MANAGEMENT AGREEMENT
This Management Agreement ("Agreement") is entered into as of ____________,
1997, by and between MSR Exploration Ltd., a Delaware corporation ("MSR"), its
subsidiaries Mountain States Resources, Inc., a Colorado corporation, Monte
Grande Exploration, Inc., a Montana corporation, Gypsy-Highview Gathering System
(G-HGS), Inc., a Montana corporation and MSR Exploration, Inc., a Texas
corporation (collectively "Subsidiaries" and individually "Subsidiary"), and
Mercury Exploration Company, a Texas corporation ("Manager").
RECITALS
MSR owns, directly or indirectly, all of the outstanding stock of
Subsidiaries. MSR and Subsidiaries own various oil and gas properties and gas
gathering and compression facilities located in the States of Montana and Texas
(collectively the "Properties"). Manager owns a substantial equity interest in
MSR and has the ability and staff to manage the Properties. The purpose of this
Agreement is to provide for the management by Manager of the Properties.
AGREEMENT
Now, therefore, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the parties agree as follows.
1. The term of this Agreement will be for two years, and thereafter for
successive terms of one year each unless terminated at the end of the initial or
any extended term by either party upon written notice to the other within 30
days before the end of the initial term or any extended term.
2. During the term of this Agreement, Manager will have the exclusive
right and obligation to manage the Properties, to provide all services necessary
in connection therewith and also with the operation, repair and maintenance of
equipment located thereon, to direct the acquisition of services, supplies and
equipment necessary or desirable for all of such purposes, and to control the
expenditure of funds. Manager will perform its services in a good workmanlike
manner in conformity with (a) good
oil field practices, (b) all applicable laws and rules, regulations and orders
of duly constituted authorities having jurisdiction, and (c) all applicable
leases, contracts and agreements.
3. In performing its services hereunder, Manager may incur expenses in
the ordinary course of business in the name and for the account of MSR and
Subsidiaries including, but not limited to, the fees and expenses of independent
consultants. Manager may use the services of its own employees and employees of
MSR and Subsidiaries. All expenditures on behalf of MSR and Subsidiaries will
require the approval of Manager. Manager will have no financial obligation
beyond the usual compensation and expenses of its employees who perform the
services.
4. MSR and Subsidiaries will reimburse Manager for that portion of the
compensation and reasonable out-of-pocket expenses of its personnel and
independent consultants that is allocable to the time devoted by those personnel
and consultants to the services of Manager hereunder and will pay Manager in
addition management fees in an amount equal to 10% thereof, such payments to be
made monthly against invoices submitted by Manager. For services during any
calendar month payment will be made no later than the 15th day of the succeeding
month. All payments will be made in Tarrant County, Texas.
5. MSR and Subsidiaries will promptly pay when due all expenses of third
parties incurred on their behalf by Manager and will indemnify Manager against
any liability therefor.
6. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, MSR AND
SUBSIDIARIES RELEASE MANAGER, ITS OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS
FROM, AND AGREE TO INDEMNIFY AND HOLD HARMLESS ALL OF THEM AGAINST, ALL CLAIMS,
ACTIONS, CAUSES OF ACTION, LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES
(INCLUDING, WITHOUT LIMITATION, COURT COSTS AND ATTORNEYS' FEES) IN ANY MANNER
ARISING OUT OF, CONNECTED WITH, OR CAUSED BY THE PERFORMANCE BY MANAGER OF ITS
OBLIGATIONS HEREUNDER REGARDLESS OF WHETHER SUCH CLAIMS, ACTIONS, CAUSES OF
ACTION, LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISE OUT OF OR ARE
BASED ON (i) NEGLIGENCE (INCLUDING SOLE NEGLIGENCE, SINGLE NEGLIGENCE,
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CONCURRENT NEGLIGENCE, ACTIVE OR PASSIVE NEGLIGENCE, BUT EXPRESSLY NOT INCLUDING
GROSS NEGLIGENCE) OF MANAGER OR ANY OTHER INDEMNIFIED PARTY OR (ii) STRICT
LIABILITY.
7. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, without reference to its conflict of laws
rules. MSR and each Subsidiary agree to submit to the jurisdiction of any
state or federal court in Texas in any suit brought by Manager in connection
with this Agreement and further agree that service of process may be obtained
by certified mail at their respective addresses for service as shown by the
records of their jurisdictions of incorporation.
8. This Agreement may be amended or modified only by an instrument in
writing signed on behalf of all parties hereto.
9. This Agreement sets forth the entire agreement between MSR,
Subsidiaries and Manager with reference to the subject matter hereof.
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Executed effective as of the date first set forth above.
MSR EXPLORATION LTD.,
MOUNTAIN STATES RESOURCES, INC.,
MSR EXPLORATION, INC.
MONTE GRANDE EXPLORATION, INC., AND
GYPSY-HIGHVIEW GATHERING SYSTEMS
(G-HGS), INC.
By:
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Xxxx X. Xxxx, Chairman
and Chief Executive Officer
MERCURY EXPLORATION COMPANY
By:
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Xxxxx X. Xxxxxx,
Executive Vice President
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