Administrative Services Agreement
Exhibit 10.4
This ADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”) is dated as of [___], 2011 by
and between VOC Brazos Energy Partners, L.P., a limited partnership formed under the laws of the
State of Texas (the “Partnership”), and The Bank of New York Mellon Trust Company, N.A., in its
capacity as trustee (the “Trustee”) of VOC Energy Trust, a statutory trust formed under the laws of
the State of Delaware (the “Trust”).
WHEREAS, pursuant to a Conveyance of Term Net Profits Interest and Assignment of Pre-Effective
Time Payment made from the Partnership and VOC Kansas Energy Partners, LLC, a Kansas limited
liability company, to the Trustee of the Trust (the “Conveyance”) of even date herewith, the
Partnership and VOC Kansas Energy Partners, L.L.C., a limited liability company formed under the
laws of the State of Kansas, have conveyed to the Trust a net profits interest in certain oil and
gas properties located in the States of Kansas and Texas (the “Net Profits Interest”);
WHEREAS, in connection with the conveyance of the Net Profits Interest, the Partnership has
agreed to provide certain administrative services for the Trust in exchange for an administrative
services fee as described herein.
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intended to be legally bound hereby, it is agreed as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Sections referred to below:
“Administrative Services Fee” has the meaning set forth in Section 3.01.
“Affiliate” means with respect to a specified Person, any Person that directly or indirectly
controls, is controlled by, or is under common control with, the specified Person. As used in this
definition, the term “control” (and the correlative terms “controlling,” “controlled by,” and
“under common control”) shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise.
“Agreement” has the meaning set forth in the introductory paragraph.
“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in Wichita, Kansas or Austin, Texas are authorized or obligated by law
or executive order to close.
“Conveyance” has the meaning set forth in the recitals.
“External Expenses” means the actual out-of-pocket fees, costs and expenses reasonably
incurred by the Partnership in connection with the provision of the Services.
“Force Majeure” shall mean any cause beyond the reasonable control of the Partnership,
including the following causes: acts of God; strikes; lockouts; acts of the public enemy, wars or
warlike action (whether actual or impending); arrests and other restraints of government (civil or
military); blockades; embargoes; insurrections; riots; epidemics or pandemics; landslides,;
lightning; earthquakes; fires; sabotage; tornadoes; named tropical storms and hurricanes and
floods; civil disturbances; terrorism; mechanical breakdown of machinery or equipment (other than
from the negligence of the Partnership); explosions; confiscation or seizure by any government or
other public authority; any order of any court of competent jurisdiction, regulatory agency or
governmental body having jurisdiction.
“Net Profits Interest” has the meaning set forth in the recitals.
“Partnership” has the meaning set forth in the introductory paragraph.
“Person” shall mean any individual, partnership, limited liability company, corporation,
trust, unincorporated association, governmental agency, subdivision, or instrumentality, or other
entity or association.
“Services” has the meaning set forth in Section 2.01.
“Termination Date” has the meaning assigned to such term in the Conveyance.
“Trust” has the meaning set forth in the introductory paragraph.
“Trust Agreement” means that certain Amended and Restated Trust Agreement of the Trust of even
date herewith among the Partnership, the Trustee and Wilmington Trust Company, as the same may be
amended from time to time.
“Trustee” has the meaning set forth in the introductory paragraph.
Section 1.02 Construction. Unless the context requires otherwise: (a) any pronoun
used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references
to Articles and Sections refer to Articles and Sections of this Agreement; (c) the terms “include,”
“includes,” “including” or words of like import shall be deemed to be followed by the words
“without limitation;” and (d) the terms “hereof,” “herein” or “hereunder” refer to this Agreement
as a whole and not to any particular provision of this Agreement. The headings contained in this
Agreement are for reference purposes only, and shall not affect in any way the meaning or
interpretation of this Agreement.
ARTICLE II
SERVICES
SERVICES
Section 2.01 Services. Subject to the terms of this Agreement and in exchange for the
payment described in Section 3.01, the Partnership hereby agrees to provide the Trust with
such
services as are necessary for the Trust and the Trustee to comply with the Trust Agreement and
Article III of the Conveyance and such other administrative services of similar character and scope
to the foregoing that the Trustee may reasonably request the Partnership to provide during the term
of this Agreement, including, without limitation, such accounting, bookkeeping and informational
services and other services as may be necessary for the preparation of reports the Trust is or may
be required to prepare and/or file in accordance with applicable tax and securities laws, exchange
listing rules and other requirements, including without limitation reserve reports and tax returns
(all of the foregoing being herein called the “Services”).
Section 2.02 Performance of Services by Others. The parties hereby agree that in
discharging the Partnership’s obligations under this Agreement, the Partnership may, in its sole
discretion, engage any other Person, including its Affiliates, to perform the Services (or any part
of the Services) on its behalf and that the performance of the Services (or any part of the
Services) by any such Person shall be treated as if the Partnership performed such Services itself.
Notwithstanding the foregoing, nothing contained herein shall relieve the Partnership of its
obligations hereunder.
Section 2.03 Intellectual Property. Any (i) inventions, whether patentable or not,
developed or invented, or (ii) copyrightable material (and the intangible rights of copyright
therein) developed, in each case by the Partnership, its Affiliates or its or their employees in
connection with the performance of the Services shall be the property of the Partnership; provided,
however, that the Trust shall be granted an irrevocable, royalty-free, non-exclusive and
non-transferable right and license to use such inventions or material; and provided further,
however, that the Trust shall only be granted such a right and license to the extent such grant
does not conflict with, or result in a breach, default, or violation of a right or license to use
such inventions or material granted to the Partnership by any Person other than an Affiliate of the
Partnership. Notwithstanding the foregoing, the Partnership will use all commercially reasonable
efforts to grant such right and license to the Trust.
Section 2.04 Independent Status. It is expressly acknowledged by the parties hereto
that each party is an “independent contractor” and nothing in this Agreement is intended nor shall
be construed to create an employer/employee relationship, or a joint venture or partnership
relationship, or to allow any party to exercise control or direction over the other party. Except
as required in connection with the performance of the Services, neither the Partnership nor any
agent, employee, servant, contractor or subcontractor of the Partnership or any of its Affiliates
shall have the authority to bind the Trust to any contract or arrangement. Neither the Trust nor
the Trustee shall be liable for the salary, wages or benefits, including workers’ compensation
insurance and unemployment insurance, of any employee, agent, servant, contractor or subcontractor
of the Partnership or its Affiliates by virtue of this Agreement.
Section 2.05 Warranties; Limitation of Liability. The Partnership will use
commercially reasonable efforts to provide the Services in a good and workmanlike manner in
accordance with the sound and prudent practices of providers of similar services. EXCEPT AS SET
FORTH IN THE PRECEDING SENTENCE, THE PARTNERSHIP MAKES NO (AND HEREBY DISCLAIMS AND NEGATES ANY AND
ALL) WARRANTIES OR REPRESENTATIONS WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES.
IN NO EVENT WILL THE PARTNERSHIP, THE TRUST, THE TRUSTEE OR
ANY OF THEIR RESPECTIVE AFFILIATES BE LIABLE TO ANY OTHER PERSON FOR ANY EXEMPLARY, PUNITIVE,
DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, WHETHER RESULTING FROM ANY ERROR IN
THE PERFORMANCE OF SERVICE, OR OTHERWISE, REGARDLESS OF WHETHER SUCH PERSON, ITS AFFILIATES OR
OTHERS MAY BE WHOLLY, CONCURRENTLY, PARTIALLY OR SOLELY NEGLIGENT OR OTHERWISE AT FAULT, EXCEPT TO
THE EXTENT SUCH EXEMPLARY, PUNITIVE, DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES
ARE PAID BY THE PARTY INCURRING SUCH DAMAGES TO A PERSON THAT IS NOT A PARTY TO THIS AGREEMENT.
THE PROVISIONS OF THIS SECTION 2.05 WILL SURVIVE TERMINATION OF THIS AGREEMENT.
Section 2.06 Disputes. Should there be a dispute over the nature or quality of the
Services or the calculation or allocation of the Administrative Services Fee, the Partnership and
the Trustee, on behalf of the Trust, shall first attempt to resolve such dispute, acting diligently
and in good faith, using the past practices of the Partnership and the Trustee as guidelines for
such resolution. If the Partnership and the Trustee are unable to resolve any such dispute within
thirty days, or such additional time as may be reasonable under the circumstances, the dispute
shall be resolved by arbitration in accordance with the provisions of Article XI of the Trust
Agreement.
The provisions of this Section 2.06 will survive termination of this Agreement.
ARTICLE III
ADMINISTRATIVE SERVICES FEE
ADMINISTRATIVE SERVICES FEE
Section 3.01 Administrative Services Fee. Beginning January 1, 2011, the Trust shall
pay to the Partnership in immediately available funds, on or before the 25th day
following each calendar quarter, an administrative services fee of $18,750 (the “Administrative
Services Fee”); with the first payment being made July 25, 2011. Effective January 1 of each
calendar year thereafter, the amount of the Administrative Services Fee payable in each of the
calendar quarters in that calendar year shall increase by 4.0% of the amount of the Administrative
Services Fee that was payable during each of the calendar quarters of the previous calendar year.
In the event that this Agreement is terminated during a calendar quarter pursuant to Section
5.01, the amount of the Administrative Services Fee for such calendar quarter shall be based
upon the pro rata portion of the Administrative Services Fee that shall have accrued during such
quarter up to and including the date of termination of this Agreement. In addition to the
Administrative Services Fee, the Trust shall reimburse the Partnership on or before the
25th day following each calendar quarter for all reasonable and necessary External
Expenses associated with the provision of Services in the preceding quarter as set forth in a
reasonably detailed invoice provided by the Partnership to the Trust on or before the
15th day following each calendar quarter.
Section 3.02 Set-Off. In the event that the Partnership owes the Trust a sum certain
in an uncontested amount under any other agreement, then any such amounts may, in the sole
discretion of the Partnership, be aggregated and the Trust and the Partnership shall discharge
their obligations by netting those amounts against any amounts owed by the Trust to the
Partnership under this Agreement.
ARTICLE IV
FORCE MAJEURE
FORCE MAJEURE
Section 4.01 Force Majeure. The Partnership’s obligation under this Agreement shall
be excused when and to the extent its performance of that obligation is prevented due to Force
Majeure. The Partnership shall promptly notify the Trustee that it is prevented from performing
its obligations by reason of Force Majeure and shall exercise due diligence to end its inability to
perform as promptly as practicable. Notwithstanding the foregoing, the Partnership shall not be
required to settle any strike, lockout or other labor dispute in which it or any of its Affiliates
may be involved.
ARTICLE V
MISCELLANEOUS
MISCELLANEOUS
Section 5.01 Term and Termination. This Agreement shall become effective on the date
of this Agreement and shall continue until the Termination Date unless earlier terminated by mutual
agreement of the parties to this Agreement. Upon termination of this Agreement in accordance with
this Section 5.01, all rights and obligations under this Agreement shall cease except for
(i) obligations that expressly survive termination of this Agreement, (ii) liabilities and
obligations that have accrued prior to such termination, including the obligation to pay any
amounts that have become due and payable prior to such termination, and (iii) the obligation to pay
any portion of the Administrative Services Fee that has accrued prior to such termination, even if
such portion has not become due and payable at the time of termination.
Section 5.02 Notice. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, by facsimile, by courier guaranteeing
overnight delivery or by first-class mail, return receipt requested, and shall be deemed given (i)
when made, if made by hand delivery, (ii) upon confirmation, if made by facsimile, (iii) one (1)
Business Day after being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the parties as follows:
| (a) | if to the Trust or the Trustee, to: |
VOC Energy Trust
x/x Xxx Xxxx xx Xxx Xxxx Xxxxxx Trust Company
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
x/x Xxx Xxxx xx Xxx Xxxx Xxxxxx Trust Company
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx LLP
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: W. Xxxxx Xxxxxxx
Fax: (000) 000-0000
Fax: (000) 000-0000
| (b) | if to the Partnership, to: |
VOC Brazos Energy Partners, L.P.
0000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxx 000
Xxxxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxx
Fax: (000) 000-0000
0000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxx 000
Xxxxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
or to such other address as such Person may have furnished to the other Persons identified in this
Section 5.02 in writing in accordance herewith.
Section 5.03 Entire Agreement; Supersedure. This Agreement constitutes the entire
agreement of the parties relating to the matters contained herein, superseding all prior contracts
or agreements, whether written or oral, relating to the matters contained herein.
Section 5.04 Effect of Waiver or Consent. Except as otherwise provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or default by any party in
the performance by that party of its obligations under this Agreement is not a consent or waiver to
or of any other breach or default in the performance by that party of the same or any other
obligations of that party under this Agreement.
Section 5.05 Amendment or Modification. This Agreement may be amended or modified
from time to time only by a written instrument executed by each of the parties to this Agreement.
Section 5.06 Assignment. Except as provided in Section 2.02, no party to this
Agreement shall have the right to assign its rights or obligations under this Agreement without the
consent of the other party to this Agreement.
Section 5.07 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties to this Agreement had signed the same document.
All counterparts shall be construed together and shall constitute one and the same instrument.
Section 5.08 Severability. If any provision of this Agreement or the application
thereof to any party to this Agreement or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such provision to the other
party to this Agreement or circumstances shall not be affected thereby and shall be enforced
to the greatest extent permitted by law.
Section 5.09 Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each party hereto agrees to execute and deliver such
additional documents and instruments and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of
this Agreement and all such transactions.
Section 5.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT
OF THE LAWS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.
| VOC BRAZOS ENERGY PARTNERS, LP | ||||||
| By: | Xxxx Texas Partners, LLC its General Partner |
|||||
| By: | Xxxx Holding Corporation its Manager |
|||||
| By: | ||||||
| Name: | ||||||
| Title: | Designated Representative | |||||
| THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee of VOC Energy Trust | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | Vice President | |||||
Signature Page to Administrative Services Agreement
