Exhibit 10.11
SHAREHOLDERS AGREEMENT
BY AND AMONG
MATADOR PETROLEUM CORPORATION,
UNION OIL COMPANY OF CALIFORNIA
AND
CERTAIN SHAREHOLDERS
OF
MATADOR PETROLEUM CORPORATION
JANUARY 20, 1998
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (this "Agreement") dated as of January 20,
1998, is by and among Matador Petroleum Corporation (formerly Matador HoldCo.),
a Texas corporation (the "Company"), Union Oil Company of California, a
California corporation ("Unocal"), and certain shareholders (the "Shareholder
Parties") of the Company listed on EXHIBIT A attached hereto. The Shareholder
Parties and Unocal, and their respective heirs, legal representatives,
administrators and successors are collectively referred to as the "MHC
Shareholders."
W I T N E S S E T H
WHEREAS, the Company and Unocal have entered into a Stock Purchase
Agreement, dated of even date herewith (the "Purchase Agreement"), and a
Contribution Agreement, dated of even date herewith (the "Contribution
Agreement"), pursuant to which Unocal will transfer certain of its assets to the
Company in exchange for 670,000 shares (the "New Shares") of the Company's
common stock, par value $0.10 per share (the "Common Stock");
WHEREAS, upon consummation of the transactions contemplated by the
Purchase Agreement and the Contribution Agreement, each Shareholder Party shall
individually own record and beneficial title to the number of shares of Common
Stock or the Company's preferred stock, par value $0.10 per share (the
"Preferred Stock"), as the case may be, set forth beside their name on EXHIBIT A
attached hereto. The shares of Preferred Stock and the Common Stock now owned or
hereafter acquired by the MHC Shareholders while this Agreement is in effect are
collectively referred to as the "Stock"; and
WHEREAS, the MHC Shareholders wish to enter into an agreement setting
forth their respective rights as shareholders of the Company.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement:
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(a) "Disposition" means any sale, inter vivos transfer, pledge,
mortgage or other encumbrance, foreclosure of such a pledge, mortgage or
other encumbrance, or any other disposition of Stock whatsoever.
(b) "Immediate Family" of any specified person means (i) a spouse,
sibling, child or grandchild of such specified person, whether related
through blood, marriage or adoption, (ii) a trust the sole beneficiaries
of which are such specified person or any of the persons described in
clause (i), (iii) a family partnership the sole partners of which are such
specified person, any of the persons described in clause (i) or any trust
described in clause (ii), or (iv) the estate of such specified person or
any of the persons described in clause (i) and the beneficiaries of such
estate.
(c) "IPO" means the first to occur of (i) the initial underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offering and sale of
shares of Common Stock for the account of the Company, (ii) the listing of
the Common Stock on a national exchange or the Nasdaq National Market or
(iii) a merger of the Company into a publicly-traded company wherein the
Company is the surviving entity.
(d) "Reply Notice" means a notice from any party hereto that
received an Offer, stating whether such party accepts the Offer.
(e) "Unocal Affiliate" means an entity that pursuant to Section 8(d)
has acquired shares of Stock owned as of the date hereof by Unocal until
such time that such entity Disposes of such Stock.
(f) "Unocal's Proportionate Share" of capital stock of the Company
shall be equal to the fraction, expressed as a percentage, represented by
a numerator equal to the number of all shares of capital stock of the
Company held by Unocal and the Unocal Affiliates over a denominator equal
to the total number of outstanding shares of capital stock of the Company
(including Common Stock, Preferred Stock and all other classes of capital
stock of the Company outstanding).
2. CONSENT. The Company has furnished to the Shareholder Parties a copy of
the Purchase Agreement and the Contribution Agreement (including all Exhibits
thereto). Subject to the terms and conditions of this Agreement, the Shareholder
Parties consent to the Purchase Agreement and the Contribution Agreement, and
the transactions contemplated thereby.
3. COOPERATION. The Shareholder Parties agree to use commercially
reasonable efforts to promptly take all such actions as may be necessary or
appropriate
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to consummate the transactions contemplated by the Purchase Agreement and
the Contribution Agreement.
4. AGREEMENT TO VOTE.
(a) Promptly after the execution of the Agreement, the Company and
the MHC Shareholders shall take such actions as are necessary to set the
number of directors of the Company at twelve and to elect the following
four persons (who shall be Unocal Designees, as defined below) to the
board of directors of the Company:
Xxxxxx Xxxxxx
Xxxx XxXxxxxx
Xxxxx Xxxxxxxx
Xxxx Xxxxxxx
(b) Subject to Sections 4(d) and (e), the Shareholder Parties agree
to vote all Common Stock now or hereafter owned by them to elect to the
board of directors of the Company those nominees proposed by Unocal
pursuant to Section 4(d) (the "Unocal Designees").
(c) Subject to Sections 4(d) and (e), Unocal agrees to vote all
Common Stock now or hereafter owned by it to elect to the board of
directors of the Company those nominees (the "Company Designees") proposed
by a majority of the Unaffiliated Directors (as defined below).
"Unaffiliated Directors" shall mean members of the board of directors of
the Company who are not Unocal Designees and are not directors elected by
the holders of the Series A Preferred Stock of the Company.
(d) The Company and the MHC Shareholders agree that, with respect to
each election of directors of the Company, Unocal shall have the right to
nominate to the board of directors of the Company a number of directors
which, when added to all Unocal Designees that will remain as directors of
the Company after such election, will be equal to Unocal's Proportionate
Share of the Company (rounded down to the nearest whole number of
directors), but in any event Unocal shall not be entitled to require that
more than 36%, and, except as set forth below, shall be entitled to
require that at least 20%, of the directors of the Company be Unocal
Designees. Notwithstanding the above, if Unocal's Proportionate Share is
less than 15%, Unocal may only nominate to Company's board of directors
the number of directors which, when added to all Unocal Designees that
will remain as directors of the Company after such election, will be equal
to Unocal's Proportionate Share (rounded down to the nearest whole number
of directors). The right to nominate contained in this
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Section 4(d) shall be exclusive to Unocal and no other transferee of the
shares of Stock owned by Unocal shall be entitled to exercise any rights
under this Section 4(d). Based on a board of directors of Matador
consisting of twelve members, Unocal would have the right to nominate four
directors on the date hereof.
(e) Nominees for the remaining positions on the board of directors
of the Company for which Unocal has not made nominations pursuant to
paragraph 4(d) above may be nominated by other parties, including, but not
limited to, the Unaffiliated Directors or the holders of the Series A
Preferred Stock of the Company (to the extent such holders have a right to
elect directors).
(f) Each MHC Shareholder will vote all of its Stock, and the Company
will take all necessary or desirable actions, as are reasonably requested
to prevent the removal, with or without cause, of any Unocal Designee or
Company Designee, without the prior written consent of Unocal, in the case
of any Unocal Designee, or a majority of the Unaffiliated Directors, in
the case of any Company Designee.
(g) Each MHC Shareholder will retain at all times the right to vote
its Stock in its sole discretion on all matters presented to the Company's
shareholders for a vote other than the matters set forth in Section 4(b),
4(c) and 4(f) above, except as otherwise limited or controlled by the
Company's Articles of Incorporation or Bylaws, as amended from time to
time.
(h) Any of the Company Designees may resign for any reason at any
time from the Company's board of directors. A majority of the Unaffiliated
Directors may, in their sole and absolute discretion, decline in a written
notice to the other MHC Shareholders to designate or nominate part or all
of their candidates for an upcoming election to the Company's board of
directors, in which case the MHC Shareholders shall not be obligated, in
the next succeeding election of directors only, to vote their Stock for
election of such Company Designees.
(i) The Unocal Designees may resign for any reason at any time from
the Company's board of directors. Unocal may, in its sole and absolute
discretion, decline in a written notice to the other MHC Shareholders to
designate or nominate candidates for an upcoming election to the Company's
board of directors, in which case the MHC Shareholders shall not be
obligated, in the next succeeding election of directors only, to vote
their Stock for election of the Unocal Designees.
(j) Notwithstanding the foregoing provisions of this Section 4, the
Shareholder Parties who hold shares of the Company's Series A Preferred
Stock
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retain all exclusive rights of the holders of such Series A Preferred
Stock as set forth in the Certificate of Designation creating the
Series A Preferred Stock to elect two members of the board of directors
voting separately as a class.
5. ADDITIONAL COVENANTS.
(a) Each MHC Shareholder agrees to support and vote for inclusion
and implementation of reasonable and customary take-over protection provisions
for the Company, including, but not limited to, a Share Rights Plan (poison-pill
agreement), staggered board seats on the board of directors of the Company and
blank-check preferred stock, that are designed to encourage any potential party
wishing to gain control of Matador to negotiate with the board of directors of
the Company as opposed to pursuing a take-over through hostile means.
(b) In the event that (i) the ownership by Unocal and its affiliates
of the Company's voting securities increases to an amount representing either
(A) greater than 50% of the votes that can be cast for election of directors of
the Company or (B) the ability to elect a majority of the directors constituting
the entire board of directors of the Company, or (ii) Unocal or any of its
affiliates acts in concert with other shareholders of the Company to change
control of the Company from the then existing board of directors of the Company
(without the consent of the then existing board of directors of the Company) or
the then existing executive management (without the consent of the then existing
Chief Executive Officer of the Company), or (iii) Unocal or any director of the
Company that is affiliated with Unocal (a "Unocal Director"), without the
consent of Xxxxxx Xx. Xxxxx, votes to terminate or refuses to vote to re-elect
Xxxxxx Xx. Xxxxx as Chairman and Chief Executive Officer of the Company or any
of its subsidiaries or otherwise votes to decrease his capacity and
responsibilities (each of the items described in clauses (b)(i), (ii) and (iii)
being referred to herein as a "Change of Control Event"), then:
(1) Unocal will immediately offer in writing to purchase (with
the offer to remain open for 45 days from delivery of such offer)
all of the Company's capital stock owned by each party who is a
shareholder of the Company at the time of the Change of Control
Event and who did not vote, as a shareholder or director of the
Company, in favor of, or otherwise directly or indirectly support,
the Change of Control Event (with an offer to be made and delivered
to each such shareholder). If an offer is accepted by a shareholder,
the purchase from such shareholder shall be closed within 15 days of
acceptance pursuant to reasonable procedures established by Unocal
and shall be for cash or publicly-traded stock of Union Oil Company
of California, at the shareholder's option, at the fair market value
of such shareholder's shares of the Company's capital stock;
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(2) If the Change of Control Event as described in clause
(b)(iii) above occurs, Unocal will provide reasonable severance to
Xxxxxx Xx. Xxxxx of not less than 2.99 years' compensation; and
(3) Unocal will provide, and cause the Company and its
subsidiaries to provide, for reasonable severance for any other
employees of the Company not retained at the same or higher
compensation (including benefits) for at least one year after the
occurrence of any Change of Control Event. Reasonable severance for
such employees shall mean at least one month's pay for each year of
service (prorated for partial years) with the Company or its
subsidiaries (with a minimum of three month's pay) for senior
officers and members of the operating committee of the Company, and
two weeks pay for each year of service (prorated for partial years)
with the Company or its subsidiaries (with a minimum of four weeks
pay) for all other employees.
For purposes of this Section 5, fair market value for a share of the
Company's capital stock shall be the higher of (i) the highest price for which a
share of such stock has been sold during the previous 30 days and (ii) the fair
market value of the Company's and its subsidiaries' assets and business as a
going concern, less debt, on a per share basis as determined by agreement of the
affected parties, or, if no agreement can be reached within 30 days of the
Change of Control Event giving rise to the need to determine the fair market
value, then by appraisal by an independent, qualified appraiser selected by the
Company (which the Company shall do within 15 days of the end of such 30-day
period) and approved by the other affected parties, such approval not to be
unreasonably withheld.
6. RESTRICTION ON SALES. None of the MHC Shareholders shall, for a period
of 180 days after an underwritten IPO, offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any shares of Stock without the
prior written consent of the Company (other than transfers pursuant to Section
8(c) or (d)); PROVIDED, HOWEVER, that this provision shall not prohibit sales of
Stock in any tender offer or other business combination or corporate
restructuring approved by the board of directors of the Company.
7. RIGHT OF FIRST OFFER. Except as herein provided, no MHC Shareholder
shall make any Disposition without the written consent of the other MHC
Shareholders and the Company, or in the absence of such written consent, except
pursuant to the provisions hereinafter set forth:
(a) Any MHC Shareholder desiring to make a Disposition or who has
received a good faith non-collusive offer to purchase such Stock which
such MHC Shareholder wishes to accept shall first make a written offer
(the "Offer") to sell such Stock for cash to the Company and to the other
MHC Shareholders.
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(b) The Offer shall be sent to the other MHC Shareholders and to the
Company and shall state (i) the number of shares of Stock included in the
proposed Disposition, (ii) the price in cash at which such Shares are
offered, (iii) the names of the proposed purchaser or purchasers, if any,
and (iv) the names of any persons with whom the selling MHC Shareholder
has discussed, within six months prior to the date of the Offer, a
Disposition (together with a general description of such discussions). The
date of the Offer shall be the date on which the notice containing the
Offer has been received (in accordance with the notice provisions of
Section 13) by all parties entitled to receive it. The Offer may be
withdrawn at any time prior to the exercise of an option granted in
Sections 7(c), 7(d) or 7(e).
(c) The Company shall have the option, for 15 days following the
date of the Offer, to purchase any or all Stock offered. Such option is
deemed exercised once a Reply Notice is delivered to the selling MHC
Shareholder. If the Company chooses to exercise the option and shall not
have sufficient surplus to permit it lawfully to purchase all of the Stock
that the Company chooses to purchase, the selling MHC Shareholder and the
other MHC Shareholders shall promptly take such action to vote their
respective shares to reduce the capital of the Company or to take such
other steps as may be appropriate or necessary to enable the Company, if
possible, to lawfully purchase the chosen amount of such Stock subject to
the Offer.
(d) If the Company does not exercise its option to purchase the
Stock or fails to purchase all of the Stock offered, the other MHC
Shareholders shall have the option, for 15 days following the expiration
of the Company's option in Section 7(c), to purchase the remaining shares
of Stock offered (i) in such proportions as they mutually agree or, (ii)
if no agreement can be reached, in that proportion of the number of shares
of such Stock that the number of shares of Stock owned by such MHC
Shareholder bears to the total number of shares of Stock owned by all of
the other MHC Shareholders that elect to purchase Stock pursuant to this
Section 7(d) (with the Series A Preferred Stock being treated as if it was
fully converted into Common Stock). Such option is deemed exercised once a
Reply Notice is delivered to the selling MHC Shareholder. For the purpose
of the foregoing, fractional interests shall either be rounded to the
nearest full share or be totaled and allocated, on a whole-share basis, by
lot among the other MHC Shareholders that have exercised their purchase
rights.
(e) If one or more of the MHC Shareholders fails to, or is unable
to, purchase all of the remaining Stock offered pursuant to Section 7(d),
the other MHC Shareholders who shall have elected to exercise their option
under Section 7(d) shall have the option to purchase not less than all of
the remaining Stock (i) in such proportions as they mutually agree or,
(ii) if no agreement can be reached, in that proportion of the remaining
number of shares of such Stock that
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the number of shares of Stock owned by such MHC Shareholder bears to the
total number of shares of Stock owned by all MHC Shareholders electing
to purchase stock pursuant to this Section 7(e). The MHC Shareholders
shall have this option for five days following the determination of
unwillingness or inability of one or more of the MHC Shareholders to
purchase all of the remaining Stock.
(f) If the other MHC Shareholders and the Company choose not to
purchase, or do not purchase, all of the Stock subject to an Offer, the
selling MHC Shareholder shall be permitted, at any time or times within
but not subsequent to six months after the lapse of all options arising in
connection with such Offer, to sell the Stock that was the subject of such
Offer but was not purchased by the other MHC Shareholders or the Company.
No such sale to such purchaser shall be made at a lower price or on any
more favorable terms than specified in such Offer. If any consideration
from the purchase is other than cash, (i) the selling MHC Shareholder
shall have the obligation to establish, (ii) in a writing delivered to the
Company and the other MHC Shareholders and to the reasonable satisfaction
of the Company and the other MHC Shareholders, that the purchase price was
not lower, and that the terms were not more favorable, than those
specified in the Offer and (iii) if the selling MHC Shareholder and the
Company cannot agree, they will submit to binding arbitration (in Dallas,
Texas, and pursuant to the Commercial Arbitration Rules of the American
Arbitration Association) the issues of whether the purchase price was
lower than and the terms were not more favorable than those specified in
the Offer. The parties agree to use best efforts to resolve their dispute
over these issues within 30 days. If after the lapse of the six-month
period such Stock has not been sold, the selling MHC Shareholder must make
a new Offer prior to any Disposition.
(g) The price per share to be paid upon the purchase of Stock under
Section 7(c), 7(d) or 7(e) shall be the price stated in the Offer.
(h) The closing of any purchase of the Stock by the other MHC
Shareholders and/or the Company shall be within 60 days of the date of the
Reply Notice. The place of the closing shall be as agreed upon among the
parties thereto, or, if no such agreement is reached, at the principal
office of the Company. The purchase price determined under Section 7(g) of
the Stock being acquired by each purchaser shall be paid by certified or
cashier's check upon the closing. Such check shall be actually delivered
to the selling MHC Shareholder or sent by certified or registered mail,
postage prepaid, return receipt requested, to the address of the selling
MHC Shareholder. In the latter case, delivery shall be deemed to have been
made to the selling MHC Shareholder upon the deposit of such documents in
the mails.
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(i) A duplicate copy of all Reply Notices by selling MHC
Shareholders shall be sent to Unocal and the Company.
(j) The Secretary of the Company shall give notice promptly to all
non-selling MHC Shareholders of the number of shares which may be
purchased at any time by any of them during each of the periods specified
above.
(k) Notwithstanding the foregoing provisions of this Section 7, the
Shareholder Parties who are the holders of shares of Series A Preferred
Stock of the Company do not waive any right of such shareholders to
consent to the purchase, redemption or acquisition of any shares of
capital stock of the Company by the Company pursuant to this Section 7, as
provided in the Certificate of Designation establishing the Series A
Preferred Stock.
8. FIRST OFFER EXCEPTIONS. A MHC Shareholder may make a Disposition
without compliance with the provisions of Section 7 if the Disposition is made:
(a) by an MHC Shareholder that is not (i) a director of the Company,
(ii) affiliated with a director of the Company or (iii) the beneficial
owner or holder (together with its affiliates) of five percent or more of
the outstanding Stock;
(b) in accordance with Rule 144 promulgated under the Securities Act
of 1933, as amended (without regard to or reliance on Rule 144(k));
(c) to a member of the Immediate Family of such MHC
Shareholder; or
(d) to another entity that is, directly or indirectly, not less than
51% owned and controlled by such MHC Shareholder; PROVIDED, HOWEVER, that
the indirect ownership of such shares of Stock may not be Disposed of by
such MHC Shareholder without complying with Section 7, 8(a), 8(b) or 8(d).
Shares of Stock Disposed of pursuant to Section 8(a) or 8(b) shall no
longer be subject to this Agreement. If the shares of Stock are Disposed of
pursuant to Section 8(c) or 8(d), such member of the Immediate Family or such
entity, respectively, shall have executed an Addendum Agreement before such
Disposition.
9. REPRESENTATIONS OF THE MHC SHAREHOLDERS. Each MHC Shareholder
represents and warrants to each other MHC Shareholder that:
(a) such MHC Shareholder has the requisite power and authority
to enter into and perform this Agreement;
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(b) if such MHC Shareholder is a corporation, the execution,
delivery and performance of this Agreement have been duly authorized by
all necessary corporate action on the part of such MHC Shareholder, and
this Agreement has been duly executed by a duly authorized officer of such
MHC Shareholder;
(c) the performance of this Agreement by the MHC Shareholder will
not require such MHC Shareholder to obtain the consent, waiver or approval
of any person and will not violate, result in a breach of or constitute a
default under any statute, regulation, agreement, trust instrument,
judgment, consent, decree or restriction by which it is bound; and
(d) such MHC Shareholder is record and/or beneficial owner of the
shares of either Common Stock or Preferred Stock as described in the
recitals hereto or in EXHIBIT A hereto, and has the full and unqualified
right to vote all of such shares as contemplated by this Agreement.
10. ENDORSEMENT OF STOCK CERTIFICATES.
(a) Contemporaneously with the execution hereof, the MHC
Shareholders shall surrender to the Company for endorsement and return to
such MHC Shareholders all certificates representing shares of Stock now
owned by them and agree that such certificates, any certificates
representing such shares that are issued in the future or certificates
representing any shares of capital stock of the Company that may hereafter
be acquired by the MHC Shareholders shall be endorsed on the back thereof,
together with any other endorsements required, as follows, or in words of
similar meaning:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
OF THE SHAREHOLDERS AGREEMENT DATED JANUARY 20, 1998 (THE
"AGREEMENT"), BY AND AMONG THE COMPANY, UNION OIL COMPANY OF
CALIFORNIA AND CERTAIN SHAREHOLDERS OF THE COMPANY, A COUNTERPART OF
WHICH HAS BEEN DEPOSITED WITH THE COMPANY AT ITS PRINCIPAL OFFICE. A
TRANSFEREE, PLEDGEE OR MORTGAGEE OF THE SHARES REPRESENTED BY THIS
CERTIFICATE SHALL BE DEEMED TO HAVE NOTICE OF AND TO BE BOUND BY THE
TERMS OF THE AGREEMENT.
Such certificates shall be endorsed on the front thereof as follows,
or in words of similar meaning:
"SEE RESTRICTIONS ON REVERSE SIDE."
(b) The Company agrees to cooperate with the MHC Shareholders with
respect to any Dispositions of Stock permitted by Section 6, 8(a) or 8(b)
by
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removing or causing to be removed the legends on certificates relating
to the shares sold or transferred in accordance with Section 6, 8(a) or
8(b), respectively.
11. TERMINATION. This Agreement shall continue in effect for the period
commencing on the date hereof until its termination upon the earliest of (i) the
bankruptcy or dissolution of the Company, (ii) the written approval of the
Company and the MHC Shareholders who hold at least 85% of the outstanding Stock
then held by all MHC Shareholders; (iii) the occurrence of any event that
reduces the number of MHC Shareholders to one, (iv) the merger or consolidation
of the Company with another entity (provided the Company is not the surviving
corporation of such merger or consolidation and provided further that the
surviving entity is not owned or controlled, directly or indirectly, by the then
current shareholders of the Company), (v) ten years from the date hereof. With
respect to The Travelers Insurance Company, The Travelers Indemnity Company, The
Phoenix Insurance Company, The Travelers Life and Annuity Company and The
Lincoln National Life Insurance Company only (collectively, the "Preferred
Shareholders"), the rights and obligations of the Preferred Shareholders under
this Agreement shall terminate immediately upon the consummation of an
underwritten IPO, except that the rights and obligations of the Preferred
Shareholders created by Section 6 of this Agreement shall survive such
termination.
12. AMENDMENTS. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the Company and the MHC
Shareholders who hold at least 85% of the outstanding Stock then held by all MHC
Shareholders.
13. NOTICES. All notices, requests, demands or other communications
required or permitted by this Agreement shall be in writing and effective when
received, and delivery shall be made personally or by registered or certified
mail, return receipt requested, postage prepaid, or overnight courier or
confirmed facsimile transmission, addressed as follows (or to such other address
as a party may designate by notice to the other party):
(a) if to the Company:
Matador Petroleum Corporation
Suite 158, Pecan Creek
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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(b) if to Unocal:
Union Oil Company of California
00000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(c) if to the Shareholder Parties, to the address of each
Shareholder Party as indicated on EXHIBIT A hereto
14. 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.
15. 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.
16. ENTIRE AGREEMENT. This Agreement, the Purchase Agreement, the
Contribution Agreement and the other agreements 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.
17. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas.
18. 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; provided that this Agreement shall not bind the holder
of any shares purchased pursuant to Section 7(f) of this Agreement. 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.
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19. 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.
20. 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.
21. INTENT. Section 4 is intended to operate as a voting agreement as
envisioned by Article 2.30.B of the Texas Business Corporation Act, as in effect
on the date thereof. A counterpart of this Agreement shall be deposited with the
Company at its principal office, where it shall be subject to inspection by the
Company's shareholders.
22. SPECIFIC PERFORMANCE. Each of the MHC Shareholders acknowledges that
the parties hereto would not have an adequate remedy at law for money damages in
the event that this Agreement was not performed in accordance with its terms,
and, therefore, agrees that each MHC Shareholder shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
23 RESERVATION OF CERTAIN RIGHTS. Notwithstanding the consents of the
Preferred Shareholders in this Agreement, the Preferred Shareholders reserve all
rights under that certain Preferred Stock Conversion Agreement, dated as of
January 19, 1998, among the Preferred Shareholders, the Company and Matador E &
P Company (f/k/a Matador Petroleum Corporation) (the "Conversion Agreement"),
and the Certificate of Designation filed by the Company with the Texas Secretary
of State to create the Series A Preferred Stock (the "Certificate of
Designation"), with respect to the following:
(a) The stock purchase rights and options under Article 9 of the
Conversion Agreement, except with respect to the issuance of the New Shares
pursuant to the Purchase Agreement, which is hereby approved;
(b) The right to consent to the purchase, redemption or other acquisition
of shares of Junior Stock (as defined in the Certificate of Designation) as
provided in Section 5(d)(iii) of the Certificate of Designation, except for the
Company's repurchase of the New Shares pursuant to Section 4(e) of the Purchase
Agreement, which is hereby approved; and
(c) The right to consent to the creation, authorization or issuance of any
shares of any class of Prior Stock (as defined in the Certificate of
Designation) and certain classes of Parity Stock (as defined in the Certificate
of Designation) as provided under Sections 5(d)(iv) and (v) of the Certificate
of Designation.
-13-
[SIGNATURES ON FOLLOWING PAGE]
-14-
MATADOR PETROLEUM CORPORATION
/s/ Xxxxxx Xx. Xxxxx
------------------------------
Name: Xxxxxx Xx. Xxxxx
Title: Chairman and CEO
UNION OIL COMPANY OF CALIFORNIA
/s/ Xxxxxx X. Xxxxx
______________________________
Name: Xxxxxx X. Xxxxx
Title: Attorney-in-Fact
-15-
SHAREHOLDER PARTIES:
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By: Lincoln Investment Management,
Inc., its Attorney-in-Fact
/s/ R. Xxxxxx Xxxxx
______________________________
Name: R. Xxxxxx Xxxxx
Title: Vice President
THE TRAVELERS INSURANCE COMPANY
/s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Second Vice President
THE TRAVELERS INDEMNITY COMPANY
/s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Second Vice President
THE PHOENIX INSURANCE COMPANY
/s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Second Vice President
THE TRAVELERS LIFE AND ANNUITY
COMPANY
/s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Second Vice President
-16-
/s/ Xxxxxx Xx. Xxxxx
------------------------------------
XXXXXX XX. XXXXX
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
XXXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxxxx
------------------------------------
XXXXXX X. XXXXXXXX
/s/ Xxxx X. Xxxxxxx
------------------------------------
XXXX X. XXXXXXX
GREGCO RESOURCES, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
--------------------------------
Title: President
-------------------------------
/s/ R. Xxxxxx Xxxxxxxx, Xx.
------------------------------------
R. XXXXXX XXXXXXXX, XX.
/s/ C. Xxxxx Xxxxx
------------------------------------
C. XXXXX XXXXX
OPAL INVESTMENTS LIMITED PARTNERSHIP
By: C. Xxxxx Xxxxx & Associates, Inc.
Managing General Partner
By: /s/ C. Xxxxx Xxxxx
------------------------------
Name: C. Xxxxx Xxxxx
-----------------------------
Title: President
----------------------------
/s/ X. X. Xxxxxxx, Xx.
------------------------------------
X. X. XXXXXXX, XX.
/s/ Xxxx X. Xxxxx
------------------------------------
XXXX X. XXXXX
-17-
EXHIBIT A
SHAREHOLDER PARTIES
No. of Shares of No. of Shares of
Preferred Stock Common Stock
of the Company of the Company
---------------- ----------------
The Travelers Insurance Company 75,000 -0-
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Securities Department - Private
Placements - 9PB
The Travelers Indemnity Company 73,334 -0-
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Securities Department - Private
Placements - 9PB
Telecopier Number: (000) 000-0000
The Phoenix Insurance Company 10,000 -0-
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Securities Department - Private
Placements - 9PB
The Travelers Life and Annuity 8,333 -0-
Company
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Securities Department - Private
Placements - 9PB
The Lincoln National Life Insurance 222,223 -0-
Company
c/o Lincoln Investment Management, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Investments - Private Placements
Xxxxxx Xx. Xxxxx -0- 129,457
0000 Xxxxxx Xxxx, #000
Xxxxxx, Xxxxx 00000
Xxxxxxx X. Xxxxxx -0- 4,600
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Xxxxxx X. Xxxxxxxx -0- 17,915
Encap Investments, L.C.
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Xxxx X. Xxxxxxx -0- 4,400
000 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000-0000
Gregco Resources, Inc. -0- 7,610
000 Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxx 00000-0000
R. Xxxxxx Xxxxxxxx, Xx. -0- 7,456
X.X. Xxx 00
Xxxxxx, Xxxxx 00000-0000
C. Xxxxx Xxxxx -0- 3,400
000 Xxxxx Xxx Xxxxx X.X.
Xxxxxxx, Xxxxx 00000-0000
Opal Investments Limited Partnership -0- 4,000
000 Xxxxx Xxx Xxxxx X.X.
Xxxxxxx, Xxxxx 00000-0000
X.X. Xxxxxxx, Xx. -0- 7,400
0000 Xxxx Xxxx Xx.
Xxxxxx, Xxxxx 00000-0000
Xxxx X. Xxxxx -0- 5,250
000 X. Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
