Exhibit 10.3

 

THIRD AMENDED AND RESTATED

 

ADMINISTRATIVE SERVICES AGREEMENT

 

BETWEEN

 

Pacific Coast Energy Company LP

 

AND

 

BREITBURN MANAGEMENT COMPANY, LLC

 

 

 

 

TABLE OF CONTENTS

 

Article I DEFINITIONS 1       Section 1.1 Definitions. 1 Section 1.2
Construction. 5     Article II RETENTION OF BREITBURN MANAGEMENT; SCOPE OF
SERVICES 6       Section 2.1 Retention of BreitBurn Management 6 Section 2.2
Performance of Services 6 Section 2.3 Performance of Services by Affiliates and
Third Parties 6 Section 2.4 Intellectual Property 6 Section 2.5 Appointment of
Independent Accounting Firm and Independent Petroleum Engineer 7     Article III
BOOKS, RECORDS AND REPORTING 7       Section 3.1 Books and Records 7 Section 3.2
Audits 7 Section 3.3 Reports 7     Article IV PAYMENT AMOUNT 7       Section 4.1
Payment Amount 7 Section 4.2 Payment of Payment Amount 8 Section 4.3 Disputed
Charges 8 Section 4.4 Set Off 8 Section 4.5 BreitBurn Management’s Employees 9  
  Article V FORCE MAJEURE 9       Section 5.1 Force Majeure 9     Article VI
ASSIGNMENTS AND SUBCONTRACTS 10       Section 6.1 Assignments 10 Section 6.2
Other Requirements 10     Article VII TERM AND TERMINATION 10       Section 7.1
Term 10 Section 7.2 Termination by PCEC 11 Section 7.3 Termination by BreitBurn
Management 11 Section 7.4 Effect of Termination 12 Section 7.5 Preferential
Right re BreitBurn Management 12 Section 7.6 Exclusivity 12

 

i

 

 

TABLE OF CONTENTS
(continued)

 

Article VIII CONFIDENTIAL INFORMATION 13       Section 8.1 Nondisclosure 13
Section 8.2 Permitted Disclosure 13     Article IX INDEMNIFICATION; waiver of
remedies 13 Section 9.1 Indemnification 13 Section 9.2 Waiver of Remedies 14    
Article X DISPUTE RESOLUTION 14     Article XI TRANSITION SERVICES 14      
Section 11.1 General Transition Services 14 Section 11.2 Access 15 Section 11.3
Employment Offers 15 Section 11.4 Employee Plans and Obligations 16 Section 11.5
Sale of PCEC 16 Section 11.6 Dissolution Agreement. 16     Article XII GENERAL
PROVISIONS 16     Section 12.1 Notices 16 Section 12.2 Further Action 17 Section
12.3 Binding Effect 17 Section 12.4 Integration 18 Section 12.5 Creditors. 18
Section 12.6 Waiver 18 Section 12.7 Counterparts 18 Section 12.8 Applicable Law
18 Section 12.9 Invalidity of Provisions 18 Section 12.10 Amendment or
Restatement 18 Section 12.11 Directly or Indirectly 18 Section 12.12
Non-Solicitation 19 Section 12.13 Prior Services 19

  

ii

 

 

 

THIRD AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT

 

THIS THIRD AMENDED AND RESTATED ADMINISTRATIVE SERVICES AGREEMENT is entered
into on May 8, 2012, but effective as of April 1, 2012 (the “Effective Date”),
by and between Pacific Coast Energy Company LP, a Delaware limited partnership
(“PCEC”), and BreitBurn Management Company, LLC, a Delaware limited liability
company (“BreitBurn Management,” and collectively with PCEC, the “Parties” and
each, a “Party”).

 

RECITALS

 

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

 

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

 

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

 

D.           The parties also wish to provide the PCEC Group with the right to
request of BreitBurn Management certain transitional services.

 

NOW, THEREFORE, PCEC and BreitBurn Management agree as follows:

 

Article I

DEFINITIONS

 

Section 1.1           Definitions.

 

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

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise. As used in this
Agreement, members of the PCEC Group shall not be Affiliates of BBEP or
BreitBurn Management, and BBEP and BreitBurn Management shall not be Affiliates
or members of the PCEC Group.

 

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

 

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

 

“BBEP Change in Control” means a change in ownership or control of BBEP effected
through any of the following:

 

1

 

  

(a)          the sale, transfer or other disposition of all or substantially all
of the assets of BBEP or its Subsidiaries;

 

(b)          the acquisition, directly or indirectly, by any person or related
group of persons of beneficial ownership of more than forty percent (40%) of the
outstanding equity securities or limited partnership interests of BBEP
immediately after the consummation of such transaction or a series of related
transactions, whether such transaction involves a direct issuance from BBEP or
the acquisition of securities from one or more existing partners or owners
(other than an acquisition by Quicksilver Resources Inc. and its Affiliates,
unless it is an acquisition of (1) all or substantially all of the outstanding
securities or interests of BBEP or (2) of a majority of the outstanding
securities or interests of BBEP and Quicksilver has more than two
representatives on the Board of Directors of BBEP or BreitBurn Management); or

 

(c)          both Halbert Washburn and Randall Breitenbach are no longer
employed as CEO and President of BBEP, respectively;

 

provided, however, that in no event will a change in control be deemed to occur
solely due to (i) the reorganization or conversion of an entity to another form
of entity if the holders of the equity securities or ownership interests,
directly or indirectly, remain substantially the same after the reorganization
or conversion, or (ii) action taken by BBEP, including, but not limited to
repurchases of equity securities or limited partnership interests.

 

“Bankrupt” with respect to any Person means such Person shall generally be
unable to pay its debts as such debts become due, or shall so admit in writing
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against such Person seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any Law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), shall remain undismissed or unstayed for a period of
30 days; or such Person shall take any action to authorize any of the actions
set forth above.

 

“BBEP Group” means BreitBurn Management and BBEP and all of their respective
Affiliates and Subsidiaries.

 

“BBEP Group Party” means the BBEP Group and their respective directors,
officers, employees, agents and permitted assigns.

 

“BreitBurn Management Change in Control” means a change in ownership, management
or control of BreitBurn Management effected through any of the following:

 

(a)          the sale, transfer or other disposition of all or substantially all
of the assets of BreitBurn Management, except to an Affiliate of BreitBurn
Management or an entity majority owned by the senior management team (ie CEO,
President, CFO, COO and/or General Counsel) of BreitBurn Management; or

 

(b)          the acquisition, directly or indirectly by any person or related
group of persons of beneficial ownership of more than fifty percent (50%) of
BreitBurn Management’s outstanding securities or membership interests
immediately after the consummation of such transaction or a series of related
transactions, whether such transaction involves a direct issuance from BreitBurn
Management or the acquisition of securities from one or more existing owners; or

 

2

 

  

(c)          both Halbert Washburn and Randall Breitenbach are no longer
employed as CEO and President, respectively, by BreitBurn Management,

 

provided, however, that in no event will a change in control be deemed to occur
solely due to the reorganization or conversion of an entity to another form of
entity if the holders of the securities or ownership interests remain
substantially the same after the reorganization or conversion.

 

“Business” means the acquisition, operation and disposition of oil and gas
producing properties, and related ancillary real estate development, by the PCEC
Group.

 

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

 

“Damages” means all judgments, amounts paid in settlement, liabilities, claims
(whether based on contract, tort, strict liability, other law or otherwise),
damages, fines, penalties, deficiencies, losses and expenses (including
interest, court costs and reasonable fees of attorneys, accountants and other
experts).

 

“Direct Costs” means all costs and expenses of every type, including but not
limited to, labor, materials, and equipment, incurred directly in the operation
of any property owned by PCEC. In the case of properties jointly owned by PCEC
and BBEP, then Direct Costs are costs attributable to the proportionate
ownership interest owned by PCEC.

 

“Dissolution Agreement” means the Dissolution Agreement dated as of May 8, 2012,
among PCEC, BBEP, BMC and the other parties thereto.

 

“Effective Date” is defined in the introductory paragraph.

 

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

 

“Fixed Fee” means (i) for the period beginning on the Effective Date and ending
on August 31, 2014, a monthly fee of Seven Hundred Thousand Dollars ($700,000)
and (ii) for periods from and after September 1, 2014, an amount to be
determined in accordance with Section 4.1(b) and based on the parameters set
forth in Schedule II

.

3

 

 

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

 

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

 

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

 

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

 

“LTIP Costs” means all costs associated with PCEC sponsored long term incentive
plans set forth on Schedule II

 

or subsequently implemented by PCEC.

“Parties” is defined in the introductory paragraph.

 

“Payment Amount” means the Fixed Fee, LTIP Costs, Direct Costs and the Third
Party Costs.

 

“PCEC” means Pacific Coast Energy Company L.P., a Delaware limited partnership
as defined in the introductory paragraph.

 

“PCEC Change in Control” means a change in ownership or control of any of PCEC,
Pacific Coast Energy Holdings LLC or PCEC (GP) effected through any of the
following:

 

(a)          the sale, transfer or other disposition of all or substantially all
of the assets of any of PCEC, Pacific Coast Energy Holdings LLC or PCEC (GP) LLC
to any Person or related group of Persons other than Affiliates of members of
the PCEC Group; or

 

(b)          the acquisition, directly or indirectly, by any Person or related
group of Persons, other than Affiliates of the PCEC Group, of beneficial
ownership of more than forty percent (40%) of the outstanding equity securities
or partnership interests of PCEC immediately after the consummation of such
transaction or a series of related transactions, whether such transaction
involves a direct issuance from PCEC or the acquisition of securities from one
or more existing partners or owners; or

 

(c)          an initial public offering of any member of the PCEC Group, except
for ROYT,

 

provided, however, that in no event will a change in control be deemed to occur
(A) solely due to the reorganization or conversion of an entity to another form
of entity if the holders of the equity securities or ownership interests,
directly or indirectly, remain substantially the same after the reorganization
or conversion or (B) as a result or in connection with an initial public
offering of ROYT or any secondary sales by the unitholders of ROYT.

 

“PCEC Group” means PCEC, Pacific Coast Energy Holdings LLC, PCEC (GP) LLC, PCEC
(LP) LLC and all of their respective Affiliates and Subsidiaries.

 

4

 

  

“PCEC Group Party” means the PCEC Group and their respective directors,
officers, employees, agents and permitted assigns.

 

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

 

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

 

“ROYT” means Pacific Coast Oil Trust, a Delaware statutory trust.

 

“Services” means such services, consistent with past service levels, which PCEC
determines may be reasonable and necessary to operate the Business, including,
without limitation, those general and administrative services necessary or
useful for the conduct of the business of the PCEC Group, including, but not
limited to, operations, geoscience, accounting, corporate development, finance,
land, legal and engineering and those services described on Schedule I hereto.

 

“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) or limited
liability company in which such Person or a Subsidiary of such Person is, at the
date of determination, a limited partner or member of such partnership or
limited liability company, but only if more than 50% of the partnership or
membership interests of such entity (considering all of the partnership or
membership interests of the entity 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, (c) a partnership
(whether general or limited) or limited liability company in which such Person
or a Subsidiary of such Person is, at the date of determination, a general
partner or manager of such partnership or limited liability company, or (d) 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.

 

“Third Party Costs” means costs incurred by BreitBurn Management on behalf of
PCEC with entities or persons other than a PCEC Group Party or a BBEP Group
Party relating specifically to the Business or the assets of PCEC and which can
be separately billed and segregated from costs incurred with respect to the
assets of BBEP, including but not limited to, outside accounting, reserve
engineering and legal costs as well as the third-party costs shown on Schedule
II hereto.

 

Other terms defined herein have the meanings so given them.

 

Section 1.2           Construction.

 

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

 

5

 

  

Article II

RETENTION OF BREITBURN MANAGEMENT; SCOPE OF SERVICES

 

Section 2.1           Retention of BreitBurn Management.

 

PCEC hereby engages BreitBurn Management to perform the Services, and to provide
all personnel and any facilities, goods and equipment necessary to perform the
Services. BreitBurn Management hereby accepts such engagement and agrees to
perform the Services requested by PCEC and to provide facilities, goods,
equipment, and all employees and other personnel as may be reasonable and
necessary to perform the Services. PCEC recognizes that BreitBurn Management is
concurrently providing Services to BBEP. All decisions relating to the
assignment of personnel or the methodology or systems to be utilized in
providing the Services shall be in the reasonable discretion of BreitBurn
Management after consultation with PCEC.

 

Section 2.2           Performance of Services.

 

BreitBurn Management hereby covenants and agrees that the Services will be
performed in accordance with (i) applicable material Governmental Approvals and
Laws and (ii) good and customary industry standards.

 

Section 2.3           Performance of Services by Affiliates and Third Parties.

 

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

 

Section 2.4           Intellectual Property.

 

(a)          Any (i) inventions, whether patentable or not, developed or
invented, or (ii) copyrightable material (and the intangible rights of copyright
therein) developed, by BreitBurn Management, its Affiliates or its or their
employees in connection with the performance of the Services shall: (a) in the
case such intellectual property relates solely to the Services or property owned
exclusively by PCEC, be the property of PCEC and (b) in all other cases be the
property of BreitBurn Management; provided, however, that the PCEC Group shall
be granted an irrevocable, royalty-free, non-exclusive right and license to use
such inventions or material. BreitBurn Management covenants not to, at any time,
make any claim to or attempt to prohibit the PCEC Group from using any process,
technical knowledge, invention, technology or equipment used in respect of the
Business and the assets of the PCEC Group, and acknowledges that all
property-specific (including general reservoir characterization studies)
technical knowledge and processes used in connection with the Business and the
assets of PCEC shall be the property of PCEC. For certainty this covenant in the
foregoing sentence shall survive the termination of this Agreement.

 

(b)          PCEC hereby grants to BreitBurn Management and its Affiliates an
irrevocable, royalty-free, non-exclusive and non-transferable right and license
to use, during the term of this Agreement, any intellectual property provided by
the PCEC Group to BreitBurn Management or its Affiliates, but only to the extent
such use is necessary for the performance of the Services. BreitBurn Management
agrees that it and its Affiliates will utilize such intellectual property solely
in connection with the performance of the Services.

 

6

 

  

Section 2.5           Appointment of Independent Accounting Firm and Independent
Petroleum Engineer.

 

Notwithstanding anything to the contrary in this Agreement, the Parties hereby
recognize and agree that PCEC shall have the exclusive authority to appoint an
independent accounting firm to audit the financial statements of PCEC and to
appoint an independent petroleum engineer to provide reports to PCEC relating to
estimates of reserves for applicable securities Laws and other reporting
purposes. It is understood by the Parties that ROYT shall be responsible for
engaging independent counsel and other advisors to advise ROYT as to compliance
with applicable securities Laws and other reporting requirements.

 

Article III

BOOKS, RECORDS AND REPORTING

 

Section 3.1           Books and Records.

 

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

 

Section 3.2           Audits.

 

PCEC shall have the right, upon reasonable notice, and at all reasonable times
during usual business hours, to audit, examine and make copies of the books and
records referred to in Section 3.1

 

. Such right may be exercised through any agent or employee of the PCEC Group
designated in writing by it or by an independent public accountant, engineer,
attorney or other agent so designated. PCEC shall bear all costs and expenses
incurred in any inspection, examination or audit. BreitBurn Management shall
review and respond in a timely manner to any claims or inquiries made by PCEC
regarding matters revealed by any such inspection, examination or audit.

 

Section 3.3           Reports.

 

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

 

Article IV

PAYMENT AMOUNT

 

Section 4.1           Payment Amount.

 

(a)          PCEC shall pay BreitBurn Management the Fixed Fee monthly. PCEC
shall also reimburse BreitBurn Management monthly for: (a) Third Party Costs,
(b) all LTIP Costs, and (c) all Direct Costs. For certainty there shall be no
duplication in the categories of fees and costs set forth in the foregoing.

 

(b)          For the period beginning September 1, 2014, PCEC and the Board of
Directors of BreitBurn GP, LLC shall meet and determine the Fixed Fee to be paid
by PCEC to BreitBurn Management for the Services to be supplied during the
ensuing two calendar year period pursuant to the provisions of this Section
4.1(b)

 

. On or about January 1, 2014, and biennially thereafter during the Term of this
Agreement, the Board of Directors of BreitBurn GP, LLC and PCEC shall meet to
determine the Fixed Fee to be utilized during the ensuing two calendar year
period. The Parties acknowledge and agree that prior approval of the Conflicts
Committee of the Board of Directors of BreitBurn GP, LLC may be required in
connection with the agreement by BreitBurn Management to the amount of the Fixed
Fee to be determined pursuant to this Section 4.1(b)

.

7

 

  

(c)          Notwithstanding anything to the contrary in this Section, with
respect to the Pre-Existing Equity Plans Obligations as defined pursuant to
Section 5.7 of that certain Purchase Agreement by and among Pro LP Corp., Pro GP
and BreitBurn Energy Partners L.P. dated June 16, 2008 for the purchase and sale
of all the limited liability interests of BreitBurn Management Company (the
“Purchase Agreement”), the PCEC Group shall reimburse BreitBurn Management for
the cost of the portion of the Pre-Existing Plans Obligations allocated to the
PCEC Group pursuant to Section 5.7 of the Purchase Agreement, and BBEP shall
reimburse BreitBurn Management for the cost of the portion of the Pre-Existing
Plans Obligations allocated to BBEP pursuant to Section 5.7 of the Purchase
Agreement. Neither PCEC nor BBEP nor any of their respective affiliates shall be
responsible for the cost of the Pre-Existing Equity Plans Obligations except as
provided in the preceding sentence. BreitBurn Management agrees not to cause
PCEC Group to incur or be responsible for any additional LTIP Costs not
otherwise set forth on or contemplated by Schedule II. Notwithstanding anything
to the contrary herein, the provisions of this Section 4.1(c) shall survive any
termination of this Agreement.

 

Section 4.2           Payment of Payment Amount.

 

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

 

Section 4.3           Disputed Charges.

 

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

 

8

 

  

Section 4.4           Set Off.

 

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

 

Section 4.5           BreitBurn Management’s Employees.

 

PCEC shall not be obligated to pay to BreitBurn Management’s or its Affiliates’
employees directly any compensation, salaries, wages, bonuses, benefits, social
security taxes, workers’ compensation insurance, retirement and insurance
benefits, training and other such expenses; provided, however, that PCEC may, at
its option, compensate employees providing Services hereunder under any PCEC
long-term incentive plan or any equity-based incentive plan or agreement for the
provision of Services hereunder; and provided further, however, that if
BreitBurn Management fails to pay any employee providing Services hereunder,
with the exception of employee claims for amounts owed that BreitBurn Management
disputes in good faith, within 30 days of the date such employee’s payment is
due:

 

(a)          PCEC may (i) pay such employee directly, (ii) employ such employee
directly, (iii) notify BreitBurn Management and begin to pay such employee
directly, or (iv) if such failure to pay affects all or substantially all such
employees, notify BreitBurn Management that this Agreement is terminated and
employ all such employees directly; and

 

(b)          BreitBurn Management shall reimburse PCEC, as the case may be, the
amount PCEC paid to BreitBurn Management for Services provided by any BreitBurn
Management employee that BreitBurn Management did not pay to any such employee.

 

Article V

FORCE MAJEURE

 

Section 5.1           Force Majeure.

 

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

 

9

 

  

Article VI

ASSIGNMENTS AND SUBCONTRACTS

 

Section 6.1           Assignments.

 

(a)          Other than as permitted by Section 11.5, without the prior consent
of BreitBurn Management, none of PCEC or the other members of the PCEC Group may
sell, assign, transfer or convey any of its rights, or delegate any of its
obligations, under this Agreement to any Person.

 

(b)          Without the prior consent of PCEC, BreitBurn Management may not
sell, assign, transfer or convey any of its rights, or delegate any of its
obligations, under this Agreement to any Person, other than the delegation of
performance of Services to an Affiliate of BreitBurn Management or a qualified
third party as permitted by Section 2.3 and the sale, assignment, transfer or
conveyance of its rights hereunder to any such Affiliate.

 

Section 6.2           Other Requirements.

 

Subject to the other provisions hereof:

 

(a)          BreitBurn Management shall exercise commercially reasonable efforts
to obtain the most favorable terms or warranties available from vendors,
suppliers and other third parties, and where appropriate, BreitBurn Management
shall assign such warranties to PCEC.

 

(b)          In rendering the Services, BreitBurn Management shall not
discriminate against any employee or applicant for employment because of race,
creed, color, religion, sex, national origin, age or handicap, and shall comply
with all applicable provisions of Executive Order 11246 of September 24, 1965,
and any successor order thereto. Subject to the above, BreitBurn Management
shall, to the extent practicable, engage employees who reside in or whose
businesses are located in the local area or state where the Services are
performed.

 

(c)          BreitBurn Management agrees to exercise commercially reasonable
efforts to avoid, during the term of this Agreement, employing unauthorized
aliens as defined in the Immigration Reform and Control Act of 1986, or any
successor Law.

 

Article VII

TERM AND TERMINATION

 

Section 7.1           Term.

 

The initial term of this Agreement shall be from the Effective Date through
August 31, 2014; provided, however, that in the absence of written notice
delivered to the other party by either party to this Agreement of the intention
not to continue under the terms of this Agreement, given no later than the day
that is 180 days before August 31, 2014, and each successive anniversary
thereof, and provided that a mutually agreeable Fixed Fee has been determined in
accordance with Section 4.1(b) for the applicable extended term, the term of
this Agreement shall be extended for one additional calendar year until either
or both parties have given notice of their intention to terminate. It is the
intention of this “evergreen” extension clause that each party have at least 180
days notice of the other party’s intention not to continue under this Agreement.

 

10

 

  

Section 7.2           Termination by PCEC.

 

(a)          Upon the occurrence of any of the following events, PCEC may
terminate this Agreement by giving written notice of such termination to
BreitBurn Management:

 

(i)          a PCEC Change in Control;

 

(ii)         a BBEP Change in Control;

 

(iii)        a BreitBurn Management Change in Control; or

 

(iv)         BreitBurn Management’s failure to pay employees providing Services
hereunder within thirty (30) days of the date such employees’ payment is due,
subject to the limitations described in Section 4.5.

 

Any termination under this Section 7.2(a) shall become effective, at the
election of PCEC as set forth in its notice, either: (1) at the end of the
calendar month following the calendar month during which the notice first
described in this Section 7.2(a) is delivered; or (2) if PCEC is not in default
under this Agreement and Transition Services are requested in writing by PCEC
pursuant to this Section 7.2(a) and Article XI , at the end of the monthly
period set forth in the notice requesting such Transition Services, which period
may extend only until the end of the sixth calendar month following the calendar
month during which the notice first described in this Section 7.2(a) is
delivered.

 

(b)          In addition to its rights under Sections 7.1 and 7.2(a) , upon 180
days prior written notice, PCEC may elect to terminate this Agreement effective
as of the end of the 180 day period following the delivery of notice by PCEC
under this paragraph 7.2(b)

.

(c)          In the event that BBEP or BreitBurn Management becomes Bankrupt or
dissolves or commences liquidation or winding-up, this Agreement shall
automatically terminate without notice to BreitBurn Management.

 

(d)          If this Agreement is terminated by PCEC prior to August 31, 2014,
pursuant to (i) Section 7.2(a)(i), (ii) Section 7.2(a)(ii) or Section
7.2(a)(iii) due to the fact that both Halbert Washburn and Randall Breitenbach
are no longer employed as CEO and President of BBEP or BreitBurn Management,
respectively, or (iii) Section 7.2(b) hereof, PCEC shall be obligated to
promptly reimburse BreitBurn Management for its reasonable expenses incurred in
reducing its staffing, including, but not limited to reasonable severance
payments, up to a maximum of the lesser of two times the Fixed Fee in effect at
the date of such termination and $2,000,000.

 

Section 7.3           Termination by BreitBurn Management.

 

(a)          Upon the occurrence of a PCEC Change in Control, BreitBurn
Management may terminate this Agreement by giving written notice of such
termination to PCEC:

 

(b)          Any termination under this Section 7.3(a) shall become effective at
the later to occur of: (1) the end of the calendar month following the calendar
month during which the notice first described in this Section 7.3(a) is
delivered; or (2) if Transition Services are requested in writing by PCEC
pursuant to Article XI , at the end of the monthly period set forth in the
notice requesting such Transition Services, which period may extend only until
the end of the sixth calendar month following the calendar month during which
the notice first described in this Section 7.3(a) is delivered. If this
Agreement is terminated by BreitBurn Management prior to August 31, 2014,
pursuant to Section 7.3(a) hereof, PCEC shall be obligated to promptly reimburse
BreitBurn Management for its reasonable expenses incurred in reducing its
staffing, including, but not limited to reasonable severance payments, up to a
maximum of the lesser of two times the Fixed Fee in effect at the date of such
termination and $2,000,000.

 

11

 

  

(c)          In the event that PCEC becomes Bankrupt or dissolves or commences
liquidation or winding-up, this Agreement shall automatically terminate without
notice to PCEC.

 

Section 7.4           Effect of Termination.

 

If this Agreement is terminated in accordance with Section 7.2 or 7.3 , at the
effective date of termination, all rights and obligations under this Agreement
shall cease except for (a) the rights and obligations under this Section 7.4 and
Articles VIII, IX, X and XI; (b) obligations that expressly survive termination
of this Agreement; (c) liabilities and obligations that have accrued prior to
such termination, including the obligation to pay any amounts that have become
due and payable prior to such termination, and (d) the obligation to pay any
portion of the Payment Amount that has accrued prior to such termination, even
if such portion has not become due and payable at that time.

 

Section 7.5           Preferential Right re BreitBurn Management.

 

In the event that BBEP elects to no longer utilize the services of any
administrative office of BreitBurn Management in the management and operation of
BBEP or if, in conjunction with a BBEP Change in Control, the purchaser of BBEP,
or substantially all of its assets, intends not to utilize substantially all of
the services of BreitBurn Management above the Asset Manager (or equivalent)
level at any administrative office, then PCEC shall have a preferential right to
acquire, for the sum of Ten Dollars, all of the assets of BreitBurn Management
with respect to such office(s), including but not limited to, furniture and
office furnishings, office equipment and computers, software and software
licenses (to the extent transferable), supplies, telephone and communications
equipment, and, at PCEC’s separate election, lease(s) on office and parking
space.

 

Section 7.6           Exclusivity.

 

During the term of this Agreement, BreitBurn Management agrees that it will not
provide any services comparable to those Services provided to PCEC hereunder to
any Person in the oil and gas industry other than to any member of the BBEP
Group or to any other member of the PCEC Group without the prior written consent
of PCEC; provided, however, that in connection with a sale or transfer by any
member of the BBEP Group or the PCEC Group of oil and gas properties or
interests therein to any third party purchaser, BreitBurn Management may,
without any such consent, agree to provide transitional services to such third
party purchaser for a period of up to one year.

 

12

 

  

Article VIII

CONFIDENTIAL INFORMATION

 

Section 8.1           Nondisclosure.

 

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

 

Section 8.2           Permitted Disclosure.

 

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

 

Article IX

INDEMNIFICATION; waiver of remedies

 

Section 9.1           Indemnification.

 

(a)          BreitBurn Management shall indemnify, defend and hold harmless each
of the PCEC Group Parties from and against all Damages of any kind or nature, of
third parties unrelated to any PCEC Group Party, to the extent that it is found
by a final and binding order of a court of competent jurisdiction that such
Damages were caused by the gross negligence or willful misconduct of BreitBurn
Management in its performance of the Services hereunder.

 

(b)          From and after the Effective Date and except for those matters for
which BreitBurn Management has indemnity obligations pursuant to Section 9.1(a)
, PCEC shall indemnify, defend and hold harmless each BBEP Group Party from and
against all Damages of any kind or nature whatsoever, arising from or related to
(i) PCEC’s breach of its obligations under this Agreement, (ii) PCEC’s
misrepresentation herein or in any notice or confirmation provided to BreitBurn
Management hereunder, (iii) the Business, (iv) any action, suit, claim or
proceeding brought by, against, on behalf of, or with respect to ROYT or any
unitholder thereof, or (v) any act or omission of BreitBurn Management in the
performance of the Services, including the negligence (whether sole, active,
passive or concurrent) or other legal fault of any BBEP Group Party.

 

(c)          To the fullest extent permitted by Law, expenses (including court
costs and reasonable legal fees) incurred by a BBEP Group Party in defending any
claim, demand, action, suit or proceeding against such BBEP Group Party for
which such BBEP Group Party may be entitled to indemnification pursuant to
Section 9.1(b) shall, if such BBEP Group Party so requests, be advanced by PCEC
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by PCEC of an undertaking by or on behalf of such BBEP Group Party
to repay such amount if it shall be finally determined that such BBEP Group
Party is not entitled to be indemnified by PCEC pursuant to Section 9.1(b).

 

13

 

  

Section 9.2           Waiver of Remedies.

 

NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NO BBEP GROUP PARTY
OR PCEC GROUP PARTY SHALL BE LIABLE TO ANY PCEC GROUP PARTY OR BBEP GROUP PARTY
FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES,
OR LOST PROFITS, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR
OTHERWISE AND WHETHER OR NOT ARISING FROM THE SOLE, JOINT OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF ANY BBEP GROUP PARTY OR PCEC
GROUP PARTY.

 

Article X

DISPUTE RESOLUTION

 

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

 

Article XI

TRANSITION SERVICES

 

Section 11.1         General Transition Services.

 

In the event that this Agreement is terminated by the giving of notice pursuant
to Section 7.1 or in the event that PCEC makes an election pursuant to Section
7.2(a) or 7.3(a) , then for so long as PCEC is not in default under this
Agreement, PCEC shall have the right to receive from BreitBurn Management
commercially reasonable transitional services (the “Transition Services”) in
addition to Services under this Agreement. Such Transition Services shall
provide for the orderly, efficient and timely transition to PCEC of the
responsibility for the administrative services previously provided by BreitBurn
Management hereunder. Such Transition Services shall be provided for the
applicable Payment Amount otherwise attributable to the period in question
without any increase in the Fixed Fee. The Transition Services shall, if
requested by PCEC in accordance with Article VII and for so long as PCEC is not
in default under this Agreement, be provided for up to a six (6) month period
(the “Transition Period”). Transition Services shall at the request of PCEC
include, without limitation, the following:

 

14

 

 

(a)          Subject to confidentiality provisions and other third party
restrictions, BreitBurn Management shall use commercially reasonable efforts to
segregate all books, records and data that relate to Business or the assets of
the PCEC Group and provide the PCEC Group with a listing of all such books,
records and data. BreitBurn Management shall take all such steps, including
using reasonable commercial efforts to obtain any applicable approvals,
consents, or waivers, as are necessary or appropriate to transfer such books,
records and data to the PCEC Group.

 

(b)          BreitBurn Management shall take all necessary or appropriate steps
to transfer and to transition to the PCEC Group the information, knowledge and
systems data relating to the Services currently provided by PCEC under this
Agreement, including without limitation, banking arrangements, taxation matters,
lease, land, conveyancing and real estate administration matters, treasury
matters, insurance coverage matters, information systems matters, human resource
matters, marketing matters, operations, development, exploration and geological
and geophysical matters, and accounting and audit matters.

 

(c)          BreitBurn Management shall use commercially reasonable efforts to
obtain any applicable approvals, consents or waivers, to transfer all contracts
applicable to the Business and the assets of the PCEC Group.

 

(d)          Subject to confidentiality provisions and other third party
restrictions, BreitBurn Management shall use commercially reasonable efforts to
obtain any applicable consents, approvals or waivers, in order to transfer all
data for all systems relating to the Business and the assets of the PCEC Group.
The PCEC Group shall be entitled to use BreitBurn Management systems, software
and hardware until such time as such data is transferred to the PCEC Group and
the PCEC Group systems are fully functional. To the extent software systems can
be duplicated at no cost to BreitBurn Management a copy shall be provided to
PCEC, and to the extent software systems relate solely to the assets of the PCEC
Group, they shall be transferred to PCEC.

 

(e)          Subject to confidentiality provisions and other third party
restrictions, BreitBurn Management shall use commercially reasonable efforts to
obtain any applicable consents, appraisals or waivers, to transfer all technical
data and knowledge, studies, reports, working papers, logs and interpretations
related to the Business or the assets of the PCEC Group to the PCEC Group.

 

Section 11.2         Access.

 

The PCEC Group shall be entitled to have, upon reasonable advance notice to
BreitBurn Management, reasonable access to BreitBurn Management and its staff
during any period during which Transition Services are being provided. The PCEC
Group shall also during the Transition Period have, upon reasonable advance
notice, reasonable access to all books, records, data, systems relating
primarily to the Business and the assets of the PCEC Group. The PCEC Group shall
be permitted to have employees or representatives in each of the areas of the
services being provided attend at the offices of BreitBurn Management during
normal business hours during the Transition Period and BreitBurn Management
shall provide such persons with reasonable working areas comparable with
BreitBurn Management employees.

 

Section 11.3         Employment Offers.

 

The PCEC Group shall be entitled before or during the Transition Period to offer
employment or service contracts to those employees of BreitBurn Management who
are field workers or officed exclusively at PCEC field offices. BreitBurn
Management agrees to use commercially reasonable efforts to assist the PCEC
Group in obtaining the transfer of the employment of such personnel to the PCEC
Group. BreitBurn Management and the PCEC Group agree to meet and discuss whether
it would be appropriate for other employees of BreitBurn Management who spend a
material amount of time on PCEC Group matters to transfer their employment to
the PCEC Group at the end of the Transition Period.

 

15

 

  

Section 11.4         Employee Plans and Obligations.

 

Each of BreitBurn Management and PCEC will use commercially reasonable efforts,
(including using commercially reasonable efforts to cause its Affiliates to take
necessary or appropriate steps and commercially reasonable efforts to obtain
applicable consents, approvals and waivers) to segregate any employee plans and
the obligations thereunder such that the PCEC Group will only have liability
under the employee plans relating to it.

 

Section 11.5         Sale of PCEC.

 

BreitBurn Management acknowledges that the PCEC Group may sell all or any
portion of PCEC, or all or a portion of its assets and therefore the PCEC Group
shall be entitled to assign the rights it has to obtain the Transition Services
hereunder to any purchaser of the PCEC Group, any part thereof, or any of its
assets.

 

Section 11.6         Dissolution Agreement.

 

PCEC shall perform its obligations as set forth in the Dissolution Agreement.

 

Article XII

GENERAL PROVISIONS

 

Section 12.1         Notices.

 

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

 

  if to PCEC:       BreitBurn Energy Company L.P.   515 South Flower Street,
Suite 4800   Los Angeles, CA 90071   Attention: Randall H. Breitenbach   Fax:
(213) 225-5917      

16

 

  

  With copies to:       Metalmark Capital Holdings LLC   1177 Avenue of the
Americas, 40th Floor   New York, New York 10036   Attention: Gregory Myers  
Facsimile: (212) 823-1949       and       Greenhill Capital Partners, LLC   300
Park Avenue   New York, New York 10022   Attention: V. Frank Pottow   Facsimile:
(212) 389-1715       and       Davis Polk & Wardwell   450 Lexington Avenue  
New York, New York 10017   Attention: John A. Bick   Facsimile: (212) 450-3800  
    if to BreitBurn Management:       BreitBurn Management Company, LLC   515
South Flower Street, Suite 4800   Los Angeles, California 90071   Attention:
Halbert S. Washburn   Facsimile: (213) 225-5917       and       Vinson & Elkins
  666 Fifth Avenue   New York, New York 10103   Attention: Alan P. Baden    
Shelley A. Barber   Facsimile: (917) 849-5337     (917) 849-5353

  

Section 12.2         Further Action.

 

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

 

Section 12.3         Binding Effect.

 

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

 

17

 

  

Section 12.4         Integration.

 

This Agreement and the Dissolution Agreement constitute the entire agreement
among the Parties hereto pertaining to the subject matter hereof and supersede
all prior agreements and understandings pertaining thereto.

 

Section 12.5         Creditors.

 

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

 

Section 12.6         Waiver.

 

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

 

Section 12.7         Counterparts.

 

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

 

Section 12.8         Applicable Law.

 

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

 

Section 12.9         Invalidity of Provisions.

 

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

 

Section 12.10         Amendment or Restatement.

 

This Agreement may be amended or restated only by a written instrument executed
by each of the Parties; provided, however, that BreitBurn Management may not,
without the prior approval of the Conflicts Committee of BreitBurn GP, LLC,
agree to any amendment or modification of this Agreement that the Conflicts
Committee determines will adversely affect the holders of common units
representing limited partner interests in BBEP.

 

Section 12.11         Directly or Indirectly.

 

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

 

18

 

 

Section 12.12         Non-Solicitation.

 

Without prejudice to the rights of PCEC pursuant to Section 11.3, during the
period beginning on the Effective Date and ending on the date on which either
Party delivers a written notice of termination pursuant to Section 7.1, Section
7.2 or Section 7.3 hereof, PCEC shall not (and shall cause each member of the
PCEC Group not to), directly or indirectly, employ or solicit for employment any
employee of BreitBurn Management; provided that the preceding prohibition of
employment and solicitation (i) shall not apply to any general solicitation (or
any employment as a result of any general solicitation) that consists of
advertising in a newspaper, periodical or internet website of general
circulation and (ii) shall in no event apply in any respect to the solicitation
for employment (or any employment as a result of such solicitation) of Randall
Breitenbach.

 

Section 12.13         Prior Services.

 

Nothing in this Agreement is intended to change, affect or supersede the
provisions of the prior Administrative Services Agreement amended hereby as it
relates to periods prior to the Effective Date and the parties each remain
responsible for all obligations, costs, liabilities and benefits provided for
under that prior agreement through the Effective Date of this Third Amended and
Restated Agreement (and for such extended periods as may have been provided for
thereunder, as applicable).

 

19

 

 

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

 

  PACIFIC COAST ENERGY COMPANY LP       By: PCEC (GP), its General Partner      
By: /s/ Randall H. Breitenbach   Name: Randall H. Breitenbach   Title:     Chief
Executive Officer       Breitburn MANAGEMENT COMPANY, LLC       By: BreitBurn
Energy Partners L.P., its sole member       By: BreitBurn GP, LLC       By: /s/
Halbert S. Washburn   Name: Halbert S. Washburn   Title:     Chief Executive
Officer

 

Third Amended and Restated Administrative Services Agreement

Signature Page

  

20

 

 

Schedule I

SERVICES PROVIDED BY BREITBURN MANAGEMENT TO PCEC

 

1.          Accounting

 

2.          Information Technology

 

3.          Real Property

 

4.          Legal

 

5.          Operations/Reservoir Engineering/Geology/Geophysics

 

6.          Administrative Services

 

7.          Financial Services

 

8.          Insurance Service

 

9.          Risk Management

 

10.         Corporate Development

 

11.         Commercial and Marketing

 

12.         Treasury

 

13.         Tax

 

14.         Audit

 

15.         SOX

 

16.         Investor Relations

 

17.         EH & S

 

18.         HR

 

19.         Regulatory Compliance

 

20.         Land Administration

 

21

 

 

Approval Levels

 

Other than pursuant to commitments set forth in PCEC’s annual budget of capital
expenditures, operating expenses and general and administrative expenses as
supplemented by forecast updates thereto, BreitBurn Management shall not cause
PCEC to directly or indirectly do any of the following without the prior
approval of a designated representative of Pacific Coast Energy Holdings LLC:
(i) sell, pledge, dispose of or encumber any assets, except in the ordinary
course of business, for a consideration in excess of $500,000 in aggregate or
incur any capital expenditure for the period following the date hereof in excess
of $250,000 individually or $1,000,000 in aggregate, or except for the sale of
petroleum substances in the ordinary course of business and consistent with
PCEC’s current marketing practices; (ii) acquire by merger, amalgamation,
consolidation or acquisition of shares or assets, any corporation, partnership
or other business organization or division thereof, or, except for investments
in securities for hedging purposes made in the ordinary course of business, make
any investment either by purchase of shares or securities, contributions of
capital, property transfer, or, except in the ordinary course of business,
purchase of any property or assets of any other individual or entity; (iii)
enter into any material joint venture, farm-out or other partnering arrangement;
(iv) except for draws in the ordinary course of business under any existing and
approved credit facility, incur any indebtedness for borrowed money or any other
material liability or obligation or issue any debt securities or assume,
guarantee, endorse or otherwise as an accommodation become responsible for, the
obligations of any other individual or entity, or make any loans or advances;
(v) pay, discharge or satisfy any material claims, liabilities or obligations
other than the payment, discharge or satisfaction in the ordinary course of
business, consistent with past practice, of liabilities reflected or reserved
against in its financial statements or incurred in the ordinary course of
business consistent with past practice; (vi) authorize, recommend or propose any
release or relinquishment of any material contract right; (vii) waive, release,
grant or transfer any rights of material value or modify or a change in any
material respect any existing license, lease, contract, production sharing
agreement, government land concession, development plan or other document;
(viii) enter into or terminate any interest rate swaps, currency swaps, hedges
or any other rate fixing agreement for a financial transaction or enter into any
hedge, put or call arrangement of any sort or any forward sale agreement for
commodities; (ix) authorize any of the foregoing, or enter into or modify any
contract, agreement, commitment or arrangement to do any of the foregoing,
except as permitted above.

 

22

 

 

Schedule II

PCEC COST BILLING AND SHARING

 

Direct Costs – all costs and expenses of every type, including but not limited
to, labor, materials, and equipment, incurred directly in the operation of any
property owned by PCEC will be directly charged to PCEC. In the case of
properties jointly owned by PCEC and BBEP, then Direct Costs are costs
attributable to the proportionate ownership interest owned by PCEC. These costs
include, but are not necessarily limited to:

 

·All lease operating expenses, fuel costs, utilities, chemicals, equipment
costs, and the costs of all outside vendors and contractors for supplies,
equipment and work performed in, or directly for the benefit of, the field.

 

·All salaries, benefits, recruiting costs and short term incentive payments
attributable to individuals working directly on PCEC Business or properties.

 

·All costs associated with drilling, reworking, completing, maintaining and
operating all producing and injection wells.

 

·All abandonment and remediation/environmental costs incurred with respect to
the field.

 

·Liability and property insurance costs are allocated to each property based
upon the risk allocation provided by the broker and underwriters.

 

·All direct costs associated with North Hills LLC or other real estate owned by
PCEC.

 

·All costs associated with the insurance provided by PCEC pursuant to Section
8(f) of the Dissolution Agreement.

 

·The same standards apply to direct billing of charges to BBEP.

 

LTIP Costs – all costs associated with PCEC sponsored long term incentive plans
or other employee incentive plans, including equity-based plans or agreements
will be directly charged to PCEC.

 

·Provided below are two lists showing all LTIP or equity plans currently
sponsored in whole or in part by PCEC:

 

·It is the understanding of the parties that at the closing of the pending
acquisition of ownership interests in PCEC from Provident, the following plans
and/or awards will be fully paid out pursuant to the change in control
provisions applicable to such plans:

 

23

 

  

        ALLOCATED           LIABILITY   EQUITY PLAN   LIABLE PARTY   PERCENTAGE
              BreitBurn Energy Company L.P. 2007 Long-Term Incentive Plan –
Performance and Restricted Awards   PCEC   100 %             BreitBurn Energy
Company L.P. Unit Appreciation Plan for Officers and Key Individuals—all Unit
Appreciation Rights tied to the net asset value of PCEC (per Article II of the
applicable Amended and Restated Award Agreements under such plan)   PCEC   100 %
            BreitBurn Energy Company L.P. Unit Appreciation Plan for Officers
and Key Individuals—all Unit Appreciation Rights with an exercise price based on
the original price per unit in the Partnerships initial public offering (per
Article IV of the applicable Amended and Restated Award Agreements under such
plan)   PCEC   100 %             PCEC Director Grants – Grant Billing & Randy
Findlay   PCEC   100 %             BreitBurn Energy Company L.P. Unit
Appreciation Plan – Profits Interest Agreements dated October 1, 2007 with
Mssrs. Jackson, Andress, Brown, Jackson Washburn and Gregory Moroney; All of
these interests will be converted to Class A shares in PCEC except Moroney to be
paid in cash   PCEC   100 %

·After the closing of the pending acquisition of ownership interests in PCEC
from Provident, the only remaining historical LTIP or equity plans sponsored by
PCEC are shown below. PCEC will be charged its proportionate share of the costs
of these plans as they are paid out. The parties agree that no further awards
shall be made to any plan participants under these plans.

 

24

 

  

EQUITY PLAN   LIABLE PARTY   ALLOCATED
LIABILITY
PERCENTAGE               BreitBurn Energy Company L.P. Long Term   BBEP   36 %
Incentive Plan (as amended on June 28, 2006)—all awards granted in 2006   PCEC  
64 %             BreitBurn Energy Company L.P. Long Term   PCEC   100 %
Incentive Plan (as amended on June 28, 2006)—all awards granted in 2007        
              BreitBurn Energy Company L.P. Unit   BBEP   48.9 % Appreciation
Plan for Employees and Consultants   PCEC   51.1 %

 

·Any new LTIP plan established by PCEC will be administered by BreitBurn
Management and will be charged directly to PCEC.

 

·PCEC will not be responsible for the costs of LTIP Plans sponsored by BBEP,
including the costs of RPU’s and CPU’s denominated to be paid in BBEP units.

 

Third-Party Costs - costs incurred by BreitBurn Management on behalf of PCEC
with entities or persons other than a PCEC Group Party or a BBEP Group Party
relating solely to the Business or the assets of PCEC and which are separately
billed and segregated from costs incurred with respect to the assets of BBEP,
including but not limited to, the third-party costs shown below, will be billed
directly to PCEC.

 

·Outside accounting, auditing, tax and SOX compliance fees and costs.

 

·Outside reserve and other engineering fees and costs.

 

·Outside legal fees and costs.

 

·Outside risk management costs.

 

·Consultant and independent contractor fees and costs.

 

·All fees and costs associated with a PCEC acquisition or divestiture.

 

·Costs incurred by North Hills LLC or in conjunction with other PCEC owned real
estate.

 

·The same standards apply to direct billing of third-party costs to BBEP.

 

25

 

 

 

Fixed Fee - a monthly fee of Seven Hundred Thousand Dollars ($700,000) for the
performance of the Services through August 31, 2014 as adjusted for the period
after August 31, 2014 pursuant to Section 4.1(b)

 

and based on the parameters set forth below.

·The Fixed Fee will reimburse BreitBurn Management an allocated portion of all
general and administrative costs incurred by BreitBurn Management for salaries,
overhead and other costs utilized in the operation of both BBEP and PCEC and
their properties. These costs (“Fixed Fee Costs”) include all general and
administrative costs incurred by BreitBurn Management at or above the Asset
Manager level (or its equivalent) including but not limited to:

 

oSalaries, recruitment costs, benefits and related human resources expenses
related to employees and contract labor who perform support Services for both
BBEP and PCEC generally in the areas of: management; accounting, tax and
internal audit; legal; finance; information technology; environmental, health
and safety; engineering; geotechnical; business development; risk management;
land and real estate; human resources; treasury; and office support.

 

oOffice rent, supplies, equipment rentals and leases, expensed computer and
information technology costs and telephone charges.

 

oComputer and information technology equipment, office furnishings, and other
capital costs, charged annually on the basis of a reasonable amortization
schedule.

 

oLegal and other professional costs.

 

oDues and publications, postage, charitable gifts and delivery costs.

 

oAutomobiles.

 

oTravel and entertainment.

 

oInsurance not directly charged to fields, including Director’s and Officer’s
liability insurance. Insurance is charged to BBEP and PCEC based on the risk
allocation provided by the broker and underwriters. For the avoidance of doubt,
the “Fixed Fee Costs” do not include any costs associated with the insurance
provided by PCEC pursuant to Section 8(f) of the Dissolution Agreement.

 

oNone of the above expenses shall be duplicative of Direct Costs, LTIP Costs or
Third-Party Costs. The costs covered by the Fixed Fee shall exclude all such
costs.

 

26