Exhibit 10.4

 

Execution Copy

ADMINISTRATIVE SERVICES AGREEMENT

AMONG

BREITBURN GP, LLC,

BREITBURN ENERGY PARTNERS L.P.,

BREITBURN OPERATING L.P.,

AND

BREITBURN MANAGEMENT COMPANY, LLC

 

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TABLE OF CONTENTS

ARTICLE I

 

 

 

DEFINITIONS

 

 

 

Section 1.1

Definitions

1

Section 1.2

Construction

4

 

 

 

ARTICLE II

 

 

 

RETENTION OF BREITBURN MANAGEMENT; SCOPE OF SERVICES

 

 

 

Section 2.1

Retention of BreitBurn Management

4

Section 2.2

Scope of Services

5

Section 2.3

Exclusion of Services

5

Section 2.4

Performance of Services by Affiliates and Third Parties

5

Section 2.5

Intellectual Property

5

Section 2.6

Appointment of Independent Accounting Firm and Independent Petroleum Engineer

6

 

 

 

ARTICLE III

 

 

 

BOOKS, RECORDS AND REPORTING

 

 

 

Section 3.1

Books and Records

6

Section 3.2

Audits

6

Section 3.3

Reports

6

 

 

 

ARTICLE IV

 

 

 

PAYMENT AMOUNT

 

 

 

Section 4.1

Payment Amount

6

Section 4.2

Payment of Payment Amount

7

Section 4.3

Disputed Charges

7

Section 4.4

Set Off

8

Section 4.5

BreitBurn Management’s Employees

8

Section 4.6

Approval of Expenses

8

 

 

 

ARTICLE V

 

 

 

FORCE MAJEURE

 

 

 

 

Section 5.1

Force Majeure

9

BREITBURN ENERGY PARTNERS L.P.
ADMINISTRATIVE SERVICES AGREEMENT

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ARTICLE VI

 

 

 

ASSIGNMENTS AND SUBCONTRACTS

 

 

 

Section 6.1

Assignments

9

Section 6.2

Other Requirements

9

 

 

 

ARTICLE VII

 

 

 

TERMINATION

 

 

 

 

Section 7.1

Termination by the Partnership on behalf of the Partnership Group

10

Section 7.2

Termination by BreitBurn Management

10

Section 7.3

Effect of Termination

11

 

 

 

ARTICLE VIII

 

 

 

CONFIDENTIAL INFORMATION

 

 

 

Section 8.1

Nondisclosure

11

Section 8.2

Permitted Disclosure

11

 

 

 

ARTICLE IX

 

 

 

LIMITATION OF LIABILITY; INDEMNIFICATION

 

 

 

Section 9.1

Limitation of Liability

12

Section 9.2

Indemnification

12

 

 

 

ARTICLE X

 

 

 

DISPUTE RESOLUTION

 

 

 

ARTICLE XI

 

 

 

GENERAL PROVISIONS

 

Section 11.1

Notices

13

Section 11.2

Further Action

14

Section 11.3

Binding Effect

14

Section 11.4

Integration

14

Section 11.5

Creditors

14

Section 11.6

Waiver

14

Section 11.7

Counterparts

14

Section 11.8

Applicable Law

14

 

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Section 11.9

Invalidity of Provisions

15

Section 11.10

Amendment or Restatement

15

Section 11.11

Directly or Indirectly

15

 

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ADMINISTRATIVE SERVICES AGREEMENT

THIS ADMINISTRATIVE SERVICES AGREEMENT is entered into on, and effective as of
October 10, 2006 (the “Effective Date”), among BreitBurn GP, LLC, a Delaware
limited liability company (the “General Partner”), BreitBurn Energy Partners
L.P., a Delaware limited partnership (the “Partnership”), BreitBurn Operating
L.P., a Delaware limited partnership (the “Operating Partnership”), and
BreitBurn Management Company, LLC, a Delaware limited liability company
(“BreitBurn Management,” and collectively with the General Partner, the
Partnership and the Operating Partnership, the “Parties” and each, a “Party”).

RECITALS

A.            The Partnership is the owner, directly or indirectly, of interests
in the Business (as hereinafter defined);

B.            The Partnership Group (as hereinafter defined) requires certain
services to operate the Business and to fulfill other general and administrative
functions relating to the Business; and

C.            The Partnership Group desires that BreitBurn Management provide
such services, and BreitBurn Management is willing to undertake such engagement,
subject to the terms and conditions of this Agreement;

NOW, THEREFORE, the Partnership and BreitBurn Management agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1          DEFINITIONS.

The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Agreement.

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

“Agreement” means this Administrative Services Agreement, as it may be amended,
supplemented or restated from time to time.

“Business” means the business of the Partnership Group.

“Bankrupt” with respect to any Person means such Person shall generally be
unable to pay its debts as such debts become due, or shall so admit in writing
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against such Person seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up,

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reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), shall remain undismissed or
unstayed for a period of 30 days; or such Person shall take any action to
authorize any of the actions set forth above.

“BreitBurn Energy” means BreitBurn Energy Company L.P., a Delaware limited
partnership.

“BreitBurn Management Party” is defined in Section 9.1.

“Confidential Information” means non-public information about the disclosing
Party’s or any of its Affiliates’ business or activities that is proprietary and
confidential, which shall include, without limitation, all business, financial,
technical and other information, including software (source and object code) and
programming code, of a Party or its Affiliates marked or designated
“confidential” or “proprietary” or by its nature or the circumstances
surrounding its disclosure it should reasonably be regarded as confidential. 
Confidential Information includes not only written or other tangible
information, but also information transferred orally, visually, electronically
or by any other means.  Confidential Information does not include information
that (i) is in or enters the public domain without breach of this Agreement, or
(ii) the receiving Party lawfully receives from a third party without
restriction on disclosure and to the receiving Party’s knowledge without breach
of a nondisclosure obligation.

“Damages” is defined in Section 9.2.

“Default Rate” means an interest rate (which shall in no event be higher than
the rate permitted by applicable law) equal to the prime interest rate of the
Operating Partnership’s principal lender.

“Effective Date” is defined in the introductory paragraph.

“Environmental Law” means current local, county, state, federal, and/or foreign
law (including common law), statute, code, ordinance, rule, order, judgment,
decree, regulation or other legal obligation relating to the protection of
health, safety or the environment or natural resources, including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. section 9601 et seq.), as amended, the Resource Conservation and
Recovery Act (42 U.S.C. section 6901 et seq.), as amended, the Federal Water
Pollution Control Act (33 U.S.C. section 1251 et seq.), as amended, the Clean
Air Act (42 U.S.C. section 7401 et seq.), as amended, the Toxic Substances
Control Act (15 U.S.C. section 2601 et seq.), as amended, the Occupational
Safety and Health Act (29 U.S.C. section 651 et seq.), as amended, the Safe
Drinking Water Act (42 U.S.C. section 300(f) et seq.), as amended, analogous
state, tribal or local laws, and any similar, implementing or successor law, and
any amendment, rule, regulation, or directive issued thereunder, including any
determination by, or interpretation of any of the foregoing by any Governmental
Authority that has the force of law.

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“Force Majeure” means any cause beyond the reasonable control of a Party,
including the following causes (unless they are within such Party’s reasonable
control): acts of God, strikes, lockouts, acts of the public enemy, wars or
warlike action (whether actual or impending), arrests and other restraints of
government (civil or military), blockades, embargoes, insurrections, riots,
epidemics, landslides, lightning, earthquakes, fires, sabotage, tornadoes, named
tropical storms and hurricanes, and floods, civil disturbances, terrorism,
mechanical breakdown of machinery or equipment, explosions, confiscation or
seizure by any government or other public authority, any order of any court of
competent jurisdiction, regulatory agency or governmental body having
jurisdiction.

“G&A Services” means those general and administrative services necessary or
useful for the conduct of the business of the Partnership Group, including, but
not limited to, accounting, corporate development, finance, land, legal and
engineering.

“Governmental Approval” means any material consent, authorization, certificate,
permit, right-of-way grant or approval of any Governmental Authority that is
necessary for the construction, ownership and operation of the Assets in
accordance with applicable Laws.

“Governmental Authority” means any court or tribunal in any jurisdiction or any
federal, state, tribal, municipal or local government or other governmental
body, agency, authority, department, commission, board, bureau, instrumentality,
arbitrator or arbitral body or any quasi-governmental or private body lawfully
exercising any regulatory or taxing authority.

“Laws” means any applicable statute, Environmental Law, common law, rule,
regulation, judgment, order, ordinance, writ, injunction or decree issued or
promulgated by any Governmental Authority.

“Parties” is defined in the introductory paragraph.

“Partnership” is defined in the introductory paragraph.

“Partnership Agreement” means the First Amended and Restated Agreement of
Limited Partnership of the Partnership, as may be amended or restated from time
to time.

“Partnership Group” means the General Partner, the Partnership, the Operating
Partnership and all of their respective Subsidiaries.

“Partnership Group Party” is defined in Section 9.1.

“Payment Amount” is defined in Section 4.1.

“Person” means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.

“Services” is defined in Section 2.2.

 

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“Subsidiary” means, with respect to any Person, (a) a corporation of which more
than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the directors or
other governing body of such Person.

Other terms defined herein have the meanings so given them.

SECTION 1.2          CONSTRUCTION.

Unless the context requires otherwise: (a) any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa; (b) references to Articles and Sections refer to Articles and Sections of
this Agreement; (c) references to Exhibits refer to the Exhibits attached to
this Agreement, each of which is made a part hereof for all purposes; (d) the
terms “include”, “includes”, “including” and words of like import shall be
deemed to be followed by the words “without limitation”; (e) the terms “hereof,”
“herein” and “hereunder” refer to this Agreement as a whole and not to any
particular provision of this Agreement; and (f) references to money refer to
legal currency of the United States of America.  The table of contents and
headings contained in this Agreement are for reference purposes only, and shall
not affect in any way the meaning or interpretation of this Agreement.

ARTICLE II

RETENTION OF BREITBURN MANAGEMENT; SCOPE OF SERVICES

SECTION 2.1          RETENTION OF BREITBURN MANAGEMENT.

The Partnership hereby engages BreitBurn Management to perform the Services, as
directed by the General Partner, and to provide all personnel and any
facilities, goods and equipment not otherwise provided by the Partnership Group
necessary to perform the Services.  BreitBurn Management hereby accepts such
engagement and agrees to perform the Services requested by the General Partner
and to provide any personnel, facilities, goods and equipment not otherwise
provided by the Partnership Group, and to provide all employees as may be
reasonable and necessary to perform the Services.  The Partnership recognizes
that BreitBurn Management is concurrently entering into an Administrative
Services Agreement with BreitBurn Energy.

 

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SECTION 2.2          SCOPE OF SERVICES.

The “Services” shall consist of such services the General Partner determines may
be reasonable and necessary to operate the Business, including, without
limitation, any G&A Services and those services described on Schedule I hereto. 
BreitBurn Management hereby covenants and agrees that the Services will be
performed in accordance with (i) applicable material Governmental Approvals and
Laws and (ii) industry standards.

SECTION 2.3          EXCLUSION OF SERVICES.

The General Partner may temporarily or permanently exclude any particular
service from the scope of the Services upon 90 days’ notice to BreitBurn
Management.

SECTION 2.4          PERFORMANCE OF SERVICES BY AFFILIATES AND THIRD PARTIES.

The Parties hereby agree that in discharging its obligations hereunder,
BreitBurn Management may engage any of its Affiliates or any qualified third
party to perform the Services (or any part of the Services) on its behalf and
that the performance of the Services (or any part of the Services) by any such
Affiliate or third party shall be treated as if BreitBurn Management performed
such Services itself.  Notwithstanding the foregoing, nothing contained herein
shall relieve BreitBurn Management of its obligations hereunder.

SECTION 2.5          INTELLECTUAL PROPERTY.

(A)           ANY (I) INVENTIONS, WHETHER PATENTABLE OR NOT, DEVELOPED OR
INVENTED, OR (II) COPYRIGHTABLE MATERIAL (AND THE INTANGIBLE RIGHTS OF COPYRIGHT
THEREIN) DEVELOPED, BY BREITBURN MANAGEMENT, ITS AFFILIATES OR ITS OR THEIR
EMPLOYEES IN CONNECTION WITH THE PERFORMANCE OF THE SERVICES SHALL BE THE
PROPERTY OF BREITBURN MANAGEMENT; PROVIDED, HOWEVER, THAT THE PARTNERSHIP GROUP
SHALL BE GRANTED AN IRREVOCABLE, ROYALTY-FREE, NON-EXCLUSIVE AND
NON-TRANSFERABLE RIGHT AND LICENSE TO USE SUCH INVENTIONS OR MATERIAL; AND
FURTHER PROVIDED, HOWEVER, THAT THE PARTNERSHIP GROUP SHALL ONLY BE GRANTED SUCH
A RIGHT AND LICENSE TO THE EXTENT SUCH GRANT DOES NOT CONFLICT WITH, OR RESULT
IN A BREACH, DEFAULT, OR VIOLATION OF A RIGHT OR LICENSE TO USE SUCH INVENTIONS
OR MATERIAL GRANTED TO BREITBURN MANAGEMENT BY ANY PERSON OTHER THAN AN
AFFILIATE OF BREITBURN MANAGEMENT.  NOTWITHSTANDING THE FOREGOING, BREITBURN
MANAGEMENT WILL USE ALL COMMERCIALLY REASONABLE EFFORTS TO GRANT SUCH RIGHT AND
LICENSE TO THE PARTNERSHIP GROUP.

(B)           THE GENERAL PARTNER AND THE PARTNERSHIP AND THE OPERATING
PARTNERSHIP HEREBY GRANT TO BREITBURN MANAGEMENT AND ITS AFFILIATES AN
IRREVOCABLE, ROYALTY-FREE, NON-EXCLUSIVE AND NON-TRANSFERABLE RIGHT AND LICENSE
TO USE, DURING THE TERM OF THIS AGREEMENT, ANY INTELLECTUAL PROPERTY PROVIDED BY
THE PARTNERSHIP GROUP TO BREITBURN MANAGEMENT OR ITS AFFILIATES, BUT ONLY TO THE
EXTENT SUCH USE IS NECESSARY FOR THE PERFORMANCE OF THE SERVICES.  BREITBURN
MANAGEMENT AGREES THAT IT AND ITS AFFILIATES WILL UTILIZE SUCH INTELLECTUAL
PROPERTY SOLELY IN CONNECTION WITH THE PERFORMANCE OF THE SERVICES.

 

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SECTION 2.6          APPOINTMENT OF INDEPENDENT ACCOUNTING FIRM AND INDEPENDENT
PETROLEUM ENGINEER.

Notwithstanding anything to the contrary in this Agreement, the Parties hereby
recognize and agree that the General Partner shall have the exclusive authority
to appoint an independent accounting firm to audit the financial statements of
the Partnership and an independent petroleum engineer to provide reports to the
Partnership relating to estimates of proved reserves for Securities and Exchange
Commission and other reporting purposes.

ARTICLE III

BOOKS, RECORDS AND REPORTING

SECTION 3.1          BOOKS AND RECORDS.

BreitBurn Management shall maintain accurate books and records regarding the
performance of the Services and its calculation of the Payment Amount, and shall
maintain such books and records for the period required by applicable accounting
practices or law.

SECTION 3.2          AUDITS.

The Partnership shall have the right, upon reasonable notice, and at all
reasonable times during usual business hours, to audit, examine and make copies
of the books and records referred to in Section 3.1.  Such right may be
exercised through any agent or employee of the Partnership Group designated in
writing by it or by an independent public accountant, engineer, attorney or
other agent so designated.  The Partnership shall bear all costs and expenses
incurred in any inspection, examination or audit.  BreitBurn Management shall
review and respond in a timely manner to any claims or inquiries made by the
Partnership regarding matters revealed by any such inspection, examination or
audit.

SECTION 3.3         REPORTS.

BreitBurn Management shall prepare and deliver to the Partnership any reports
provided for in this Agreement and such other reports as the Partnership may
reasonably request from time to time regarding the performance of the Services.

ARTICLE IV

PAYMENT AMOUNT

SECTION 4.1          PAYMENT AMOUNT.

The Partnership shall reimburse BreitBurn Management on a monthly basis for all
direct and indirect expenses BreitBurn Management incurs, or payments it makes
on behalf of the Partnership Group or expenses allocated to BreitBurn Management
by its Affiliates, in each case in connection with the performance by BreitBurn
Management or its Affiliates of the Services (including, subject to Section 4.5,
salary, bonus, incentive compensation and other amounts paid

 

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to any Person to perform the Services) (collectively, the “Payment Amount”);
provided, however, that to the extent any Services performed by BreitBurn
Management or its Affiliates benefit both the Partnership and BreitBurn Energy,
each of the Partnership and BreitBurn Energy shall be responsible for
reimbursement of BreitBurn Management for such Services in proportion to the
benefits each of them received therefrom.  BreitBurn Management shall charge the
Partnership based on BreitBurn Management’s good-faith determination of the
actual time spent by its personnel performing the Services, plus related
expenses.  BreitBurn Management personnel providing services to both the
Partnership and one or more other affiliates shall be charged based on BreitBurn
Management’s good faith estimate of actual time spent performing the services
plus expenses or on other systematic and rational allocations as determined by
BreitBurn Management.  Notwithstanding the foregoing, the Partnership shall be
obligated to reimburse BreitBurn Management for a portion of the cost of the
existing benefit plans of BreitBurn Management, including those plans of
BreitBurn Energy Company L.P. adopted by BreitBurn Management.  The amount of
the reimbursement shall be determined by BreitBurn Management on any basis that
it deems to be reasonable and need not be based on the amount of services
performed for the Partnership.

SECTION 4.2          PAYMENT OF PAYMENT AMOUNT.

BreitBurn Management shall invoice the Partnership on or before the 25th day of
each month for the estimated Payment Amount for the next succeeding month, plus
or minus any adjustment necessary to correct prior estimated billings to actual
billings. Subject to Section 4.3, all invoices shall be due and payable, in
immediately available funds, on the last day of the month to which the invoice
relates. Upon the request of the Partnership, BreitBurn Management shall furnish
a reasonable detail of the Services provided and charges assessed during any
month.

SECTION 4.3          DISPUTED CHARGES.

THE PARTNERSHIP MAY, WITHIN 120 DAYS AFTER RECEIPT OF A CHARGE FROM BREITBURN
MANAGEMENT, TAKE WRITTEN EXCEPTION TO SUCH CHARGE, ON THE GROUND THAT THE SAME
WAS NOT A REASONABLE COST INCURRED BY BREITBURN MANAGEMENT OR ITS AFFILIATES IN
CONNECTION WITH THE SERVICES. THE PARTNERSHIP SHALL NEVERTHELESS PAY BREITBURN
MANAGEMENT IN FULL WHEN DUE THE FULL PAYMENT AMOUNT OWED TO BREITBURN
MANAGEMENT. SUCH PAYMENT SHALL NOT BE DEEMED A WAIVER OF THE RIGHT OF THE
PARTNERSHIP TO RECOUP ANY CONTESTED PORTION OF ANY AMOUNT SO PAID. HOWEVER, IF
THE AMOUNT AS TO WHICH SUCH WRITTEN EXCEPTION IS TAKEN, OR ANY PART THEREOF, IS
ULTIMATELY DETERMINED NOT TO BE A REASONABLE COST INCURRED BY BREITBURN
MANAGEMENT OR ITS AFFILIATES IN CONNECTION WITH ITS PROVIDING THE SERVICES
HEREUNDER, SUCH AMOUNT OR PORTION THEREOF (AS THE CASE MAY BE) SHALL BE REFUNDED
BY BREITBURN MANAGEMENT TO THE PARTNERSHIP TOGETHER WITH INTEREST THEREON AT THE
DEFAULT RATE DURING THE PERIOD FROM THE DATE OF PAYMENT BY THE PARTNERSHIP TO
THE DATE OF REFUND BY BREITBURN MANAGEMENT.

 

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SECTION 4.4          SET OFF.

In the event that BreitBurn Management owes the Partnership a sum certain in an
uncontested amount under any other agreement, then any such amounts may be
aggregated and the Partnership and BreitBurn Management may discharge their
obligations by netting those amounts against any amounts owed by the Partnership
to BreitBurn Management under this Agreement.  If the Partnership or BreitBurn
Management owes the other party a greater aggregate amount, that Party may pay
to the other Party the difference between the amounts owed.

SECTION 4.5          BREITBURN MANAGEMENT’S EMPLOYEES.

The obligations under Sections 4.1 and 4.2, to the extent they relate to
Services provided by employees of BreitBurn Management or its Affiliates, shall
be limited to payment to BreitBurn Management for expenses in connection with
its or its Affiliates’ employees engaged in the provision of Services hereunder,
and the Partnership shall not be obligated to pay to BreitBurn Management’s or
its Affiliates’ employees directly any compensation, salaries, wages, bonuses,
benefits, social security taxes, workers’ compensation insurance, retirement and
insurance benefits, training and other such expenses; provided, however, that
the Partnership may, at its option, compensate such employees under the
Partnership’s Long-Term Incentive Plan for the provision of Services hereunder;
and provided further, however, that if BreitBurn Management fails to pay any
employee, with the exception of employee claims for amounts owed that BreitBurn
Management disputes in good faith, within 30 days of the date such employee’s
payment is due:

(A)           THE PARTNERSHIP MAY (I) PAY SUCH EMPLOYEE DIRECTLY, (II) EMPLOY
SUCH EMPLOYEE DIRECTLY, (III) NOTIFY BREITBURN MANAGEMENT AND BEGIN TO PAY ALL
EMPLOYEES PROVIDING SERVICE TO THE PARTNERSHIP DIRECTLY, OR (IV) NOTIFY
BREITBURN MANAGEMENT THAT THIS AGREEMENT IS TERMINATED AND EMPLOY ALL EMPLOYEES
DIRECTLY; AND

(B)           BREITBURN MANAGEMENT SHALL REIMBURSE THE PARTNERSHIP, AS THE CASE
MAY BE, THE AMOUNT THE PARTNERSHIP PAID TO BREITBURN MANAGEMENT FOR EMPLOYEE
SERVICES THAT BREITBURN MANAGEMENT DID NOT PAY TO ANY SUCH EMPLOYEE.

The Partnership recognizes that, pursuant to the Administrative Services
Agreement between BreitBurn Management and BreitBurn Energy, BreitBurn
Management will have similar rights to those of the Partnership contained in
this Section 4.5.

SECTION 4.6          APPROVAL OF EXPENSES.

BreitBurn Management acknowledges that all charges for Services assessed by
BreitBurn Management and included in the Payment Amount must be approved by the
persons authorized to approve such Payment Amount pursuant to the Partnership’s
governance and delegation-of-authority process.  Additionally, BreitBurn
Management acknowledges that the Audit Committee of the General Partner’s Board
of Directors may at any time review the Payment Amounts and the levels of
Services and, as a result, may direct the Partnership to decrease the level of
Services or to dispute a prior invoice pursuant to Section 4.3.  In addition to
the information BreitBurn

 

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Management is obligated to provide pursuant to Section 4.2, BreitBurn Management
shall provide such other information as reasonably necessary to determine the
veracity or appropriateness of any Payment Amount hereunder.

ARTICLE V

FORCE MAJEURE

SECTION 5.1          FORCE MAJEURE.

A Party’s obligation under this Agreement shall be excused when and to the
extent its performance of that obligation is prevented due to Force Majeure;
provided, however, that a Party shall not be excused by Force Majeure from any
obligation to pay money.  The Party that is prevented from performing its
obligation by reason of Force Majeure shall promptly notify the other Parties of
that fact and shall exercise due diligence to end its inability to perform as
promptly as practicable.  Notwithstanding the foregoing, a Party is not required
to settle any strike, lockout or other labor dispute in which it may be
involved; provided, however, that, in the event of a strike, lockout or other
labor dispute affecting BreitBurn Management, BreitBurn Management shall use
reasonable efforts to continue to perform all obligations hereunder by utilizing
its management personnel and that of its Affiliates.

ARTICLE VI

ASSIGNMENTS AND SUBCONTRACTS

SECTION 6.1          ASSIGNMENTS.

(A)           WITHOUT THE PRIOR CONSENT OF BREITBURN MANAGEMENT, NONE OF THE
PARTNERSHIP OR THE OTHER MEMBERS OR THE PARTNERSHIP GROUP MAY SELL, ASSIGN,
TRANSFER OR CONVEY ANY OF ITS RIGHTS, OR DELEGATE ANY OF ITS OBLIGATIONS, UNDER
THIS AGREEMENT TO ANY PERSON.

(B)           WITHOUT THE PRIOR CONSENT OF THE PARTNERSHIP, BREITBURN MANAGEMENT
MAY NOT SELL, ASSIGN, TRANSFER OR CONVEY ANY OF ITS RIGHTS, OR DELEGATE ANY OF
ITS OBLIGATIONS, UNDER THIS AGREEMENT TO ANY PERSON, OTHER THAN THE DELEGATION
OF PERFORMANCE OF SERVICES TO AN AFFILIATE OF BREITBURN MANAGEMENT OR A
QUALIFIED THIRD PARTY AS PERMITTED BY SECTION 2.4 AND THE SALE, ASSIGNMENT,
TRANSFER OR CONVEYANCE OF ITS RIGHTS HEREUNDER TO ANY SUCH AFFILIATE.

SECTION 6.2          OTHER REQUIREMENTS.

Subject to the other provisions hereof:

(A)           ALL MATERIALS AND WORKMANSHIP USED OR PROVIDED IN PERFORMING THE
SERVICES SHALL BE IN ACCORDANCE WITH APPLICABLE SPECIFICATIONS AND STANDARDS.

(B)           BREITBURN MANAGEMENT SHALL EXERCISE REASONABLE DILIGENCE TO OBTAIN
THE MOST FAVORABLE TERMS OR WARRANTIES AVAILABLE FROM VENDORS, SUPPLIERS AND
OTHER THIRD PARTIES, AND WHERE APPROPRIATE, BREITBURN MANAGEMENT SHALL ASSIGN
SUCH WARRANTIES TO THE PARTNERSHIP.

 

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(C)           IN RENDERING THE SERVICES, BREITBURN MANAGEMENT SHALL NOT
DISCRIMINATE AGAINST ANY EMPLOYEE OR APPLICANT FOR EMPLOYMENT BECAUSE OF RACE,
CREED, COLOR, RELIGION, SEX, NATIONAL ORIGIN, AGE OR HANDICAP, AND SHALL COMPLY
WITH ALL APPLICABLE PROVISIONS OF EXECUTIVE ORDER 11246 OF SEPTEMBER 24, 1965,
AND ANY SUCCESSOR ORDER THERETO.  SUBJECT TO THE ABOVE, BREITBURN MANAGEMENT
SHALL, TO THE EXTENT PRACTICABLE, ENGAGE EMPLOYEES WHO RESIDE IN OR WHOSE
BUSINESSES ARE LOCATED IN THE LOCAL AREA OR STATE WHERE THE SERVICES ARE
PERFORMED.

(D)           BREITBURN MANAGEMENT AGREES TO EXERCISE REASONABLE DILIGENCE TO
ENSURE THAT, DURING THE TERM OF THIS AGREEMENT, IT SHALL NOT EMPLOY UNAUTHORIZED
ALIENS AS DEFINED IN THE IMMIGRATION REFORM AND CONTROL ACT OF 1986, OR ANY
SUCCESSOR LAW.

ARTICLE VII

TERMINATION

SECTION 7.1          TERMINATION BY THE PARTNERSHIP ON BEHALF OF THE PARTNERSHIP
GROUP.

(A)           UPON THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS, THE
PARTNERSHIP, ON BEHALF OF THE PARTNERSHIP GROUP, MAY TERMINATE THIS AGREEMENT BY
GIVING WRITTEN NOTICE OF SUCH TERMINATION TO BREITBURN MANAGEMENT:

(I)      PROVIDENT ENERGY TRUST AND ITS AFFILIATES CEASE TO MAINTAIN A DIRECT OR
INDIRECT CONTROLLING INTEREST IN THE GENERAL PARTNER OR BREITBURN MANAGEMENT; OR

(II)     BREITBURN MANAGEMENT’S FAILURE TO PAY ANY EMPLOYEE WITHIN THIRTY (30)
DAYS OF THE DATE SUCH EMPLOYEE’S PAYMENT IS DUE, SUBJECT TO THE LIMITATIONS
DESCRIBED IN SECTION 4.5.

Any termination under this Section 7.1(a) shall become effective immediately
upon delivery of the notice first described in this Section 7.1(a), or such
later time (not to exceed the first anniversary of the delivery of such notice)
as may be specified by the Partnership.

(B)           IN ADDITION TO ITS RIGHTS UNDER SECTION 7.1(A), THE PARTNERSHIP
MAY TERMINATE THIS AGREEMENT AT ANY TIME BY GIVING NOTICE OF SUCH TERMINATION TO
BREITBURN MANAGEMENT.  ANY TERMINATION UNDER THIS SECTION 7.1(B) SHALL BECOME
EFFECTIVE 90 DAYS AFTER DELIVERY OF SUCH NOTICE, OR SUCH LATER TIME (NOT TO
EXCEED THE FIRST ANNIVERSARY OF THE DELIVERY OF SUCH NOTICE) AS MAY BE SPECIFIED
BY THE PARTNERSHIP.

(C)           IN THE EVENT THAT BREITBURN MANAGEMENT BECOMES BANKRUPT OR
DISSOLVES AND COMMENCES LIQUIDATION OR WINDING-UP, THIS AGREEMENT SHALL
AUTOMATICALLY TERMINATE WITHOUT NOTICE TO BREITBURN MANAGEMENT.

SECTION 7.2          TERMINATION BY BREITBURN MANAGEMENT.

(A)           BREITBURN MANAGEMENT MAY TERMINATE THIS AGREEMENT BY GIVING
WRITTEN NOTICE OF SUCH TERMINATION TO THE PARTNERSHIP IN THE EVENT THAT
PROVIDENT ENERGY TRUST AND ITS AFFILIATES CEASE TO MAINTAIN A DIRECT OR INDIRECT
CONTROLLING INTEREST IN THE GENERAL PARTNER OR

 

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BREITBURN MANAGEMENT.  ANY TERMINATION UNDER THIS SECTION 7.2(A) SHALL BECOME
EFFECTIVE IMMEDIATELY UPON DELIVERY OF THE NOTICE FIRST DESCRIBED IN THIS
SECTION 7.2(A).

(B)           IN ADDITION TO ITS RIGHTS UNDER SECTION 7.2(A), BREITBURN
MANAGEMENT MAY TERMINATE THIS AGREEMENT AT ANY TIME BY GIVING NOTICE OF SUCH
TERMINATION TO THE PARTNERSHIP. ANY TERMINATION UNDER THIS SECTION 7.2(B) SHALL
BECOME EFFECTIVE 90 DAYS AFTER DELIVERY OF SUCH NOTICE, OR SUCH LATER TIME (NOT
TO EXCEED THE FIRST ANNIVERSARY OF THE DELIVERY OF SUCH NOTICE) AS MAY BE
SPECIFIED BY BREITBURN MANAGEMENT.

SECTION 7.3          EFFECT OF TERMINATION.

If this Agreement is terminated in accordance with Section 7.1 or 7.2, all
rights and obligations under this Agreement shall cease except for (a)
obligations that expressly survive termination of this Agreement; (b)
liabilities and obligations that have accrued prior to such termination,
including the obligation to pay any amounts that have become due and payable
prior to such termination, and (c) the obligation to pay any portion of the
Payment Amount that has accrued prior to such termination, even if such portion
has not become due and payable at that time.

ARTICLE VIII

CONFIDENTIAL INFORMATION

SECTION 8.1          NONDISCLOSURE.

Each of BreitBurn Management and the Partnership Group agrees that (i) it will
not disclose to any third party or use any Confidential Information disclosed to
it by the other except as expressly permitted in this Agreement, and (ii) it
will take all reasonable measures to maintain the confidentiality of all
Confidential Information of the other Party in its possession or control, which
will in no event be less than the measures it uses to maintain the
confidentiality of its own information of similar type and importance.

SECTION 8.2         PERMITTED DISCLOSURE.

Notwithstanding the foregoing, each Party may disclose Confidential Information
(i) to the extent required by a court of competent jurisdiction or other
governmental authority or otherwise as required by law, including without
limitation disclosure obligations imposed under the federal securities laws,
provided that such Party has given the other Party prior notice of such
requirement when legally permissible to permit the other Party to take such
legal action to prevent the disclosure as it deems reasonable, appropriate or
necessary, or (ii) to its consultants, legal counsel, Affiliates, accountants,
banks and other financing sources and their advisors.

 

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ARTICLE IX

 

LIMITATION OF LIABILITY; INDEMNIFICATION

SECTION 9.1          LIMITATION OF LIABILITY.

Except as may be provided in Section 9.2 below, BreitBurn Management and its
controlling persons, directors, officers, employees, agents and permitted
assigns (each, a “BreitBurn Management Party”) shall not be liable to the
Partnership Group and their respective directors, officers, employees, agents or
permitted assigns (each, a “Partnership Group Party”) for any liabilities,
claims, damages, losses or expenses, including, but not limited to, any special,
indirect, incidental or consequential damages, of a Partnership Group Party
arising in connection with this Agreement and the Services provided hereunder.

SECTION 9.2          INDEMNIFICATION.

(A)   BREITBURN MANAGEMENT SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS EACH OF THE
PARTNERSHIP GROUP PARTIES FROM AND AGAINST ALL LIABILITIES, CLAIMS, DAMAGES,
LOSSES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, COURT COSTS AND REASONABLE
ATTORNEYS’ FEES)(COLLECTIVELY REFERRED TO AS “DAMAGES”) OF ANY KIND OR NATURE,
OF THIRD PARTIES UNRELATED TO ANY PARTNERSHIP GROUP PARTY CAUSED BY OR ARISING
IN CONNECTION WITH THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF BREITBURN
MANAGEMENT IN CONNECTION WITH THE PERFORMANCE OF THE SERVICES, EXCEPT TO THE
EXTENT THAT DAMAGES WERE CAUSED DIRECTLY OR INDIRECTLY BY ACTS OR OMISSIONS OF
ANY PARTNERSHIP GROUP PARTY.

(B)   THE PARTNERSHIP HEREBY ACKNOWLEDGES THAT BREITBURN MANAGEMENT IS AN
“INDEMNITEE” AS SUCH TERM IS DEFINED IN THE PARTNERSHIP AGREEMENT AND ENTITLED
TO INDEMNITY UNDER THE PROVISIONS OF SECTIONS 7.7 AND 7.8 OF THE PARTNERSHIP
AGREEMENT.

ARTICLE X

DISPUTE RESOLUTION

If the Parties are unable to resolve any dispute regarding the validity or terms
of this Agreement or its termination, service or performance issues, there is a
material breach of this Agreement that has not been corrected within thirty (30)
days of receipt of notice of such breach or any other dispute between the
parties related to this Agreement,  either party hereto may refer the matter to
an arbitrator selected in accordance with the rules of JAMS in Los Angeles
County, California as the exclusive remedy for any such dispute, and in lieu of
any court action, which is hereby waived.  The only exception shall be a claim
by either Party for injunctive relief pending arbitration.

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ARTICLE XI

GENERAL PROVISIONS

 

SECTION 11.1        NOTICES.

All notices or other communications required or permitted under, or otherwise in
connection with, this Agreement must be in writing and must be given by
depositing same in the mail, addressed to the Person to be notified, postpaid
and registered or certified with return receipt requested or by transmitting by
national overnight courier or by transmitting by national overnight courier or
by delivering such notice in person or by facsimile to such Party.  Notice given
by mail, national overnight courier or personal delivery shall be effective upon
actual receipt.  Notice given by facsimile shall be effective upon confirmation
of receipt when transmitted by facsimile if transmitted during the recipient’s
normal business hours or at the beginning of the recipient’s next business day
after receipt if not transmitted during the recipient’s normal business hours. 
All notices to be sent to a Party pursuant to this Agreement shall be sent to or
made at the address, in each case as follows:

if to the General Partner:

BreitBurn GP, LLC
515 South Flower  Street, Suite 4800
Los Angeles, CA 90071
Attention:  Halbert S. Washburn
Fax:  (213) 225-5917

if to the Partnership:

BreitBurn Energy Partners L.P.
515 South Flower  Street, Suite 4800
Los Angeles, CA 90071
Attention:  Halbert S. Washburn
Fax:  (213) 225-5917

if to the Operating Partnership:

BreitBurn Operating L.P.
515 South Flower  Street, Suite 4800
Los Angeles, CA 90071
Attention:  Halbert S. Washburn
Fax:  (213) 225-5917

 

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if to BreitBurn Management:

BreitBurn Management Company, LLC
515 South Flower  Street, Suite 4800
Los Angeles, CA 90071
Attention:  Randall J. Findlay
Fax:  (213) 225-5917

SECTION 11.2        FURTHER ACTION.

The Parties shall execute and deliver all documents, provide all information and
take or refrain from taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.

SECTION 11.3        BINDING EFFECT.

This Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

SECTION 11.4        INTEGRATION.

This Agreement constitutes the entire Agreement among the Parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.

SECTION 11.5        CREDITORS.

None of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.

SECTION 11.6        WAIVER.

No failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof shall constitute waiver of any such
breach of any other covenant, duty, agreement or condition.

SECTION 11.7        COUNTERPARTS.

This Agreement may be executed in counterparts, all of which together shall
constitute an agreement binding on all the Parties hereto, notwithstanding that
all such Parties are not signatories to the original or the same counterpart. 
Each Party shall become bound by this Agreement immediately upon affixing its
signature hereto.

SECTION 11.8        APPLICABLE LAW.

This Agreement shall be construed in accordance with and governed by the laws of
the State of Delaware, without regard to the principles of conflicts of law.

 

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SECTION 11.9        INVALIDITY OF PROVISIONS.

If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

SECTION 11.10      AMENDMENT OR RESTATEMENT.

This Agreement may be amended or restated only by a written instrument executed
by each of the Parties; provided, however, that the Partnership may not, without
the prior approval of its Conflicts Committee, agree to any amendment or
modification of this Agreement that the General Partner determines will
adversely affect the holders of common units representing limited partner
interests in the Partnership.  The Parties hereto agree that, for purposes of
this Section 8.10, any material change in the nature, quantity or duration of
the Services to be provided under this Agreement shall constitute a modification
of this Agreement.

SECTION 11.11      DIRECTLY OR INDIRECTLY.

Where any provision of this Agreement refers to action to be taken by any Party,
or which such Party is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Party,
including actions taken by or on behalf of any Affiliate of such Party.

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective
as of, the Effective Date.

BREITBURN GP, LLC

 

 

 

By:

/s/ Halbert S. Washburn

 

 

 

Name:

Halbert S. Washburn

 

 

Title:

Co-Chief Executive Officer

 

 

 

 

 

BREITBURN ENERGY PARTNERS L.P.

 

 

 

By:

BreitBurn GP LLC, its General Partner

 

 

 

 

 

 

 

 

By:

/s/ Halbert S. Washburn

 

 

 

 

Name:

Halbert S. Washburn

 

 

 

Title:

Co-Chief Executive Officer

 

 

 

 

 

 

BREITBURN OPERATING L.P.

 

 

 

By:

BreitBurn Operating GP, LLC, its General
Partner

 

 

 

 

 

By:

/s/ Halbert S. Washburn

 

 

 

 

Name:

Halbert S. Washburn

 

 

 

Title:

Co-Chief Executive Officer

 

 

 

 

 

 

BREITBURN MANAGEMENT COMPANY, LLC

 

 

 

 

 

By:

/s/ Randall J. Findlay

 

 

 

Name:

Randall J. Findlay

 

 

Title:

Chairman

BREITBURN ENERGY PARTNERS L.P.
ADMINISTRATIVE SERVICES AGREEMENT
SIGNATURE PAGE

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SCHEDULE I

 

SERVICES PROVIDED BY BREITBURN MANAGEMENT
TO PARTNERSHIP

1.                                       Accounting

2.                                       Information Technology

3.                                       Real Property

4.                                       Legal

5.                                       Securities and Exchange Commission
Reporting

6.                                       Operations/Reservoir
Engineering/Geology/Geophysics

7.                                       Administrative Services

8.                                       Financial Services

9.                                       Insurance Service

10.                                 Risk Management

11.                                 Corporate Development

12.                                 Commercial and Marketing

13.                                 Treasury

14.                                 Tax

15.                                 Audit

16.                                 SOX

17.                                 Investor Relations

BREITBURN ENERGY PARTNERS L.P.
ADMINISTRATIVE SERVICES AGREEMENT

I-1

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