1
EXHIBIT 10.16
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is entered into as of the 1st day of April, 1997, by and
between Continental Natural Gas, Inc., an Oklahoma corporation ("CNG"), and
Bird Creek Resources, Inc., an Oklahoma corporation ("BCR").
RECITALS
A. CNG leases office space (the "Office Facilities") in the 1400
South Boston Building, Fifth Floor, 1412 South Boston, Tulsa, Oklahoma 74119.
CNG also employs various administrative, clerical and accounting personnel in
the operation of its business at the Office Facilities.
B. BCR occupies a portion of the Office Facilities and, from time to
time, CNG advances various expenses and/or provides accounting and/or
administrative services to BCR.
C. CNG and BCR desire to memorialize their agreement with respect to
the use of the Office Facilities and provision of services by CNG to BCR.
STATEMENT OF AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration this date paid by
each party to the other, the receipt and sufficiency of which are acknowledged
by execution of this Agreement, the parties hereto hereby agree as follows:
1. Office Facilities and Services Provided by CNG.
(a) Office Facilities Occupied by BCR. CNG agrees to provide
BCR with space in the Office Facilities as CNG and BCR may mutually
agree from time to time.
(b) Reception Services. CNG shall provide receptionist
services as it deems necessary, in its sole discretion, to the efficient
operation of the Office Facilities.
(c) Maintenance and Remodeling of the Office Facilities. CNG
shall provide all janitorial, heating, electric, telephone and general
maintenance services for the Office Facilities. In no event, however,
shall CNG be required to install equipment or remodel the Office
Facilities to accommodate BCR. No remodeling of the Office Facilities
may be undertaken by BCR without the prior written consent of CNG.
(d) Accounting, Clerical and Administrative Services. CNG
shall provide BCR with accounting, clerical and administrative services
as CNG and BCR shall mutually agree
1
2
from time to time. In addition, CNG may provide liability and casualty
insurance, as well as office and other supplies for BCR's account.
(e) Payment for Office Facilities and Services Provided by
CNG. In return for the use of the Office Facilities and provision of
services to BCR, BCR shall pay CNG the following:
(i) Direct Expenses. An amount equal to all direct
expenses incurred by CNG on BCR's behalf, including but not
limited to, insurance expenses, photocopying charges, telephone
charges, and any and all other charges which CNG can directly
attribute to BCR's account;
(ii) Accounting, Clerical and Administrative Services
Expenses. An allocable portion of all salaries, employee
benefits, employment taxes (including FICA, FUTA and all other
employment related taxes), unemployment and disability insurance
and/or compensation with respect to CNG employees who perform
services for BCR; and
(iii) Overhead Expenses. An allocable portion of all
overhead expenses incurred by CNG for operation of the Office
Facilities, including but not limited to, office supplies, rent
paid by CNG for the Office Facilities, janitorial expense, repair
and maintenance expense, telephone expense, utility expense,
equipment rental, copier lease expense, premises liability
insurance, and any and all other expenses reasonably necessary to
the operation of the Office Facilities by CNG which cannot be
directly attributed to BCR or any other party.
For purposes of this paragraph 1(e), an "allocable portion" shall
mean that portion of such expenses which are attributable to BCR's usage
of the Office Facilities or the services of CNG's employees, as the case
may be.
2. Billing and Payment for Services Rendered by CNG.
(a) Invoices. Invoices for services rendered pursuant to
paragraph 1 above, shall be submitted by CNG to BCR on a monthly basis.
(b) Payment of Invoices. Each such invoice shall become due
and payable no later than the 15th day (the "Due Date") after the day on
which the invoice is submitted by CNG.
(c) Late Charges. In the event that payment is not received
by CNG on or before the Due Date, all unpaid balances shall accrue
interest at the rate of twelve percent (12%) per annum.
2
3
(d) Attorney Fees. In the event any action is brought to
enforce, or for the breach of, the payment provisions of this Agreement,
the prevailing party shall be entitled to recover its costs and
expenses, including a reasonable attorney's fee.
(e) Termination of Agreement. In the event payment is not
timely made pursuant to the terms of this paragraph 2, CNG may suspend
services and terminate this Agreement upon ten (10) days prior written
notice to BCR.
3. Term. This Agreement shall commence as of the date hereof and
shall continue until March 31, 1998; provided, however, the term of this
Agreement shall be automatically renewed month to month thereafter unless
either party shall give written notice to the other not less than thirty (30)
days prior to the expiration of the initial term of this Agreement or any
extension thereof.
4. Destruction by Fire or Other Casualty. Should the Office
Facilities be partially or totally destroyed by fire or other casualty, or
sustain damage to any part thereof such that it is unfit for the purposes
intended in this Agreement, this Agreement shall terminate and neither CNG or
BCR shall be under any further obligation or liability hereunder.
5. Condemnation. Should the Office Facilities be taken, in whole or
in part, by condemnation or other administrative proceeding then, in that
event, this Agreement shall terminate and neither CNG or BCR shall be under any
further obligation or liability hereunder.
6. Miscellaneous.
(a) Benefit. This Agreement shall be binding upon and insure
to the benefit of the parties hereto and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended
to confer upon any other person any rights or remedies under or by
reason of this Agreement.
(b) Construction. Every covenant, term and provisions of this
Agreement shall be construed simply according to its fair meaning and
not strictly for or against any party.
(c) Notice. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered in person, or, whether or not actually received, if deposited
in the United States mail, registered or certified mail, with sufficient
postage prepaid thereon, and addressed as follows:
3
4
If to CNG: Continental Natural Gas, Inc.
1412 S. Boston, Suite 500
Tulsa, Oklahoma 74119
Attn: Garry D. Smith
If to BCR: Bird Creek Resources, Inc.
1412 S. Boston, Suite 500
Tulsa, Oklahoma 74119
Attn: H. Ric Hedges
or to such other address as CNG or BCR may have notified the other in
writing.
(d) Entire Agreement. This Agreement embodies the entire
understanding between the parties hereto and supersedes all prior
agreements and understandings relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties have duly executed this agreement as of
the day and year first above written.
CONTINENTAL NATURAL GAS, INC.
By /s/ GARRY D. SMITH
----------------------------------
Garry D. Smith, Vice President
BIRD CREEK RESOURCES, INC.
By /s/ H. RIC HEDGES
----------------------------------
H. Ric Hedges, President
4