Exhibit 10.5

SERVICES AGREEMENT

BY AND BETWEEN

TPG PACE ENERGY HOLDINGS CORP.,

AS PARENT

TPG PACE ENERGY OPERATING LLC,

AS OWNER

AND

ENERVEST OPERATING, L.L.C.,

AS SERVICE PROVIDER

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TABLE OF CONTENTS

 

ARTICLE I. DEFINITIONS      1  

1.1

  Definitions      1   ARTICLE II. POWER AND AUTHORITY; SERVICES      1  

2.1

  Service Provider Power and Authority; Services      1  

2.2

  Emergency      3  

2.3

  Limitations on Service Provider’s Authority      4  

2.4

  Ownership of Property      4  

2.5

  Service Provider’s Delegation of Authority      4  

2.6

  Key Persons; Dedicated Employees; Shared Employees      5  

2.7

  Other Business Pursuits      6  

2.8

  Operatorship; Certain Conditions of Service      6  

2.9

  Insurance      6  

2.10

  Performance Standard      7  

2.11

  Meetings.      7  

2.12

  Funds      7  

2.13

  Master Service Agreements      8  

2.14

  Seismic Licenses      8  

2.15

  Actions by Owner Group      8  

2.16

  Owner’s Delegation of Authority      8  

2.17

  Certain Excluded Assets      9   ARTICLE III. PAYMENTS      9  

3.1

  Consideration      9  

3.2

  Payment Terms      11  

3.3

  Owner Group Financial Responsibility      11  

3.4

  Maintenance of Accounts and Records      12  

3.5

  Taxes      13  

3.6

  Service Provider Records; Audit      13  

3.7

  Disputed Charges      14   ARTICLE IV. TERM; TERMINATION      14  

4.1

  Term      14  

4.2

  Termination      14  

4.3

  Effect of Termination      16  

4.4

  Transition Period      16  

4.5

  Performance Termination Fee      16   ARTICLE V. MARKETING OF PRODUCTION     
16  

5.1

  Marketing Services      16   ARTICLE VI. FORCE MAJEURE      17  

6.1

  Excused Performance      17  

6.2

  No Preclusion      17  

 

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6.3

  Limitations on Effect of Force Majeure      17   ARTICLE VII. INDEMNITIES     
17  

7.1

  Service Provider Indemnity      17  

7.2

  Owner Indemnity      18  

7.3

  DISCLAIMERS      18  

7.4

  Disclaimer of Application of Anti-Indemnity Statutes      19   ARTICLE VIII.
NON-SOLICITATION      19  

8.1

  Non-Solicitation      19   ARTICLE IX. REPRESENTATIONS AND WARRANTIES; OTHER
COVENANTS AND RESPONSIBILITIES      19  

9.1

  Representations and Warranties      19  

9.2

  Additional Owner Group Representations      20  

9.3

  Additional Service Provider Representations      20  

9.4

  Service Provider Responsibilities      21   ARTICLE X. MISCELLANEOUS      21  

10.1

  Counterparts      21  

10.2

  Notices      21  

10.3

  Governing Law; Venue      23  

10.4

  Non-Compensatory Damages      24  

10.5

  Waiver; Rights Cumulative      24  

10.6

  Entire Agreement      24  

10.7

  Amendment      24  

10.8

  Parties in Interest      24  

10.9

  Successors and Permitted Assigns      25  

10.10

  Assignment      25  

10.11

  Further Assurances      25  

10.12

  Preparation of Agreement      25  

10.13

  Severability      25  

10.14

  No Recourse      25  

10.15

  Interpretation      26  

10.16

  Confidentiality      26  

10.17

  Publicity      27  

10.18

  Performance Dispute Resolution      27  

 

 

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SERVICES AGREEMENT

This SERVICES AGREEMENT (this “Agreement”) is executed and agreed to as of
July 31, 2018 (the “Closing Date”), by and between TPG Pace Energy Holdings
Corp., a Delaware corporation (“Parent”), TPG Pace Energy Operating LLC, a
Delaware limited liability company (“Owner”), and EnerVest Operating, L.L.C., a
Delaware limited liability company (“Service Provider”). Parent, Owner and
Service Provider are hereinafter each referred to as a “Party” and are
collectively referred to as the “Parties”.

RECITALS

WHEREAS, Owner acquired certain oil and gas properties from certain Affiliates
of Service Provider pursuant to (i) that certain Purchase and Sale Agreement
dated March 20, 2018, by and among EnerVest Energy Institutional Fund XI-A,
L.P., EnerVest Energy Institutional Fund XI-WI, L.P., EnerVest Holding, L.P.,
EnerVest Wachovia Co-Investment Partnership, L.P. and Owner (the “Giddings
Transaction Agreement”), (ii) that certain Contribution and Merger Agreement
dated March 20, 2018, by and among EnerVest Energy Institutional Fund XIV-A,
L.P., EnerVest Energy Institutional Fund XIV-WIC, L.P., EnerVest Energy
Institutional Fund XIV-2A, L.P., EnerVest Energy Institutional Fund XIV-3A,
L.P., EnerVest Energy Institutional Fund XIV-C, L.P., Parent and Owner (the
“Eagleford Transaction Agreement”), and (iii) that certain Membership Interest
Purchase Agreement dated March 20, 2018, by and among EnerVest Energy
Institutional Fund XIV-A, L.P., EnerVest Energy Institutional Fund XIV-WIC,
L.P., EnerVest Energy Institutional Fund XIV-C, L.P., and Owner (collectively
with the Giddings Transaction Agreement and the Eagleford Transaction Agreement,
the “Transaction Agreements”); and

WHEREAS, pursuant to this Agreement, Parent and Owner desire to have Service
Provider perform, and Service Provider agrees to perform, the Services
(hereinafter defined) pursuant to and in accordance with the terms of this
Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

ARTICLE I.

DEFINITIONS

1.1    Definitions . All capitalized terms not otherwise defined herein shall
have the meanings given them in the Transaction Agreements. As used in this
Agreement, capitalized terms set forth on Annex A shall have the meanings set
forth therein.

ARTICLE II.

POWER AND AUTHORITY; SERVICES

2.1    Service Provider Power and Authority; Services.

(a)    Subject to the direction and control of the Owner Group, the terms and
provisions of this Agreement, and the Development Plan and Budget, and subject
to the limitations set forth in Section 2.3, Service Provider shall provide the
Owner Group with services identical in

 

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scope, nature and quality to the services historically provided by Service
Provider in connection with its management and operation during the period from
January 1, 2016, to the Closing Date of the Assets acquired (directly or
indirectly) by the Owner Group pursuant to the Transaction Agreements, including
all accounting, financial, managerial, project management, business development,
marketing, operational, land, lease maintenance, regulatory, environmental,
geological and geophysical, engineering, tax, information technology and other
day-to-day services reasonably necessary to operate the business of the Owner
Group in relation to the Assets, including the services more particularly
described on Exhibit A attached hereto, but in each case excluding the Excluded
Services (the “Services”). The Service Provider shall perform the Services in
consideration for the Services Fee at the Service Provider’s cost; provided,
however, that Service Provider will not be responsible for Owner Group Costs,
and, notwithstanding anything to the contrary, nothing shall require Service
Provider to advance its own funds for Owner Group Costs.

(b)    As part of the Services, Service Provider will use its commercially
reasonable efforts to propose, conduct and complete all operations and
activities contemplated by the Development Plan and Budget at the times
contemplated by the Development Plan and Budget. Service Provider shall promptly
notify the Owner Group in writing if at any time Service Provider reasonably
expects to exceed the aggregate amount set forth in the Development Plan and
Budget for any category of expenses. Notwithstanding anything in this Agreement
to the contrary (other than Section 2.2), in no event shall Service Provider
incur any costs or expenses for the account of Owner or reimbursable by Owner in
an amount greater than 10% in excess of the aggregate amount set forth in the
Development Plan and Budget for any category of expenses without the prior
written consent of Owner.

(c)    Owner shall have the right from time to time to elect to cease having
Service Provider provide any of the Services and to provide such Services itself
or by another service provider, and upon request from Owner, Service Provider
will reasonably cooperate with Owner in the transition of such Services to the
Owner Group or a new service provider specified by Owner. For the avoidance of
doubt any such election shall not result in a reduction of the Services Fee.

(d)    The Service Provider shall be entitled during the Term and any Transition
Services Period to utilize solely in connection with the performance of the
Services those offices, buildings, yards, and other sites and those vehicles and
such other tools and equipment as were acquired by Owner Group pursuant to the
Transaction Agreements that were utilized historically prior to the Closing Date
in relation to the Assets by field-level employees of the Service Provider (the
“Field Facilities and Equipment”). Service Provider shall not pay any rent, fee
or other cost for its use of the Field Facilities and Equipment. Service
Provider shall return the Field Facilities and Equipment to the Owner Group at
the end of the Term and any Transition Services Period in the same condition as
on the Closing Date, ordinary wear and tear excepted.

(e)    If at any time Service Provider fails or is unable to perform any of the
Services, and such failure or inability is not cured within thirty (30) days
after delivery by Owner to Service Provider of written notice of such failure or
inability, Owner Group shall use commercially reasonable efforts to obtain
reasonable replacement services therefor. In such event, Owner Group shall have
the right to deduct the amount of costs so incurred by Owner Group from

 

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its payments of the Monthly Services Fee; provided, however, pursuant to the
dispute resolution procedures set forth in Section 10.18, Service Provider may
dispute that it has failed, or is unable, to perform any of the Services, in
which case there shall be no deduction from the Services Fee until such time as
there has been a final determination that Service Provider has failed, or is
unable, to perform those Services which Owner alleges that Service Provider has
failed, or is unable, to perform. If it is ultimately determined that Service
Provider has in fact failed or been unable to perform any of the Services for
which Owner Group has obtained reasonable replacement services and has incurred
costs which were not deducted because of the operation of this Section 2.1(e),
Service Provider will reimburse Owner Group for such costs. The Service
Provider’s obligations to make such reimbursement shall survive the end of the
Term and the Transition Services Period until any such dispute is resolved and
any reimbursement owned to Owner Group has been paid.

(f)    The Owner Group will be responsible for the following, at its own expense
(the “Excluded Services”):

 

  (i)

Parent’s chief executive officer, chief financial officer, general counsel,
business development personnel, and investor relations personnel, including all
salaries and benefits of such personnel;

 

  (ii)

Owner Group D&O insurance;

 

  (iii)

rent and overhead costs associated with the Owner Group’s office space;

 

  (iv)

consolidated Owner Group financial reporting, including selecting, engaging and
overseeing third party financial auditors (however, the Services will include
Asset-level financial reporting and auditing and providing asset-level SEC
reporting information to Owner Group);

 

  (v)

third party Owner Group reserve reports, including selecting, engaging and
overseeing third party reserve engineers (however, the Services will include
internal reserves engineering, including estimating and internal reporting of
Asset-level reserves);

 

  (vi)

selecting, engaging, and overseeing Owner Group outside counsel and investment
bankers;

 

  (vii)

Sarbanes Oxley compliance; and

 

  (viii)

other items agreed by Owner and Service Provider to be Excluded Services.

2.2    Emergency. In the event of an imminent emergency relating to the Assets
(“Emergency”), while acting as a Reasonable and Prudent Service Provider,
Service Provider shall, without any prior notice to, or approval from, the Owner
Group, take all customary measures consistent with the standards set forth in
Section 2.10 for the protection of life, health, the environment and property.
In such event, Service Provider shall use commercially reasonable

 

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efforts to notify the Owner Group of the existence or occurrence of such an
imminent Emergency as soon as reasonably possible after the Emergency occurs,
but in any event within twenty four (24) hours of its being put on notice of an
imminent Emergency, setting forth the nature of the imminent Emergency, the
corrective action taken or proposed to be taken, and the actual or estimated
cost and expense associated with such corrective action.

2.3    Limitations on Service Provider’s Authority. Notwithstanding anything
herein to the contrary, without the prior written consent of the Owner Group,
Service Provider shall not take any action set forth on Exhibit B. The Owner
Group may at any time amend Exhibit B by providing written notice to Service
Provider, which notice shall include an amended Exhibit B reflecting such
amendment. Any such amendment shall be effective upon Service Provider’s receipt
of such written notice.

2.4    Ownership of Property.

(a)    Without limitation to Service Provider’s (or any Affiliate of Service
Provider’s) rights and remedies under any Operating Agreement, the Parties agree
and acknowledge that neither Service Provider nor any Affiliate of Service
Provider shall, by virtue of its role as “Service Provider” hereunder or as a
result of the terms of this Agreement, have, or be deemed to have, any direct
ownership interest in the Assets (or in any of the equipment, materials or other
property related thereto and purchased by the Owner Group directly or by Service
Provider on behalf of Owner Group).

(b)    All of the assets and properties owned, purchased, leased, developed,
constructed and otherwise acquired or entered into in connection with the
performance of the Services pursuant to this Agreement (including (i) all Assets
and all wells, equipment, machinery, materials, supplies, inventory, other
personal property and other assets and properties owned, leased or otherwise
acquired in connection therewith, (ii) rights-of-way, Applicable Contracts, and
any and all reports, records, statements and information prepared or caused to
be prepared by Service Provider in connection with this Agreement, and (iii )
all proceeds, cash and funds generated or attributable to the Assets) shall be
and remain the sole property of the Owner Group. If, at any time during the term
of this Agreement, any such assets or properties are held in the name of Service
Provider or its Affiliates, Service Provider will (and will cause its Affiliates
to) promptly convey such assets and properties to the Owner Group.

2.5    Service Provider’s Delegation of Authority.

(a)    Service Provider shall be permitted to use Affiliates of Service Provider
and the officers and employees of any of its Affiliates in order to perform the
Services. Service Provider may not delegate any authority, power, or right that
could not be exercised directly by Service Provider under this Agreement.

(b)    If any Person other than Service Provider is used to perform any of the
Services (or any part of the Services), the performance by such Person of such
Services shall be treated hereunder as if Service Provider performed such
Services itself, and if the costs of such performance by Service Provider would
have been borne by the Service Provider under the provisions of this Agreement,
then the costs of such performance by such Person shall be borne

 

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by Service Provider and shall not result in incremental costs to the Owner
Group. Service Provider shall not change any material corporate-level or
back-office third-party service provider without the consent of Owner. Service
Provider agrees that upon written notice (stating adequate cause related to
inadequate performance or cost issues) provided by Owner after consultation with
Service Provider, Service Provider shall use commercially reasonable efforts to
replace any third-party service provider identified by the Owner Group to cease
performing the Services on behalf of Service Provider

2.6    Key Persons; Dedicated Employees; Shared Employees.

(a)    At all times, at Service Provider’s sole cost and expense, Service
Provider shall retain and have available to it a professional staff and outside
consultants and contractors which together shall be reasonably adequate in size,
experience and competency to discharge properly the duties and functions of
Service Provider hereunder. Service Provider shall devote personnel and time and
grant access to such assets and buildings of Service Provider as are necessary
to provide the Services consistent with the standards set forth in this
Agreement.

(b)    Service Provider shall cause the Key Persons who are not Dedicated
Employees to devote a substantial amount of their professional time and efforts
to providing the Services, and in any event to spend sufficient time on the
Services to ensure that the Service Provider fully performs its obligations
under this Agreement, in each case so long as such individuals are employed by
Service Provider. Service Provider may, after obtaining Owner’s prior written
consent (not to be unreasonably withheld), replace any Key Person with another
employee of substantially equal experience and expertise as the Key Person being
replaced, in which case the replacement employee shall become a Key Person. If
any Key Person’s employment with Service Provider terminates for any reason or
any Key Person is no longer providing the Services as required by this
Section 2.6(b), Service Provider shall thereafter use commercially reasonable
efforts, after obtaining Owner’s prior written consent (not to be unreasonably
withheld), to promptly replace such Key Person with another employee of
substantially equal experience and expertise as the Key Person being replaced,
in which case the replacement employee shall become a Key Person.

(c)    Service Provider shall cause the Dedicated Employees to devote
substantially all of their professional time and efforts to providing the
Services so long as such individuals are employed by Service Provider. Service
Provider may, after consultation with Owner, replace any Dedicated Employee with
another employee of substantially equal experience and expertise as the
Dedicated Employee being replaced or add Dedicated Employees as contemplated in
Section 3.1(b), in which case the replacement employee or the added employee
shall become a Dedicated Employee. Except as otherwise provided in
Section 3.1(b), if any Dedicated Employee’s employment with Service Provider
terminates for any reason or any Dedicated Employee is no longer providing the
Services as required by this Section 2.6(c), Service Provider shall thereafter
use commercially reasonable efforts, after consultation with Owner, to promptly
replace such Dedicated Employee with another employee of substantially equal
experience and expertise as the Dedicated Employee being replaced, in which case
the replacement employee shall become a Dedicated Employee.

 

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(d)    Service Provider shall cause the Shared Employees to devote at least
one-third of their professional time and efforts to providing the Services so
long as such individuals are employed by Service Provider. Service Provider may
replace any Shared Employee with another employee of substantially equal
experience and expertise as the Shared Employee being replaced, in which case
the replacement employee shall become a Shared Employee. Except as otherwise
provided in Section 3.1(b), if any Shared Employee’s employment with Service
Provider terminates for any reason or any Shared Employee is no longer providing
the Services as required by this Section 2.6(d), Service Provider shall
thereafter use commercially reasonable efforts to promptly replace such
individual with another employee of substantially equal experience and expertise
as the Shared Employee being replaced, in which case the replacement employee
shall become a Shared Employee.

2.7    Other Business Pursuits. The Owner Group acknowledges that Service
Provider is not providing services exclusively to the Owner Group, and Service
Provider may and will continue to from time to time provide services (including
services substantially similar to the Services) to other persons (including
Affiliates of Service Provider) as long as it may do so consistent with the
dedication of Key Persons, Dedicated Employees and Shared Employees to the
performance of the Services made under Section 2.6 and subject to any other
written agreement between any member of the Owner Group and Service Provider or
any of its Affiliates. After the Closing Date, prior to Service Provider or any
of its Affiliates agreeing to provide any such services to any Third Party,
Service Provider shall give the Owner Group written notice of the same.

2.8    Operatorship; Certain Conditions of Service.

(a)    Except as otherwise stated herein, Service Provider shall perform the
Services as an “independent contractor” of the Owner Group and nothing in this
Agreement is intended, and nothing shall be construed, to create an
employer/employee, partnership, joint venture, association or other similar
relationship between Service Provider and the Owner Group or any of their
respective Affiliates or any of their employees.

(b)    All personnel involved in the Services shall be responsible to Service
Provider. Subject to Section 2.6, the selection of such employees and
contractors, and their hours of labor, shall be determined by Service Provider,
and Service Provider shall have the right to hire or dismiss its full time or
part time personnel for any reason or for no reason.

(c)    Subject to the terms of this Agreement, all matters pertaining to the
employment, supervision, compensation, promotion and discharge of any personnel
of Service Provider or its Affiliates are the responsibility of Service Provider
and its Affiliates; provided, however, that Service Provider agrees that upon
written notice from the Owner Group (stating adequate cause), Service Provider
shall cause any Person identified by the Owner Group (including any employee of
Service Provider or its Affiliates) to cease performing the Services on behalf
of Service Provider. Subject to the terms of this Agreement, all such employment
arrangements are solely Service Provider’s and its Affiliates’ obligations
(including the payment of salaries and employee benefits with respect to such
personnel).

2.9    Insurance. Service Provider shall maintain insurance of the type, in the
amounts and with the limits, historically maintained by Service Provider in
relation to the Assets. To the

 

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extent that the cost of such insurance is within the scope of Section 3.3(b),
the cost shall be an Owner Group Cost. To the extent that the cost of such
insurance is not within the scope of Section 3.3(b), the cost shall be covered
by the Services Fee. Service Provider shall require all contractors and
subcontractors to carry insurance under terms usual and customary in the
industry. Owner Group shall be named insured on Asset-level insurance (e.g.,
property and casualty insurance and liability insurance). If Owner Group desires
to maintain any of such insurance itself, instead of having it provided by
Service Provider, Owner Group may provide such insurance itself, and in such
event the Services Fee will be reduced by the amount of any resulting savings of
Service Provider in the insurance costs that are not Owner Group Costs. If Owner
Group desires insurance coverage in excess of that maintained by Service
Provider, it may acquire such additional coverage at its cost. Notwithstanding
anything herein to the contrary, the Owner Group shall not be required to pay or
reimburse Service Provider for any blanket or area-wide regulatory bonds
maintained by Service Provider in performing the Services, and the Owner Group
shall only be required to reimburse Service Provider for the Owner Group’s share
(based on Owner’s ownership interest in the oil and gas interest underlying the
Assets) of any regulatory bonds specific to any of the Assets.

2.10    Performance Standard. Service Provider shall perform the Services as a
reasonable and prudent oil and gas operator, and in connection with matters not
directly related to the operation of oil and gas assets in a reasonable manner
in accordance with customary business practices, in a good and workmanlike
manner, with due diligence and dispatch, in accordance with good oilfield
practice, and in compliance with the terms of all applicable Leases, Applicable
Contracts, Surface Contracts, and similar agreements affecting the Assets and/or
this Agreement, and in compliance with all Laws. The standard of performance set
forth in this Section 2.10 is referred to herein as acting as a “Reasonable and
Prudent Service Provider”.

2.11    Meetings. Representatives of Owner Group shall have the right from time
to time at the request of Owner to be present at and participate in internal
Service Provider meetings in which the operation of the Assets and the
performance of the Services are discussed by Service Provider personnel. In
addition, representatives of Service Provider (which shall include Key Persons
and other senior representatives of Service Provider requested by Owner and
appropriate for the materiality and subject matter of the meeting) and the Owner
Group shall meet telephonically, or otherwise at a mutually agreeable location,
at least once per Calendar Month (or more frequently as requested by the Owner
Group) on a mutually agreeable day and time to discuss the Services performed by
Service Provider, the past, current or future operation and development of the
Assets and/or any other matters with respect to the Assets or the business of
the Owner Group reasonably requested by Owner or Service Provider.

2.12    Funds.

(a)    Funds belonging to the Owner Group shall be kept at all times on deposit
in bank accounts of the Owner Group and Service Provider shall disburse such
funds for the payment of costs and expenses incurred in connection with the
Services that are Owner Group Costs, including all Asset Taxes and Burdens paid
on Hydrocarbons, but excluding costs to be borne by Service Provider under the
terms of this Agreement, and subject to the Development Plan and Budget and this
Agreement.

(b)    At no time shall any of the Owner Group’s funds be commingled with funds
belonging to Service Provider or its Affiliates or any of their respective
representatives or with the funds of any Third Parties.

 

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(c)    Service Provider shall direct all third parties making payments or
otherwise transferring funds to the Owner Group to pay, transfer, and deposit
such funds to the Owner Group directly into the bank accounts of the Owner
Group.

(d)    If at any time Service Provider or any of its Affiliates comes into
possession of any funds of the Owner Group, Service Provider shall hold such
funds in trust for the benefit of the Owner Group and shall promptly cause such
funds to be deposited into bank accounts of the Owner Group.

(e)    Service Provider shall not pay any monies from the accounts of the Owner
Group to itself or any Affiliate of Service Provider without the prior written
consent of Owner.

(f)    Third-party costs (and incremental internal costs of Service Provider
incurred with the approval of Owner) of establishing, implementing, maintaining,
and managing the accounts and systems required to accomplish the foregoing shall
be Owner Group Costs. Service Provider shall use commercially reasonable efforts
to cause the accounts and systems to be in place and operational on or prior to
the Closing Date.

2.13    Master Service Agreements. The Parties acknowledge that Service Provider
is not conveying any of its master services agreements to the Owner Group
pursuant to the Transaction Agreements. After the Closing Date, subject to the
terms of this Agreement, Service Provider shall be permitted to contract for
Services with Third Party vendors through its master services agreements.
Service Provider shall use commercially reasonable efforts, in the ordinary
course of business, to enter into master services agreements with all vendors in
the name of the Owner Group. Once any such master services agreement is in
place, Service Provider shall thereafter contract for Services with the
applicable Third Party vendor under the Owner Group’s master services agreement.

2.14    Seismic Licenses. Service Provider will not acquire or license any
seismic data without the prior written consent of the Owner Group. In the event
that Service Provider does acquire or license any such seismic data, the costs
thereof will be Owner Group Costs and Service Provider will use commercially
reasonable efforts to acquire or license such data in the name of the Owner
Group with a right for the Service Provider to use such data as long as it is
providing the Services hereunder. If Owner desires to co-license (or otherwise
acquire the right to utilize) any seismic licenses currently utilized by Service
Provider, the costs thereof will be Owner Group Costs.

2.15    Actions by Owner Group. Any action, consent or approval required to be
taken hereunder by any member of the Owner Group shall be taken by Owner and any
notices to be given to or by the Owner Group shall be given to Owner.

2.16    Owner’s Delegation of Authority. On an annual basis (and, as of the
Closing Date, for the remainder of 2018), Owner shall execute and deliver to
Service Provider a revocable written instrument substantially in the form
attached hereto as Exhibit G designating and appointing Service Provider as its
agent and attorney-in-fact with full power and authority to perform the Services
(the “Annual Delegation”).

 

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2.17    Certain Excluded Assets. The Parties have agreed that certain assets
described in Exhibit E attached hereto that were utilized historically prior to
the Closing Date in relation to the Assets but that were not acquired by the
Owner Group on the Closing Date pursuant to the terms of the Transaction
Agreements will be utilized by the Service Provider in connection with the
performance of Services and that such assets will be assigned and transferred to
the Owner Group at the time and in the manner set forth in Exhibit E. To the
extent that any of the assets described on Exhibit E are held by Service
Provider under a lease, license, or similar agreement, Service Provider shall
use commercially reasonable efforts to maintain such leases, licenses, and other
agreements in effect during the Term and the Transition Services Period and, if
not previously assigned to Owner Group in accordance with Exhibit E, shall use
reasonable efforts to assign such leases, license, and other agreements upon the
termination of this Agreement. If Service Provider acquires any additional
assets of the type described in Exhibit E that are used in relation to the
Assets during the Term that were not paid for by the Owner Group as Owner Group
Costs, if the Owner Group desires to have such assets transferred to it upon
termination of this Agreement, Owner Group shall reimburse the Service Provider
for the actual cost of such additional assets.

ARTICLE III.

PAYMENTS

3.1    Consideration.

(a)    Owner shall pay to Service Provider, (a) as the sole consideration for
the Services provided by Service Provider, an amount equal to $23,563,531 per
year during the Term and the Transition Services Period, prorated for any
partial year in which the Services are provided (such amount, as modified from
time to time pursuant to this Section 3.1, the “Services Fee”), plus (b) to the
extent such costs and expenses have not been previously paid by Owner or out of
Owner funds or otherwise reimbursed to Service Provider by Owner, reimbursement
for all Owner Group Costs incurred by Service Provider in performing the
Services, plus (c) any COPAS overhead fees related to the Assets operated by
Owner Group that are received by Owner Group and any COPAS overhead fees payable
directly by Owner Group under joint operating agreements applicable to the
Assets operated by Owner Group (and for Assets operated by Owner Group not
covered by a joint operating agreement, an amount equal to $8,500 per drilling
well and $812 per producing well in the Austin Chalk producing area and $8,500
per drilling well and $844 per producing well in the Eagle Ford producing area,
in both cases reduced to reflect Owner Group’s working interest, and as adjusted
in accordance with COPAS MFI-47 (“Adjustment of Overhead Rates”)) (collectively,
the “COPAS Payment”). Owner shall pay to Service Provider with respect to each
Calendar Month during the Term and the Transition Services Period an amount
equal to one-twelfth of the excess of the Services Fee over the sum of any
amount incurred directly by the Owner Group for Asset-level insurance in
accordance with Section 2.9, and any amount Owner is entitled to deduct in
accordance with Section 2.1(e), prorated for any partial Calendar Year in which
the Services are provided (such amount, the “Monthly Services Fee”).

 

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(b)    If after the Closing Date the Owner Group acquires, directly or
indirectly, in a transaction that is not a Specified Acquisition, a material
amount of additional assets with respect to which Owner desires to have the
Services performed or additional assets within the Designated Area (in which
case Service Provider shall perform the Services in respect of such assets),
then such assets shall upon their acquisition become Assets hereunder, and the
Services Fee shall be increased by the Service Provider’s reasonable, good-faith
estimate of the amount of all incremental costs to be incurred by Service
Provider that are not Owner Group Costs arising from any increase in the
headcount of the Dedicated Employees and Shared Employees reasonably required in
order for the Services to be performed with respect to such additional Assets
and any other incremental costs (other than Owner Group Costs) that are
reasonably required to be incurred by Service Provider to provide Services with
respect to such Assets. If the Owner Group disposes of a material amount of
Assets after the Closing Date, then the Services Fee shall be decreased by the
Service Provider’s reasonable, good-faith estimate of the amount of savings in
costs (other than Owner Group Costs) incurred by Service Provider arising from
any decrease in the headcount of the Dedicated Employees and Shared Employees
that reasonably may be made as a result of the disposition of such Assets and
any other decrease in such costs that are reasonably required to be incurred by
Service Provider to provide Services as a result of not having to provide
Services with respect to the Assets disposed of. Any such decrease in headcount
of Dedicated Employees and/or Shared Employees shall be subject to the approval
of Owner. Service Provider will provide the Owner Group with reasonable
documentation supporting any increase or decrease to the Services Fee pursuant
to this Section 3.1(b) and an opportunity to review and audit such adjustments.
If after the Closing Date the Owner Group consummates a Specified Acquisition,
and the Owner desires to have the Services performed with respect to the assets
that were acquired in such Specified Acquisition, the Service Provider will not
be required to provide the Services with respect to such assets unless the
Service Provider and the Owner mutually agree on an appropriate increase in the
Services Fee to cover the Service Provider’s incremental costs that are not
Owner Group Costs that Service Provider would incur in the performance of the
Services with respect to such Assets. “Specified Acquisition” means the
acquisition, directly or indirectly, of oil and gas properties and related
assets if (a) the total value of the acquisition is greater than $1,000,000,000
or (b) the majority of the oil and gas properties acquired are outside of the
Austin Chalk and Eagle Ford producing areas in South Texas.

(c)    If after the Closing Date the Owner Group increases the rig count
attributable to the Assets above the levels specified in the initial Development
Plan and Budget, the Services Fee shall be increased by the Service Provider’s
reasonable, good-faith estimate of the amount of all incremental costs to be
incurred by Service Provider that are not Owner Group Costs arising from any
increase in the headcount of the Dedicated Employees and Shared Employees
reasonably required as a result of such increase, taking into account the
additional COPAS Payments that will be received by Service Provider as a result
of the increase and which might result in double-recovery of costs by Service
Provider. If, after an increase of the Services Fee pursuant to the foregoing,
there is a decrease in the rig count attributable to the Assets, the Services
Fee shall be reduced by the Service Provider’s reasonable, good faith estimate
of the reduction in costs to be realized by Service Provider that are not Owner
Group Costs arising from any decrease in the headcount of the Dedicated
Employees and Shared Employees reasonably resulting from such decrease;
provided, however, that such decrease shall not cause the Services Fee to drop
below the amount of the Services Fee as of the Closing Date.

 

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(d)    Service Provider will be entitled to keep, receive and retain all COPAS
overhead fees received by Service Provider in relation to the Assets operated by
Owner Group.

3.2    Payment Terms.

(a)    No later than the thirtieth (30th) day of each Calendar Month, Service
Provider shall deliver to Owner a monthly statement (each, a “Monthly
Statement”) setting forth (i) the Monthly Services Fee for the preceding
Calendar Month, (ii) an itemized list of Owner Group Costs not paid directly
from Owner Group funds that were incurred by Service Provider during the
applicable Accounting Month, and (iii) the COPAS Payment for the applicable
Accounting Month. Service Provider shall provide to Owner such documentation as
Owner may reasonably request to support each such Monthly Statement. Subject to
Section 3.2(b), Owner shall pay to Service Provider the amount reflected in such
Monthly Statement not later than the 30th day after the receipt of such Monthly
Statement.

(b)    If Owner disputes in good faith all or any portion of any Monthly
Statement delivered by Service Provider pursuant to this Agreement, Owner may
deliver written notice of such dispute to Service Provider, setting forth in
reasonable detail the reasons for such dispute. Notwithstanding the delivery of
any such written notice of dispute, Owner shall pay, if applicable, to Service
Provider the undisputed portions of such Monthly Statement in accordance with
the terms of this Agreement. If it is determined by the Parties or otherwise
that any amount is owed by either Party to the other Party hereunder, then the
owing Party shall promptly (but in any event within five (5) Business Days after
such determination) reimburse the other Party such amount.

(c)    All payments shall be made by wire transfer of immediately available
funds, to the account (or accounts) designated by the Person entitled to receipt
of such payment.

3.3    Owner Group Financial Responsibility. The Owner Group shall be ultimately
responsible for the payment (either directly or via reimbursement of the Service
Provider) for the following costs (“Owner Group Costs”):

 

  (a)

costs of performing the Excluded Services;

 

  (b)

direct expenses incurred in the operation of the Owner Group’s business in
connection with the Assets, or in the operation of the Assets, that Service
Provider has historically allocated to direct asset expenses, as long as such
expenses are customarily treated as direct asset expenses under GAAP and COPAS
accounting procedures, but excluding all costs and expenses attributable to the
compensation, benefits, or other costs and expenses attributable to the
Dedicated Employees that are not field-level Dedicated Employees;

 

  (c)

capital expenditures attributable to the Assets incurred in connection with the
Development Plan and Budget;

 

  (d)

taxes (other than taxes of Service Provider);

 

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  (e)

royalties and costs payable to Third Parties in gathering, treating, processing,
transporting and marketing Hydrocarbons from the Assets;

 

  (f)

third-party costs (and incremental internal costs of Service Provider incurred
with the approval of Owner) of establishing and implementing the accounts and
systems required under Section 2.12;

 

  (g)

other items agreed by Owner and Service Provider to be Owner Group Costs.

3.4    Maintenance of Accounts and Records.

(a)    Service Provider shall maintain on behalf of the Owner Group all Records
and other records, books, accounts, files, data, and other information that are
required hereunder to be maintained by the Service Provider (other than the
books and records of Service Provider referred to in Section 3.5) (such records,
books, accounts, files, data, and other information, the “Owner Records and
Data”). All Owner Records and Data maintained in electronic form shall be
logically separate from all electronic records and data of Service Provider and
its Affiliates. Service Provider shall ensure that no Persons other than
authorized Persons will be able to access such Owner Records and Data, with the
Persons so authorized being only those Persons for which access is reasonably
necessary for the performance of the Services. Service Provider shall ensure
that Owner Group and its representatives have reasonable access to all Owner
Records and Data (including all Owner Records and Data maintained in electronic
form), in the case of physical records during reasonable business hours
physically at the location at which such books and records are maintained, in
each case to the greatest extent practicable as if such Owner Records and Data
were maintained by Owner on its own behalf. All such Owner Records and Data
shall be the property of the Owner Group and shall be delivered to Owner at
Service Provider’s cost at the end of the Term and any Transition Services
Period, together with the information systems on which electronic Owner Records
and Data are maintained, including copies of all databases and other system
applications in which such Owner Records and Data are maintained.

(b)    Service Provider shall maintain, separately and in accordance with GAAP,
on behalf of the Owner Group, as Owner Records and Data, complete and accurate
books of account and financial records reflecting the results of operations of
the Owner Group relating to the Assets, including (a) complete and accurate
accounts and records of all Owner Group Costs and all other expenses, costs, and
liabilities accrued or incurred by or on behalf of the Owner, including all
Asset Taxes and Burdens paid on Hydrocarbons in connection with the Assets, and
(b) complete and accurate accounts and records of all revenues accrued,
invoiced, and/or received by Owner in connection with the Assets. Service
Provider shall, at the request of the Owner Group, carry out or cause to be
carried out an annual Asset-level audit of such books and records and shall
assist Owner and its representatives in connection with the preparation by Owner
of the Owner Group audited financial statements. Service Provider shall provide
to Owner Group an annual service organization control report (“Annual SOC
Report”) for the benefit of Owner Group. Owner Group shall pay all fees and
other amounts payable to the SOC Service Provider and shall pay Service Provider
for the personnel costs actually incurred by Service Provider for one Service
Provider employee (not already a Dedicated Employee or Shared Employee) while
such employee is dedicated to overseeing the Annual SOC Report and interfacing
with the SOC Service Provider.

 

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Owner in its reasonable discretion shall specify the scope and content of each
Annual SOC Report, to be provided to its financial statement auditors, and the
service provider (the “SOC Service Provider”) that will be retained to prepare
each Annual SOC Report, and Service Provider will retain the SOC Service
Provider. Service Provider shall maintain any operations-related information
that normally would be included as part of such accounting documentation,
including invoices, operating and maintenance records, volumes of production,
price received for hydrocarbon sales, lease operating expenses, processing
charges, gathering and transportation expenses, cash collections, cash payments
and property tax allocations.

3.5    Taxes. Service Provider shall be responsible for all (i) income taxes
resulting from amounts paid or payable to it under this Agreement,
(ii) employment taxes and social security payments relating to its own
employees, and (iii) all other taxes incurred by Service Provider that do not
constitute Owner Group Costs. For the avoidance of doubt, Service Provider, and
not Owner, shall treat the providers of services under this Agreement as
employees for tax purposes.

3.6    Service Provider Records; Audit.

(a)    Service Provider shall maintain complete and accurate books and records
of its activities in connection with the performance of the Services, including
any Owner Group Costs actually paid by Service Provider from its own funds.
Service Provider shall retain all such books and records for a period of not
less than two (2) Calendar Years following the end of the Calendar Year in which
the Services are performed (the “Audit Period”) or any longer period if required
by Law, including any statutory IRS audit period applicable to Owner Group.

(b)     Upon not less than ten (10) Business Days’ prior written notice to
Service Provider during the Audit Period for any particular Calendar Year, Owner
shall have the right to audit Service Provider’s books and records for the
Calendar Year to which the Audit Period applies, and the costs charged to Owner
in that Calendar Year. The cost of each such audit shall be borne by Owner;
provided, that, if any material amounts are determined to be owed by Service
Provider to Owner as a result of such audit, then Service Provider shall
reimburse Owner for such cost of audit. Unless otherwise mutually agreed, any
audit shall be conducted at the principal office of Service Provider.

(c)    Owner may request information prior to the commencement of the audit, and
Service Provider shall, to the extent available, provide the information
requested as soon as practical in order to facilitate the forthcoming audit. The
Service Provider will, to the extent practicable, provide the information in
electronic format or hard copy within ten (10) Business Days after the written
request.

(d)    In the event Owner discovers any discrepancies as a result of any audit
performed hereunder, Owner may prepare and distribute a written report to
Service Provider setting forth in reasonable detail such discrepancies. The
Service Provider shall reply to the report in writing as soon as practical and
in any event no later than thirty (30) days after delivery of the report. At the
conclusion of an audit, Service Provider and Owner shall endeavor to promptly
settle any outstanding matters.

 

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(e)     All adjustments resulting from an audit which are agreed to by Service
Provider and Owner shall be reflected promptly in Service Provider’s books and
records and in the books and records of Owner maintained by Service Provider. If
any dispute shall arise in connection with an audit and no settlement can be
reached by the Parties as provided in Section 3.6(d), within sixty (60) days
after Owner delivers a written report pursuant to Section 3.6(d), unless
otherwise agreed by the Parties, the dispute shall be resolved in accordance
with the dispute resolution provisions in Section 3.7.

3.7    Disputed Charges. Owner may, during the Audit Period for any particular
Calendar Year, take written exception to any invoice rendered by Service
Provider for any expenditure or any part thereof charged to Owner in that
Calendar Year, on the ground that the same was not a cost incurred by Service
Provider for which Service Provider is entitled to reimbursement pursuant to
this Agreement. If the amount as to which such written exception is taken or any
part thereof is ultimately determined to be a cost for which Service Provider is
not entitled to reimbursement pursuant to this Agreement, such amount or portion
thereof (as the case may be) shall be paid by Service Provider to Owner together
with interest at the Agreed Rate.

ARTICLE IV.

TERM; TERMINATION

4.1    Term. This Agreement will commence on the Closing Date, and, unless
earlier terminated in accordance with Section 4.2, will remain in effect for a
period of five (5) years from the Closing Date (the “Initial Term”), and shall
continue in effect thereafter for consecutive one-year renewal terms (each, a
“Renewal Term”) unless terminated at the end of the Initial Term or any Renewal
Term by either Owner or Service Provider by at least 90 days’ prior notice (the
period from the Closing Date until the date on which is Agreement terminates,
the “Term”).

4.2    Termination. This Agreement may also be terminated as follows:

(a)    On the ninetieth (90th) day following written notice (a “Termination
Notice”) by either Owner or Service Provider to the other; provided that
(i) neither Party may deliver a Termination Notice until after the second
anniversary of the Closing Date and (ii) any Party delivering a Termination
Notice shall have the right to withdraw such Termination Notice at any time
prior to the ninetieth (90th) day following the delivery of such Termination
Notice;

(b)    Automatically upon written notice by either Owner or Service Provider to
the other, upon (i) a Change of Control of the Owner Group or (ii) a sale by the
Owner Group of all or substantially all of the Assets (directly or indirectly,
whether through an asset transaction or an equity transaction and whether
through one transaction or a series of transactions), other than any such sale
to any of its Affiliates, subsidiaries, parents, stockholders, members or other
interest holders;

(c)    Automatically upon written notice by Owner to Service Provider after the
first anniversary of the Closing Date if the board of directors of Parent by
unanimous vote of its members (excluding any member of the board that is an
Affiliate of Service Provider or is appointed or designated by or employed by
Service Provider or any of its Affiliates) makes a good-faith determination that
Service Provider has failed to satisfactorily perform the Services (a
“Performance Termination”);

 

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(d)    Automatically upon written notice by Owner to Service Provider,

 

  (i)

upon any Material HSE Event;

 

  (ii)

if in any six (6) month period, three (3) or more Key Persons are no longer
employed by Service Provider or its Affiliates and devoting that portion of
their time required by Section 2.6(b) to providing Services; provided that any
Key Person that has been replaced, with the consent of Owner, by another
employee of substantially equal experience and expertise shall not count toward
the three (3) Key Person threshold;

 

  (iii)

if in any six (6) month period, more than fifty percent (50%) of the Dedicated
Employees are no longer employed by Service Provider or its Affiliates and
devoting substantially all of their business time to providing Services;

 

  (iv)

upon Service Provider asserting a Force Majeure Event for more than forty-five
(45) consecutive days or more than ninety (90) days in any three hundred
sixty-five (365) day period;

 

  (v)

upon a Change of Control resulting in John Walker and other Key Persons
collectively not controlling Service Provider; or

 

  (vi)

upon a Bankruptcy of Service Provider;

(e)    Automatically upon written notice by Owner to Service Provider, upon a
material default or breach by Service Provider or any of its Affiliates of this
Agreement or the Non-Compete Agreement, which has not resulted solely from the
breach by Owner Group of any of its obligations under this Agreement, if:

(i)    such material default or breach is capable of being cured and does not
arise from the gross negligence, willful misconduct or fraud of the Service
Provider or its Affiliates, and such material default or breach is not cured
within thirty (30) days after delivery by Owner to Service Provider or its
Affiliates of written notice of such material default or breach;

(ii)    such material default or breach is not capable of being cured or arises
from the gross negligence, willful misconduct or fraud of the Service Provider
or its Affiliates.

(f)    Automatically upon written notice by Service Provider to Owner, upon a
material default or breach of this Agreement, if (i) such material default or
default is not cured within thirty (30) days after delivery by Service Provider
to Owner of written notice of such material default or breach and (ii) such
material default of breach has not resulted from the actions or inactions of
Service Provider;

 

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4.3    Effect of Termination. The terms of Section 3.6, this Section 4.3,
Section 4.4, Article VII, Article X and Annex A shall survive any termination of
this Agreement. The termination of this Agreement shall not relieve either Party
of any liability or obligation accruing or that had accrued prior to the
Termination Effective Date (including any Service Provider’s right to receive
any amounts payable under Article III that have accrued prior to the date of
termination) or deprive a Party not in breach of its rights to any remedy
otherwise available to such Party. Upon the Termination Effective Date, to the
extent not previously done, Service Provider shall (a) assign to Owner all
Applicable Contracts entered into in connection with Service Provider’s
performance of the Services pursuant to the terms of this Agreement, (b) assign
and transfer all Assets in Service Provider’s or its Affiliates possession
(including any permits or other Surface Contracts with respect to the Assets) to
the Owner Group, and (c) promptly deliver to Owner all Owner Records and Data.

4.4    Transition Period. Notwithstanding anything to the contrary in this
Agreement, in addition to Service Provider’s obligations under Section 4.3, the
Service Provider shall, during the Transition Services Period, continue to
provide Services in accordance with this Agreement, and pursuant to the terms of
this Agreement, and upon request from Owner will reasonably cooperate with Owner
in the transition of such Services to the Owner Group or a new service provider
specified by Owner. The “Transition Services Period” shall be the period
beginning on the Termination Effective Date and ending upon the nine-month
anniversary of the Termination Effective Date; provided that, in the case of a
termination pursuant to Section 4.1, Section 4.2(d), Section 4.2(e), or
Section 4.2(f), or a termination pursuant to Section 4.2(a), Section 4.2(b), or
Section 4.2(c), where, during the Transition Services Period, instances arise
that would allow Owner to have terminated this Agreement pursuant to
Section 4.2(d) or Section 4.2(e) had this Agreement still been in effect at such
time, Owner may elect (by written notice to Service Provider) to terminate the
Transition Services Period effective upon the date specified in such notice,
which shall be at least 30 days after the date of such notice.

4.5    Performance Termination Fee. In the event of a Performance Termination,
in addition to the payment of the Services Fee during the Transition Services
Period and all other amounts payable to Services Provider under this Agreement,
Owner will pay to Service Provider a lump-sum termination fee of $17,500,000
upon the termination of the Transition Services Period.

ARTICLE V.

MARKETING OF PRODUCTION

5.1    Marketing Services.

(a)    In providing marketing services under this Agreement, Service Provider
shall (i) use commercially reasonable efforts to sell and market production from
the Assets for the best available price, (ii) ensure that the Owner Group’s
share of production from the Assets will be subject to the same (or better)
prices and the same terms as are applicable to Service Provider and its
Affiliates and (iii) perform such services as a Reasonable and Prudent Service
Provider in accordance with prevailing industry standards and customs.

(b)    Title to all Hydrocarbon production from the Assets will remain in the
Owner Group at all times until such time as title to such production is required
to be transferred to the purchasing Third Party counterparty under the terms of
the applicable gathering, processing,

 

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fractionation, transportation, or marketing contracts, including the Existing
Arrangements. Service Provider acknowledges and agrees that all funds and
revenues received by Service Provider for the Owner Group’s production from the
Assets shall remain the sole property of the Owner Group.

(c)    As requested by Service Provider from time to time, the Owner Group will
reasonably cooperate and coordinate with Service Provider in order to permit
Service Provider to provide marketing services with respect to the Assets;
provided, however, the Owner Group shall not be required to take or consent to
any action that requires the Owner Group’s consent under Exhibit B.

(d)    Service Provider shall direct all Third Parties to deliver all the Owner
Group’s proceeds from the Assets directly to accounts that are owned and
controlled by the Owner Group.

(e)    Service Provider shall promptly upon receipt or preparation provide to
Owner all reports, notices and information prepared in the ordinary course of
business by Service Provider (as such reports and information are produced or
compiled) relating to the marketing services provided pursuant to this
Agreement.

ARTICLE VI.

FORCE MAJEURE

6.1    Excused Performance. A Party shall not be responsible or liable for, or
deemed in breach of, this Agreement for any delay or failure in the performance
of its obligations under this Agreement (other than obligations to pay amounts
owing under this Agreement) to the extent such performance is prevented by a
Force Majeure Event; provided, that (a) the affected Party gives the other Party
prompt written notice describing the particulars of the Force Majeure Event and
the proposed cure; (b) the suspension of performance is of no greater scope and
of no longer duration than is reasonably attributable to the Force Majeure
Event; (c) the affected Party uses commercially reasonable efforts to remedy its
inability to perform its obligations under this Agreement or the Force Majeure
Event (which efforts shall not require settlement of any labor or similar
dispute on terms not acceptable to the Party claiming the Force Majeure Event);
and (d) when the affected Party is able to resume performance of its obligations
under this Agreement, that Party shall give the other Party written notice to
that effect.

6.2    No Preclusion. The existence of a Force Majeure Event shall not relieve
any Party of (a) any of its payment obligations under this Agreement, or (b) any
other obligation under this Agreement to the extent that performance of such
other obligation is not precluded by such Force Majeure Event.

6.3    Limitations on Effect of Force Majeure. In no event will any delay or
failure of performance caused by a Force Majeure Event extend this Agreement
beyond its Term.

ARTICLE VII.

INDEMNITIES

7.1    Service Provider Indemnity. Service Provider hereby releases,
indemnifies, defends and holds harmless Owner and the other Owner Indemnified
Parties from and against any

 

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and all Liabilities (a) to the extent attributable to or arising out of the
gross negligence or willful misconduct of any Service Provider Indemnified
Parties or (b) for personal injury, illness, or death of or damage to and loss
of property (whether real or personal, owned or leased) incurred or suffered by
any Service Provider Indemnified Party as a result of, relating to or arising
out of, any Service Provider’s or any other of the Service Provider Indemnified
Parties’ performance of the Services hereunder, REGARDLESS OF WHETHER SUCH
LIABILITIES ARE THE RESULT OF (IN WHOLE OR IN PART) THE SOLE, ACTIVE, PASSIVE,
CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, OTHER FAULT OR THE
VIOLATION OF LAW, IN EACH CASE, OF OR BY ANY OWNER INDEMNIFIED PARTY, EXCEPT (IN
EACH CASE) TO THE EXTENT SUCH LIABILITIES ARE A RESULT OF THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF ANY OWNER INDEMNIFIED PARTY. Owner must give Service
Provider written notice of any claim under this Section 7.1 on or before the
date that is 24 Months counted from and after the end of the Term and any
Transition Services Period (excluding such month in which the Term or the
Transition Services Period ends, as applicable), after which no claim may be
made against Service Provider by Owner or any Owner Indemnified Party under
Section 7.1(a) and/or Section 7.1(b).

7.2    Owner Indemnity. Owner hereby releases, indemnifies, defends and holds
harmless Service Provider and the other Service Provider Indemnified Parties
from and against any and all Liabilities (a) to the extent attributable to or
arising out of the gross negligence or willful misconduct of any Owner
Indemnified Party or (b) for personal injury, illness, or death of or damage to
or loss of property (whether real or personal, owned or leased) incurred or
suffered by any Owner Indemnified Party as a result of, relating to or arising
out of, any Service Provider’s or any other of the Service Provider Indemnified
Parties’ performance of the Services hereunder, REGARDLESS OF WHETHER SUCH
LIABILITIES ARE THE RESULT OF (IN WHOLE OR IN PART) THE SOLE, ACTIVE, PASSIVE,
CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, OTHER FAULT OR THE
VIOLATION OF LAW, IN EACH CASE, OF OR BY ANY SERVICE PROVIDER, EXCEPT (IN EACH
CASE) TO THE EXTENT SUCH LIABILITIES ARE A RESULT OF THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF ANY SERVICE PROVIDER INDEMNIFIED PARTY. Service Provider
must give Owner written notice of any claim under this Section 7.2 on or before
the date that is 24 Months counted from and after the end of the Term or any
Transition Services Period (excluding such month in which the term or the
Transition Services Period ends, as applicable), after which no claim may be
made against Service Provider by Owner or any Owner Indemnified Party under
Section 7.2(a) and/or Section 7.2(b).

7.3    DISCLAIMERS. Notwithstanding any other term of this Agreement to the
contrary, except as provided in Article IX, SERVICE PROVIDER makes no and
disclaims any other representations and warranties, express, implied or
statutory, with respect to the performance or results of the Services. OWNER, ON
BEHALF OF ITSELF AND ITS AFFILIATES ACKNOWLEDGES AND AGREES THAT SERVICE
PROVIDER SHALL HAVE NO LIABILITY TO OWNER IN CONNECTION WITH ANY DECISIONS MADE
OR ACTIONS TAKEN BY OWNER IN RELIANCE UPON ANY INFORMATION OR ADVICE PROVIDED BY
SERVICE PROVIDER HEREUNDER, SUCH DECISIONS BEING MADE OR ACTIONS TAKEN AT
OWNER’S SOLE RISK.

 

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7.4    Disclaimer of Application of Anti-Indemnity Statutes. The Parties
acknowledge and agree that the provisions of any anti-indemnity statute relating
to oilfield services and associated activities shall not be applicable to this
Agreement or the transactions contemplated hereby or thereby.

ARTICLE VIII.

NON-SOLICITATION

8.1    Non-Solicitation. The Owner Group shall not hire or attempt to employ any
of Service Provider’s or EnerVest, Ltd.’s personnel that are employed at Service
Provider’s or EnerVest, Ltd.’s Houston corporate office during the Term of this
Agreement and for a period of ninety (90) days after the expiration of the
Transition Service Period; provided, that the non-solicitation restriction in
this Article VIII shall not apply in the event an employee of Service Provider
or EnerVest, Ltd. or Affiliates of Service Provider contacts any member of the
Owner Group regarding employment in response to an advertisement identifying
employment opportunities or if an employee of Service Provider, EnerVest, Ltd.
or Affiliates of Service Provider contacts any member of the Owner Group without
having been solicited.

ARTICLE IX.

REPRESENTATIONS AND WARRANTIES; OTHER COVENANTS AND

RESPONSIBILITIES

9.1    Representations and Warranties. Each of Parent and Owner represents and
warrants to Service Provider, and Service Provider represents and warrants to
Parent and Owner, as follows:

(a)    Organization, Good Standing, Etc. Such Party is a limited liability
company, corporation or other legal entity, that has been duly formed, validly
existing and in good standing under the laws of the State of Delaware, and each
duly qualified and/or licensed to the extent and as may be required by
applicable Law, and in good standing in such State.

(b)    Authority; Enforceable Agreement. Such Party 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 such Party 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.

(c)    Legal Requirements. Such Party 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
(i) in the case of Owner Group, required to carry out its business relating to
the Assets and (ii) in the case of Service Provider, required for Service
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, such Party will be in compliance in all
material respects with all terms and conditions of each of the foregoing.

 

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(d)    No Consent. 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 such Party
of this Agreement or to consummate any transactions contemplated hereby.

(e)    No Conflict. The execution, delivery, and performance by such Party of
this Agreement and the consummation of the transactions contemplated herein will
not (i) conflict with or result in a breach of any provisions of the
organizational documents of such Party, (ii) subject, in the case of Owner and
Parent, to the accuracy of Service Provider’s representations and warranties in
Section 9.3(b), result in a default or the creation of any material encumbrance
or give rise to any right of termination, cancellation, or acceleration under
any of the terms, conditions, or provisions of any note, bond, mortgage,
indenture, license, contract or agreement to which such Party is a party,
(iii) violate in any material respect any judgment, order, ruling, regulation,
or decree applicable to such Party as a party in interest, or (iv) violate any
Law applicable to such Party.

9.2    Additional Owner Group Representations. Owner represents and warrants to
Service Provider that it 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 Service Provider. Owner has
access to and, as necessary, shall seek the advice of its own legal, tax,
economic, insurance, environmental, technical, engineering, operations,
geological and geophysical advisors.

9.3    Additional Service Provider Representations. Service Provider represents
and warrants to Owner and Parent that:

(a)    except as set out in Schedule 9.3(a), neither Service Provider or any
Affiliate of Service Provider has agreed to provide services (including services
substantially similar to the Services) to any Third Party;

(b)    all Dedicated Employees and Shared Employees are directly employed by
Service Provider or by EnerVest Employee Services, L.L.C. (a Delaware limited
liability company) and Service Provider has the right to utilize Dedicated
Employees and Shared Employees employed by EnerVest Employee Services, L.L.C.;

(c)    Service Provider or EnerVest, Ltd. owns and has title to or has in its
own name a valid leasehold interest in or a valid license to use all facilities,
equipment, computer hardware, software, and other property and assets necessary
for the performance of the Services and Service Provider has the right to
utilize all of the foregoing in connection with the performance of the Services
(in each case other than the Field Facilities and Equipment owned by Owner Group
and in each case except to the extent that Service Provider loses such right as
a result of the transactions contemplated hereby) and is a party to all
contracts with Third Parties under which Third Parties will perform any of the
Services,;

(d)    The 2017 COPAS overhead for the Owner Group interest in the oil and gas
properties included in the Assets was $6,910,552 and the 2017 COPAS overhead for
the other joint interest owners in such assets was $4,192,936.

 

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(e)    the execution, delivery, and performance by Parent and Owner of this
Agreement and the consummation of the transactions contemplated herein will not
result in a default or the creation of any material encumbrance or give rise to
any right of termination, cancellation, or acceleration under any of the terms,
conditions, or provisions of any of the “Contracts” (as defined in the
Transaction Agreements).

9.4    Service Provider Responsibilities.

(a)    Books and Records. Service Provider shall keep and maintain proper and
complete books and records of all matters pertaining to performance of the
Services. Owner shall have the right to (1) reasonably consult from time to time
with the independent accountants and advisors of Service Provider regarding
Service Provider’s performance of the Services; (2) reasonably consult from time
to time at reasonable times and following reasonable notice, with management of
Service Provider at their respective places of business regarding performance of
the Services, so long as such consultation does not unreasonably interfere with
the operation of the business of Service Provider; and (3) consult with any
other personnel of Service Provider or to inspect any of the properties or
assets of Service Provider utilized in Service Provider’s performance of the
Services.

(b)    Financial Information. Service Provider shall provide to Owner prompt
notice of any event that would reasonably be expected to have a material effect
on Service Provider’s financial condition, business or operations. Service
Provider shall assist Owner in the preparation of Owner’s financial statements
and required public disclosures.

ARTICLE X.

MISCELLANEOUS

10.1    Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all of such counterparts shall constitute for all purposes one
agreement. Any signature hereto delivered by a Party by facsimile or email scan
transmission shall be deemed an original signature hereto.

10.2    Notices. All notices and communications required or permitted to be
given hereunder shall be in writing and shall be delivered personally, or sent
by bonded overnight courier, or mailed by U.S. Express Mail or by certified or
registered United States Mail with all postage fully prepaid, or sent by
electronic mail transmission (provided that the acknowledgment of the receipt of
such electronic mail is requested and received, excluding automatic receipts,
with the receiving Person affirmatively obligated to promptly acknowledge
receipt) addressed to Service Provider or Owner, as appropriate, at the address
for such Person shown below or at such other address as Service Provider or
Owner shall have theretofore designated by written notice delivered to the other
Parties:

If to Service Provider:

EnerVest Operating, L.L.C.

1001 Fannin, Suite 800

Houston, Texas 77002

Attention: Andy West

Email: awest@enervest.com

 

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With a copy to (which shall not constitute notice):

EnerVest Operating, L.L.C.

1001 Fannin, Suite 800

Houston, Texas 77002

Attention: Philip Berry

Email: pberry@enervest.com

If to Owner:

TPG Pace Energy Holdings Corp.

301 Commerce Street, Suite 3300

Fort Worth, TX 76102

Attention: Jerry Neugebauer

Email: GNeugebauer@tpg.com

With a copy to (which shall not constitute notice):

Vinson & Elkins LLP

1001 Fannin, Suite 2500

Houston, Texas 77002

Attention: Keith Fullenweider

Email:    kfullenweider@velaw.com

and

Vinson & Elkins LLP

2001 Ross Avenue, Suite 3700

Dallas, Texas 75201

Attention: John Grand

Email: jgrand@velaw.com

Any notice given in accordance herewith shall be deemed to have been given only
when delivered to the addressee in person, or by courier, during normal business
hours on a Business Day (or if delivered or transmitted after normal business
hours on a Business Day or on a day other than a Business Day, then on the next
Business Day), or upon actual receipt by the addressee during normal business
hours on a Business Day after such notice has either been delivered to an
overnight courier or deposited in the United States Mail, as the case may be (or
if delivered after normal business hours on a Business Day or on a day other
than a Business Day, then on the next Business Day). Service Provider or Owner
may change the address to which such communications are to be addressed by
giving written notice to the other Party in the manner provided in this
Section 10.2.

 

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10.3    Governing Law; Venue.

(a)     THIS AGREEMENT AND ANY CLAIM, CONTROVERSY, OR DISPUTE ARISING UNDER OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE RIGHTS,
DUTIES, AND RELATIONSHIP OF THE PARTIES HERETO AND THERETO, SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION
OF PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION.

(b)    THE PARTIES AGREE THAT THE APPROPRIATE, EXCLUSIVE, AND CONVENIENT FORUM
FOR ANY DISPUTES BETWEEN ANY OF THE PARTIES ARISING OUT OF OR RELATING TO THIS
AGREEMENT (OTHER THAN TO THE EXTENT SET FORTH IN SECTION 10.18) OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY SHALL BE IN ANY STATE OR FEDERAL
COURT IN HOUSTON, TEXAS AND EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS SOLELY IN RESPECT OF ANY PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT (OTHER THAN TO THE EXTENT SET FORTH IN SECTION
10.18). THE PARTIES FURTHER AGREE THAT THE PARTIES SHALL NOT BRING SUIT WITH
RESPECT TO ANY DISPUTES ARISING OUT OF THIS AGREEMENT (OTHER THAN TO THE EXTENT
SET FORTH IN SECTION 10.18) OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY COURT
OR JURISDICTION OTHER THAN THE ABOVE SPECIFIED COURTS. THE PARTIES FURTHER
AGREE, TO THE EXTENT PERMITTED BY LAW, THAT A FINAL AND NONAPPEALABLE JUDGMENT
AGAINST A PARTY IN ANY ACTION OR PROCEEDING CONTEMPLATED ABOVE SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION WITHIN OR OUTSIDE THE
UNITED STATES BY SUIT ON THE JUDGMENT, A CERTIFIED OR EXEMPLIFIED COPY OF WHICH
SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND AMOUNT OF SUCH JUDGMENT.

(c)    TO THE EXTENT THAT ANY PARTY OR ANY OF ITS AFFILIATES HAS ACQUIRED, OR
HEREAFTER MAY ACQUIRE, ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION, EXECUTION, OR OTHERWISE) WITH RESPECT TO ITSELF
OR ITS PROPERTY, SUCH PARTY (ON ITS OWN BEHALF AND ON BEHALF OF ITS AFFILIATES)
HEREBY IRREVOCABLY (I) WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS WITH
RESPECT TO THIS AGREEMENT AND (II) SUBMITS TO THE PERSONAL JURISDICTION OF ANY
COURT DESCRIBED IN SECTION 10.3(b).

(d)    THE PARTIES AGREE THAT THEY HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE
TRANSACTION AGREEMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

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10.4    Non-Compensatory Damages. NONE OF THE PARTIES SHALL BE ENTITLED TO
RECOVER ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, REMOTE OR
SPECULATIVE DAMAGES OR DAMAGES FOR LOST PROFITS OF ANY KIND (OTHER THAN, IN EACH
CASE, REASONABLY FORESEEABLE CONSEQUENTIAL DAMAGES CUSTOMARILY AVAILABLE AS
DIRECT DAMAGES WITH RESPECT TO COMMON LAW CONTRACTUAL DAMAGES CLAIMS) ARISING
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, EXCEPT TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES (INCLUDING
COSTS OF DEFENSE AND REASONABLE ATTORNEY’S FEES INCURRED IN CONNECTION WITH
DEFENDING OF SUCH DAMAGES) TO A THIRD PARTY, WHICH DAMAGES (INCLUDING COSTS OF
DEFENSE AND REASONABLE ATTORNEY’S FEES INCURRED IN CONNECTION WITH DEFENDING
AGAINST SUCH DAMAGES) SHALL NOT BE EXCLUDED BY THIS PROVISION. SUBJECT TO THE
PRECEDING SENTENCE, OWNER AND SERVICE PROVIDER WAIVE ANY RIGHT TO RECOVER ANY
SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, REMOTE OR SPECULATIVE
DAMAGES OR DAMAGES FOR LOST PROFITS OF ANY KIND (OTHER THAN, IN EACH CASE,
REASONABLY FORESEEABLE CONSEQUENTIAL DAMAGES CUSTOMARILY AVAILABLE AS DIRECT
DAMAGES WITH RESPECT TO COMMON LAW CONTRACTUAL DAMAGES CLAIMS), ARISING IN
CONNECTION WITH OR WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, EXCEPT TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES
(INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEY’S FEES INCURRED IN
CONNECTION WITH DEFENDING OF SUCH DAMAGES) TO A THIRD PARTY.

10.5    Waiver; Rights Cumulative. Any of the terms, covenants, representations,
warranties or conditions hereof may be waived only by a written instrument
executed by or on behalf of the Party waiving compliance. No course of dealing
on the part of Service Provider and Owner, or their respective officers,
employees, agents or representatives or any failure by Service Provider and
Owner to exercise any of its rights under this Agreement shall operate as a
waiver thereof or affect in any way the right of such Person at a later time to
enforce the performance of such provision. No waiver by Service Provider and
Owner of any condition or any breach of any term, covenant, representation or
warranty contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of any breach of any
other term, covenant, representation or warranty. The rights of Service Provider
and Owner under this Agreement shall be cumulative, and the exercise or partial
exercise of any such right shall not preclude the exercise of any other right.

10.6    Entire Agreement. This Agreement constitutes the entire agreement
between the Parties pertaining to the Services and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties pertaining to the subject matter hereof.

10.7    Amendment. This Agreement may be amended only by an instrument in
writing executed by all Parties.

10.8    Parties in Interest. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns.

 

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Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any Person other
than Owner and Service Provider and their respective successors and permitted
assigns, or the Owner Indemnified Parties and the Service Provider Indemnified
Parties (but only to the extent set out in Section 7.1 and Section 7.2,
respectively), any rights, remedies, obligations or liabilities under or by
reason of this Agreement; provided, that only a Party and its respective
successors and permitted assigns will have the right to enforce the provisions
of this Agreement on its own behalf or on behalf of any Owner Indemnified Party
or Service Provider Indemnified Party (but shall not be obligated to do so).

10.9    Successors and Permitted Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties and their successors and permitted
assigns.

10.10    Assignment. No Party may assign (directly or indirectly, including by
merger, consolidation, equity sale or otherwise, but excluding a Change of
Control of either Party or any transaction involving the securities of any Party
or any of its Affiliates that have publicly traded securities) this Agreement or
its obligation or duties hereunder (except as expressly provided for herein)
without the prior written consent of the other Party; provided, however, Owner
may assign this Agreement to any Affiliate of Owner who then owns (or
concurrently with the assignment of this Agreement will own) a portion of the
Assets without Service Provider’s prior written consent, without relieving Owner
from any of its obligations or Liabilities hereunder; and further provided that
such Affiliate remains an Affiliate of Owner. Each Party acknowledges that the
Services to be provided by Service Provider hereunder are unique personal
services and that the entry of Owner into this Agreement is based on a special
relationship with Service Provider and the unique qualities and abilities of
Service Provider.

10.11    Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Party shall execute and deliver all such
future instruments and take such other further action as may be reasonably
necessary or appropriate to carry out the provisions of this Agreement and the
intention of the Parties as expressed herein.

10.12    Preparation of Agreement. Each of the Parties and their respective
counsels participated in the preparation of this Agreement. In the event of any
ambiguity in this Agreement, no presumption shall arise based on the identity of
the draftsman of this Agreement.

10.13    Severability. If any term or provision of this Agreement is determined
to be invalid, illegal, or incapable of being enforced by any rule of Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon a determination that any term
or provision is invalid, illegal, or incapable of being enforced, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.

10.14    No Recourse. For the avoidance of doubt, the provisions of this
Agreement shall not give rise to any right of recourse against any current or
former stockholder, member, partner, owner, director, manager, officer,
employee, agent or representative of Service Provider or of Owner.

 

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10.15    Interpretation. All references in this Agreement to Articles, Sections,
subsections and other subdivisions refer to the corresponding Articles,
Sections, subsections and other subdivisions of or to this Agreement unless
expressly provided otherwise. Titles appearing at the beginning of any Articles,
Sections, subsections and other subdivisions of this Agreement are for
convenience only, do not constitute any part of this Agreement, and shall be
disregarded in construing the language hereof. The words “this Agreement”,
“herein”, “hereby”, “hereunder” and “hereof”, and words of similar import, refer
to this Agreement as a whole and not to any particular Article, Section,
subsection or other subdivision unless expressly so limited. The words “this
Article”, “this Section”, and “this subsection”, and words of similar import,
refer only to the Article, Section or subsection hereof in which such words
occur. The word “including” (in its various forms) means including without
limitation. All references to “$” or “dollars” shall be deemed references to
United States dollars. Each accounting term not defined herein will have the
meaning given to it under GAAP. Pronouns in masculine, feminine or neuter
genders shall be construed to state and include any other gender, and words,
terms and titles (including terms defined herein) in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires. References to any Law or agreement shall mean such Law or agreement as
it may be amended from time to time.

10.16    Confidentiality.

(a)    Service Provider agrees that all information relating to the Assets or
the business and finances of the Owner Group that is disclosed to Service
Provider or that it obtains or develops in performing the Services, including
all Owner Records and Data, is “Confidential Information” hereunder, shall be
kept strictly confidential and shall not be disclosed at any time during the
Term and any Transition Services Period and for a period of two years thereafter
to any Person that is not a Party without Owner’s consent and shall not be used
for any purpose other than the performance of the Services, except that
Confidential Information may be disclosed:

(i)    To the extent and only to the extent reasonably necessary for the
performance of the Services, to Affiliates of the Service Provider and its and
their directors, officers, managers, employees, members, partners, agents and
authorized representatives (including attorneys, accountants, and consultants)
(“Representatives”), provided that such Representatives need to know such
Confidential Information for purposes of performing the Services and agree to be
or are otherwise bound by the Service Provider’s obligations under this
Section 10.16, and provided that Service Provider shall be liable hereunder for
any breach of such obligations by any of its Representatives;

(ii)    to the extent that such Confidential Information is required to be
furnished in compliance with any applicable laws, rules, or regulations, or
pursuant to any legal proceedings or because of any order of any court binding
upon Service Provider (provided that Service Provider shall (A) first give
written notice of the intended disclosure to Owner as soon as practicable;
(B) consult with Owner on the advisability of taking steps to resist or narrow
the disclosure of Confidential Information; and (C) if disclosure is required or
deemed advisable, cooperate with Owner in attempting to obtain an order or other
reliable assurance that confidential treatment will be accorded to designated
portions of the Confidential Information,

 

26

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or that the Confidential Information will otherwise be held in the strictest
confidence to the fullest extent permitted under the laws, rules or regulations
of any applicable Governmental Authority);

(iii)    to the extent that such Confidential Information must be disclosed
pursuant to any rules or requirements of any government or stock exchange having
jurisdiction over Service Provider, or its Affiliates;

(iv)    any data or information which, through no fault of Service Provider and
without breach of any duty of confidentiality owed to Owner, becomes a part of
the public domain (provided that information is not considered to be in the
public domain for purposes of this Agreement unless it is lawfully available to
the general public from a single source without restriction on its use or
disclosure, and provided further that specific information is not considered to
be in the public domain if only a general embodiment or description of such
information is available in the public domain); or

(v)    data and information customarily provided to unaffiliated third parties
owning interests in the Assets under joint operating agreements.

(b)    Service Provider acknowledges that the unauthorized disclosure or use of
Confidential Information could cause irreparable harm and significant injury,
the precise measure of which would be difficult to ascertain. Accordingly, Owner
will be entitled to seek specific performance and injunctive or other equitable
relief, without bond, as a remedy for any such breach or threatened breach, in
addition to all other rights and remedies that Owner may have.

10.17    Publicity. Without prior written consent of Owner, Service Provider
will not issue, or permit any agent or Affiliate of Service Provider to issue,
any press releases or otherwise make, or cause any agent or Affiliate to make,
any public statements with respect to this Agreement, any Confidential
Information or the activities contemplated hereby. Without the prior written
consent of Service Provider, Owner will not issue, or permit any agent or
Affiliate of Owner to issue, any press releases or otherwise make, or cause any
agent or Affiliate to make, any public statements with respect to this
Agreement, the terms of this Agreement, any confidential or proprietary
information of Service Provider (including the amount of the Services Fee), or
the activities contemplated hereby.

10.18    Performance Dispute Resolution. Service Provider, may, upon notice to
Owner, dispute a claim pursuant to Section 2.1(e) that Service Provider has
failed, or is unable, to perform any of the Services, or that Service Provider
has not cured such failure or inability, by submitting the matter to arbitration
in accordance with this Section 10.18. Within ten (10) Business Days of a matter
being submitted to arbitration by Service Provider in accordance with the
preceding sentence, each of Service Provider and Owner shall (i) summarize their
position with regard to such dispute in a written document of twenty (20) pages
or less and (ii) submit such summaries to an arbitrator as selected by mutual
agreement of the Parties (the “Arbitrator”), together with the applicable notice
and any other documentation such party may desire to submit. If the Parties
cannot agree on an Arbitrator within ten (10) Business Days after Service
Provider’s election to submit such matters to arbitration under this
Section 10.18, then either Service Provider or Owner

 

27

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may request the Houston, Texas office of the American Arbitration Association
(“AAA”) (or, if there is no such office, the office of the AAA serving Houston,
Texas) to select the Arbitrator. Within ten (10) Business Days after receiving
the Parties’ respective submissions, the Arbitrator shall render a decision
choosing either Service Provider’s position or Owner’s position with respect to
the matter submitted to arbitration, based on the materials described above. Any
decision rendered by the Arbitrator pursuant hereto shall be final, conclusive,
and binding on Service Provider and Owner and enforceable against any of the
Parties in any court of competent jurisdiction. The costs of the Arbitrator
shall be borne equally between Service Provider, on the one hand, and Owner, on
the other hand.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the date and year first above
written.

 

SERVICE PROVIDER: ENERVEST OPERATING, L.L.C. By:   /s/ Jud Walker Name:   Jud
Walker Title:   President and Chief Executive Officer OWNER: MAGNOLIA OIL & GAS
OPERATING LLC By:  

/s/ Stephen Chazen

Name:   Stephen Chazen Title:   President and Chief Executive Officer PARENT TPG
PACE ENERGY HOLDINGS CORP. By:  

/s/ Stephen Chazen

Name:   Stephen Chazen Title:   President and Chief Executive Officer

 

Signature Page

to Services Agreement

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ANNEX A

DEFINITIONS

“AAA” is defined in Section 10.18.

“Accounting Month” means, with respect to each Calendar Month in which a Monthly
Statement is delivered under Section 3.2, the Calendar Month that immediately
precedes the Calendar Month in which such Monthly Statement is to be delivered
under Section 3.2.

“AFE” means any authorization for expenditure or other capital commitment
relating to the Assets.

“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, such Person. The term “control” and its
derivatives with respect to any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
partnership or other ownership interests, by contract or otherwise.
Notwithstanding the foregoing, for purposes of this Agreement, neither Parent
nor any of its Subsidiaries shall be an Affiliate of Service Provider or any of
its Affiliates, and neither Service Provider nor any of its Affiliates shall be
an Affiliate of Parent or any of its Subsidiaries.

“Agreed Rate” means the United States prime rate as published in the “Money
Rates” section of The Wall Street Journal, plus 300 basis points.

“Agreement” is defined in the preamble.

“Annual Delegation” is defined in Section 2.16.

“Applicable Contracts” means (a) the “Contracts” (as defined in the Transaction
Agreements), (b) the Existing Arrangements, and (c) all other Contracts entered
into by or on behalf of Owner relating to the Assets.

“Arbitrator” is defined in Section 10.18.

“Asset Taxes” means ad valorem, property, excise, severance, production, sales,
use and similar taxes based upon the operation or ownership of the Assets or the
production of Hydrocarbons or the receipt of proceeds therefrom, but excluding,
for the avoidance of doubt, (x) any income, capital gain, franchise and similar
taxes and (y) any transfer, sales, use and similar taxes incurred or imposed
with respect to the transfer of any of the Assets.

“Assets” means (a) the “Assets” (as defined in the Transaction Agreements) and
(b) any additional oil and gas assets and/or properties acquired by Owner or any
of its Subsidiaries with respect to which Owner elects to have Service Provider
provide the Services.

“Audit Period” is defined in Section 3.6(a).

 

Annex A

--------------------------------------------------------------------------------

“Bankruptcy” means, with respect to any Person: (a) the filing by such Person of
a voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under the U.S. Bankruptcy Code (or
corresponding provisions of future Laws) or any other insolvency Law, or a
Person’s filing an answer consenting to or acquiescing in any such petition;
(b) the making by such Person of any assignment for the benefit of its creditors
or the admission by a Person of its inability to pay its debts as they mature;
or (c) the expiration of 120 days after the filing of an involuntary petition
under the U.S. Bankruptcy Code (or corresponding provisions of future Laws)
seeking an application for the appointment of a receiver for the assets of such
Person, or an involuntary petition seeking liquidation, reorganization,
arrangement or readjustment of its debts under any other insolvency Law, unless
the same shall have been vacated, set aside or stayed within such 120-day
period.

“Burdens” means royalties, overriding royalties, production payments, carried
interests, net profits interests, reversionary interests, back-in interests and
other burdens upon, measured by or payable out of production.

“Business Day” means a day other than a Saturday, Sunday or a day on which
commercial banks in Houston, Texas are authorized or required by applicable Law
to be closed for business.

“Calendar Month” means any of the months of the Gregorian calendar.

“Calendar Year” means a period of 12 consecutive Calendar Months commencing on
the first day of January and ending on the following 31st day of December,
according to the Gregorian calendar

“Change of Control” means any direct or indirect change of control of a Person
(whether through merger, sale of shares or other equity interests, or
otherwise), resulting in a change of least 50% or more of the combined voting
power of a Person’s then outstanding securities (or other ownership interests),
through a single transaction or series of related transactions, from one or more
transferors to one or more transferees. Notwithstanding any provision to the
contrary herein, a “Change of Control” shall not be deemed to have occurred if
any securities of a Person or any or all of its assets are transferred or
distributed to any of its Affiliates, subsidiaries, parents, stockholders,
members or other interest holders.

“Closing Date” is defined in the preamble.

“Confidential Information” is defined in Section 10.16.

“Contract” means any written or oral: contract; agreement; agreement regarding
indebtedness; indenture; debenture; note, bond or loan; collective bargaining
agreement; mortgage; license agreement; farmin or farmout agreement;
participation, exploration or development agreement; crude oil, condensate or
gas purchase and sale, gathering, processing, transportation or marketing
agreement; operating agreement; balancing agreement; unitization agreement;
facilities or equipment lease; production handling agreement; or other similar
contract, but in each case specifically excluding, however, any Lease,
right-of-way, permit or other instrument (other than acquisition or similar
sales or purchase agreements) creating, evidencing or assigning any interest in
any Asset that constitutes real property or any other property related to or
used or held for use in connection with the operation of any Asset.

 

Annex A

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“COPAS Payment” is defined in Section 3.1(a).

“Dedicated Employees” means the employees listed on Schedule 1-B and includes
any replacements of any Dedicated Employees made in accordance with Section 2.6,
and any Dedicated Employees added pursuant to Section 3.1(b).

“Designated Area” means the following counties in Texas: Atascosa, Austin,
Bastrop, Brazos, Burleson, Colorado, DeWitt, Fayette, Gonzales, Grimes, Karnes,
Lavaca, Lee, Milam, Montgomery, Robertson, Washington, and Wilson.

“Development Plan and Budget” means a development plan and/or budget prepared by
Service Provider and/or Owner, and adopted and approved by Owner. Until such
time as an updated, revised, or replacement Development Plan and Budget is
adopted and approved by Owner, references to the “Development Plan and Budget”
shall be to the Development Plan and Budget attached hereto as Exhibit D;
thereafter, references to the “Development Plan and Budget” shall be to the most
recently adopted and approved Development Plan and Budget, at it may have been
updated or revised with the approval of the Owner.

“Eagleford Transaction Agreement” is defined in the Recitals.

“Emergency” is defined in Section 2.2.

“Excluded Services” is defined in Section 2.1(f).

“Existing Arrangements” means all gathering, processing, fractionation,
transportation, and/or marketing agreements to which Service Provider (or any
Affiliate of Service Provider) or Owner is a party and to which hydrocarbon
production from the Assets is subject.

“Field Facilities and Equipment” is defined in Section 2.1(d).

“Force Majeure Event” means any event not reasonably within the control of the
Party claiming the force majeure, including the following to the extent such
events are not reasonably within the control of the Party claiming the force
majeure: act of God, act of the public enemy, war, blockade, public riot, act of
terrorism, lightning, fire, storm, flood or other act of nature, explosion,
governmental action (including changes in Laws, regulations or policies with the
effect of Law or, in each case, the enforcement thereof), and governmental delay
or restraint (including with respect to the issuance of permits); provided,
however, that a “Force Majeure Event” shall not include lack of financing or
funds.

“GAAP” means United States generally accepted accounting principles.

“Giddings Transaction Agreement” is defined in the Recitals.

“Governmental Authority” means any federal, state, local, municipal, tribal or
other government; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, regulatory or taxing authority
or power; and any court or governmental tribunal, including any tribal authority
having or asserting jurisdiction.

 

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“Hydrocarbons” means oil, gas, condensate and other gaseous and liquid
hydrocarbons or any combination thereof.

“Initial Term” is defined in Section 4.1.

“Key Persons” means the employees listed on Schedule 1-A and includes any
replacements of any Key Persons made in accordance with Section 2.6.

“Laws” means any applicable constitution, decree, resolution, law, statute, act,
ordinance, rule, directive, order, treaty, code or regulation and any injunction
or final non-appealable judgment or any interpretation of the foregoing, as
enacted, issued or promulgated by any Governmental Authority.

“Leases” means the “Leases” (as defined in the Transaction Agreements).

“Liabilities” means any and all (a) claims, including those for property damage,
pollution (including response costs, remediation costs, environmental damage and
damages to natural resources), bodily injury, personal injury, illness, disease,
maintenance, cure, loss of parental or spousal consortium, wrongful death, loss
of support, death, and wrongful termination of employment, and (b) damages,
liabilities, losses, demands, liens, encumbrances, fines, penalties, causes of
action of any kind (including actions in rem or in personam), obligations,
costs, judgments, interest and awards (including payment of attorneys’ fees and
costs of litigation and investigation costs) and amounts, of any kind or
character, (in each case) whether arising in connection with judicial
proceedings, administrative proceedings or otherwise.

“Material HSE Event” means (i) any material violation of any Law relating to
health, safety, or the environment, or any material spill or release of oil or
other hazardous materials that results in Owner or Service Provider incurring a
material remediation obligation, in each case that occurs during the performance
of the Services as a result of the activities of Service Provider or any
contractor retained by Service Provider for the performance of the Services or
(ii) any fatal accident involving any employee of Service Provider or any
contractor retained by Service Provider for the performance of the Services that
occurs during the performance of the Services as a result of the activities of
Service Provider or any contractor retained by Service Provider for the
performance of the Services. For purposes of clause (i) of this definition
“material” means any occurrence that results in fines or liabilities in excess
of $5 million in the aggregate or otherwise materially and adversely affects the
business of the Owner Group in connection with the Assets.

“Monthly Services Fee” is defined in Section 3.1(a).

“Monthly Statement” is defined in Section 3.2(a).

“Non-Compete Agreement” means that certain Non-Compete Agreement, dated as of
July 31, 2018, by and among Parent and EnerVest, Ltd.

“Non-Operated Assets” means those Assets that are not Operated Assets.

“Oil and Gas Interest” means any oil and gas lease or oil, gas and mineral lease
and any interests in such leases (including leasehold interests, royalty and
overriding royalty interests and

 

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production payments), any mineral fee interests and any other mineral or royalty
interests, any wells or future wells located on a Lease, and any oil, gas or
mineral unitization, pooling, operating or communitization Contracts,
declarations or orders, and any interests in the units created thereby.

“Operated Assets” means those Assets that are operated by Owner.

“Operating Agreements” means the joint operating agreements, unit operating
agreements and similar operating agreements burdening or relating to the Assets.

“Owner” is defined in the preamble.

“Owner Group” means Parent, Owner, and each of their respective Subsidiaries.

“Owner Group Costs” is defined in Section 3.3.

“Owner Indemnified Parties” means the Owner and its Affiliates and its and their
contractors and subcontractors (other than Service Provider), and its and their
employees, officers, directors, shareholders, partners, owners, members,
managers, agents and representatives.

“Owner Records and Data” is defined in Section 3.4(a).

“Parent” is defined in the preamble.

“Party” and “Parties” are defined in the preamble.

“Performance Termination” is defined in Section 4.2(c).

“Permitted Encumbrances” means all “Permitted Encumbrances” (as defined in the
Transaction Agreements).

“Person” means any individual, firm, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization,
Governmental Authority or any other entity.

“Reasonable and Prudent Service Provider” is defined in Section 2.10.

“Records” means (i) all “Records” (as defined in the Transaction Agreements) and
all other files, books, records, and accounts in Service Provider’s possession
or to which Service Provider has access in any way relating to the Assets,
including, without limitation, all such files, records, books, and accounts
maintained in computer-sensible form, whether on magnetic tape, disks, or other
storage media, together with the computer software and programs required to
enter, delete, read, manipulate, revise, append, transfer, communicate, and/or
print data therein, and including, without limitation, all title and contract
files, legal files, well files, accounting records, billings, invoices,
statements, receipts, logs, tank tables, daily gauge and run tickets, logs,
seismological sections, correspondence, interpretations, reserve reports and
other reports, and other data, information, and instruments in any way relating
to the Assets; and (ii) all data and information contained in any of the
records, books, accounts, files, and/or materials described above.

 

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“Renewal Term” is defined in Section 4.1.

“Representatives” is defined in Section 10.16(a).

“SEC” means the United States Securities and Exchange Commission.

“Service Provider” is defined in the preamble.

“Service Provider Indemnified Parties” means the Service Provider and its
Affiliates and its and their contractors and subcontractors, and its and their
employees, officers, directors, shareholders, partners, owners, members,
managers, agents and representatives.

“Services” is defined in Section 2.1(a).

“Services Fee” is defined in Section 3.1(a).

“Shared Employees” means the employees occupying the positions and performing
the functions listed on Schedule 1-C and includes any replacements of any Shared
Employees made in accordance with Section 2.6, and any Shared Employees added
pursuant to Section 3.1(b).

“Specified Acquisition” is defined in Section 3.1(b).

“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 (without regard to the occurrence of any
contingency); provided that as long as Parent owns an equity interest in Owner,
Owner shall be a Subsidiary of Parent.

“Surface Contracts” means the “Surface Contracts” (as defined in the Transaction
Agreements).

“Term” is defined in Section 4.1.

“Termination Effective Date” means the date on which this Agreement terminates
in accordance with Section 4.1 or Section 4.2.

“Termination Notice” is defined in Section 4.2(a).

 

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“Third Party” means a Person other than Service Provider and its Affiliates and
any Person in the Owner Group.

“Transaction Agreements” is defined in the Recitals.

“Transition Services Period” is defined in Section 4.4.

 

Annex A