operator's Fees and
Non-Operator's Fees, respectively, for each of the PetroCorp Operated
Properties and Non-Operated Properties. In addition, with respect to
Services of a non-routine nature that (i) are performed in-house by Xxxxxx-
Xxxxxxx, and (ii) prior to the Effective Date, either (x) were not
performed by PetroCorp, or (y) were performed by third party consultants
retained by or on behalf of PetroCorp. Xxxxxx-Xxxxxxx shall be entitled to
compensation at a mutually agreed rate that is competitive with the
generally available rate charged for such services in the area in which
such services were furnished."
5. Governing Law. This Amendment shall be subject to, and interpreted by and
in accordance with, the laws (excluding conflict of law provisions) of the State
of Oklahoma.
6. Construction. This Amendment, and all the provisions of this Amendment,
shall be deemed drafted by both parties hereto.
7. Authority. Each of the persons signing below on behalf of a party hereto
represents and warrants that he or she has full requisite power and authority to
execute and deliver this Amendment on behalf of the parties for whom he or she
is signing and to bind such party to the terms and conditions of this Amendment.
8. Counterparts. This Amendment may be executed in counterparts, each of which
shall be deemed an original. This Amendment shall become effective only when all
of the parties hereto shall have executed the original or counterpart hereof.
This Amendment may be executed and delivered by a facsimile transmission of a
counterpart signature page hereof.
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EXECUTED on the respective dates set forth below, but effective for all
purposes as of March 1, 2001.
XXXXXX-XXXXXXX OIL COMPANY
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Vice President
Date: March 5, 2001
PETROCORP INCORPORATED
By: /s/ Xxxx X. Xxxxxxxxxxx
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Xxxx X. xxxxxxxxxxx
President and Chief Executive Officer
Date: March 7, 2001
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