FORM OF MANAGEMENT SERVICES AGREEMENT
Exhibit 10.2
FORM OF MANAGEMENT SERVICES AGREEMENT
BY AND AMONG
AECP MANAGEMENT, LLC,
an Oklahoma Limited Liability Company
AMERICAN ENERGY CAPITAL PARTNERS, LP
a Delaware Limited Partnership
AND
AECP OPERATING COMPANY, LLC
a Delaware Limited Liability Company and
Wholly Owned Subsidiary of AECP LP
Dated [●], 2014
TABLE OF CONTENTS
ARTICLE I Defined Terms, Interpretation | 1 | |
Section 1.1 | Defined Terms | 1 |
Section 1.2 | References and Titles | 12 |
ARTICLE II Management Services | 12 | |
Section 2.1 | Engagement of Manager | 12 |
Section 2.2 | Direction of Result of Management Services | 12 |
Section 2.3 | Management Standards | 13 |
Section 2.4 | Records; Financial Reports; Instruments of Service | 13 |
Section 2.5 | Certain Limitations on Management Services | 14 |
Section 2.6 | Well Operations | 14 |
ARTICLE III Financial Administration | 14 | |
Section 3.1 | Budget. | 14 |
Section 3.2 | Cash Management | 15 |
Section 3.3 | Revenues and Joint Interest Xxxxxxxx | 15 |
Section 3.4 | Manager Payments | 16 |
Section 3.5 | Payment to Owner | 16 |
ARTICLE IV Contract Administration; Power of Attorney | 16 | |
Section 4.1 | Contract Administration | 16 |
Section 4.2 | Purchases for the Owner | 16 |
Section 4.3 | Affiliate Transactions | 16 |
Section 4.4 | Power of Attorney | 17 |
ARTICLE V Compensation and Expenses | 17 | |
Section 5.1 | Management Fee | 17 |
Section 5.2 | Reimbursement of Organization and Offering Expenses; Reimbursement of Out-of-Pocket Expenses | 18 |
Section 5.3 | Acquisition Fee and Acquisition Expenses | 20 |
Section 5.4 | Disposition Fee and Disposition Expenses | 21 |
Section 5.5 | Financing Coordination Fee | 22 |
ARTICLE VI Representations, Warranties and Covenants | 22 | |
ARTICLE VII Additional Agreements of Manager; Restrictions on Manager | 23 | |
Section 7.1 | Compliance with Laws | 23 |
Section 7.2 | Compliance with Obligations | 23 |
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Section 7.3 | Prohibited Acts | 23 |
Section 7.4 | Emergencies | 25 |
Section 7.5 | Manager’s Insurance | 25 |
ARTICLE VIII Personnel Administration | 26 | |
Section 8.1 | General | 26 |
Section 8.2 | Responsibility | 26 |
ARTICLE IX Investment Opportunities | 26 | |
Section 9.1 | Investment Opportunities. | 26 |
Section 9.2 | Initial Budget; Revisions to Budget. | 27 |
ARTICLE X Term; Termination | 27 | |
Section 10.1 | Term | 27 |
Section 10.2 | Termination | 28 |
Section 10.3 | Transition Services | 29 |
Section 10.4 | Effect of Termination | 29 |
ARTICLE XI Indemnification; Liability of the Parties | 29 | |
Section 11.1 | Indemnification | 29 |
Section 11.2 | EXTENT OF INDEMNIFICATION; EXPRESS NEGLIGENCE RULE | 30 |
Section 11.3 | Indemnification Procedure | 30 |
Section 11.4 | Limitation on Consequential and Other Damages | 30 |
Section 11.5 | Manager Liability | 31 |
Section 11.6 | Conspicuous | 31 |
ARTICLE XII Force Majeure | 31 | |
ARTICLE XIII Miscellaneous | 32 | |
Section 13.1 | Time | 32 |
Section 13.2 | Independent Contractor | 32 |
Section 13.3 | Notices | 32 |
Section 13.4 | Cooperation | 33 |
Section 13.5 | No Third Party Beneficiaries | 34 |
Section 13.6 | Cumulative Remedies | 34 |
Section 13.7 | Governing Law; Jurisdiction; Waiver of Jury Trial | 34 |
Section 13.8 | Entire Agreement | 34 |
Section 13.9 | Assignment | 34 |
Section 13.10 | Amendment | 35 |
Section 13.11 | Severability | 35 |
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Section 13.12 | Waiver | 35 |
Section 13.13 | Counterparts; Facsimiles; Electronic Transmission | 35 |
Section 13.14 | Corporate Opportunity | 35 |
Section 13.15 | Joint Acknowledgement | 36 |
EXHIBITS: | ||
Exhibit A | Scope of Services | A-1 |
Exhibit B | Insurance | B-1 |
Exhibit C | Cost Reimbursement | C-1 |
Exhibit D | Operating Agreement | D-1 |
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This MANAGEMENT SERVICES AGREEMENT (this “Agreement”), dated as of [•] [•], 2014 and effective for all purposes as of the [___] day of ____________, 2014 (the “Effective Date”), is by and among AECP MANAGEMENT, LLC, an Oklahoma limited liability company (the “Manager”), American Energy CAPITAL PARTNERS, LP, a Delaware limited partnership (“AECP LP”), and AECp OPERATING COMPANY, LLC, a Delaware limited liability company and a wholly owned subsidiary of AECP LP (the “Owner”). The Manager, AECP LP and Owner are referred to herein individually as a “Party,” and collectively as the “Parties.” Capitalized terms used but not defined herein shall have the meanings assigned to such terms in Article I.
A. AECP GP is the sole general partner of AECP LP; and
B. The Owner is engaged in the Business; and
C. The Manager is experienced and skilled in the conduct of business in the oil and gas acquisition, exploration, development and production industry, and has the ability to provide technical, commercial, financing and management services that may be necessary or useful to the Owner; and
D. The Owner desires to engage the Manager to perform and provide, and the Manager desires to perform and provide for and on behalf of the Owner, the Services as set forth herein and in accordance with the terms and conditions hereof.
ARTICLE
I
Defined Terms, Interpretation
Section 1.1 Defined Terms. As used in this Agreement, each of the following terms has the meaning given in this Section 1 as follows:
“Acquisition Expenses” means any and all expenses, including but not limited to legal fees and expenses, travel and communications expenses, financial advisory fees, brokerage fees, costs of appraisals, engineering fees and expenses, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums and the costs of performing due diligence (including, without limitation, title, environmental and similar due diligence), but excluding Acquisition Fees, in each case incurred by AECP LP, the Owner, the Manager or any of their Affiliates in connection with the selection, evaluation, acquisition, origination, making or development of any Property Acquisition, whether or not acquired.
“Acquisition Fee” means the fee payable to the Manager pursuant to Section 5.3.
“AECP GP” means American Energy Capital Partners, GP LLC, a Delaware limited liability company and the general partner of AECP LP.
“AECP LP” has the meaning specified in the introductory paragraph.
“Affiliate” means, with respect to any Person, each other Person that directly or indirectly (through one or more intermediaries or otherwise) controls, is controlled by, or is under common control with such Person, provided, however, that the Parties specifically acknowledge and agree that for purposes of this Agreement neither AECP GP nor the Owner is an Affiliate of the Manager.
“Agreement” means this Agreement, as amended, supplemented or modified from time to time.
“Approved Credit Facility” means a revolving or other credit facility entered into by AECP LP, the Owner or a Subsidiary of the Owner.
“Assets” means (a) the Leases; (b) the Xxxxx; (c) all royalty, overriding royalty, production payments, net profits interests and other interests in oil and gas properties owned by the Owner and its Subsidiaries; (d) all tangible personal property, equipment, machinery, inventory, supplies, spare parts, fixtures and improvements that are a part of any Lease or Well or are owned by or in the possession of the Owner and its Subsidiaries; and (e) all files, records and business data that relate to any Lease or Well or any of the business of the Owner and its Subsidiaries.
“Bankruptcy” means, with respect to any Person, the occurrence of any of the following events, conditions or circumstances: (i) such Person shall file a voluntary petition in bankruptcy or shall be adjudicated as bankrupt or insolvent, or shall file any petition or answer or consent seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under the United States Bankruptcy Reform Act of 1978 (the “Bankruptcy Code”) or any present or future applicable federal, state or other statute or Law relating to bankruptcy, insolvency, reorganization or other relief for debtors, or shall seek or consent to, or acquiesce in, the appointment of any trustee, receiver, conservator or liquidator of such Person or of all or any substantial part of its properties (the term “acquiesce,” as used in this definition, includes the failure to file a petition or motion to vacate or discharge any order, judgment or decree within 20 days, after entry of such order, judgment or decree); (ii) an involuntary case or other proceeding shall be commenced against such Person seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief with respect to such Person or its debts under the Bankruptcy Code or any present or future applicable federal, state or other statute or Law relating to bankruptcy, insolvency, reorganization or other relief for debtors, or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed or unstayed for a period of 90 consecutive days, (iii) a court of competent jurisdiction shall enter an order, judgment or decree approving a petition filed against such Person seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Bankruptcy Code, or any other present or future applicable federal, state or other statute or law relating to bankruptcy, insolvency, reorganization or other relief for debtors, and such Person shall acquiesce in the entry of such order, judgment or decree or such order, judgment or decree shall remain unvacated and unstayed for an aggregate of 90 days (whether or not consecutive) from the date of entry thereof, or any trustee, receiver, conservator or liquidator of such Person or of all or any substantial part of its property shall be appointed without the consent or acquiescence of such Person and such appointment shall remain unvacated and unstayed for an aggregate of 90 days (whether or not consecutive); (iv) such Person shall admit in writing its inability to pay its debts as they mature or shall generally not be paying its debts as they become due; or (v) such Person shall make a general assignment for the benefit of creditors or take any other similar action for the protection or benefit of creditors.
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“Basket Amount” means the following: (i) prior to 90 days following the second Fiscal Year after the occurrence of the Full Investment Date, 2.0% of the aggregate capital contributions to AECP LP made on or before such date, and (ii) after 90 days following the second Fiscal Year after the occurrence of the Full Investment Date, 2.0% of the after tax present value, discounted at 10%, of the cash flows attributable to AECP LP’s consolidated estimated net proved reserves as set forth in AECP LP’s financial statements filed with the Securities and Exchange Commission.
“Budget” means the budget approved pursuant to Section 3.1(a), as amended and revised from time to time in accordance with Section 3.1(b).
“Business” of the Owner and its subsidiaries is (a) to acquire, hold, maintain, renew, drill, develop, operate and sell working interests, net profits interests, leasehold interests, royalties, and other types of oil and gas interests and/or equity interests in corporate, limited liability company or partnership entities owning oil and gas interests; (b) to produce, collect, store, treat, deliver, market, sell, farm-out or otherwise dispose of oil, gas and related hydrocarbons and minerals from its properties and interests; and (c) to take all such other actions incidental to any of the foregoing as may be necessary or desirable.
“Business Day” means any day other than Saturday or Sunday or any day on which commercial banks in Oklahoma City, Oklahoma or New York, New York are authorized or required by law to close.
“Calendar Month” means any of the months in the Gregorian calendar.
“Calendar Quarter” means the calendar quarter of each Calendar Year ending March 31, June 30, September 30 and December 31.
“Calendar Year” means a 12 consecutive Calendar Month period commencing on January 1, but the first Calendar Year will begin on the Effective Date and the last Calendar Year will end on the date Owner is dissolved.
“Common Units” means common units consisting of limited partner interests of AECP LP issued by the Partnership to Investors in the Offering.
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“Company Agreement” means the First Amended and Restated Limited Liability Company Agreement of AECP GP, as same may be amended, supplemented or restated during the term of this Agreement.
“Contract Purchase Price” means the total consideration, including any “carried interest” consideration or deferred or “earn-out” payments when paid by AECP LP or the Owner in connection with the acquisition from any seller(s) of any Property Acquisition. With respect to any acquisition that consists, in whole or in part, of the contribution to AECP LP or the Owner by the owner(s) of the property Acquisition in consideration for equity interests of AECP LP, such equity interests shall be determined to have the fair market value mutually agreed by AECP GP and the Manager.
“Contract Sales Price” means the total consideration, including any “carried interest” consideration or deferred or “earn-out” payments when received by AECP LP or the Owner for the sale or other disposition of any Assets (other than sales of oil, gas and other hydrocarbons produced from the Assets in the ordinary course of business). With respect to any sale or disposition of Assets that consists, in whole or in part, of the receipt by AECP LP or the Owner of non-cash consideration, such non-cash consideration shall be determined to have the fair market value mutually agreed by AECP GP and the Manager.
“Control” (including collective meanings, “controlling,” “controlled by” and “under common control with”) means 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.
“Dealer Manager” means Realty Capital Securities, LLC, or such other Person selected by AECP GP to act as the dealer manager of the Offering.
“Dealer Manager Fee” means a fee of three percent (3.0%) of the Gross Proceeds that is payable to the Dealer Manager for serving as the dealer manager of the Offering.
“Default Amount” has the meaning specified in Section 5.3.
“Default Rate” means, on the date of determination, the Prime Rate (as published in the “Money Rates” table of the Wall Street Journal, eastern edition) plus an additional 2.0 percentage points (that is, 200 basis points; or, if such rate is at any time contrary to any applicable Law, then “Default Rate” shall be reduced to mean the maximum rate permitted by applicable Law).
“Development Activities” means all operations and activities related to the development of the Assets, including the drilling of any Development Xxxxx, recompletions, workovers and operations subsequent to a well reaching its objective depth on any Lease or other prospect held by the Owner or its subsidiaries and related proposals, activities and operations required to commence and sustain production from such well(s), including the design, fabrication or other acquisition, and installation, of a related development system.
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“Development Well” means a well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.
“Disposition Expenses” means any and all expenses, exclusive of Disposition Fees, incurred by AECP LP, the Owner, the Manager or any of their Affiliates in connection with the sale or other disposition, or proposed sale or other disposition, of all or any portion of the Assets (other than the sale of oil, gas or other hydrocarbons produced from the Assets) , whether or not sold or otherwise disposed of, including, without limitation, legal fees and expenses, travel and communications expenses, brokerage fees, costs of appraisals, engineering fees and expenses, accounting fees and expenses, title insurance premiums and the costs of performing due diligence.
“Disposition Fee” means the fee payable to the Manager pursuant to Section 5.4.
“Draft Budget” has the meaning specified in Section 3.1(a).
“DRULPA” means the Delaware Revised Uniform Limited Partnership Act or any successor statute, as amended from time to time.
“Economic Run” means data and other information, delivered in written or electronic formats, necessary to present a base case, an upside case and a downside case economic analysis of a Property Acquisition, including, at a minimum and without limitation, the following:
(a) Cash flow financial model analysis, including:
(i) a calculation of the Property Acquisition internal rate of return using such assumptions with respect to leverage, debt amortization and general and administrative expenses and management fees as Manager and Owner mutually agree at any time and from time to time are appropriate for financial modeling purposes with respect to Property Acquisitions; and
(ii) projected financial results from the Property Acquisition;
(b) supporting property-level reserve reports prepared by either qualified internal or independent reserve engineers as determined by the Manager in its discretion; and
(c) a cash flow analysis showing the projected impact of the Property Acquisition on the projected cash flow of the Owner.
“Effective Date” has the meaning specified in the introductory paragraph of this Agreement.
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“Emergency” means any sudden or unexpected event which causes, or risks causing, (a) substantial damage to any Asset or the property of a Third Party, or (b) death of or injury to any Person, (c) damage or substantial risk of damage to natural resources (including wildlife) or the environment, (d) safety concerns associated with continued operations or (e) non-compliance with applicable Law, in each case which event is of such a nature that a response cannot, in the reasonable discretion of Manager, await the decision of Owner. For the avoidance of doubt, an “Emergency” shall include any release or threatened release of Hazardous Substances into the environment that requires notification to any Governmental Authority under applicable Law.
“Employee” means each employee or individual independent contractor of Manager.
“Expense Cap” has the meaning specified in Section 5.2(a).
“Financing Coordination Fee” has the meaning specified in Section 5.5.
“Force Majeure Event” means any cause or event not reasonably within the control of the Party whose performance is sought to be excused thereby including the following causes and events (solely to the extent such causes and events are not reasonably within the control of the Party claiming suspension), which list of events is not exhaustive: acts of God, strikes, lockouts, or other industrial disputes or disturbances, acts of the public enemy, wars, blockades, insurrections, civil disturbances and riots, epidemics, landslides, lightning, earthquakes, fires, tornadoes, hurricanes, storms, floods, washouts, excessive rainfall and warnings for any of the foregoing which may necessitate the precautionary shut-down of xxxxx, plants, pipelines, gathering systems, or other related facilities; arrests, orders, directives, restraints and requirements of governments and government agencies, either federal or state, civil and military; outages (shutdown) for the making of repairs, alterations, relocations or inspections; inability to secure labor or materials, inclement weather that necessitates extraordinary measures and expense to construct facilities or maintain operations, or any other causes, whether of the kind enumerated herein or otherwise, not reasonably within the control of the Party claiming suspension. Such term shall likewise include, in those instances where either Party is required to obtain servitudes, rights-of-way, grants, permits, or licenses to enable such Party to fulfill its obligations hereunder, the inability of such Party to acquire, or delays on the part of such Party in acquiring, at reasonable cost and after the exercise of reasonable diligence, such servitudes, rights-of-way, grants, permits or licenses, and in those instances where either Party hereto is required to secured permits or permissions from any Governmental Authority to enable such Party to fulfill its obligations hereunder, the inability of such Party to acquire, or delays on the part of such Party in acquiring, at reasonable cost and after the exercise of reasonable diligence, such permits and permissions.
“Full Investment Date” means the date on which AECP LP has invested, committed for investment or otherwise spent 90% or more of the aggregate capital contributions (net of the Dealer Manager Fee, Selling Commissioners, volume discounts, any marketing expenses, due diligence expenses and Organization and Offering Expenses) received by AECP LP from the Offering.
“FWPP” means the Chesapeake Energy Corporation Founders Well Participation Program, dated as of June 10, 2005.
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“FWPP Assets” shall mean any assets or properties acquired by Xxxxxx X. XxXxxxxxx, directly or through any of his Affiliates or by his spouse, in connection with or pursuant to the FWPP.
“FWPP Opportunity” shall mean any right of Xxxxxx X. XxXxxxxxx or any entity of which he is an Affiliate to acquire a working interest in any oil and gas property pursuant to the FWPP.
“GAAP” means generally accepted accounting principles, as recognized by the U.S. Financial Accounting Standards Board (or any generally recognized successor).
“General Parameters” means the general parameters for a Property Acquisition as the Manager and Owner may mutually agree at any time and as same may thereafter be amended, modified or superseded by mutual agreement of the Manager and Owner, which general parameters shall include, without limitation, general parameters for terms and conditions of Property Acquisitions with respect to title, environmental, other liabilities, indemnification, gas imbalances, conditions to closing and other matters mutually determined to be appropriate.
“General Partner” means AECP GP, in its capacity as the general partner of AECP LP.
“Governmental Authority” means any federal, national, regional, state, municipal or local government, any political subdivision or any governmental, judicial, public or statutory instrumentality, tribunal, court, arbitral panel, or other regulatory bureau, authority, body or entity having legal jurisdiction over the matter or Person in question.
“Gross Proceeds” means the aggregate sales price of all Common Units issued by AECP LP to Investors in the Offering, without deduction for the Dealer Manager Fee, Selling Commissions, volume discounts, any marketing expense and due diligence expense reimbursement or Organization and Offering Expenses.
“Hazardous Substances” means any pollutants, contaminants, toxic or hazardous substances, materials, wastes, constituents, compounds or chemicals that are regulated by, or may form the basis of liability under any environmental Laws, including asbestos-containing materials (but excluding any NORM).
“Hedging Policy” means a policy or policy with respect to Xxxxxx that Owner approves as the Hedging Policy of the Owner from time to time.
“Xxxxxx” means any commodity futures contract, commodity swap, commodity option, commodity forward sale, commodity put, call or collar or other similar agreement or arrangement designed to protect against fluctuations in the price of oil, gas or other hydrocarbons used, sold or produced by a person.
“Holdings” means AECP Holdings, LLC, an affiliate of the Manager.
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“Initial Closing” means the initial closing of the purchase of Common Units from AECP LP by Investors pursuant to the Offering.
“Initial Purchase Price” means $20.00, the amount paid by the Investors to AECP LP to purchase Common Units in the Offering.
“Initial Term” has the meaning specified in Section 10.1.
“Insured” has the meaning specified in Section 7.5.
“Investors” means Purchasers of Common Units from AECP LP pursuant to the Offering.
“Invoice” has the meaning specified in Section 5.1.
“Joint Venture” means any partnership, limited partnership or other arrangements with a Person(s) other than AECP LP or the Owner in which AECP LP or the Owner is a member, partner or co-venturer and which is established to own, operate or develop Property Acquisitions.
“Law” means any and all applicable laws, statutes, ordinances, permits, decrees, rulings, writs, injunctions, orders, codes, judgments, principles of common law, rules or regulations which are promulgated, issued or enacted by a Governmental Authority having jurisdiction.
“Lease Operations” means all necessary or useful lease and land administration services and maintaining all land, lease and other related records (including title to the Owner’s Assets and the maintenance and curing of the same) and all technical, regulatory, permitting and marketing supervision and oversight determined by the Manager to be necessary or appropriate to assure that the Owner’s Assets are being explored, developed, produced, gathered and operated in accordance with this Agreement, including the Exhibits hereto, and applicable contracts and agreements.
“Leases” means the oil, gas and mineral leases and operating rights now owned or hereafter participated in or acquired by the Owner as of the date of determination.
“Listing Date” has the meaning assigned to such term in the Partnership Agreement.
“Loan(s)” means any indebtedness or obligation in respect of borrowed money or evidenced by bonds, notes, debentures, deeds of trust, letters of credit, volumetric production payments, or similar instruments, including secured loans and mezzanine loans.
“Management Services” has the meaning specified in Exhibit A.
“Manager” has the meaning specified in the introductory paragraph of this Agreement.
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“Manager Indemnified Parties” has the meaning specified in Section 11.1.
“Manager Personnel” means the officers and employees of the Manager, the officers and employees of Affiliates of the Manager, and all other persons otherwise engaged by the Manager for the provision of the Management Services hereunder.
“Material Adverse Effect” shall mean any event, circumstance, change or effect (a) that is material and adverse to the business, assets, properties, liabilities, financial condition or results of operations of AECP, the Owner and any subsidiaries thereof, determined on a consolidated basis, if applicable.
“Material Commitment” means any agreement, contract or other arrangement binding on Owner or any of its subsidiaries which could reasonably be expected to result in payments by the Owner or any of its subsidiaries of more than the Basket Amount then in effect or that AECP GP or Owner advises the Manager would otherwise qualify as a material contract under Regulation S-K of the Securities Act of 1933.
“Monthly Management Fee” has the meaning specified in Section 5.1.
“NASAA Guidelines” means the guidelines adopted September 22, 1976 by the North American Securities Administrators Association, Inc. relating to the registration of Oil and Gas Programs, as amended and in effect at the time the determination is made pursuant to this Agreement.
“Offering” means the best efforts registered public offering of Common Units consisting of (i) a minimum offering of 100,000 Common Units at the Initial Purchase Price per Common Unit for Gross Proceeds of $2.0 million at the Initial Purchase and (ii) a maximum offering of 100.0 million Common Units for Gross Proceeds of up to $2.0 billion.
“Operating Agreement” means (i) the operating agreements, gas balancing agreements, and participation agreements (including the applicable Accounting Procedures) which relate to the Assets or any of the Leases and other agreements governing the drilling and operation of and accounting for the Leases, and (ii) with respect to Leases owned entirely by the Owner and not already subject to an operating agreement at the time of acquisition by the Owner, the form of operating agreement attached as Exhibit D with such additions or modifications thereto as the Manager determines to be necessary or appropriate for the particular Assets to be subject thereto or for the operations to be conducted thereon.
“Operator” means the person appointed as Operator of any Asset owned by Owner pursuant to an Operating Agreement, which shall be (a) the Manager or an Affiliate of the Manager with respect to Assets operated by the Manager or an Affiliate of Manager pursuant to Section 2.7 and (b) the Third Party designated as operator with respect to Assets not operated by the Manager or an Affiliate of the Manager.
“Operating Services” has the meaning specified in Exhibit A.
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“Organization and Offering Expenses” means all costs and expenses of organizing and selling the Offering (other than the Selling Commissions and the Dealer Manager Fees) paid by AECP LP, AECP GP or the Manager in connection with the Offering, including, but not limited to, fees of the underwriters' attorneys, expenses for printing, engraving, mailing, filing, salaries of employees while engaged in sales activity, charges of transfer agents, registrars, trustees, escrow holders or escrow agent, depositaries, engineers and their experts, expenses of qualification of the sale of the Common Units under Federal and State law, including taxes and fees, accountants' and attorneys' fees and other front-end fees, charges incurred by or on behalf of AECP GP or the Manager in connection with the formation of AECP LP, the Owner and the Manager, the preparation, negotiation, and execution of the Partnership Agreement, this Agreement, any dealer manager or soliciting dealer agreement, escrow agent agreement subscription agreement and any other agreement in connection with or relating to the Offering, issuance of Common Units in the Offering and reimbursement of AECP LP, AECP GP or the Manager for costs in connection with preparing supplemental sales materials.
“OrgOff Reimbursement Amount” has the meaning specified in Section 5.2(a).
“Out-of-Pocket Expenses” has the meaning specified in Section 5.2(c).
“Owner” has the meaning specified in the introductory paragraph of this Agreement and, unless the context otherwise requires, includes the subsidiaries of the Owner.
“Owner Agreement” means the First Amended and Restated Limited Liability Company Agreement of Owner, as same may be amended, supplemented or restated during the term of this Agreement.
“Owner Indemnified Parties” has the meaning specified in Section 11.2.
“Parties” has the meaning specified in the introductory paragraph.
“Partnership Agreement” means the First Amended and Restated Agreement of Limited Partnership of AECP LP, as same may be amended, supplemented or restated during the term of this Agreement.
“Permitted Investment” means (a) any evidence of indebtedness, maturing not more than one (1) year after such time, issued or guaranteed by the United States Government, (b) commercial paper, maturing not more than nine (9) months from the date of issue, which is issued by a corporation (other than an Affiliate of the Manager) organized under the laws of any state of the United States or of the District of Columbia and rated A-l by Standard & Poor's Ratings Group, or any successor thereto, or P-l by Xxxxx'x Investors Service, Inc., (c) any certificate of deposit or bankers acceptance, maturing not more than one (1) year after such time, which is issued by a commercial banking institution that is a member of the U.S. Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, or (d) any repurchase agreement entered into with any commercial banking institution of the stature referred to in clause (c) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c), and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such commercial banking institution thereunder.
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“Permits” has the meaning specified in Exhibit A.
“Person” (whether or not capitalized) means any natural person, corporation, company, limited or general partnership, joint stock company, joint venture, association, limited liability company, trust, bank, trust company, land trust, business trust or other entity or organization, whether or not a Governmental Authority.
“Property Acquisition” means any acquisition or proposed acquisition of developed and undeveloped producing or non-producing oil and gas properties (generally consisting of Leases and Xxxxx) where such properties are located onshore in the United States, but excluding any FWPP Opportunity.
“Proposal” has the meaning specified in Section 9.1(c).
“Reasonably Prudent Operator” means conducting the applicable activities as a reasonably prudent operator, in a good and workmanlike manner, with due diligence and dispatch, in accordance with good oilfield practice, and in compliance with applicable law and regulation, but with no liability for losses sustained or liabilities incurred, except as such may result from gross negligence or willful misconduct.
“Records” has the meaning specified in Section 2.4.
“Rejected Proposal” has the meaning specified in Section 9.1(b).
“Selling Commission(s)” means the fee(s) payable to the Dealer Manager and reallowable to Soliciting Dealers with respect to Common Units sold by them in the Offering.
“Services” has the meaning set forth in Section 2.1.
“Soliciting Dealers” means broker-dealers that are members of the Financial Industry Regulatory Authority Inc., or that are exempt from broker-dealer registration, and that, in either case, have executed soliciting dealer or other agreements with the Dealer Manager to sell Common Units in the Offering.
“Term” has the meaning specified in Section 10.1.
“Third Party” means any Person other than a Party to this Agreement or any Affiliate of a Party to this Agreement.
“Utica Shale Formation” means the Utica Shale Formation in Ohio, West Virginia and Pennsylvania.
“Xxxxx” means all oil, gas and other hydrocarbon xxxxx now owned or hereafter participated in or acquired by the Owner.
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Section 1.2 References and Titles. All references in this Agreement to Exhibits, Schedules, Sections, paragraphs, subsections and other subdivisions refer to the corresponding Exhibits, Schedules, Sections, paragraphs, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular Section, subsection or other subdivision unless expressly so limited. The word “including” (in its various forms) means including without limitation. All references to “$” or “dollars” shall be deemed references to United States Dollars. Titles appearing at the beginning of any Sections, subsections or other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be disregarded in construing the language hereof. The words “this Agreement,” “here,” “hereby,” “hereunder’’ and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The words “this Section” and “this subsection,” and words of similar import, refer only to Section or subsection hereof in which such words occur. The word “or” is not exclusive, and the word “including” (in its various forms) means including without limitation. Each accounting term not defined herein, and each accounting term partly defined herein to the extent not defined, will have the meaning given to it under GAAP. Exhibits and Schedules referred to herein are attached to and by this reference incorporated herein for all purposes. Pronouns in masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. References to any Law or agreement (or contract) means such Law or agreement (or contract) as it may be amended from time-to-time. If an ambiguity, question of intent or question of interpretation arises, this Agreement must be construed as if drafted jointly, and there must not be any presumption, inference or conclusion drawn against either Party by virtue of the fact that its representatives have authored this Agreement or any of its terms. Any reference to an agreement or contract herein shall include any amendment, modification or replacement thereof that is in accordance with the provisions of this Agreement.
ARTICLE
II
Management Services
Section 2.1 Engagement of Manager. Commencing on the Effective Date, the Owner hereby appoints, retains and authorizes the Manager, and the Manager hereby accepts and agrees, to perform the Management Services and Operating Services (collectively, the “Services”) during the Term at all times in accordance with the terms and conditions set forth in this Agreement.
Section 2.2 Direction of Result of Management Services. Except with respect to the means or method by which the Manager performs the Services (which shall be subject to the good faith direction or control of the Manager), the provision of the Services hereunder shall at all times be subject to the direction of the Owner, including, without limitation, the Owner’s right, subject to Section 3.5, to direct the Manager with respect to funds held in any Owner’s account(s) managed by the Manager. The Parties acknowledge that the Owner’s need for and scope of the Services may change from time to time depending on the nature, number and size of the interests comprising the Assets held by the Owner at any given time, and Owner reserves the right to change the scope of the Services consistent with Exhibit A from time to time by mutual agreement with the Manager.
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Section 2.3 Management Standards. Subject to the terms hereof, the Manager will act in compliance with the provisions of this Agreement and, where this Agreement does not specifically establish a particular obligation or standard, (a) with respect to Assets subject to an Operating Agreement of which Manager is the Operator (and if the Owner or any of its subsidiaries is designated as the Operator of any Assets Owner shall take such actions as are necessary or appropriate to cause the Manager to be designated as the Operator of same) in compliance with the terms of such Operating Agreement as they apply to the Assets; (b) with respect to Assets subject to an operating agreement of which the Manager is not the Operator, as a Reasonably Prudent Operator consistent with generally acceptable standards for non-operated properties in the oil and gas business based on information regarding such operations furnished or otherwise obtained by the Manager and (c) with respect to Assets or business of the Owner not subject to an Operating Agreement, in a manner consistent with generally acceptable standards in the oil and gas business. The Manager shall have no obligation to advance funds for the account of the Owner or to pay any sums of its own in connection with the performance of the actions which it is authorized or required to take on behalf of the Owner hereunder.
Section 2.4 Records; Financial Reports; Instruments of Service. At all times during the Term, the Manager shall maintain complete books of account, receipts, disbursements, Permits and all other records relating to the Services performed hereunder (the “Records”), and all accounting Records shall be maintained in accordance with GAAP. The Manager shall deliver (i) monthly financial and operating reports to Owner in respect of the most recently ended Calendar Month in a form requested and as may be required by Owner, but in any event no later than 30 days after the end of each Calendar Month, and (ii) quarterly cash flow forecasts for Owner as may be required by Owner, but in any event no later than 15 days prior to the start of the applicable Calendar Quarter. Further, the Manager shall prepare and submit to Owner a monthly management report in respect of the most recently ended Calendar Month with such information as Owner may request, as well as any other information (without regard to whether relating to such Calendar Month) that Owner may request. Owner and/or any representatives designated by Owner may at any time during normal business hours, upon not less than two (2) Business Days’ advance notice, examine and/or make and retain copies of said Records. Upon the request from Owner to the Manager given at any time or from time to time, the Manager shall furnish to Owner a report setting forth the borrowing, hedging transactions and intangible drilling costs made or incurred during the preceding six-month period and such other information as Owner may reasonably request and as is available to the Manager in order to permit Owner to comply with the reporting requirements of the NASAA Guidelines as then in effect.
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Section 2.5 Certain Limitations on Management Services. It is the intent of Owner and the Manager to maintain the separate corporate existence of both entities, to hold themselves out to others as separate corporate entities and to conduct their respective businesses in a manner which respects and preserves their separate identities. Owner and the Manager also acknowledge and agree that AECP LP, as the sole member of Owner, is relying on the establishment and maintenance of the separate corporate entity of Owner. Accordingly, the Manager will provide the Management Services, and the Owner will operate its business, consistent with this intent. Without limiting the foregoing, the Manager, to the extent applicable when providing Management Services on behalf of Owner, shall (i) maintain proper books and records that show the assets, liabilities, and transactions of the Owner separate from those of any other person and prepare financial statements for Owner in the same manner, (ii) not commingle the funds received by the Manager on behalf of the Owner with any other person’s funds, including those of the Manager, (iii) pay liabilities and expenses invoiced directly to the Owner or its Assets only out of the Owner’s own funds maintained by or on behalf of Owner, and (iv) maintain separate bank accounts belonging only to, or maintained by the Owner. Nothing in this Agreement shall prohibit the Manager and Owner from acknowledging to third parties their status as parties to this Agreement.
Section 2.6 Well Operations. If the interest of the Owner in a Lease (together with any interest owned by the Manager and its Affiliates) entitle the Owner to appoint the Operator of the property, the Manager (or its designated Affiliate) shall use its reasonable commercial efforts to assist the Owner to take the actions necessary to designate the Manager as the Operator of such property, which designation shall be pursuant to either (i) the operating agreement currently in effect with respect to a property acquired by the Owner or (ii) if any of such properties are not currently operated pursuant to an operating agreement, an operating agreement (including XXXXX) in the form attached hereto as Exhibit D, with such additions or modifications thereto as the Manager determines to be necessary or appropriate for the particular Assets to be subject thereto or for the operations to be conducted thereon. To the extent any of the Services described herein are duplicative of services to be provided by the Manager or any of its Affiliates under any joint operating agreement or other agreement, then the Manager shall so advise Owner of such duplicative services, and, unless Owner and the Manager otherwise mutually agree, no additional obligations will be incurred or implied by any of the terms of this Agreement, and such joint operating agreements or other agreement (and not this Agreement) will govern the terms of such services.
ARTICLE
III
Financial Administration
Section 3.1 Budget.
(a) Annual Budget Process. The Manager shall prepare and submit to Owner at least 45 days before the beginning of each Calendar Year after the first Property Acquisition by Owner, a budget (“Draft Budget”) detailing the Development Activities planned to be commenced during the relevant Calendar Year, which shall specify the amounts expected to be spent by the Owner during such Calendar Year to conduct such Development Activities, and to otherwise own its Assets and conduct the Business during such Calendar Year; provided that in connection with the first acquisition made by the Owner, the Manager shall deliver a Draft Budget to Owner in connection with such acquisition as contemplated by Section 9.2(a). The Owner shall approve or disapprove the Draft Budget no later than 15 days prior to the start of the Calendar Year; provided that the first Draft Budget shall be approved as provided in Section 9.2(a). If the Owner approves the Draft Budget, the Draft Budget shall be deemed the Budget for purposes of this Agreement, until revised in accordance with Section 3.1(b) below. If the Owner fails to approve a Draft Budget by the commencement of a Calendar Year, then until a Draft Budget for such Calendar Year is approved, the Manager is authorized to pay from the Owner’s account the costs and expenses incurred in the ordinary course of business in amounts materially consistent with, and for Development Activities and other activities set forth in, the prior Calendar Year’s Budget as adjusted for supplements to such Budget attributable to any subsequent Property Acquisition(s), including in respect of costs and expenses to the extent incurred pursuant to the contractual obligations of the Owner, including any Material Commitments, and other costs and expenses approved as provided in this Agreement.
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(b) Approval of Additional Activities. From time to time prior to the termination of this Agreement, the Manager may present to Owner supplemental Development Activities or other activities that the Manager proposes to be undertaken by the Owner and that are not included in the applicable approved Budget for such Calendar Year, and revisions to a previously approved Budget that the Manager recommends be adopted by Owner. If Owner approves such revised Budget, the revised Budget shall be deemed the Budget as used in this Agreement. In addition, the Budget shall be deemed to be amended as provided in Section 9.2(b).
(c) Cooperation. Prior to and in respect of any proposals made by the Manager to Owner pursuant to Section 3.1(b), the Manager and Owner agree to use good faith efforts (1) to exchange information regarding such proposals and proposed activities to be undertaken in connection with any such proposal or potential alternatives to any such proposal and (2) to ensure an efficient and expedient review and decision-making process in respect of such proposals. In addition, upon the reasonable request of Owner to the Manager, which may be submitted no more frequently than once each Calendar Quarter, the Owner will have the right to review with the Manager the current year’s Budget against expenditures incurred to date during the Calendar Year covered by such Budget.
(d) Permitted Overruns. Whenever any provision of this Agreement permits the Manager to make an expenditure or conduct a Development Activity or other operation as provided in the Budget, the Manager will be deemed to have made such expenditure or conducted such Development Activity or other operation as contemplated by the Budget if (1) the aggregate expenditures during any Budget period do not exceed the amount set forth in the approved Budget for such Budget period for such Development Activity or other operation by more than 10.0% (provided that the Manager shall advise Owner of such excess(es) within ten (10) Business Days after it is incurred) or (2) the expenditure(s) are determined by the Manager to be required in connection with an Emergency.
Section 3.2 Cash Management. The Manager shall implement a cash management system for the cash and cash equivalents of the Owner, the Manager shall not commingle Owner’s funds with those of the Manager or its Affiliates, and funds of the Owner held by the Manager shall be employed or applied for the exclusive benefit of Owner. The Manager shall invest any cash held on behalf of the Owner only in Permitted Investments and shall hold all such Permitted Investments and any cash in trust on behalf of the Owner. The Manager shall as promptly as commercially practicable deposit all cash and Permitted Investments held on behalf of Owner in excess of 50% of the then remaining unexpended portion of the approved Budget as directed by Owner in one or more accounts of Owner.
Section 3.3 Revenues and Joint Interest Xxxxxxxx. The Manager shall receive all revenues and joint interest xxxxxxxx for the account of the Owner and promptly credit or charge, as the case may be, the Owner with the Owner’s net revenue and joint interest xxxxxxxx with respect to its properties, on a property-by-property basis.
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Section 3.4 Manager Payments. From time to time, Manager shall pay, unless otherwise instructed by Owner, from the Owner’s funds administered by the Manager, as and to the extent required by any applicable contract, or Law and, to the Manager’s knowledge, to the extent not previously paid by any purchaser, operator or Third Party, in each case to the extent such liability is attributable to the Owner’s interest in a property or otherwise an obligation of Owner, all taxes, royalties, overriding royalties, delay rentals, operating expenses and other charges under operating agreements, debt service on the Owner’s debts, the OrgOff Reimbursement Amount, the Monthly Management Fee, Acquisition Fee, Disposition Fee, Financing Fee and Incentive Performance Fee (which shall be paid to the Manager in accordance with Article V) and other debts and obligations of the Owner (including the costs to be reimbursed to the Manager pursuant to Section 5.2).
Section 3.5 Payment to Owner. As contemplated pursuant to Section 2.2, the Owner may, from time to time, direct the Manager to transfer to an account specified by the Owner funds in accounts maintained for Owner by the Manager that the Owner and the Manager mutually agree are not necessary for the conduct of the Owner’s business as contemplated by the Budget then in effect (for purposes of determining the funds necessary to be retained, taking into account, among other items, funds required in accordance with the Budget then in effect for working capital purposes, reserves for capital expenditures, reserves for payments due to the Manager pursuant to Article V and reserves for an approved Property Acquisition; provided, however, that if in accordance with the direction by Owner of the Manager in accordance with Section 2.2 or Section 3.4 or otherwise an activity contemplated in the Budget then in effect and for which funds are retained is not consummated, then any remaining funds reserved therefor will then be transferred to the Owner pursuant to this Section 3.5).
ARTICLE
IV
Contract Administration; Power of Attorney
Section 4.1 Contract Administration. The Services shall include negotiating, administering and terminating contracts, by and on behalf of the Owner, in the ordinary course of Business, but in all cases in compliance with the Budget. All such contracts shall be executed by the Manager in the name of the Owner, pursuant to the power of attorney granted herein.
Section 4.2 Purchases for the Owner. The day-to-day operations and management of the Owner’s Business shall include the purchase (or lease) of such equipment, supplies and other goods necessary for the efficient operation of the Owner’s Business and as shall be consistent with the Budget. Purchases shall be made only at reasonable costs.
Section 4.3 Affiliate Transactions. The Manager shall not make or cause the Owner to make any contract (other than an Operating Agreement as provided herein) with or purchase or sell goods or services from or to the Manager or any Affiliate of the Manager, unless such contract or purchase or sale is specifically identified as an Affiliate transaction in the Budget, or with the prior written approval of Owner. Nothing in this Section 4.3 shall be construed to limit or restrict the right of the Manager to engage, or require Owner’s prior approval of the engagement by Manager of, any Affiliate of Manager to perform any of the Services on behalf of the Manager so long as the Affiliate of Manager is not entitled to any payment by Owner for providing such Services.
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Section 4.4 Power of Attorney. (a) By execution of this Agreement, the Owner does hereby make, constitute and appoint the Manager, and its successors, with full power of substitution, as its true and lawful attorney and agent with full power and authority in its name, place and stead to execute, swear to, acknowledge, deliver, file, record in the appropriate public offices and publish any and all contracts, agreements, instruments, conveyances, mortgages, deeds, notes and other documents of any kind or nature related to, arising out of or in connection with the Manager's performance of this Agreement.
(b) During the Term of this Agreement, the power of attorney granted in this Section 4.4 shall survive the Bankruptcy, dissolution or other termination of the Owner, shall extend and be binding upon the Owner's successors and assigns and shall continue in full force and effect regardless of the occurrence of any of the foregoing. The Owner hereby agrees to be bound by any such contracts, agreements, instruments, conveyances, mortgages, deeds, notes and other documents executed or otherwise entered into by the attorney and agent acting in good faith pursuant hereto and pursuant to such power of attorney, and hereby waives any and all defenses that may be available to contest, negate, or disaffirm any action of the attorney and agent taken under such power of attorney, except in cases of bad faith, gross negligence, willful misconduct or material breach of this Agreement.
ARTICLE
V
Compensation and Expenses
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(b) Except as set forth in this Section 5.2, in no event will the Manager be entitled to reimbursement from AECP LP or the Owner, nor will AECP LP or the Owner be obligated to reimburse the Manager, for any Organization and Offering Expenses incurred by the Manager and its Affiliates. The Manager may apply any funds that it holds on behalf of AECP LP or the Owner to payment of the OrgOff Reimbursement Amount then due to the Manager pursuant to this Section 5.2(a), but if the funds that the Manager holds on behalf of AECP LP or the Owner are insufficient to pay in full when due the amounts due to the Manager pursuant to this Section 5.2, then AECP LP or the Owner will promptly make payment to the Manager of the amount due and unpaid in immediately available funds by wire transfer to an account specified by the Manager to AECP LP or the Owner. The OrgOff Reimbursement Amount that is payable to the Manager by AECP LP or the Owner pursuant to Section 5.2(a) will be in addition to all fixed rate charges under any joint operating agreements in which the Manager or its Affiliates act as operator and the Owner owns a working interest. Pursuant to the Partnership Agreement, AECP LP will reimburse AECP GP at or promptly after the Initial Closing and each subsequent closing of the issuance of Common Units in the Offering for the Organization and Offering Expenses it incurs up to a maximum of one percent (1.0%) of the Gross Proceeds raised in the Offering, which reimbursement shall be made concurrently with each payment to the Manager of the OrgOff Reimbursement Amount.
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(c) The Manager shall pay all reasonable out-of-pocket expenses (excluding for purposes of this Section 5.2 Organization and Offering Expenses, Acquisition Expenses and Disposition Expenses) of the Manager and its Affiliates, agents and consultants (“Out-of-Pocket Expenses”), pursuant to the policies and procedures established by the Manager and approved by the Owner and in accordance with the Budget, and consistent with the allocations set forth in Exhibit C hereto, for the payment or reimbursement of such costs with respect to activities conducted for the Owner pursuant to this Agreement. The Owner shall reimburse the Manager for all such Out-of-Pocket Expenses paid by the Manager on behalf of the Owner or in connection with the Business of the Owner and for which the Manager has not been previously reimbursed, and on or before the 20th day after each Calendar Month in which the Manager incurs Out-of Pocket Expenses the Manager will invoice the Owner for such Out-of Pocket Expenses incurred during the preceding month accompanied by reasonable supporting detail. At any time that is not less than ten (10) days following the date that Owner receives an invoice for Out-of-Pocket Expenses pursuant to this Section 5.2(b), the Manager may apply any funds that it holds on behalf of Owner to payment of the amount specified in such invoice less any amount(s) to which Owner has reasonably objected in writing during such 10-day period. If the Owner timely objects to any amount in any such invoice, Owner and Manager shall use their reasonable commercial efforts to resolve such dispute amicably, and promptly after the resolution of such matter the Manager may apply any funds that it holds on behalf of Owner to payment of the amount determined to be owing to the Manager. If the funds that the Manager holds on behalf of Owner are insufficient to pay in full when due the amounts due to the Manager pursuant to this Section 5.2(b), then Owner will promptly make payment to the Manager of the amount due and unpaid in immediately available funds by wire transfer to an account specified by the Manager to Owner. Any amounts payable to the Manager by Owner pursuant to this Section 5.2(b) will be in addition to all fixed rate charges under any joint operating agreements in which the Manager or its Affiliates act as operator and the Owner owns a working interest.
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ARTICLE
VI
Representations, Warranties and Covenants
The Manager represents, warrants and covenants to the Owner and AECP LP as follows:
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ARTICLE
VII
Additional Agreements of Manager; Restrictions on Manager
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ARTICLE
VIII
Personnel Administration
ARTICLE
IX
Investment Opportunities
Section 9.1 Investment Opportunities.
(a) Commensurate with the Gross Proceeds raised by AECP LP from time to time that have not been previously invested in Property Acquisitions or reserved for Development Activities or other investment in any of the Assets or the payment of fees or expenses pursuant to this Agreement or the Partnership Agreement, the Manager shall offer to Owner the right to purchase any Property Acquisition that (i) the Manager identifies in accordance with the performance of Item 14 of its Management Services as described in Exhibit A or that otherwise becomes available to the Manager and (ii) which the Manager believes may be appropriate for the Owner.
(b) The Manager shall offer to the Owner any Property Acquisition referred to in Section 9.1(a) in accordance with the terms of Section 9.1(c). Upon receipt of any Proposal, Owner shall decide in accordance with Section 9.1(d) whether or not to approve the Property Acquisition that is the subject of such Proposal. If Owner determines not to approve or otherwise fails to approve such Property Acquisition within five (5) Business Days after the Owner’s receipt of a Proposal (a “Rejected Proposal”), then the Manager or any of its Affiliates may pursue and, if successful in such pursuit, participate in such Property Acquisition.
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(c) If the Manager proposes to refer a Property Acquisition or other acquisition of oil and gas properties to the Owner, the Manager shall submit a written report (“Proposal”) to Owner for its consideration. Such Proposal shall be in the form or format that the Manager generally uses, or will have used when presenting any such Property Acquisition or other acquisition of oil and gas properties to Owner and shall contain the Economic Run for the Property Acquisition or other acquisition of oil and gas properties, the initial Budget or any revisions to the Budget as provided in Section 9.2, and all other information determined by the Manager or requested by Owner as necessary or appropriate to describe the terms, economics, oil and gas reserve information, and other information requested by Owner as necessary or appropriate to evaluate and consider the Proposal. Additionally, if the Manager or an Affiliate of the Manager has an existing economic interest in more than 5% of the properties that are the subject of the Proposal, the Manager shall disclose this fact to Owner in the Proposal. Information submitted to Owner in the Proposal shall include, without limitation, the Economic Run data with respect to the acquisition that is the subject of the Proposal authorization(s) for expenditure, budgeting information, a recommendation with respect to the amount of indebtedness to be incurred pursuant to the Approved Credit Facility, key terms related to such Proposal, including, without limitation, whether such terms deviate or, to Manager’s knowledge, are expected to deviate from the General Parameters, if applicable, and any other available information determined by the Manager to be relevant to Owner’s investment decision or requested by Owner. In addition, if the Seller of a proposed Property Acquisition that is the subject of a Proposal is an Affiliate(s) of the Manager, the offer price for the acquisition by the Owner of such Property Acquisition from such Affiliate(s) shall not exceed the lesser of (i) the costs incurred by such Affiliate(s) to acquire, own, operate and develop such Property Acquisition (which shall be supported by reasonable documentation included in the Proposal) or (ii) the fair market value of such Property Acquisition as determined by mutual agreement of the Manager and Owner in such manner as the Manager and Owner mutually determine to be appropriate under the circumstances.
(d) Upon receipt of a Proposal, Owner shall have five (5) Business Days to notify the Manager of Owner’s intent to make the Property Acquisition as described in the Proposal. If Owner does not provide such notice to the Manager within such time, Owner shall be deemed to have rejected the Property Acquisition that is the subject of the Proposal and such Proposal shall thereafter constitute a Rejected Proposal.
Section 9.2 Initial Budget; Revisions to Budget.
(a) Initial Budget. In connection with the first Property Acquisition, the Manager shall prepare a Draft Budget for operation of the properties proposed to be acquired and submit such Draft Budget to Owner with the Proposal as contemplated by Section 9.1. If the Owner approves the Property Acquisition, Owner shall be deemed to have approved the Draft Budget and such Draft Budget shall then constitute the approved Budget as contemplated by Section 3.1.
(b) Revised Budgets. In connection with each Property Acquisition following the first Property Acquisition, the Manager may prepare an amendment to the then existing approved Budget to reflect the additional costs and expenses associated with the ownership of the Assets proposed to be acquired and submit such proposed revision to the Owner as contemplated by Section 9.1. If the Owner approves the Property Acquisition, Owner shall be deemed to have approved the revision to the Budget and such revised Budget shall then constitute the approved Budget as contemplated by Section 3.2.
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(a) This Agreement shall terminate (the “Termination Date”) on the first to occur of (i) the date on which the Parties mutually agree to terminate this Agreement and (ii) the termination date set forth on any notice given in accordance with Section 10.2(b) or Section 10.2(c) (each, a “Termination Notice”). Each Termination Notice shall be provided in writing and set forth in reasonable detail the basis for the termination and the Termination Date. If requested by Owner, the Manager, following its receipt of a Termination Notice, shall continue to perform the Services in accordance with this Agreement for a period not to exceed 120 days of such notice and, in such event, the date on which such continued Services are no longer necessary (as specified by Owner in the Termination Notice) will be considered the Termination Date for purposes hereof.
(b) Owner may terminate this Agreement by delivery of a Termination Notice to the Manager following the occurrence of any of the following events:
(i) | the dissolution and liquidation of AECP LP in connection with the sale of all or substantially all of the Owner’s assets; |
(ii) | during the Bankruptcy of the Manager; |
(iii) | at any time during the 30 days after a breach by the Manager of its obligations hereunder that has had or, if continued, is reasonably likely to have a Material Adverse Effect, which breach remains uncured 60 days following the receipt by the Manager of written notice of such breach by the Owner; |
(iv) | at any time within 15 Business Days following (A) the determination by a court of competent jurisdiction that the Manager has defrauded AECP LP or Owner or stolen or misappropriated any of the Assets or funds of Owner and (B) such circumstances have not been cured or remedied (which may include a cash payment) by Manager within 30 days following such judicial determination; or |
(v) | the General Partner is removed as the general partner of AECP LP by the majority vote of the Common Units and the General Partner did not vote in favor of or otherwise approve such removal. |
(c) The Manager may terminate this Agreement by delivery of a Termination Notice to Owner (i) during or following the Bankruptcy of the Owner or (ii) upon a material breach by Owner of its obligations hereunder that remains uncured 30 days following the receipt by Owner of notice of such breach by the Manager.
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ARTICLE
XI
Indemnification; Liability of the Parties
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Section 11.4 Limitation on Consequential and Other Damages.
(a) NEITHER PARTY shall be entitled to recover from THE OTHER Party, or such Party’s respective Affiliates any indirect, consequential, punitive or exemplary damages or damages for lost profits of any kind arising under or in connection with this Agreement or the transactions contemplated hereby, except to the extent any such Party suffers such damages (including costs of defense and reasonable attorney’s fees incurred in connection with defending of such damages) to a Third Party, which damages (including costs of defense and reasonable attorneys’ fees incurred in connection with defending against such damages) shall not be excluded by this provision as to recovery hereunder. Subject to the preceding sentence, each Party, on behalf of itself and each of its Affiliates waives any right to recover punitive, special, exemplary and consequential damages, including damages for lost profits, arising in connection with or with respect to this Agreement or the transactions contemplated hereby.
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(b) The amount of damages for which an indemnified Party is entitled to indemnity under this Article XII shall be reduced by the amount of insurance proceeds received by the indemnified Party or its Affiliates with respect to such damages (net of any collection costs and net of any increase in premiums resulting from claims with respect to such damages), and, to the extent insurance coverage for such damages is available under insurance policies of the indemnified Party and not under the insurance policies of the indemnifying Party, the indemnified Party will use commercially reasonable efforts to assert claims under such insurance coverage with respect to such damages.
If a Party is rendered unable, wholly or in part, by reason of a Force Majeure Event to perform its obligations under this Agreement, other than obligations to make payments or provide indemnification or defense when due hereunder, then such Party’s obligations shall be suspended to the extent affected by the Force Majeure Event. Any Party claiming any Force Majeure Event shall provide prompt written notice thereof to the other Party including full particulars of such Force Majeure Event.
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To the Manager: |
AECP Management, LLC 000 X.X. 00xx Xxxxxx Xxxxx 000 Xxxxxxxx Xxxx, Xxxxxxxx 00000 Attention: Xxxxxx X. Xxxxx XX General Counsel Phone: (000) 000-0000 Fax: (000) 000-0000 Email: xxx.xxxxx@xxx-xx.xxx |
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With a copy to: |
AECP Management, LLC 000 X.X. 00xx Xxxxxx Xxxxx 000 Xxxxxxxx Xxxx, Xxxxxxxx 00000 Attention: Xxxxx X. Xxxxxxx Phone: (000) 000-0000 Fax: (000) 000-0000 Email: xxxxx.xxxxxxx@xxx-xx.xxx | |||
To AECP LP: | American Energy Capital Partners, LP | |||
c/o AECP GP LLC | ||||
000 Xxxx Xxxxxx | ||||
Xxx Xxxx, XX 00000 | ||||
Attention: | General Counsel | |||
Phone: | (000) 000-0000 | |||
Fax: | (212) 415- | |||
Email: | ||||
With a copy to: | Xxxxxxx & Xxxxxxxxx, Inc. | |||
0000 X. Xxxxxxxxx | ||||
Xxxxx 000 | ||||
Xxxxxxxx Xxxx, Xxxxxxxx 00000 | ||||
Attention: Xxxxxx Xxxxxxxxx | ||||
Phone: (000) 000-0000 | ||||
Fax: (000) 000-0000 | ||||
E-mail: xxxxxxxxxx@xxxxxxxx.xxx | ||||
To Owner: | AECP Operating Company, LLC] | |||
000 Xxxx Xxxxxx | ||||
Xxx Xxxx, XX 00000 | ||||
Attention: | General Counsel | |||
Phone: | (000) 000-0000 | |||
Fax: | (212) 415- | |||
Email: | ||||
With a copy to: | ||||
Either Party may, upon written notice to the other Party, change the address(es) and person(s) to whom such communications are to be directed.
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Section 13.7 Governing Law; Jurisdiction; Waiver of Jury Trial. THE VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS RULES WHICH WOULD OTHERWISE APPLY THE LAWS OF ANOTHER JURISDICTION. EACH PARTY AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN ANY U.S. FEDERAL OR STATE COURT IN THE STATE OF TEXAS AND (A) IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS, (B) WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN SUCH COURTS, (C) WAIVES ANY OBJECTION THAT SUCH COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER IT AND (D) AGREES THAT SERVICE OF PROCESS UPON IT MAY BE EFFECTED BY MAILING A COPY THEREOF POSTAGE PREPAID, REGISTERED OR CERTIFIED WITH RETURN RECEIPT REQUESTED AT THE ADDRESS SPECIFIED IN SECTION 13.3. THE FOREGOING CONSENTS TO JURISDICTION AND SERVICE OF PROCESS SHALL NOT CONSTITUTE GENERAL CONSENTS TO SERVICE OF PROCESS IN THE STATE OF TEXAS FOR ANY PURPOSE EXCEPT AS PROVIDED HEREIN AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES. FURTHER, EACH PARTY HEREBY KNOWINGLY AND INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING UNDER, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
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[Remainder of Page Intentionally Left Blank
Signature Pages Follow]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
MANAGER: | |||
AECP Management, LLC | |||
an Oklahoma limited liability company | |||
By: | |||
Xxxxxx X. Xxxxx XX | |||
General Counsel | |||
AECP LP | |||
American Energy Capital Partner, LP | |||
a Delaware limited partnership | |||
By: | American Energy Capital Partners GP, LLC | ||
its General Partner | |||
By: | Xxxxxx X. Xxxx, Xx. | ||
Chief Executive Officer and President | |||
OWNER: | |||
AECP Operating Company, LLC | |||
a Delaware limited liability company | |||
By: | |||
EXHIBIT A
SCOPE OF SERVICES
The “Services” shall mean general management, administrative and operating services reasonably requested by and at the direction of Owner and shall include, collectively, the Management Services and the Operating Services performed on behalf of the Owner and any Subsidiary, and other service or activity agreed by Owner and the Manager. At all times, the Manager’s provision of the Management Services and Operating Services shall be subject to the limitations set forth in this Agreement, and any other limits or restrictions mutually agreed by Owner and the Manager.
The following services shall constitute “Management Services”:
Exhibit A - 1 |
Exhibit A - 2 |
The following services shall constitute “Operating Services”:
Exhibit A - 3 |
2. The Manager shall apply, pay for (subject to reimbursement by the Owner as set forth herein), obtain, and maintain in a timely manner all approvals, authorizations, licenses and permits necessary or advisable for or in connection with the Owner’s ownership of the Assets and operation of its Business (the “Permits”).
Exhibit A - 4 |
EXHIBIT B
INSURANCE
Exhibit B |
EXHIBIT C
COST REIMBURSEMENT
In addition to the payment of costs and expenses incurred in connection with the provision of Services under this Agreement as expressly set forth in Section 5.2 of this Agreement, the Manager shall be responsible to pay without reimbursement of any kind from the Owner, all of the following:
Personnel salaries and bonuses
Personnel burdens and benefits
Pension, retirement and insurance plans
Unemployment, payroll and other taxes
Administrative contractors or consultants
Office rent and occupancy costs
Office equipment and rentals
Office supplies
Office utilities
Data processing
Office maintenance and repairs
Employee parking
Telephone and communications
Postage and delivery expense
Business meals
Professional dues and subscriptions
Training expenses
Club memberships
Computer and software support
Payroll and other fees
Banking and industry relationships
General land services (unless associated with a Proposal and other than contract land services)
Except to the extent that the following Services are included within the items for which the Manager is responsible as provided above, the Manager shall be entitled to reasonable reimbursement in accordance with Section 5.2 of the Management Agreement for the following out-of-pocket expenses to the extent such costs and expenses are incurred in accordance with the terms of the Agreement and any applicable joint operating agreement or applicable law:
Audit expense
Independent geological, geophysical and engineering services
Tax return services
Investor reporting expense
Legal services (other than legal services for prosecuting or defending claims regarding breach of this Agreement or claims brought by employees, consultants, officers, directors or agents or in formation of the Manager)
Outsourced accounting services
Exhibit C - 1 |
Contract land services
Acquisition and due diligence costs - engineering, title, general land services associated with a Proposal, third-party consultants, environmental, broker fees, travel, meals and lodging directly related to Producing Property Acquisitions for the Owner
Divestiture costs ‒ engineering, title, third-party consultants, financial advisors, environmental, broker fees, travel, meals and lodging directly related to Assets of the Owner
Formation and offering costs of the Owner
Travel costs associated with Owner meetup or meeting with any Investors
Bank services, including without limitation, the Approved Credit Facility and any amendment, restatement or replacement thereof and any waiver thereunder
XXXXX overhead fees and standard district office expenses rebillable under the applicable operating agreement
Insurance
Franchise or state taxes
Third Party marketing fees
Risk management expenses
Exhibit C - 2 |
EXHIBIT D
OPERATING AGREEMENT
Exhibit D |