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EXHIBIT 10.4
FINANCIAL ADVISORY SERVICES CONTRACT
This Financial Advisory Services Contract, dated as of March 31, 1995
(this "Contract") is between Titan Resources, L.P., a Texas limited partnership
("Company"), and Natural Gas Partners, L.P., a Delaware limited partnership,
and Natural Gas Partners II, L.P., a Delaware limited partnership
(collectively, "NGP"), and sets forth the terms and conditions pursuant to
which the Company will retain NGP to act as its financial advisor.
The Company and NGP agree as follows:
1. Retention of Financial Advisor; Scope of Services.
(a) Subject to the terms and conditions set forth herein, the Company
hereby retains NGP to act as a financial advisor to the Company during the
Contract Period (as defined in paragraph 2 below).
(b) As financial advisor to the Company, NGP will, from time to time,
as requested by the Company, provide consultation, assistance and advice with
respect to the Company's financial operations, including, without limitation,
the following:
(i) assistance in the equity or debt private placement or
public offering process, including drafting of documents, planning and
participation in meetings with investors, and general oversight of
legal, accounting, private placement and underwriting issues;
(ii) assistance in bank loan and credit agreement negotiation,
documentation and compliance;
(iii) assistance in upgrading and implementing a long-term
budgeting and planning process,
(iv) ongoing advice on 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 financial 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 Titan Resources
I, Inc., the general partner of the Company (the "General Partner"), (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 Contract do not include
those of an "investment
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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 Contract will be coordinated on
behalf of NGP by its employee ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and any request by the Company
for the performance of services hereunder shall be directed to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇.
2. Contract Period and Termination. NGP shall act as the Company's
financial advisor under this Contract, effective as of March 31, 1995 (the
"Effective Date") and continuing until the earlier of (i) the date of
dissolution of the Company, (ii) the first date on which NGP no longer owns at
least 35 percent of the outstanding shares of common stock of the General
Partner; provided that, this Contract may be terminated effective as of the end
of any fiscal quarter of the Company on or after June 30, 1995, if NGP provides
written notice of its election to terminate this Contract to the Company not
less than 30 days before the date on which termination is to be effective (the
period from the effective date of this contract until the date of its
termination is referred to herein as the "Contract Period"). Upon termination,
neither party will have any further obligation under this Contract, except for
(i) the Company's obligation to pay to NGP the fees and reimbursements then due
pursuant to Paragraph 5, which shall continue after such termination until such
amounts are paid in full, and (ii) the Company's or NGP's obligation to provide
the indemnities contained in Paragraph 6, which shall continue in effect for a
period of three years after such termination.
3. Fees and Expenses. NGP shall be entitled to an annual fee for
its services provided during the Contract Period, which fee is due and payable
by the Company quarterly in arrears, on the last day of each fiscal quarter of
the Company, commencing with the quarter ending June 30, 1995. The fee during
the period from the Effective Date until the date the Company commences making
rental payments to the landlord for its administrative office space located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, shall be $37,500 per year, and thereafter shall
be $75,000 per year (in each case pro-rated for any portion of a year).
Notwithstanding the termination of this Contract, pursuant to the terms hereof
or otherwise, 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) in connection with NGP's activities
pursuant to this Contract during the Contract Period; provided that, without
the prior approval of the Company, the Company will not be obligated to
reimburse NGP for more than $10,000 of such expense during any calendar year.
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4. Indemnification. In consideration of 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 its affiliates
and affiliated entities, each of its 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 losses, 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 any matter related to this
Contract, including, without limitation, any act or omission by NGP in
connection with its role as financial advisor and its acceptance of or the
performance or non-performance of its obligations under this Contract.
(b) The indemnity provided for in subparagraph (a) above shall cover
any loss, claim, damage, liability, cost or expense incurred by an Indemnified
Person REGARDLESS OF THE ORDINARY NEGLIGENCE OF SUCH INDEMNIFIED PERSON, but
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 or willful misconduct.
(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.
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(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 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
Contract 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
he 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 5 of this
Contract, 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 outstanding units of the Company's partnership interests 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
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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 Contract.
(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 Contract, 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.
(d) If it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) in a proceeding in which a claim
for indemnification has been made by an Indemnified Party, that the Company has
sustained any loss, claim, damage, liability, cost or expense resulting
directly and exclusively from NGP's gross negligence or willful misconduct in
connection with the performance or non-performance by NGP of its obligations
under this Contract, then NGP shall indemnify and hold harmless the Company for
the amount of any such loss, claim, damage, liability, costs or expense so
determined to have been sustained by the Company.
5. GOVERNING LAW. THE VALIDITY AND INTERPRETATION OF THIS CONTRACT
SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS APPLICABLE TO
CONTRACTS MADE AND TO BE FULLY PERFORMED THEREIN.
6. Successors and Assigns. The benefits of this Contract 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 Contract by the parties hereto
shall be binding upon their respective successors and assigns. This Contract
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 Contract 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:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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with a copy to:
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Company:
Titan Resources, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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 NGP's
relationship to the Company and the relationship of each employee or agent of
NGP to the Company shall be that of an independent contractor. Nothing
contained in this Contract shall constitute or be construed to be or create a
partnership or joint venture between NGP and the Company or their respective
successors or assigns. Neither NGP nor any partner, employee or agent of NGP
shall ever be considered to be an employee of the Company.
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.
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12. Survival. All representations, warranties and agreements
contained herein, or contained in certificates submitted pursuant to this
Contract, 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. Entire Contract. This Contract and the exhibits hereto embody
the entire agreement and understanding of the parties and supersede any and all
prior agreements, arrangements and understandings relating to matters provided
for herein.
14. Counterparts. This Contract 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 Contract is executed as of the date first written above by a duly
authorized representative of each of the Company and NGP.
COMPANY
TITAN RESOURCES, L.P.
By: Titan Resources I, Inc.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: President
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NGP
NATURAL GAS PARTNERS, L.P.
By: G.F.W. Energy, L.P., its
general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Authorized Employee
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NATURAL GAS PARTNERS II, L.P.
By: G.F.W. Energy II, L.P., its
general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: Authorized Member
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