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EXHIBIT 10.34
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of June
16, 1998 by and between DeepFlex Production Services, Inc. ("DPSI") and RIGCO
North America, L.L.C. ("RIGCO").
WHEREAS, RIGCO and DPSI executed a Management Agreement dated September
25, 1996, whereby RIGCO received the benefit of management services which
DeepTech International Inc. ("DeepTech") had agreed to provide to DPSI, and for
which management services RIGCO reimbursed DPSI (the "Original Agreement");
WHEREAS, the agreement for management services between DPSI and
DeepTech will be terminated effective upon the closing of the merger of DeepTech
with and into El Paso Energy Corporation, or under certain conditions, a
subsidiary thereof which is scheduled to occur no later than September 30, 1998;
and
WHEREAS, DPSI and RIGCO desire to enter into an agreement whereby DPSI
will provide management services to RIGCO to replace those currently being
provided to RIGCO under the soon to be terminated Original Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
RIGCO and DPSI hereby stipulate and agree as set forth below.
I.
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meaning ascribed thereto:
"Affiliates" means, with respect to either Party, entities that
directly or indirectly through one or more intermediaries Control, or are
Controlled by, or under, common Control with such Party.
"Agreement" shall have the meaning set forth in the preamble.
"Control" (including its derivatives) shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise.
"DeepTech" shall have the meaning set forth in the recitals.
"DPSI" shall have the meaning set forth in the preamble.
"Effective Date" means the date first written in the preamble.
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"Fiscal Year" shall mean the period from July 1 through June 30.
"FPS III" shall mean FPS III, Inc., a Delaware corporation.
"FPS V" shall mean FPS V, Inc., a Delaware corporation.
"Original Agreement" shall have the meaning set forth in the recitals
to this Agreement above.
"Overhead" shall mean DPSI's operating, selling, general,
administrative and other similar expenses for any period as determined by DPSI.
"Parties" means collectively DPSI and RIGCO. "Party" means individually
DPSI or RIGCO.
"Person" shall mean any individual or entity, including any
partnership, corporation, limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
"Term" means the period from the Effective Date hereof until this
Agreement is terminated pursuant to Article 5.
II.
DUTIES AND OBLIGATIONS OF DEEPTECH
2.1 Management Services. DPSI agrees to provide non-exclusive
management and other related services to RIGCO and Affiliates controlled by it
which include, but are not limited to, services related to acquisitions to be
made by RIGCO, cash management, review of significant operating and financial
matters, initiation and review of significant business opportunities and such
other management services as the parties may from time to time agree.
III.
COMPENSATION, EXPENSES AND PAYMENT
3.1 Fee and Expenses. The annual compensation (prorated for any portion
of a year) due DPSI from RIGCO for services provided pursuant to this Agreement
shall be equal to the amount of DPSI's Overhead allocated to RIGCO plus all out
of pocket expenses incurred by DPSI for the benefit of RIGCO. Such allocation
shall be based on the relationship between the DPSI resources expended in
connection with RIGCO and the total DPSI resources. Such relationship shall be
determined using any mutually agreed basis, including a time and space analysis.
3.2 Payment. For purposes of accounting and periodic payment, before
the first day of each calendar month, DPSI shall present RIGCO with an invoice
which reflects an amount equal to DPSI's best estimate as to (i) RIGCO's share
of DPSI's Overhead for that month, if any, plus (ii) all reimbursable amounts
incurred by DPSI for the direct benefit of RIGCO. RIGCO
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shall pay such sum on or before the first day of that calendar month. On or
before September 1 of each calendar year, DPSI shall furnish a statement to
RIGCO detailing (i) the actual amount, if any, of DPSI's Overhead for the
immediately preceding Fiscal Year, (ii) payments made from RIGCO to DPSI for
such Fiscal Year, and (iii) any adjustment balance due to/from DPSI. Within
fifteen days of the date of such statement, DPSI or RIGCO, as applicable, shall
remit the balance due.
3.3 Uncompensated Services. It is recognized by the Parties that DPSI
is the sole stockholder of FPS III and FPS V, each of which currently owns a
fifty percent (50%) membership interest in RIGCO. It is expressly acknowledged
and agreed by the Parties that the compensation to DPSI provided for in this
Agreement is solely to compensate DPSI for the management services provided to
RIGCO, and that DPSI, FPS III and FPS V are not and shall not be compensated for
any activities related to their status as stockholders or members, as
applicable.
IV.
ACCESS TO INFORMATION, BOOKS AND RECORDS
DPSI and its duly authorized representatives shall have complete access
to RIGCO's offices, facilities and records wherever located, in order to
discharge DPSI's responsibilities hereunder; provided, however, RIGCO shall
provide and make available to DPSI and its duly authorized representatives at
DPSI's Houston offices, at DPSI's request, all such records required by DPSI to
perform its duties pursuant to this Agreement. All records and materials
furnished to DPSI by RIGCO in performance of this Agreement shall at all times
during the Term remain the property of RIGCO. For a period of one year after the
end of each Fiscal Year, RIGCO shall have the right to inspect and audit the
books and records of DPSI to the extent necessary to verify RIGCO's
proportionate share of DPSI's Overhead attributable to such Fiscal Year.
V.
TERM AND TERMINATION OF THE AGREEMENT
5.1 Initial Term. This Agreement shall be effective from the Effective
Date and shall continue for five years thereafter (the "Initial Term"); subject,
however, to the terms of Section 5.2 hereof. At the end of the Initial Term,
this Agreement shall continue in force and effect for subsequent one (1) year
periods unless terminated by either Party ninety (90) days prior to the
anniversary date of the Effective Date.
5.2 Termination. This Agreement may be sooner terminated on the first
to occur of the following:
(a) Termination by Mutual Agreement
In the event the Parties shall mutually agree in writing, this
Agreement may be terminated on the terms and dates stipulated
therein.
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(b) Optional Termination
After the Initial Term, either Party may, ninety (90) days prior
to any anniversary of the Effective Date, provide to the other
Party written notice of its intent to terminate this Agreement on
such anniversary date, whereupon this Agreement shall terminate on
the anniversary date specified in such notice.
(c) Uncorrected Material Breach
In the event either Party shall fail to discharge any of its
material obligations hereunder, or shall commit a material breach
of this Agreement, and such default or breach shall continue for a
period of thirty (30) days after the other Party has served notice
of such default, this Agreement may then be terminated at the
option of the non-breaching Party by notice thereof to the
breaching Party.
5.3 Effects of Termination. Except for covenants or other provisions
herein that, by their terms, expressly extend beyond the Term, the Parties'
obligations hereunder are limited to the Term.
5.4 RIGCO's Remedies. If DPSI shall at any time owe or otherwise become
liable to RIGCO for any amount pursuant to the terms of this Agreement, in
addition to RIGCO's other rights hereunder, at law or in equity, RIGCO shall
have the right to offset any such amount against any amount held by RIGCO for
the account of DPSI and against any amount otherwise due or to become due to
DPSI from RIGCO.
VI.
INDEMNIFICATION OF DPSI
RIGCO hereby agrees to indemnify and hold harmless DPSI from and
against any and all claims, courses of action, liabilities, damages, costs,
charges, fees, expenses (including reasonable attorneys' fees and expenses to be
reimbursed as incurred), suits, orders, judgments, adjudications and losses of
whatever nature and kind which DPSI or its Affiliates or designees or for which
DPSI or its Affiliates or designees become liable as the result of the
performance of DPSI's obligations and duties pursuant to this Agreement,
including DPSI's negligence; provided, DPSI shall not be indemnified for gross
negligence or willful misconduct on the part of DPSI.
VII.
MISCELLANEOUS
7.1 Relationship of Parties. This Agreement does not create a
partnership, joint venture or association; nor does this Agreement, or the
operations hereunder, create the relationship of lessor and lessee or xxxxxx and
bailee. Nothing contained in this Agreement or in any agreement made pursuant
hereto shall ever be construed to create a partnership, joint venture or
association, or the relationship of lessor and lessee or xxxxxx and bailee, or
to impose any duty, obligation or liability that would arise therefrom with
respect to either or both of the Parties.
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Specifically, but not by way of limitation, except as otherwise expressly
provided for herein, nothing contained herein shall be construed as imposing
any responsibility on DPSI for the debts or obligations of RIGCO or any of its
Affiliates. It is expressly understood that DPSI is hereby engaged by RIGCO to
provide management and operational services as an agent of RIGCO. DPSI, its
Affiliates and designees shall have the right to render similar services for
other business entities and persons, including its own, whether or not engaged
in the same business as RIGCO, and may enter into such other business
activities as DPSI and its Affiliates, in their sole discretion, may determine.
7.2 No Third Party Beneficiaries. Except to the extent a third party is
expressly given rights herein, any agreement herein contained, expressed or
implied, shall be only for the benefit of the Parties and their respective legal
representatives, successors, and assigns, and such agreements or assumption
shall not inure to the benefit of any other party whomsoever, it being the
intention of the Parties hereto that no person or entity shall be deemed a third
party beneficiary of this Agreement except to the extent a third party is
expressly given rights herein.
7.3 General Representations. Each Party represents and warrants that on
the date hereof: (1) it is a corporation or limited liability company, duly
established, validly existing and in good standing under the laws of its state
or jurisdiction of formation, with power and authority to carry on the business
in which it is engaged and to perform its respective obligations under this
Agreement; (2) the execution and delivery of this Agreement have been duly
authorized and approved by all requisite corporate action; (3) it has all the
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder, and, upon execution, the Agreement will
constitute a valid, legal and binding obligation of each Party; and (4) the
execution and delivery of this Agreement do not, and consummation of the
transactions contemplated herein will not, violate any of the provisions of its
charter or bylaws or any applicable state or federal laws applicable to them.
7.4 Notices. Any notice, demand, or communication required, permitted,
or desired to be given hereunder shall be deemed effectively given when
personally delivered or mailed by prepaid certified mail, return receipt
requested, addressed as follows:
If to DPSI, to: DeepFlex Production Services, Inc.
0000 Xxxxx Xxxxx
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
(000) 000-0000
Attention: Chief Financial Officer
If to RIGCO, to: RIGCO North America, L.L.C.
0000 Xxxxx Xxxxx
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
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or to such other address and to the attention of such other persons or officers
as either Party may designate by written notice pursuant to this Section 7.4.
7.5 GOVERNING LAW. THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED AND
SHALL BE INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES
WHICH, IF APPLIED, MIGHT PERMIT OR REQUIRE THE APPLICATION OF THE LAWS.
7.6 Assignment. No assignment of this Agreement or any of the rights or
obligations set forth herein by either Party shall be valid without the specific
written consent of the other Party; provided, however, that any Party shall have
the right, without the other Party's consent, to (i) assign its rights and
obligations under this Agreement to any Affiliate, and any such Affiliate may
reassign such rights and obligations so long as such rights and obligations are
not assigned to any Person other than an Affiliate of such Party, and (ii)
mortgage, pledge, encumber or otherwise impress a lien or security interest upon
its rights and interest in and to this Agreement.
7.7 Waiver of Breach. The waiver by either Party of a breach or
violation of any provision of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach of the same or any other
provision hereof.
7.8 Additional Assurances. The provisions of this Agreement shall be
self-operative and shall not require further accord between the Parties except
as may herein specifically be provided to the contrary; provided, however, that
at the request of either Party, the other Party shall execute such additional
instruments and take such additional actions as shall be necessary to effectuate
this Agreement.
7.9 Severability. In the event any provision of this Agreement is held
to be unenforceable for any reason, such provision shall be severable from this
Agreement if it is capable of being identified with and apportioned to
reciprocal consideration or to the extent that it is a provision that is not
essential and the absence of which would not have prevented the Parties from
entering into this Agreement. The unenforceability of a provision that has been
performed shall not be grounds for invalidation of this Agreement under
circumstances in which the true controversy between the Parties does not involve
such provision.
7.10 Article and Section Headings. The article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
7.11 Amendments and Contract Execution. This Agreement and amendments
hereto shall be in writing and executed in multiple copies by duly authorized
agents of the Parties. Each multiple copy shall be deemed an original, but all
multiple copies together shall constitute one and the same instrument.
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7.12 Entire Agreement. This Agreement supersedes all previous contracts
between the Parties and constitutes the entire Agreement between the Parties
with respect to the subject matter of this Agreement, and no changes in or
additions to this Agreement shall be recognized unless incorporated herein by
written amendment.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized representatives as of the day and
year first above written.
DPSI: DeepFlex Production Services, Inc.
By:
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Xxxxxx X. Xxxx
Vice President
RIGCO: RIGCO North America, L.L.C.
By:
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Xxxxxx X. Xxxxxxx
Senior Vice President
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