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EXHIBIT 10.4
ADVISORY SERVICES AGREEMENT
This Advisory Services Agreement, effective as of
_________________________, 1998 (this "Agreement") is between Vista Energy
Resources, Inc., a Delaware corporation (the "Company"), and Natural Gas
Partners II, L.P., a Delaware limited partnership and Natural Gas Partners III,
L.P., a Delaware limited partnership (collectively, "NGP").
The Company and NGP agree as follows:
1. Retention of Advisor; Scope of Services.
(a) Subject to the terms and conditions set forth herein,
the Company hereby retains NGP to act as an advisor to the Company.
(b) As advisor to the Company, NGP will, from time to
time, as requested by the Company, provide consultation, assistance and advice
to the Company with respect to the Company's operations, including without
limitation, the following: obtaining capital, whether through bank financing or
the private placement or public offering of equity or debt, including bank loan
and credit agreement negotiation, documentation and compliance, drafting of
documents, and planning and participation in meetings with financing sources;
general oversight of legal, accounting, placement and underwriting issues;
implementing a long-term budgeting and planning process; and business
acquisitions, including negotiation strategies and financing alternatives.
(c) The parties hereto acknowledge that (i) NGP is not
regularly engaged in the business of providing advisory services and that the
services to be performed by NGP hereunder are provided as an incident to NGP's
activities as an owner of a significant portion of the stock of the Company,
(ii) the fees to be paid to NGP hereunder were established at an amount which
is believed to be approximately equal to the amount of indirect costs and
expenses NGP will incur in providing such services, (iii) NGP is not an
"investment advisor", within the meaning of the Investment Advisors Act of
1940, as amended, or applicable state laws, or a "broker" or "dealer" under the
Securities Exchange Act of 1934, as amended, or applicable state laws, (iv) the
nature of the services to be provided by NGP under this Agreement do not
include those of an "investment advisor" (i.e., providing advice as to the
value of securities or the advisability of investing in, purchasing or selling
securities), or those of a "broker" or "dealer" (i.e. effecting transaction in
securities for the account of the Company or others), and (v) it is
specifically intended by the parties hereto that NGP's activities hereunder not
subject NGP to any regulation or registration under federal or state laws.
(d) The parties hereto acknowledge and agree that NGP
will make available any and all of its employees, agents and other resources,
which NGP, it its sole discretion, determines is necessary for it to perform
its services hereunder. The parties further acknowledge that unless and until
NGP provides notice to the contrary, all decisions with respect to staffing,
scheduling and allocating NGP's resources for purposes of this Agreement will
be coordinated on behalf of NGP by
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its representatives Xxxxxxx X. Xxxxx and Xxxxx X. Xxxxx, and any request by the
Company for the performance of services hereunder shall be directed to Xxxxxxx
X. Xxxxx or Xxxxx X. Xxxxx.
2. Termination. This Agreement shall continue (unless otherwise
extended by the mutual agreement of the parties) until the earlier of (i) the
date of dissolution of the Company, and (ii) the second anniversary of the date
hereof. Notwithstanding the immediately preceding sentence, this Agreement may
be terminated effective as of the end of any fiscal quarter of the Company at
any time in the sole discretion of NGP, if NGP provides written notice of its
election to terminate this Agreement to the Company not less than 30 days
before the date on which termination is to be effective. Upon termination,
neither party will have any further obligation under this Agreement, except for
(i) the Company's obligation to pay to NGP the fees and reimbursements then due
pursuant to Paragraph 3, for the period prior to the termination, which
obligation shall continue after such termination until such amounts are paid in
full, and (ii) the Company's obligation to provide the indemnification
contained in Paragraph 4, which shall continue in effect for a period of four
years after such termination.
3. Fees and Expenses. NGP shall be entitled to a fee of $75,000
per year (pro-rated for any portion of a year) for its services during the term
of this Agreement, beginning on the date hereof. Such fee shall be payable
quarterly in arrears on the last day of each fiscal quarter of the Company
beginning with the first fiscal quarter after the date hereof. In addition,
the Company shall promptly reimburse NGP for all reasonable out-of-pocket
expenses incurred by NGP and its partners, employees and agents (including any
legal fees incurred by NGP by in-house or outside counsel) in connection with
NGP's activities pursuant to this Agreement during the Contract Period. In
consideration of the payment of the fees and expenses described in this
Xxxxxxxxx 0, XXX shall not charge any separate transaction fees for assisting
the Company in future financings or acquisitions.
4. Indemnification. In consideration of NGP's investment in the
Company and the services performed and to be performed by NGP for the Company,
and for other good and valuable consideration, the Company and NGP hereby agree
as follows:
(a) The Company shall indemnify and hold harmless NGP,
NGP's affiliates and affiliated entities, each of NGP's partners, officers,
employees, agents and each person, if any, who "controls" NGP (within the
meaning of the federal securities laws) (collectively the "Indemnified Parties"
and individually, an "Indemnified Party") from and against any and all actions
or claims and any and all claims, damages, liabilities, costs or expenses
(including, without limitation, reasonable attorneys' fees and any legal or
other expenses in giving testimony or furnishing documents in response to a
subpoena or otherwise or the costs of investigating, preparing or defending any
action or claim, whether or not in connection with any action or litigation in
which any Indemnified Party is a party), joint or several, to which any
Indemnified Party may become subject under the Securities Act of 1933 or any
other federal or state securities law or otherwise as and when incurred,
directly or indirectly, caused by, relating to, based upon or arising out of
NGP's ownership interest in the Company or any matter relating to this
Agreement, including, without limitation, any act or omission
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by NGP in connection with its role as an advisor and its acceptance of or the
performance or non-performance of its obligations under this Agreement.
(b) The indemnity provided for in subparagraph (a) above
shall not cover any loss, claim, damage, liability, cost or expense to the
extent it is found in a final judgment by a court of competent jurisdiction
(not subject to further appeal) to have resulted from an Indemnified Party's
gross negligence, willful misconduct or, to the extent not permitted by
applicable law, ordinary negligence; provided, however, that to the extent not
prohibited by applicable law, the indemnity provided for in subparagraph (a)
above shall cover any loss, claim, damage, liability, cost or expense by an
Indemnified Party REGARDLESS OF WHETHER SUCH LOSS, CLAIM, DAMAGE, LIABILITY,
COST OR EXPENSE WAS THE RESULT OF, OR IS ATTRIBUTABLE TO, THE ORDINARY
NEGLIGENCE OF SUCH INDEMNIFIED PARTY.
(c) The indemnity provided for in subparagraph (a) shall
be in addition to any liability that the Company may otherwise have to the
Indemnified Parties and shall be subject to the following:
(i) Promptly after receipt by an Indemnified
Party under subparagraph (a) above of notice of the commencement of
any action, proceeding, investigation or other event with respect to
which any Indemnified Party demands indemnification hereunder, such
Indemnified Party shall, if a claim in respect thereof is to be made
against the Company, notify the Company in writing of the commencement
thereof, provided that the failure to so notify the Company shall not
relieve it from any liability that it may have to any Indemnified
Party, except to the extent the Company is prejudiced by such failure.
(ii) Notwithstanding anything expressed or implied
herein to the contrary, the indemnity provided for herein shall cover
the amount of any settlements entered into in connection with any
claim for which an Indemnified Party may be indemnified hereunder, if
and only if such settlement is consented to by the Company.
(iii) No settlement binding on an Indemnified Party
may be made without the consent of such Indemnified Party (which
consent shall not be unreasonably withheld).
(iv) If the claim for indemnification arises out
of a claim for damages by a person other than an Indemnified Party,
the Company, after giving notice to the Indemnified Party, may
undertake to defend or settle such claim for damages and may employ
counsel for such purpose. The Indemnified Party, at its own expense,
shall have the right to employ separate counsel with respect to such
claim and to participate in, but not control, such settlement or
defense; provided that, if the Company is also a defendant in respect
of any such claim and a potential conflict exists between the
interests of the Company and those of an Indemnified Party or if the
Company does not elect to undertake the settlement or defense of such
claim, the Indemnified Parties shall, at the expense of the Company,
have the right to employ not more than one counsel to represent the
Indemnified
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Parties with respect to such claim and the Indemnified Parties may
control any settlement or defense applicable to the claims brought
against such Indemnified Parties.
(v) Expenses and other costs incurred by an
Indemnified Party in connection with any suit, action or other
proceeding relating to this Agreement shall be advanced by the Company
to such Indemnified Party prior to any final determination of whether
an Indemnified Party is entitled to be indemnified for such costs and
expenses hereunder, if the Indemnified Party provides to the Company
an undertaking to return any amounts so received to the extent that it
is ultimately determined that such person was not entitled to be
indemnified for such costs and expenses hereunder.
(vi) In order to provide for just and equitable
contribution, if a claim for indemnification is made hereunder but a
court of competent jurisdiction finds in a final judgment (not subject
to appeal) that such indemnification may not be enforced in such case,
even though the express provisions hereof provide for indemnification,
then in such case, the Company on the one hand, and the Indemnified
Parties on the other hand, shall contribute to the losses, claims,
damages, liabilities or costs so that the Indemnified Parties are
responsible in the aggregate for a percentage of the losses, claims,
damages, liabilities or costs equal to a fraction, the numerator of
which is the fees (but not expenses) previously received by NGP
pursuant to Paragraph 3 of this Agreement, and the denominator of
which is the sum of total aggregate amount of all consideration
received by the Company in respect of transactions giving rise to such
claim for indemnification, or, if no such transaction exists or has
not been completed, the fair market value of the Company's outstanding
common stock on the date hereof, and the Company shall be responsible
for the remainder of such losses, claims, damages, liabilities or
costs; provided, however, that if such allocation is not permitted by
applicable law then the relative fault of the Company, on the one
hand, and the Indemnified Parties, on the other hand, in connection
with the statements, acts or omissions that resulted in such losses,
claims, damages, liabilities or costs and relevant equitable
considerations shall also be considered. No person found liable for a
fraudulent misrepresentation shall be entitled to contribution from
any person who is not also found liable for such fraudulent
misrepresentation. Notwithstanding the foregoing, the Indemnified
Parties, in the aggregate, shall not be obligated to contribute any
amount hereunder that exceeds the amount of fees (but not expenses)
NGP received previously pursuant to this Agreement.
(vii) The Company agrees that the Indemnified
Parties shall not have any liability (whether direct or indirect, in
contract, tort or otherwise) to the Company for or in connection with
any matter related to this Agreement, except for liabilities or
expenses that are found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted
primarily and directly from NGP or such other Indemnified Party's
gross negligence or willful misconduct.
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5. GOVERNING LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS MADE AND TO BE FULLY PERFORMED THEREIN.
6. Successors and Assigns. The benefits of this Agreement shall
inure to the parties hereto, their respective successors and assigns, and to
the indemnified parties hereunder and their successors and representatives, and
the obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns. This Agreement
may not be assigned by any party to an unaffiliated party without the express
written consent of the other party hereto.
7. Notices. All communications under this Agreement shall be in
writing and shall be delivered personally or sent by personal delivery,
expedited delivery, certified mail, return receipt requested or by telecopy as
follows:
If to NGP:
000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xx, Xxx Xxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxx X. Xxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000-0000
Telecopy Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
If to the Company:
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Telecopy Number: (000) 000-0000
Attention: C. Xxxxxxx Xxxx
Either party may change its address or telecopy number set forth above
by giving the other party notice of such change in accordance with the
provisions of this Paragraph 7. A notice shall be deemed given, if by personal
delivery or expedited delivery service, on the date of such delivery to such
address, if by certified mail, on the date shown on the applicable return
receipt, or if by telecopy, on the date of receipt of the transmission of such
notice at such telecopy number.
8. Nature of Relationship. The parties hereto intend that the
services provided by NGP to the Company pursuant to this Agreement are being
provided as an independent contractor. Nothing contained in this Agreement
shall constitute or be construed to be or create a general partnership or joint
venture between NGP and the Company or their respective successors or assigns.
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9. Captions. The Paragraph titles herein are for reference
purposes only and do not control or affect the meaning or interpretation of any
term or provision hereof.
10. Amendments. No alteration, amendment, change or addition
hereto shall be binding or effective unless the same is set forth in writing
signed by a duly authorized representative of each party.
11. Partial Invalidity. If the final determination of a court of
competent jurisdiction declares, after the expiration of the time within which
judicial review (if permitted) of such determination may be perfected, that any
term or provision hereof is invalid or unenforceable (i) the remaining terms
and provisions hereof shall be unimpaired, and (ii) the invalid or
unenforceable term or provision shall be replaced by a term or provision that
is valid and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision.
12. Survival. All representations, warranties and agreements
contained herein, or contained in certificates submitted pursuant to this
Agreement, shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, and shall survive
the execution and delivery hereof.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which together
shall be considered one and the same agreement.
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This Agreement is executed as of the date first written above by a
duly authorized representative of each of the Company and NGP.
COMPANY
VISTA ENERGY RESOURCES, INC.
By:
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C. Xxxxxxx Xxxx, Chief Executive Officer
NGP
NATURAL GAS PARTNERS II, L.P.
By: G.F.W. Energy II, L.P., General Partner
By: GFW II, L.L.C., General Partner
By:
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Xxxxxxx X. Xxxxx, Authorized Member
NATURAL GAS PARTNERS III, L.P.
By: Rainwater Energy Investors, L.P.
By: GFW III, L.L.C., General Partner
By:
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Xxxxxxx X. Xxxxx, Authorized Member
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