Exhibit 10.9
CONTRIBUTION AGREEMENT
BETWEEN
UNION OIL COMPANY OF CALIFORNIA
AND
MATADOR PETROLEUM CORPORATION
January 20, 1998
CONTRIBUTION AGREEMENT
This Contribution Agreement (this "Agreement") is entered into as of the 20th
day of January, 1998, between UNION OIL COMPANY OF CALIFORNIA, a California
corporation whose address is 00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxx, XX 00000
(herein referred to as "Unocal") and MATADOR PETROLEUM CORPORATION (formerly
named Matador Hold Co.), a Texas corporation, whose address is 0000 Xxxxxx
Xxxx, Xxxxx 000, Xxxxxx, XX 00000-0000 (herein referred to as "Matador").
1. TRANSFER: For and in consideration of the mutual benefits to be derived
herefrom, and subject to the terms and conditions hereinafter set forth,
Unocal hereby transfers, assigns, conveys and delivers to Matador the
following:
(a) Unocal's leasehold interest in the oil, gas and other mineral leases
described in Exhibit "A" insofar as same cover and affect the lands
described in Exhibit "A";
(b) the xxxxx, equipment and facilities permanently located on the lands
described in Exhibit "A", including, but not limited to, pumps,
surface and subsurface well equipment, gas plants, saltwater
disposal xxxxx, lines and facilities, sulfur recovery facilities,
compressors, compressor stations, dehydration facilities, treating
facilities, gathering lines, flow lines, valves, meters, separators,
tanks, tank batteries and other fixtures;
(c) the oil, condensate and natural gas liquids produced after the
Effective Date (as defined in Section 2 of this Agreement),
including line fill below the pipeline connections as of the
Effective Date, attributable to the leasehold interests described in
Exhibit "A";
(d) all personal property, warehouse stock and idle equipment pertaining
to the properties described on Exhibit "A";
(e) all contracts and agreements concerning the properties described in
Exhibit "A", including, but not limited to, unit agreements, pooling
agreements, areas of mutual interest agreements, farmout agreements,
farm-in agreements, saltwater disposal agreements, water injection
agreements, water rights agreements, surface use agreements, line
well injection agreements, road use agreements, drilling contracts,
seismic agreements, operating agreements, well service contracts,
production sales contracts, gas contracts, gas balancing agreements,
storage or warehouse agreements, supplier contracts, service
contracts, construction agreements, division orders and transfer
orders, insofar as and only insofar as they relate to the interests
and properties described in Exhibit "A" ("Existing Contracts");
(f) authorizations, permits, and similar rights and interests applicable
to, or used in connection with, any or all of the interests and
properties described in Exhibits "A"; and
(g) all files, compilations, reports, seismic data, logs, records,
information and data relating to the properties described in Exhibit
"A", including, without limitation: (i) land and title records
(including abstracts of title, title opinions, and title curative
documents), (ii)
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contract files, (iii) correspondence, (iv) operations,
environmental, production and accounting records, (v) facility and
well records and (vi) geological, geophysical, engineering and other
scientific and technical data and information, including seismic
lines, maps and interpretations, relating to the properties
described on Exhibit "A", provided, however, that Unocal shall not
be required to assign to Matador any interest in items (i) through
(vi) above, if such an assignment, in Unocal's sole determination,
is precluded by existing contractual obligations, such as
confidentiality agreements, which restrict such assignment. To the
extent that any such items are precluded from assignment, Unocal
shall provide reasonable access to such items to Matador or its
agents, to the full extent such access is available under the terms
of any contracts or other agreements restricting an assignment to
Matador hereunder.
(h) all other real and personal property interests of Unocal regarding
property located in Xxx, Xxxx or Xxxxxx Counties, New Mexico.
All of the property and contract rights, titles and interests described
above are hereinafter collectively called the "SENM Properties." It is the
intention of the parties that Unocal convey to Matador all of its property
interests, both real and personal, in Xxx, Xxxx and Xxxxxx Counties, New
Mexico, whether or not specifically set forth on Exhibit "A" or delineated
above; provided that the interests described in this Section 1, the
interests transferred under this Agreement and the term "SENM Properties"
only includes interests owned by Unocal or an affiliate of Unocal as of
the Effective Date before the consummation of this Agreement.
2. CLOSING AND EFFECTIVE DATE. The Effective Date of the Transfer will be
7:00 a.m. on October 1, 1997, (the "Effective Date") with closing to occur
contemporaneously with the execution of this Agreement (the "Closing
Date"). Unocal shall be entitled to all amounts realized from, and
accruing to, the SENM Properties prior to the Effective Date, including
the right to all production in storage, processing and inventory, and
shall be responsible for all expenses for the development and operation of
the SENM Properties prior to the Effective Date, and Matador shall be
entitled to all amounts realized from, and accruing to, the SENM
Properties subsequent to the Effective Date, and shall be responsible for
all expenses for the development and operation of the SENM Properties
subsequent to the Effective Date. It is understood and agreed, however,
that any amounts attributable to suspense accounts or other revenues not
properly credited to the account of Unocal due to accounting errors, title
discrepancies, improperly calculated royalties, oil or gas marketing and
sales adjustments, refunds, improperly calculated interests or other
discrepancies attributable to periods prior to the Effective Date that are
disclosed and collected by or through the efforts of Matador, shall belong
to, and are hereby assigned to, Matador. At Unocal's request, Matador
shall provide documentation to demonstrate the efforts made to collect any
amount that Matador claims an entitlement to pursuant to this paragraph.
The parties agree that Matador shall have the burden to demonstrate that
monies attributable to the period prior to the Effective Date are
collected by and through its own efforts.
3. EXISTING OBLIGATIONS
The SENM Properties will be conveyed subject to any and all Existing
Contracts and all other agreements contained in Unocal's files and
disclosed to Matador ("Other Agreements"), or filed for record in the
records of the Xxx, Xxxx or Xxxxxx County Clerk's office, the New Mexico
Oil Conservation Division or the Bureau of Land Management for the SENM
Properties, or otherwise
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actually known to Matador prior to Closing. To the extent of the interest
acquired by Matador hereunder, Matador agrees to and shall assume and be
responsible for all obligations of Unocal under such Existing Contracts
and Other Agreements as of the Effective Date.
4. ADJUSTMENTS
(a) Oil, gas and other production from or attributable to the SENM
Properties which was produced prior to the Effective Date and
proceeds from the sale thereof shall belong to Unocal.
(b) Matador will assume all responsibility for notifying the buyer(s) of
production of the change of ownership. The parties shall execute
such letters in-lieu of transfer orders or such other documents as
may be reasonably required by any purchaser of production. Within
one hundred twenty (120) days after closing, Matador and Unocal will
effect a cash adjustment to account for (1) any production prior to
the Effective Date the proceeds from which are reserved to Unocal;
(2) any payments received by Unocal for production which was
produced after the Effective Date the proceeds from which are due to
Matador; (3) costs, expenses, charges, and credits relating to
operations of the SENM Properties incurred and paid by Unocal
between the Effective Date and the Closing for which Matador should
reimburse Unocal; (4) any costs and expenses for operations incurred
prior to the Effective Date attributable to the SENM Properties
which have not been paid by Unocal as of the Closing Date for which
Unocal should be responsible; and (5) such other adjustments
(including prepayments) as may be agreed upon by the parties hereto.
5. WARRANTY: Unocal agrees to convey the SENM Properties without any warranty
whatsoever, express or implied, as to description, contractual
obligations, title, condition, fitness for purpose, merchantability,
completeness or otherwise, but with full substitution and subrogation of
Unocal, and all persons claiming by, through and under Unocal, to the
extent assignable, in and to all covenants and warranties of Unocal's
predecessors in title and with full subrogation of all rights accruing
under the applicable statutes of limitation or prescription under the laws
of the state where the assets are located and all rights of actions of
warranty against all former owners of the SENM Properties.
6. INDEMNIFICATION:
(a) Matador agrees to assume any and all responsibility which Unocal may
have under applicable governmental laws, rules and regulations
concerning the plugging and abandonment of xxxxx which are part of,
or located on, the SENM Properties, and agrees to defend, indemnify
and hold Unocal harmless from any and all liabilities arising from
Matador's failure, or alleged failure, to properly plug and abandon
such xxxxx from and after the Closing Date.
(b) From and after the Closing Date, Matador agrees to assume all
responsibility and liability related to the environmental condition
of the SENM Properties arising from events or occurrences occurring
after the Closing Date and agrees to defend, indemnify and hold
Unocal harmless from any and all claims arising from the presence of
NORM, asbestos and any other environmental contaminants which may be
deposited or released on the SENM Properties after the Closing Date.
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(c) In addition to provisions (a) and (b) above, Matador agrees to
indemnify and hold harmless Unocal from and against all losses,
costs, claims, demands, suits, fees, liability and expense with
respect to the SENM Properties which arise out of or relate to
Matador's ownership and/or operation of such properties, or which in
any manner relates to the condition of the premises and equipment
with regard to any event or occurrence occurring after the Closing
Date.
(d) For a period of three years after the Closing Date, Unocal agrees to
retain all responsibility and liability related to any material
adverse environmental condition on or arising from, or any violation
of environmental laws related to, the SENM Properties that existed
or occurred on or prior to the Closing Date, and agrees to defend,
indemnify and hold Matador, its officers, directors, agents,
employees and affiliated companies, harmless from any and all
claims, losses, damages, fines, penalties, expenses (including, but
not limited to, reasonable attorneys' fees) and costs (collectively,
"Damages") arising therefrom or related thereto. For purposes of
this paragraph, "material adverse environmental condition" shall
mean only those environmental conditions for which (i) remediation
is required, or a fine, penalty, claim, damage, loss, cost or
expense is payable, under applicable law, rules, regulations or
governmental agency action or third- party actions or claims, (ii)
Damages from such condition exceed $10,000 and (iii) the aggregate
of all Damages (including, but not limited to, costs to remediate)
for which indemnity claimed during the three-year period immediately
following the Closing Date exceeds $100,000. For purposes of this
paragraph, "environmental laws" means all laws, rules, regulations,
pronouncements, policies and similar items of any governmental body,
agency or subdivision that deal with the protection of the
environment or the release of contaminants or regulated substances
into the environment. Matador shall notify Unocal, in writing,of any
remedial efforts for which Matador seeks indemnification from Unocal
under this Section and the parties shall mutually agree upon a plan
for remediation; provided, however, that no failure by Matador to
give notice pursuant to this Section will relieve Unocal of any
liability under this Section, except to the extent that such failure
has a material adverse effect on Unocal's liability under this
Section.
(e) In addition to provision (d) above, Unocal agrees to defend,
indemnify and hold harmless Matador and its affiliated companies,
and its and their officers, directors, agents, and employees, from
and against all losses, costs, claims, demands, suits, fees,
liability and expense with respect to the SENM Properties which
arise out of or relate to (i) Unocal's ownership and/or operation of
such SENM Properties, or which in any manner relates to the
condition of the SENM Properties and equipment with regard to any
event or occurrence occurring or arising prior to the Closing Date,
(ii) any instrument, contract or other agreement not disclosed to
Matador or filed of record or (iii) any lien, claim or encumbrance
other than those usual and customary permitted encumbrances in
transactions of this type, the net cumulative effect of which do not
operate to reduce the net revenue interest with respect to any
property set forth in Exhibit "A" by more than a proportionately
reduced 5% or to increase the costs and expenses relating to the
operations and development of any Property by more than a
proportionately reduced 5% of the working interest indicated on
Exhibit "A".
(f) Matador further covenants and agrees to defend any suits brought
against Unocal based upon any claim for which Matador has agreed to
provide indemnification under this Section 6, and to pay any
demands, assessments, judgments, costs, and expenses
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incident to its indemnity obligations hereunder; provided, that
Unocal shall, nevertheless, have the right to participate (at
Unocal's expense if Matador is defending the suit or claim) in the
defense of any such suit or suits without relieving Matador of its
obligation to defend the same.
(g) Unocal further covenants and agrees to defend any suits brought
against Matador based upon any claim for which Unocal has agreed to
provide indemnification under this Section 6, and to pay any
demands, assessments, judgments, costs, and expenses incident to its
indemnity obligations hereunder; provided, that Matador shall,
nevertheless, have the right to participate (at Matador's expense if
Unocal is defending the suit or claim) in the defense of any such
suit or suits without relieving Unocal of its obligation to defend
the same.
7. RECORDS: At or promptly after the Closing, Unocal shall deliver to
Matador either originals or copies of all of Unocal's records relating
to the SENM Properties.
8. TAXES: Ad valorem taxes for 1997 personal property, severance taxes and
similar obligations shall be prorated as of the Effective Date hereof.
Matador will be responsible for payment of the taxes assessed for the tax
year 1997 and will xxxx Unocal, and provide supporting data, for its pro
rata share. Matador will bear all applicable sales taxes or similar taxes
imposed by any state, county, municipal or other governmental entity as a
result of the sale of SENM Properties.
9. GAS OVER AND UNDER PRODUCTION: Notwithstanding anything to the contrary
contained in this Agreement, Matador acknowledges and agrees to the
following regarding possible gas imbalance on the SENM Properties.
(a) GAS UNDERPRODUCTION: In the event Unocal is underproduced as to any
well(s) appurtenant to the SENM Properties, Matador agrees not to
hold Unocal liable for such underproduction. Unocal, however, agrees
that if Closing occurs, Matador is hereby assigned all of its
contractual rights to make up such underproduction.
(b) GAS OVERPRODUCTION: In the event Unocal is overproduced as to any
xxxxx(s) appurtenant to the SENM Properties, Matador acknowledges
and agrees that its share of gas from any such overproduced well(s)
may at some point be curtailed by underproduced working interest
owner(s) or in the event production should cease prior to achieving
volumetric balancing Matador may be subject to cash balancing. The
parties to this Agreement agree that Unocal shall not be liable to
Matador in the event such curtailment or cash balancing occurs, and
Matador shall accept the SENM Properties subject to and assume any
obligations created by such overproduction.
10. OTHER ACTIONS: The parties agree to execute such further documents or take
such further actions after the Closing Date, which may be necessary in
order to effectuate the transactions contemplated hereunder.
11. WAIVER: No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof
(regardless of whether such provision is similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.
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12. SEVERABILITY: If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto 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 transactions contemplated hereby are
fulfilled to the extent possible.
13. BULK TRANSFER: Buyer hereby waives compliance by Unocal with the
provisions of any applicable Bulk Transfer Act under the Uniform
Commercial Code, and Unocal warrants and agrees to pay and discharge when
due all claims of creditors which could be asserted by reason of such
noncompliance.
14. WARRANTY DISCLAIMERS: ALL PERSONAL PROPERTY, MACHINERY, FIXTURES,
EQUIPMENT AND MATERIALS CONVEYED HEREBY ARE SOLD AND ASSIGNED AND ACCEPTED
BY MATADOR, IN THEIR "WHERE IS, AS IS" CONDITION, WITHOUT ANY WARRANTIES
WHATSOEVER, EXPRESS OR IMPLIED OR STATUTORY, OF MARKETABILITY, QUALITY,
CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, ALL
OF WHICH ARE EXPRESSLY DISCLAIMED. THE PARTIES AGREE THAT TO THE EXTENT
REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED
IN THIS SECTION ARE "CONSPICUOUS" DISCLAIMERS FOR THE PURCHASE OF ANY
APPLICABLE LAW.
15. COMMUNICATIONS: Unless otherwise provided in this Agreement,
communications (including notices) under this Agreement that must be in
writing and delivered by a specified date will be deemed to have been made
when received at the following addresses by registered or certified mail,
postage prepaid, or by messenger (or at such other address as a party may
specify by notice to the other party):
Union Oil Company of California Matador Petroleum Corporation
00000 Xxxxxxxxx Xxxxxxx 0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000 Xxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxx Attn: Xxxxxx Xx. Xxxxx
Office: 000-000-0000 Office: 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000
16. XXXX-XXXXX XXXXXX ANTITRUST: The parties have determined that the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 does not apply to
this transaction.
17. COUNTERPARTS: This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
18. ENTIRE AGREEMENT: This Agreement and the Stock Purchase Agreement and
Shareholders Agreement of even date herewith among Unocal, Matador and
others and the other agreements
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contemplated hereby and thereby constitute the entire agreement among the
parties pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral,
written or inferred, of the parties, and there are no other warranties,
representations or agreements between the parties in connection with the
subject matter hereof.
19. GOVERNING LAW: This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas.
20. BINDING EFFECT AND ASSIGNMENT: This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any person other than the parties hereto and their
respective heirs, successors and assigns, any rights, benefits or
obligations hereunder.
21. HEADINGS: The headings contained herein are inserted for convenience of
reference only and are not intended to be a part of or affect the meaning
or interpretation of this Agreement.
22. SURVIVAL. The provisions of this Agreement shall survive the closing of
the transactions contemplated hereby.
IN WITNESS WHEREOF, Matador and Unocal have caused their names to be
affixed to this Contribution Agreement as of the date first above written.
UNION OIL COMPANY OF CALIFORNIA
BY: /s/ Xxxxxx X. Xxxxx
--------------------------------
MATADOR PETROLEUM CORPORATION
BY: /s/ Xxxxxx Xx. Xxxxx
--------------------------------
Xxxxxx Xx. Xxxxx
Chairman and CEO
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