Management Services Agreement, effective July 1, 2020, by and among Mid-Con Energy Partners, LP and Contango Resources, Inc

Services Provider is a wholly owned subsidiary of Contango Oil & Gas Company, a Texas corporation.  

Subject to the terms hereof, MLP desires to have Services Provider perform, and Services Provider desires to perform, the Services (as defined herein) pursuant to and in accordance with the terms of this Agreement; and

Services Provider represents that it is capable of performing the Services for MLP on the terms and conditions set forth herein.

Definitions

Certain Rules of Interpretation

The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement.

Unless otherwise specified in this Agreement or the context otherwise requires: (i) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (ii) any reference to the masculine, feminine or neuter gender shall include all genders, the plural shall include the singular and the singular shall include the plural; (iii) all Preamble, Recital, Article, Section, clause and Exhibit references used in this Agreement are to the preamble, recitals, articles, sections, clauses, schedules and exhibits to this Agreement; (iv) wherever the word “include,” “includes” or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation;” (v) the terms “date hereof” and “date of this Agreement” mean the date first written above; (vi) with respect to the determination of any period of time, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; (vii) (A) any reference to “days” means calendar days unless Business Days are expressly specified and (B) any reference to “months” or “years” shall mean Months or calendar years, respectively, in each case unless otherwise expressly specified; (viii) the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends and such phrase shall not mean simply “if”; and (ix) each accounting term not otherwise defined in this Agreement has the meaning commonly applied to it in accordance with GAAP.

Unless otherwise specified in this Agreement, any deadline or time period set forth in this Agreement that by its terms ends on a day that is not a Business Day shall be automatically extended to the next succeeding Business Day.

Unless otherwise specified in this Agreement or the context otherwise requires, all references to any (i) statute in this Agreement include the rules and regulations promulgated thereunder and all applicable, guidance, guidelines, bulletins or policies issued or made in connection therewith by a Governmental Authority, and (ii) Law in this Agreement shall be a reference to such Law as amended, re-enacted, consolidated or replaced as of the applicable date or during the applicable period of time.

Unless otherwise specified in this Agreement, all references in this Agreement to (i) any contract, other agreement, document or instrument (excluding this Agreement) mean such contract, other agreement, document or instrument as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and, unless otherwise specified therein, include all schedules, annexes, addendums, exhibits and any other documents attached thereto or incorporated therein by reference, and (ii) this Agreement mean this Agreement as amended, supplemented or otherwise modified from time to time in accordance with its terms.

With regard to each and every term and condition of this Agreement, the Parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the Parties desire or are required to interpret or construe any such term or condition or any agreement or instrument subject thereto, no consideration shall be given to the issue of which Party actually prepared, drafted or requested any term or condition of this Agreement.

Services; Procurement of Goods and Services; Meetings

During the Term, Services Provider shall provide (directly or through its Affiliates) to MLP or its Subsidiaries, or, with the prior written approval of MLP, shall cause another Person to provide to MLP or its Subsidiaries, the Services set forth on Exhibit A hereto.

To the extent that Services Provider is permitted to arrange for contracts with any Third Party for goods or services in connection with the provision of Services, Services Provider shall use commercially reasonable efforts (i) to obtain such goods and services at rates competitive with those otherwise generally available in the area in which services or materials are to be furnished, and (ii) to obtain from such Third Party such customary warranties and guarantees as may be reasonably required with respect to the goods and services so furnished.

Services Provider shall take any and all actions as appropriate for a Reasonable and Prudent Services Provider (as defined herein) in response to an imminent emergency relating to the Properties that may endanger property, lives or the environment and requires immediate action to address such dangers (each such event, an “Emergency”). In such event, Services Provider may take such steps and incur such costs and expenses that, in Services Provider’s reasonable opinion, are required to deal with such Emergency as a Reasonable and Prudent Services Provider, including the safeguarding of life, property and the environment.  In such event, Services Provider shall use commercially reasonable efforts to notify MLP of the existence or occurrence of such an Emergency as soon as reasonably practicable after the occurrence of such Emergency, but in any event within twenty-four (24) hours of its being put on notice of such Emergency, setting forth the nature of the Emergency, the corrective action taken or proposed to be taken, and the actual or estimated cost and expense associated with such corrective action

Notwithstanding anything to the contrary, nothing shall require Services Provider to (i) other than with respect to the reports, financial information and other information to be provided by Services Provider under the express terms hereunder (including such reports and information identified on Exhibit B hereto), provide records, financial information, or other information which is not kept or reported by Services Provider in connection with its respective assets in the ordinary course of business, (ii) except to the extent necessary to

perform the Services and without limiting MLP’ rights and remedies in Section 4.2, hire any new employees or retain any existing employees, or (iii) advance its own funds in the performance of the Services.  

Representatives of Services Provider and MLP shall meet telephonically, or otherwise at a mutually agreeable location, no less than once per Month on a mutually agreeable day and time to discuss the Services performed by Services Provider, the past, current or future operation and development of the Properties and/or any other matters with respect to the Properties or the business of MLP reasonably requested by MLP.

General Standard of Performance

Limitation on Services and Services Provider’s Authority

Subject to MLP’s compliance with its obligations under this Agreement, Services Provider shall not incur any liens, encumbrances or charges upon or against any of the Properties arising from the provision of Services or materials under this Agreement except for inchoate liens and customary liens in favor of service providers, incurred in the ordinary course of business, or as expressly approved or consented to in writing by MLP.

If Services Provider or any of its Subsidiaries or Affiliates used or licensed intellectual property owned by any Third Party immediately prior to the Effective Date that Services Provider deems necessary (in its sole discretion) to perform the Services, Services Provider shall, at MLP’s cost, maintain any such licenses and authorizations solely to the extent necessary to authorize Services Provider’s continued use of such intellectual property (directly or indirectly) in performing the Services; provided, however, with respect to intellectual property not used or licensed by Services Provider or any of its Subsidiaries or Affiliates immediately prior to the Effective Date, Services Provider shall not be obligated to secure or otherwise obtain any such licenses or authorizations from any Third Party.

Neither Services Provider nor any Affiliate of Services Provider shall be deemed to have any direct or indirect ownership interest in the Properties (or in any equipment, materials and other property related thereto and purchased by MLP either directly or on behalf of MLP by Services Provider or any of its Affiliates) by virtue of its role as “Services Provider” hereunder or as a result of the terms of this Agreement.

Notwithstanding anything herein to the contrary, without the prior written consent of MLP, Services Provider shall not:  

cause or direct MLP to enter into any Contract (or make any material modifications, amendments or extensions thereto) (i) with any Affiliate of Services

Provider or (ii) with any Third Party, to the extent any such Third-Party Contract is likely to result in annual obligations of MLP in excess of $100,000, in the aggregate;

cause or direct MLP to incur or guarantee any indebtedness for borrowed money;

unless otherwise permitted under this Section 2.3, encumber, hypothecate, mortgage, burden, or otherwise impair the Properties in any respect, or do any act  that has the natural and foreseeable consequence of causing any of the foregoing;

sell, assign, transfer, surrender or relinquish or farm out the Properties with a fair market value reasonably estimated by Services Provider to exceed $100,000 excluding (i) the sale of equipment no longer used or useful in connection with the operation of the Properties, and (ii) the sale or marketing of Hydrocarbon production attributable to Properties consistent with the terms of this Agreement;

purchase or acquire for MLP’s account any additional interests of any kind in oil, gas or other minerals for a cash purchase price or any other consideration in excess of $50,000;

propose any operation reasonably expected to cost MLP in excess of (i) $50,000 on any individual operation or (ii) $150,000 in the aggregate for all operations proposed by Services Provider in any Month;

approve any individual AFE or similar request under any Contract (other than those required under the terms of any Contract) which would reasonably be estimated to require expenditures in excess of (i) $50,000 on any individual operation or (ii) $150,000 in the aggregate for all AFEs or similar requests in any Month;

terminate or voluntarily relinquish any material permit from any Governmental Authority in respect to the Properties or participate in or acquiesce to any material variation or cancellation of the same;

make any regulatory or other filings of any kind with any Governmental Authority that could reasonably be expected to materially adversely affect MLP’s ownership or use of, and the ability to operate, the Properties, except as required by applicable Laws;

abandon Wells, dismantle or decommission material personal property, close pits located on the real property that comprises the Properties or restore the surface of such Wells, personal property and pits, except as required by applicable Laws or Contracts;

settle any litigation or arbitration with respect to MLP or the Properties which requires payment for which MLP is responsible in an amount greater than $50,000 or results in any ongoing adverse liability of such amount to MLP;

unless otherwise permitted under this Section 2.3, voluntarily waive or release any material right that could reasonably be expected to materially adversely affect MLP’s ownership or use of, and the ability to operate, the Properties or waive,

release, assign, compromise, or settle any material right or claim with respect to any of the Properties;

make any affirmative non-consent election with respect to the Properties relating to any individual operation requiring expenditures in excess of $50,000, net to MLP’s interest;

elect to relinquish any Lease or otherwise decline to pay lease maintenance or shut-in payments that would maintain a Lease during the pendency of non-production;

enter into, modify or terminate any hedging obligations with respect to the Properties or MLP; or

commit to do any of the foregoing.

Insurance

Access and Information

With respect to each Service provided hereunder and to the extent applicable, MLP shall grant, and cause its Subsidiaries to grant, to the personnel and representatives of Services Provider reasonable access during normal business hours to their respective locations, systems, records and information as reasonably necessary for Services Provider to perform its obligations hereunder.  When on the property owned or controlled by MLP, or when given access to any systems, software or networks owned or controlled by MLP, Services Provider shall: (a) comply with applicable policies and procedures concerning health, safety, security, data privacy, confidentiality and data security; (b) comply with MLP’s directions from time to time relating to such access; (c) not commit waste or damage to MLP’s property or systems; (d) not make material changes or improvements to such property or systems without MLP’s prior written consent; and (e) permit its personnel to be appropriately supervised, directed and/or accompanied during such access as requested by MLP; provided, however, that in each such case: (i) the access of Services Provider shall not unreasonably interfere with any of the business or operations of MLP; and (ii) in the event that MLP reasonably determines that providing such access could be commercially detrimental, violate any Law or agreement or waive any attorney-client privilege, then the Parties shall promptly use commercially reasonable efforts to permit such access in a manner that avoids any such harm or consequence.

For each Service, if requested by MLP, Services Provider shall deliver to MLP, to the extent reasonably available, as soon as reasonably practicable, all information received, stored or created for the benefit of MLP in the form in which it exists, whether in electronic and/or hard copy form as may be reasonably requested.

Services Provider shall grant to the personnel and representatives of MLP reasonable access during normal business hours to its respective locations, systems, records and information as reasonably requested by MLP to facilitate the orderly transition of operatorship contemplated by the Transition Services Agreement, dated as of June 1, 2020, by and between Mid-Con Energy Operating, LLC, and MLP (the “TSA”).  When on the property owned or controlled by Services Provider, or when given access to any systems, software or networks owned or controlled by Services Provider, MLP shall (and shall direct its Subsidiaries and its and their representatives to): (a) comply with applicable policies and procedures concerning health, safety, security, data privacy, confidentiality and data security; (b) comply with Services Provider’s reasonable directions from time to time relating to such access; (c) not commit waste or damage to Services Provider’s property or systems; (d) not make material changes or improvements to such property or systems without Services Provider’s prior written consent; (e) permit its personnel and representatives to be appropriately supervised, directed and/or accompanied during such access as requested by Services Provider; provided, however, that in each such case: (i) the access of MLP shall not unreasonably interfere with any of the business or operations of Services Provider; and (ii) in the event that Services Provider reasonably determines that providing such access could be commercially detrimental, violate any Law or agreement or waive any attorney-client privilege, then the Parties shall promptly use commercially reasonable efforts to permit such access in a manner that avoids any such harm or consequence.

Changes to Services; Additional Services

MLP may, upon written notice to Services Provider, request reasonable changes and/or modifications in the manner in which a Service is performed (e.g., frequency, schedule, delivery methods).  Services Provider agrees that it will not unreasonably withhold, condition or delay its consent to any such requests for reasonable changes and/or modifications, provided that MLP agrees to pay or reimburse Services Provider for any increase in costs attributable to such changes and/or modifications.  To the extent the Parties mutually agree on the scope and applicable terms of any such changes and/or modifications, and any increase in costs relating thereto, Services Provider shall implement such changes and/or modifications as agreed (and if the implementation timeline is not explicitly agreed, each Party shall use commercially reasonable efforts to implement such changes and/or modifications in a timely manner) and prepare a Budget Amendment, if applicable, to reflect such changes.

During the Term, MLP may request Services Provider to perform, or cause to be performed, a service that is not included on Exhibit A (an “Additional Service”) by delivering to the Services Provider a written communication requesting such Additional Service and proposing the modification to the Monthly Services Fee for such Additional Service.  The Parties will discuss in good faith any such request and, if following such good faith discussions, the Parties mutually agree that such Additional Service should be provided, and agree upon the modification to the Monthly Services Fee, the Parties shall amend the Services Schedule and the Budget by the addition of such specification based on agreed terms, and such Additional Service shall thereupon be a Service for all purposes hereunder.

Cooperation; Relationship of the Parties

The Parties will use good faith efforts to cooperate with each other in all matters relating to the provision and receipt of Services and payment for such Services; provided, however, that this Section 2.7(a) shall not be construed as limiting a Party’s rights under this

Agreement, and, for the avoidance of doubt, shall not obligate a Party to agree to changes to the Services or the Budget.  

Each Party (including its employees) shall act solely as an independent contractor of the other Party.  Neither Party nor its representatives are an employee, officer, agent, partner, business representative or legal representative of, or joint venturer with, the other Party.  Except as expressly provided herein, (i) neither Party has authority to assume any obligation on behalf of the other Party and neither Party shall hold out to Third Parties that it has any authority to do so or take any action that might mislead or confuse Third Parties in this regard, and (ii) nothing in this Agreement shall be construed to give any Party the power or authority to act for, bind or commit any other Party.

Certain Conditions of Service

All personnel involved in the provision of Services by Services Provider or its Affiliates or contractors shall be responsible to Services Provider.  The selection of such employees and contractors, and their hours of labor, shall be determined by Services Provider.  Subject to, and without limiting MLP’s rights and remedies in, Section 4.2, Services Provider shall have the right to hire or dismiss full time or part time personnel for any position with respect to the Services.

Notwithstanding anything herein to the contrary, all matters pertaining to the employment, supervision, compensation, promotion and discharge of any personnel of Services Provider or its Affiliates are the responsibility of Services Provider and its Affiliates.  All such employment arrangements are solely Services Provider’s and its Affiliates’ obligations (including the payment of salaries and employee benefits with respect to such personnel).

Notwithstanding anything herein to the contrary, MLP and Services Provider acknowledge that employees of Affiliates of Services Provider may assist Services Provider in providing the Services hereunder in accordance with the terms hereof and the Budget.

Notices to Third Parties

Budget; Approval of Budget Amendments

Payment for Services; Invoice

During the Term, MLP shall (i) pay Services Provider a total of $333,333.00 per Month for each Month (the “Monthly Services Fee”) for which the Services are provided pursuant to the terms of this Agreement, with such Monthly Services Fee covering, among other things, actual salaries, wages and employee benefits, including discretionary bonus payments with respect to the performance of the Properties, paid by Services Provider to employees and personnel of Services Provider or its Affiliates or permitted contractors in proportion to the percentage of such employee’s and personnel’s time that is dedicated to the provision of the Services in accordance with the terms and conditions of this Agreement, (“Service Charges”); (ii) without duplication to any amounts payable or reimbursements for costs charged under any Operating Agreement, reimburse Services Provider for all costs and expenses incurred by Services Provider and solely and directly attributable to the provision of the Services for any Month (or any portion thereof) and not otherwise Service Charges, including all amounts incurred by Services Provider in favor of Third Parties and attributable to Services Provider’s performance of the Services, together with any amounts incurred by or for the benefit of MLP (whether directly by MLP or by Services Provider on MLP’s behalf) but excluding normal lease operating expenses and amounts payable under Operating Agreements and Applicable Contracts (collectively, “Direct Charges”); (iii) on or prior to the expiration of ten (10) Business Days following the Effective Date, issue in favor of Services Provider Warrants to acquire Common Units of MLP, on terms consistent with that certain Term Sheet on or about the date of this Agreement and in form otherwise reasonably satisfactory to Services Provider; and (iv) upon the termination of this Agreement an amount equal to the product of (A) the number of Months in which the Term was in effect and (B) $166,666.66 (the “Termination Payment”), provided, however, that (x) MLP shall have no obligation to pay the Termination Payment in the event this Agreement is terminated by MLP in accordance with Sections 4.2(b) or Section 4.2(c) and (y) the Termination Payment shall not exceed $2,000,000.

No later than five (5) days prior to the beginning of each Month, Services Provider shall tender to MLP an invoice setting forth a good-faith estimate of the Direct Charges and the Service Charges for Services provided by Services Provider to MLP for such Month (the “Invoice”).  The Invoice shall include supporting documentation, information and good-faith estimated calculations that substantiate the costs and expenses described in the Invoice. MLP shall pay in full the undisputed amounts set forth in the Invoice on or before the thirtieth (30th) day following receipt of the Invoice by MLP (the “Due Date”); provided, however, if the Due Date is on a Saturday, Sunday or a federal holiday, the Due Date shall be the succeeding Business Day. No later than forty-five (45) days following the end of Month with respect to such Invoice, Services Provider shall tender to MLP a statement (the “True-Up Statement”) reflecting the actual Direct Charges and the Service Charges for Services provided by Services Provider to MLP for such Month and the Parties

shall true up the difference between the Invoice and the True-Up Statement in accordance with the following: (i) if the true-up amount is positive, MLP shall pay to Services Provider such difference, and (ii) if the true-up amount is negative, Services Provider shall credit MLP such difference. All amounts due with respect to the True-Up Statement shall be paid or credited, as applicable, within ten (10) days’ receipt by MLP of the True-Up Statement (the “True-Up Statement Due Date”). The Invoice and True Up Statement shall not include normal lease operating expenses and amounts payable under Operating Agreements and Applicable Contracts.

MLP may object in good faith to any Invoice or True-Up Statement (or any portion thereof) at any point up to and including the Due Date and the True-Up Statement Due Date, as applicable.  If MLP desires to make such an objection, it must provide written notice of such objection to Services Provider with such notice describing the dispute in reasonable detail, including any alleged errors in charges and attaching written documentation to reasonably support such objection.  The Parties shall work together in good faith to resolve any dispute regarding an Invoice; provided, if the Parties fail to agree on the existence or amount of any such adjustment within thirty (30) days following Services Provider’s receipt of MLP’s written notice delivered pursuant to this Section 3.2(c), the Parties  may submit the dispute to an independent third-party regionally or nationally recognized auditing firm that is mutually agreeable to the Parties. The Parties shall cooperate with such auditing firm and each Party shall provide access to its books and records as may be reasonably necessary to permit a determination by such auditing firm. The resolution by such auditing firm shall be final and binding on the Parties.

If any undisputed amount due under an Invoice or True Up Statement remains unpaid for more than sixty (60) days following MLP’s receipt of such Invoice or True Up Statement, Services Provider shall have the right to immediately suspend or discontinue Services hereunder until any such undisputed past-due amount is paid in full.

If MLP fails to pay the undisputed amount of any Invoice or True Up Statement within sixty (60) days after MLP’s receipt of such Invoice or True Up Statement, interest on such amounts will accrue from the Due Date or the True-Up Statement Due Date, as applicable, through, and including, the date MLP actually makes payment for the undisputed amount, at the Overdue Rate.

All references in this Agreement to an “undisputed amount” mean amounts that are not disputed in good faith in accordance with the procedures set forth in Section 3.2(c).

Limitation on Charges

Audits

MLP shall have the right to audit costs, expenses and fees charged to MLP and other accounting records prepared or maintained by Services Provider under this Agreement.

Upon not less than five (5) Business Days’ prior written notice to the Services Provider, MLP shall have the right to audit (or cause to be audited) the Services Provider’s books and records maintained during the Term (the “Audit Period”).  MLP shall provide Services Provider a written notice of any Claims for all discrepancies disclosed by said audit and related to the Audit Period.  The cost of each such audit shall be borne pro rata between

the Parties with each Party being responsible for such cost to the extent that the audit indicates an adjustment payable by such Party in proportion to the aggregate adjustments resulting from such audit.  Any such audit shall be conducted in a manner reasonably designed to limit inconvenience and disruption to the operations of the Services Provider.  Unless otherwise mutually agreed, any audit shall be conducted at the principal office of the Services Provider or at such other place as the books and records of the Services Provider related to the Services are maintained.

At the conclusion of an audit, the Parties shall endeavor to settle outstanding matters expeditiously.  To this end, MLP will make a reasonable effort to prepare and distribute a written report to the Services Provider as soon as reasonably practicable and in any event within thirty (30) days after the conclusion of an audit under this Section 3.4(c).  The report shall include all Claims arising from such audit together with comments pertinent to the operation of the accounts and records.  Services Provider shall make a reasonable effort to reply to the report in writing as soon as possible and in any event no later than thirty (30) days after delivery of the report.

All adjustments resulting from an audit agreed to between the Parties shall be reflected promptly in Services Provider’s books and records.  If any dispute shall arise in connection with an audit, it shall be reported to and discussed by the Parties within thirty (30) days.

MLP and its Affiliates (and any of their respective representatives and agents) shall have the right at any reasonable time to inspect and/or observe Services Provider’s performance of the Services; provided that any such inspections or observations shall be conducted in a manner as to not interfere with the operations of Services Provider or its Affiliates.

Term

Termination. This Agreement may be terminated upon written notice to the other Party as follows:

by either Party, upon the Bankruptcy of such other Party;

by MLP, upon an action constituting gross negligence or willful misconduct on the part of Services Provider in connection with the performance of the Services;

by either Party, upon a material default by the other Party of its covenants or obligations under this Agreement, if:

such material default is capable of being cured, and such material default is not cured within fifteen (15) days after delivery by the non-defaulting Party of written notice (a “Default Notice”); provided, however, that if such material default

cannot be cured within such fifteen (15) day period, the defaulting Party shall have up to thirty (30) days from receipt of such Default Notice to cure such material default if such material default is capable of being cured within such period and the defaulting Party proceeds diligently to cure such material default; or

such material default is not capable of being cured, and such material default resulted from a material breach by the defaulting Party in the performance of any of its covenants or obligations under this Agreement.

by either Party upon a Change in Control or the sale of all or substantially all of the assets of MLP or any of its Subsidiaries.

Notwithstanding anything herein to the contrary, the Parties may terminate any Service by mutual written agreement at any time and this Agreement shall terminate upon its having been terminated with respect to all Services.

Effect of Termination

Confidential Information

MLP and its Affiliates, on the one hand, and Services Provider and its Affiliates, on the other hand, shall not use (except for the purposes of fulfilling each Party’s obligations under this Agreement) or permit the use of, and shall keep, and shall cause their respective representatives to keep, confidential, for a period of two years following termination of this Agreement, all Confidential Information, whether oral or written, concerning the other Party in their possession, their custody or under their control to the extent such Confidential Information (i) is obtained in the course of performing services for the other Party pursuant to this Agreement or (ii) is based upon or is derived from information described in the preceding clause (i), and each Party shall not (without the prior written consent of the other) otherwise release or disclose such Confidential Information to any other Person, except such Party’s representatives or Affiliates, in each case who have a need to know such information and who are bound by confidentiality obligations at least as restrictive as this Section 5.1.  Each Party shall exercise the same care with the other Party’s Confidential Information as it takes to preserve confidentiality for its own similar information.  This Section 5.1 shall not apply to, and Confidential Information does not include, information (A) that has been in the public domain other than as a result of disclosure by the receiving Party or its Affiliates or representatives, (B) that was available to the receiving Party on a non-confidential basis prior to its disclosure under this Agreement, (C) that has been later lawfully acquired from other sources by the receiving Party (provided that such source is

not and was not bound by a confidentiality agreement), (D) the use or disclosure of which is permitted by this Agreement or (E) that the receiving Party has agreed in writing may be so used or disclosed.

If either Party or any of its Affiliates determines that it is required to disclose pursuant to applicable Law, or receives any demand under lawful process or from any Governmental Authority to disclose or provide, Confidential Information of the other Party (or of its Affiliates) that is subject to the confidentiality provisions of Section 5.1(b), such Party shall promptly notify the other Party prior to disclosing or providing such Confidential Information and shall cooperate at the expense of Services Provider in seeking any reasonable protective arrangements or other remedies requested by such other Party.  Subject to the foregoing, the Person that received such request may thereafter disclose or provide such information if and to the extent required by such Law or by lawful process or such Governmental Authority; provided, however, that the Person shall only disclose such portion of the information as is reasonably required to be disclosed or provided.

If a Party so requests in writing, the other Party shall, unless otherwise required by Law, promptly return or destroy all Confidential Information of the requesting Party in its possession and direct each of its representatives to promptly return or destroy all Confidential Information of the requesting Party in its possession.  Notwithstanding the foregoing, such Party and its representatives may each retain copies of the Confidential Information for legal retention purposes or to maintain a record of the extent of disclosure hereunder and may retain electronically archived copies.  Confidential Information so retained shall remain subject to the terms of this Agreement.

Marketing Services

At the direction of MLP, Services Provider shall gather, process, fractionate, transport, and market all Hydrocarbon production from the Properties (collectively, the “Marketing Services”).  In performing the Marketing Services, Services Provider shall (i) use commercially reasonable efforts to sell and market production from the Properties for the best available price and (ii) perform such Marketing Services as a Reasonable and Prudent Services Provider in accordance with prevailing industry standards and customs.

Subject to MLP’s prior written consent, Services Provider shall have the right to amend, modify, or supplement the Existing Arrangements set forth on Schedule 6.1(b) hereto, to the extent necessary as determined by Services Provider in its good faith discretion (each, a “Modification”), so long as such Modification is consistent with (A) the reasonable and prudent operation of the Properties, (B) prevailing industry standards and practices for processing, transportation and marketing contracts in or around the Properties. Within five (5) Business Days after executing any Modification to any Existing Arrangement, Services Provider shall provide MLP with a copy of such Modification.  

Title to all Hydrocarbon production from the Properties will remain in MLP at all times while Services Provider is providing Services hereunder. Services Provider acknowledges and agrees that all funds and revenues received by Services Provider for MLP’s production from the Properties shall remain the sole property of MLP.

In addition to any information or reports described on Exhibit B, Services Provider shall promptly upon receipt or preparation provide to MLP all reports, notices and information

(i) prepared in the ordinary course of business by Services Provider (as such reports and information are produced or compiled) relating to the production being gathered, processed, fractionated, transported, or marketed hereunder on behalf of MLP, and (ii) received by Services Provider from any counterparty under any Existing Arrangement.

Non-performance

Duty to Mitigate

use all reasonable efforts to continue to perform the Services and any other obligations hereunder;

take all reasonable action to correct or cure the event or condition constituting the Force Majeure;

use all reasonable efforts to mitigate or limit the adverse effects of the event of Force Majeure and damages to the other Party; and

provide prompt notice to the other Party of the cessation of the event of Force Majeure.

Indemnification

Indemnification of MLP by Services Provider. Services Provider hereby agrees to defend, indemnify and hold harmless MLP and its respective partners and Subsidiaries and each of their respective officers, managers, directors, employees, representatives and agents (each, an “MLP Indemnified Party”) from and against any and all Claims to the extent arising out of, or relating to (i) Services Provider’s breach of any of express representation or warranty of Services Provider contained in this Agreement (ii) a breach of Services Provider’s express financial or administrative obligation under this Agreement (excluding, for purposes of clarity, land and Lease maintenance Services); and (iii) the gross negligence, willful misconduct or fraud of Services Provider; provided, however, that Services Provider shall have no obligation to defend, indemnify, hold harmless or release any MLP Indemnified Party from any Claims to the extent such Claims arise out of or are related to the gross negligence (whether sole, concurrent, active or passive), willful misconduct, fraud or any other legal fault, including strict liability, of any MLP Indemnified Parties or any Third Party.  Notwithstanding any other provision hereof, Services Provider shall in no circumstances be liable to MLP Indemnified Parties pursuant to clause (i) in this Section 8.1(a) in connection with this Agreement in excess of the aggregate amount actually received by Services Provider from MLP pursuant to Section 3.2 during the Term.

Indemnification of Services Provider by MLP. MLP hereby agrees to defend, indemnify and hold harmless Services Provider and its respective members, partners and Affiliates and each of their respective officers, managers, directors, employees, representatives and agents (each, a “Services Provider Indemnified Party”) from and against any and all Claims arising out of, in connection with, or relating to (i) MLP’s or its Affiliates’ breach of any representation or warranty under this Agreement or (ii) breach of MLP’s express financial or administrative obligations under this Agreement; and (iii) except to the extent that MLP is entitled to an indemnity pursuant to Section 8.1(a), all Claims in favor of any Third Party or any MLP Indemnified Party arising out of Services Provider’s performance and provision of the Services in accordance with this Agreement, including as a result of the negligence (whether sole, concurrent, active or passive) and any other legal fault, including strict liability, of any Services Provider Indemnified Parties, Services Provider or any Third Party; provided, however, that MLP will not be required to release or indemnify any Services Provider Indemnified Party from any Claims to the extent such Claims arise out of or are related to the gross negligence, willful misconduct or fraud of any Services Provider Indemnified Party.

Notification of Indemnification Obligation

For purposes of this Article 8 the term “Indemnifying Party”, when used in connection with particular Claims, shall mean the Party or Parties having an obligation to indemnify another Party or Parties with respect to such Claims pursuant to this Article 8 and the term “Indemnified Party”, when used in connection with particular Claims, shall mean the Party or Parties having the right to be indemnified with respect to such Claims by another Party or Party pursuant to this Article 8

The Indemnified Party shall promptly notify the Indemnifying Party in writing of any claim, including a description of the claim in reasonable detail, and the Indemnifying Party shall have the right to assume the investigation and defense of the claim, including employing legal counsel.  If the Indemnifying Party does not promptly assume the investigation and defense of the claim, the Indemnified Party may do so, after providing written notice thereof to the Indemnifying Party, including employing legal counsel of its choice, at the Indemnifying Party’s expense.  In any case, the Indemnifying Party shall pay for or reimburse the Indemnified Party for all court costs, reasonable attorneys’ fees, experts’ fees and other reasonable costs resulting from the investigation or defense of any claims.  If the Indemnifying Party assumes the defense of a claim, the Indemnified Party shall have the right to employ, at its sole expense, separate legal counsel and participate in the defense of the claim; provided, however, that control over the process and authority to compromise such claim shall vest solely in the Indemnifying Party.

Waiver of Consequential Damages and Lost Profits

Release of Directors

Representations and Warranties of Services Provider

Services Provider is a corporation duly formed, validly existing and in good standing under the laws of the State of Texas and is duly qualified and/or licensed to the extent and as may be required by applicable Law, and in good standing in the State of Oklahoma.

Services Provider has taken all necessary action to authorize the execution, delivery and performance of this Agreement and has adequate power, authority and legal right to enter into, execute, deliver and perform this Agreement. This Agreement is legal, valid and binding with respect to Services Provider and is enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally.

Services Provider has, or before commencing activities in any state or other jurisdiction will have, all requisite power, approvals, authorizations, consents, licenses, orders, franchises, rights, registrations and permits of all Governmental Authorities of such state or other jurisdiction required for Services Provider to provide the Services in such jurisdiction; each of the foregoing is or will be in full force and effect and has been duly and validly issued; and at the time Services are performed, Services Provider will be in compliance (and will cause its Affiliates to be in compliance) in all material respects with all terms and conditions of each of the foregoing.

No permit, consent, approval, authorization or order of, and no notice to or filing with, any Governmental Authority or Third Party is required in connection with the execution, delivery or performance by Services Provider of this Agreement or to consummate any transactions contemplated hereby.

Representations and Warranties of MLP

MLP is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware and is duly qualified and/or licensed to the extent and as may be required by applicable Law, and in good standing in the State of Delaware.

MLP has taken all necessary action to authorize the execution, delivery and performance of this Agreement and has adequate power, authority and legal right to enter into, execute, deliver and perform this Agreement. This Agreement is legal, valid and binding with respect to MLP and is enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally.

MLP has, or before commencing activities in any state or other jurisdiction will have, all requisite power, approvals, authorizations, consents, licenses, orders, franchises, rights, registrations and permits of all Governmental Authorities of such state or other jurisdiction required for MLP to commence such activities in such jurisdiction; each of the foregoing is or will be in full force and effect and has been duly and validly issued.

No permit, consent, approval, authorization or order of, and no notice to or filing with, any Governmental Authority or Third Party is required in connection with the execution, delivery or performance by MLP of this Agreement or to consummate any transactions contemplated hereby.

Responsibilities of MLP

MLP is sophisticated in the ownership and evaluation of oil and gas properties, and it shall exercise its own independent analysis and evaluation of operations as may be proposed by Services Provider. MLP has access to and, as necessary, shall seek the advice of its own legal, tax, economic, insurance, environmental, engineering, geological and geophysical advisors.

MLP hereby designates and appoints Services Provider as its true and lawful agent and attorney-in-fact with full power and authority, for and on behalf of and in the name of MLP, for the sole and exclusive purpose of (i) executing, acknowledging and delivering all such division orders, transfer orders, certificates and other documents as may from time to time, be necessary or proper in performing the Marketing Services hereunder and (ii) extending or renewing any of the Leases for an amount less than (x) $25,000, individually, and (y) $100,000 in the aggregate in any 30 day period, in each case, in accordance with (and subject to the restrictions contained in) this Agreement and performance of the Services.  The foregoing designation and appoint may be revoked at any time by MLP upon written notice to Services Provider.

Responsibilities of Services Provider

Entire Agreement

Amendment; Waiver

Disclaimer of Warranties

Notices

Assignment; No Third-Party Beneficiaries

Governing Law

Submission to Jurisdiction; Consent to Service of Process; Waiver of Jury Trial.

Each Party irrevocably consents and agrees that any action, proceeding, or other litigation by or against the other Party or any other Person with respect to any claim or cause of action based upon or arising out of or related to this Agreement or the Services contemplated hereby, shall be brought and tried exclusively in the federal or state courts located in Harris County, Texas, and any such legal action or proceeding may be removed to the aforesaid courts.  By execution and delivery of the Agreement, each Party irrevocably submits to the exclusive jurisdiction of such courts and hereby submits to the jurisdiction of such courts, and waives (a) any objection which it may now or hereafter have to the laying of venue with respect any such action, proceeding, or litigation arising out of or in connection with this Agreement or the Services contemplated hereby brought in the aforesaid courts, and (b) any right to stay or dismiss any such action, proceeding, or litigation brought before the aforesaid courts on the basis of forum non-conveniens.  Each Party further agrees that personal jurisdiction over it may be affected by service of process by certified mail, postage prepaid, addressed as provided in Section 10.4 of this Agreement.  The Parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection which either Party may now or hereafter have to the laying of venue of any such action or proceeding brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

Each of the Parties hereby consents to process being served by any other Party in any action or proceeding by delivery of a copy thereof in accordance with the provisions of Section 10.4; provided, however, that such service will not be effective until the actual receipt thereof by the Party being served.

Each Party to this Agreement waives any right to trial by jury in any action or proceeding in respect of any claim arising out of or relating to this Agreement or the relationship of the Parties hereunder.

Severability

Counterparts

Timing

Fulfillment of Obligations

Lease operating statements for the previous Month, including a consolidated lease operating statement for all operations.

Monthly cash forecast (3 months).

Monthly financial and operating reports to MLP in respect of the most recently ended Month in a form requested and as may be required by MLP. Services Provider shall prepare and submit to MLP a monthly management report in respect of the most recently ended Month with such information as MLP may request, as well as any other information (without regard to whether relating to such Month) that MLP may request. MLP and/or any representatives designated by MLP may at any time during normal business hours, upon three (3) Business Days’ advance notice, examine and/or make and retain copies of said records.  With each Month’s financial and operating reports, Services Provider shall also provide evidence of all payments made during such month, including evidence of all royalty payments.

A drilling status report for the previous Month, including for each Well: township, section and range; the spud date, online and completion dates; the target formation; and completed lateral length; and a comparison between AFEs issues for such Well and the actual costs of such Well.

Copies of any correspondence between Services Provider and any Governmental Authority with respect to the ownership, operation or use of the Properties, including copies of all material reports provided by or to any Governmental Authority.

All plugging and abandonment reports.

Assist MLP with the preparation of any and all reports or information required under MLP’s organizing documents including the preparation of, any financial statement or report that MLP or any of its Affiliates or Subsidiaries is obligated to prepare or report under any such Person’s organizing documents, under any Law, rule or regulation, including the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended.