EXHIBIT 10.1
SERVICE AGREEMENT
by and between
ARGOSY ENERGY INTERNATIONAL
and
AVIVA OVERSEAS, INC.
Dated as of June 1, 2000
Table of Contents
ARTICLE I TERM OF AGREEMENT......................................................2
Section 1.1....................................................................2
ARTICLE II RENDITION OF SERVICES BY CONTRACTOR TO CLIENT..........................3
Section 2.1....................................................................3
Section 2.2....................................................................3
Section 2.3....................................................................4
ARTICLE III LIMITATION OF AUTHORITY OF CONTRACTOR..................................4
Section 3.1....................................................................4
Section 3.2....................................................................5
Section 3.3....................................................................5
ARTICLE IV SPECIAL PROVISIONS.....................................................5
Section 4.1 Non-Compete.....................................................5
Section 4.2 Colombia Opportunities..........................................6
Section 4.3 Service Priorities..............................................7
Section 4.4 Drafting........................................................7
ARTICLE V COMPENSATION OF CONTRACTOR BY CLIENT...................................7
Section 5.1....................................................................7
Section 5.2....................................................................7
ARTICLE VI CONTROL OF INFORMATION.................................................8
ARTICLE VII NOTICES................................................................8
ARTICLE VIII RECISSION OF PRIOR AGREEMENT; MERGER;
NO MODIFICATION EXCEPT IN WRITING......................................9
Section 8.1....................................................................9
Section 8.2....................................................................9
ARTICLE IX GOVERNING LAW.........................................................10
Section 9.1...................................................................10
ARTICLE X NO ASSIGNMENT.........................................................10
Section 10.1..................................................................10
ARTICLE XI ARBITRATION...........................................................10
Section 11.1 Agreement to Arbitrate......................................10
Section 11.2 Notice of Arbitration.......................................11
Section 11.3 Selection of Arbitrator.....................................12
Section 11.4 Award Final.................................................12
Section 11.5 Availability of Injunctive Relief...........................12
ARTICLE XII SUBMISSION TO JURISDICTION; AGENT FOR SERVICE.........................12
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SERVICE AGREEMENT
SERVICE AGREEMENT ("Agreement"), dated the /1/st day of June, 2000,
between Argosy Energy International, a Utah LP, with address at c/o Crosby
Capital LLC, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (hereinafter
referred to as "Client"), and Aviva Overseas, Inc., a Delaware corporation, with
address at 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (hereinafter
referred to as "Contractor.")
WHEREAS, Client holds certain oil and gas interests situated in the
Republic of Colombia, S.A. ("Colombia"); and
WHEREAS, Client desires to engage Contractor to render services; and
IN CONSIDERATION of the covenants, agreements, terms and conditions
herein contained, Client and Contractor hereby agree as follows:
ARTICLE I
TERM OF AGREEMENT
-----------------
Section 1.1
Except as otherwise provided in this Article I, this Agreement shall
remain in full force and effect for a term of twenty-two (22) months from the
date first above written, and shall continue thereafter from month to month,
unless terminated by either party hereto by written notice given to the other at
least thirty (30) days prior to the expiration of the term then in effect;
provided, however, that Contractor shall continue to be bound by the obligations
of Section 4.1 and Article VI hereof subsequent to termination of this Agreement
for any reason whatsoever.
(a) If either party hereto shall be in default in any material
respect of any of the terms, covenants, or conditions herein contained, the
other party hereto may give to the defaulting party written notice of its
default, and if the defaulting party fails to cure such default within fifteen
(15) days after such notice, this Agreement may be terminated upon notice by the
other party hereto.
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(b) In the event of the institution of any action or proceeding under
any bankruptcy or insolvency law or any law for the relief of creditors against
either party hereto, or in the event of the appointment of a receiver or trustee
for the benefit of creditors of either party hereto, the other party may, by
notice, immediately terminate this Agreement.
(c) Client shall have the option to terminate this Agreement upon
notice in the event (i) either Xxxxxx Xxxxxxx or Xxx Xxxxx is no longer a full
time employee of Aviva Petroleum, Inc., a Texas corporation, and an officer of
Contractor, or (ii) either of such individuals becomes incapacitated and is
unable to perform the responsibilities of a full time employee.
ARTICLE II
RENDITION OF SERVICES BY CONTRACTOR TO CLIENT
---------------------------------------------
Section 2.1
Throughout the term hereof or any continuation thereof, Contractor
shall cause to be rendered to Client the following services, to the extent and
in the manner, form and frequency required by Client:
A. Accounting/Finance
B. General Administration
C. Special Projects
D. Colombia On-site Requirements
The foregoing service, denominated "A" through "D", inclusive, shall
hereinafter be referred to, collectively, as "Services."
Section 2.2
Contractor shall devote sufficient time to the duties and
responsibilities to perform its obligations; and will at all times faithfully,
industriously, and to the best of its ability, experience and talents, perform
all such duties and responsibilities in a good and workmanlike manner.
Contractor shall cause to be furnished all personnel (including professional,
executive, technical, administrative and clerical), equipment, systems and
materials reasonably necessary to provide the Services to Client.
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Section 2.3
A. Accounting/Finance services shall consist of maintenance of
accounting books and records for Client in conformity with generally accepted
accounting principles in the jurisdiction in which Client is located, including
maintenance of the general ledger, accounts receivable and payable records,
monthly preparation of statements, plan comparisons to actual budget reporting,
cash accounting and bookkeeping. Furthermore, Accounting/Finance services shall
consist of Contractor providing operational advice concerning policy and
controls for (i) treasury functions, including but not limited to, money
management, bank relations and borrowings, and (ii) insurance and tax matters.
B. General Administration services shall consist of providing
executive guidance, creating and maintaining project logs, preparation of
general business plans, proposing control of administrative business efficiency
and organizational structure, regular status reporting and providing
recommendations regarding personnel hiring, placement, promotion and
compensation, and sundry other general office services.
C. Special Project Services shall include assistance in the
preparation of year-end reserve engineering report and annual audited financial
statements for the Client.
D. Colombia On-Site Requirements shall include quarterly meetings in
Bogota with Client staff by Xxx Xxxxxxx and one annual field trip by Xxx Xxxxxxx
to the Client production facilities. To the extent deemed necessary by Client,
Xxx Xxxxx shall attend one annual meeting a year in Bogota.
ARTICLE III
LIMITATION OF AUTHORITY OF CONTRACTOR
-------------------------------------
Section 3.1
Contractor is not authorized or empowered by this Agreement to act as
Client's agent and except as herein above provided, Contractor shall have no
power or authority to and shall not negotiate or conclude any contract,
agreement, bond or other instrument or legal undertaking whatsoever on behalf of
or in the name of Client, nor shall Contractor acknowledge, deliver, cancel,
revoke, vary, amend or otherwise effect any contract, agreement, bond or other
instrument or legal undertaking whatsoever on behalf or in the name of Client.
Contractor agrees that neither it nor any of its employees or representatives
will hold himself out or represent to potential venture parties or Ecopetrol or
to the trade that they have authority to make contracts or commitments on behalf
of or in the name of
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Client. Contractor, its employees and officers shall have no authority to (i)
execute any checks or negotiable instruments on behalf of Client or (ii)
initiate wire transfers or other bank transfers on behalf of Client.
Section 3.2
In its performance of Services hereunder Contractor will at all times
act in the capacity of an independent contractor with respect to Client. Nothing
in this Agreement shall constitute or be construed as constituting or tending to
establish a joint venture, partnership or agency relationship between Contractor
and Client for any purpose whatsoever. Except as required for the full and
faithful performance of this Agreement, neither party shall be bound by or be
liable for any act or omission of the other party or for any purpose, warranty,
representation, obligation or debt incurred by the other.
Section 3.3
In certain circumstances, Client may delegate specific authority to
Contractor to negotiate on behalf of Client or take other actions on behalf of
Client. In such circumstances, a written delegation must be signed by Client
prior to such delegation. Therefore in all other cases, contractor shall be
deemed an advisor to Client.
ARTICLE IV
SPECIAL PROVISIONS
------------------
Section 4.1 Non-Compete
(a) Non Compete. Contractor, Aviva Petroleum, Inc., any employee
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of Aviva Petroleum, Inc., any officer or director of Contractor or Aviva
Petroleum, Inc., and any affiliate of Contractor or Aviva Petroleum, Inc. will
not, during the term of this Agreement and the two years following termination
of this Agreement, directly or indirectly, for any reason, for its own account
or on behalf of or together with any other Person:
(i) own, finance, control, or participate in the
ownership or control of, or become a principal, agent, or other
representative of any Person engaged in a business competitive
with Client in Colombia;
(ii) accept employment with a Person that is engaged
in a business competitive with Client in Colombia;
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(iii) permit its name to be used by or in connection with a
business competitive with Client in Colombia;
(iv) solicit, divert, recruit or employ any employee of
Client, or induce any employee thereof to terminate his or her
employment;
(v) call on, solicit, perform services for any Person
that is or has been a venture partner of Client or any
prospective venture partner that had received or, to the
knowledge of the Client, was about to receive a business proposal
therefrom, for the purpose of soliciting or selling any product
or service in competition Client in Colombia;
(vi) advise or suggest to any Person that such Person
curtail, cancel or withdraw its business from Client; or
(vii) call on any Entity which has been called on by Client
in connection with a possible acquisition by Client, with the
knowledge of that Entity's status as such an acquisition
candidate, for the purpose of acquiring that Entity or arranging
the acquisition of that Entity by any Person other than Client:
or
(viii) participate in any business activities in Colombia in
the oil & gas exploration, production, transportation and service
industries.
Section 4.2 Colombia Opportunities
Contractor shall advise Client of any and all potentially viable
opportunities in Colombia. Such opportunities shall be limited to the oil & gas
exploration, production, transportation, and service industries. If Contractor
advises Client of a potentially viable opportunity in Colombia and Client elects
not to pursue that opportunity, but the general partner of Client, either
directly or through an affiliated entity, elects to pursue that opportunity at
any time within one (1) year of the date it has been presented by Contractor to
Client, then the general partner of Client agrees, by its execution of this
Agreement, to offer Contractor the opportunity to participate, on a "heads-up"
basis, in said opportunity, based upon its percentage interest in the Client.
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Section 4.3 Service Priorities
Client shall set the monthly priorities for Contractor. To the extent
Client requires no services in such month, Contractor shall be so advised and
relieved of its obligation to perform such services. However, such action by
Client shall not relieve Client of obligation to pay for such monthly services.
Section 4.4 Drafting
Neither this Agreement nor any provision contained in this Agreement
shall be interpreted in favor of or against any party hereto because such party
or its legal counsel drafted this Agreement or such provision.
ARTICLE V
COMPENSATION OF CONTRACTOR BY CLIENT
------------------------------------
Section 5.1
For and in consideration of the Services to be furnished by
Contractor, to Client hereunder, Client shall pay at the end of each month a fee
to be computed and paid in the manner set forth herein below:
(a) The monthly fee for the period June 1, 2000, through March 31,
2001, shall be $71,000.
(b) The monthly fee for the period April 1, 2001, through March,
2002, shall be $46,000.
(c) The monthly fee after March 2002 shall be $21,000. Section 5.2
The Contractor shall bear all of its own out-of-pocket expenses
including, but not limited to, travel expenses. Additionally, the Contractor
shall pay or reimburse Client for any and all third-party fees related to (i)
annual reserve engineer reports and (ii) the year-end audits to the extent such
fees arise from audit activities in the United States. All other third party
fees incurred by Contractor (other than general administrative overhead costs)
in performance of its duties under this Agreement pursuant to written
authorization or instruction from Client shall be paid or reimbursed by Client.
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ARTICLE VI
CONTROL OF INFORMATION
----------------------
Contractor shall promptly return all information, whether of a
promotional, administrative, operational or economic nature, in tangible form
furnished to it in the course of the performance of its Services hereunder
together with all copies made therefrom, upon the request of Client and/or the
party who furnished such information, or shall destroy or otherwise dispose of
the same as directed by Client. Contractor shall not disclose any of Client's
information to any other person, firm or corporation without Client's express
consent. The obligations of Contractor provided in this Article VI shall survive
termination of this Agreement for any reason whatsoever, but shall not extend to
promotional material disseminated by Client to the public.
Additionally, nothing in this Article VI shall prevent Contractor, in
its capacity as limited partner of Client, from obtaining, retaining, and using
any information about Client or its business as may be permitted by the terms
and provisions of the Limited Partnership Agreement of Client.
ARTICLE VII
NOTICES
-------
All notices, requests, demands and other communications called for or
contemplated hereunder shall be in writing and shall be deemed to have been duly
given when sent to the party to whom addressed by registered or certified mail,
return receipt requested, postage prepaid, by overnight courier, with the fees
therefore prepaid or billed to the sender, or by telecopy, telegram, telex or
wire (if promptly confirmed by mail or overnight courier as provided above) to
the parties, their successors in interest, or their assignees at the following
addresses, or at such other addresses as the parties may designate by written
notice in the manner aforesaid:
If to Client: Argosy Energy International
c/o Bunker Hill Associates, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxxxx
Facsimile No. (000) 000-0000
with copies to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 XxXxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Facsimile No. (000) 000-0000
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If to Contractor: Aviva Overseas, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxxxx
Facsimile No. (000) 000-0000
With copies to: Jenkens & Xxxxxxxxx, a Professional Corporation
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxxx
Facsimile No. (000) 000-0000
ARTICLE VIII
RESCISSION OF PRIOR AGREEMENT; MERGER; NO MODIFICATION EXCEPT IN WRITING
------------------------------------------------------------------------
Section 8.1
This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. All prior understandings and
agreements between the parties relating to the subject matter hereof are hereby
rescinded and terminated, and are hereby superceded by this Agreement. Neither
party is relying upon any statement, representation or warranty, either express
or implied, made by or on behalf of the other, not expressly set forth herein.
Section 8.2
Except as otherwise provided, this Agreement may not be modified,
waived, discharged or terminated, except by a writing signed by the party
against whom same is sought to be enforced.
ARTICLE IX
GOVERNING LAW
-------------
Section 9.1
The validity, construction and performance of this Agreement shall be
governed by the law of Texas.
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ARTICLE X
NO ASSIGNMENT
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Section 10.1
Neither party hereto may assign this Agreement, `nor any rights or
obligations hereunder. Any attempted or actual assignment hereof shall be null
and void.
ARTICLE XI
ARBITRATION
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Section 11.1 Agreement to Arbitrate
Except as expressly provided herein, all disputes between Contractor
and the Client arising out of or in connection with the execution,
interpretation and performance of this Agreement (including the validity, scope
and enforceability of this Article 11) shall, to the fullest extent permitted by
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law, be solely and finally settled by a sole arbitrator, as set forth below (the
"Arbitrator"). THE ARBITRATION PROCEEDINGS SHALL BE HELD IN DALLAS COUNTY,
TEXAS, AND EXCEPT AS OTHERWISE MAY BE PROVIDED IN THIS ARTICLE 11, THE
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ARBITRATION PROCEEDINGS SHALL BE CONDUCTED PURSUANT TO AND IN ACCORDANCE WITH
THE TEXAS GENERAL ARBITRATION ACT, TEX. CIV. PRAC. & REM. CODE (S) 171.000 ET
SEQ. (XXXXXX 1996) ("TGAA") AND THE COMMERCIAL ARBITRATION RULES (THE "AAA
---
RULES") OF THE AMERICAN ARBITRATION ASSOCIATION (THE "AAA"), TO THE EXTENT THE
----- ---
AAA RULES ARE NOT INCONSISTENT WITH THE TGAA (THE TGAA AND THE AAA RULES ARE
COLLECTIVELY REFERRED TO AS THE "ARBITRATION RULES").
Section 11.2 Notice of Arbitration
If Contractor, on the one hand, or the Client, on the other hand,
determines to submit a dispute to arbitration pursuant to this Article 11 such
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party shall furnish the AAA and the other party(s) with a dated, written
statement indicating (i) such party's intent to commence arbitration proceedings
pursuant to this Article 11, (ii) the name and address of such party and a
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designated officer or agent thereof, (iii) the nature, with reasonable detail,
of the dispute, (iv) the remedy such party will seek and (v) any other
information required under the Arbitration Rules.
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Section 11.3 Selection of Arbitrator
The Arbitrator, who shall be selected in accordance with the
procedures of the AAA, shall be a retired or former state district court judge
for the State of Texas or a retired or former judge of any Federal court
appointed under Article III of the United States Constitution who presided in a
court located in the State in which the arbitration is conducted.
Section 11.4 Award Final
To the extent permissible under applicable law, the parties hereto
agree that the award of the Arbitrators shall be final and shall not be subject
to judicial review, except as permitted by Texas law. Judgment on the
arbitration award may be entered and enforced in any court having jurisdiction
over the parties or their assets. It is the intent of the parties that the
arbitration provisions hereof be enforced to the fullest extent permitted by
applicable law.
Section 11.5 Availability of Injunctive Relief
Any party hereto may request a court of competent jurisdiction, as set
forth in Article 12 hereof, to grant provisional injunctive relief to such party
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solely for the purpose of maintaining the status quo until an arbitrator can
render an award on the matter in question and such award can be confirmed by a
court having jurisdiction thereof.
ARTICLE XII
SUBMISSION TO JURISDICTION; AGENT FOR SERVICE
---------------------------------------------
EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF DALLAS, STATE OF TEXAS, AND IRREVOCABLY
AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY
AGREEMENT OR INSTRUMENT EXECUTED HEREUNDER, OTHER THAN ANY ACTION OR PROCEEDING
REQUIRED BY ARTICLE 11 TO BE SUBMITTED TO ARBITRATION, SHALL BE LITIGATED IN
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SUCH COURTS, AND EACH OF THE PARTIES WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED ON PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS TO THE
CONDUCT OF ANY SUCH ACTION OR
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PROCEEDING IN ANY SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT, AND CONSENTS TO ALL SUCH SERVICE OF PROCESS MADE IN THE MANNER SET
FORTH IN ARTICLE VII. Nothing contained in this Article 12 shall affect the
----------- ----------
right of any party to serve legal process on any other party in any other manner
permitted by law. Nothing contained in this Article 12 shall affect the
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obligations of the parties with respect to the arbitration of disputes under
Article 11.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
ARGOSY ENERGY INTERNATIONAL AVIVA OVERSEAS, INC.
--------------------------- -------------------
By: XXXXXX ACQUISITION, LLC, General Partner
By: Xxxxxx Capital, LLC, as sole member By: /s/ X. Xxxxxxx
--------------------
Xxxxxx Xxxxxxx
President
By: /s/ Xxx X. Xxxxxxx
--------------------------
Xxx X. Xxxxxxx
President
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