EXHIBIT 10.4

 

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”), dated as of June 1,
2020 (the “Effective Date”), is made by and between MID-CON ENERGY OPERATING,
LLC, an Oklahoma limited liability company (“OpCo”) and MID-CON ENERGY PARTNERS,
LP, a Delaware limited partnership (the “Partnership”).  OpCo and the
Partnership are collectively referred to herein as the “Parties” and each a
“Party”.

 

RECITALS

 

WHEREAS, the Partnership, OpCo and certain other parties have entered into
certain recapitalization transactions concurrently herewith (the
“Recapitalization Transactions”).

 

WHEREAS, in connection with the Recapitalization Transactions and the documents
executed and delivered in connection therewith, the Parties desire for the
Partnership to assume and release OpCo from certain liabilities on the terms and
conditions described herein;

WHEREAS, the Parties desire to make certain other arrangements as set forth
herein with respect to electric deposits and retention and severance of
employees;

NOW, THEREFORE, in consideration of the transactions described in the documents
executed and delivered in connection with the Recapitalization Transactions, and
the mutual covenants set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto agree as follows:

 

1.

Definitions.  Capitalized terms used in this Agreement shall have the meanings
given such terms below.

(a)

“Governmental Authority” means (a) the United States or any state or local
subdivision thereof and (b) any court or any governmental or administrative
department, commission, board, bureau, agency or arbitration tribunal of the
United States or of any state or political subdivision thereof.

(b)

“Joint Operating Agreements” means those certain unit operating agreements,
joint operating agreements, plans of unitization and similar agreements and
arrangements entered into by OpCo as the operator of certain oil and gas wells
and related properties in which the Partnership or one of its subsidiaries has a
working interest.

(c)

“Liability” means any direct or indirect liability, indebtedness, obligation,
commitment, expense, claim, deficiency or guarantee of or by any Person of any
type, whether known or unknown, and whether accrued, absolute, contingent,
matured, or unmatured.

(d)

“Person” means any natural person, corporation, company, partnership (general or
limited), limited liability company, trust, joint venture, joint stock company,
unincorporated organization, Governmental Authority or other entity or
association.

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(e)

“Properties” means the oil and gas wells and related properties owned by the
Partnership and operated by OpCo pursuant to the Joint Operating Agreements.

(f)

“Services Agreement” means that certain Services Agreement, entered into as of
December 20, 2011, among OpCo, the Partnership and certain other parties.

2.

References and Construction.  In this Agreement, unless expressly stated
otherwise or the context requires otherwise, (a) the words “this Agreement,”
“hereof,” “hereunder,” “herein,” “hereby” or words of similar import shall refer
to this Agreement as a whole and not to a particular Section, subsection, clause
or other subdivision hereof, (b) the words used herein shall include the
masculine, feminine and neuter genders, and the singular and the plural, (c) the
word “includes” and its derivatives means “includes, but is not limited to” and
corresponding derivative expressions, and (d) unless expressly provided to the
contrary, the word “or” is not exclusive.

3.

Assumption of Liabilities. Effective as of the Effective Date, OpCo hereby
delegates and assigns to the Partnership, and the Partnership hereby assumes and
agrees to fully and timely pay, perform, discharge and otherwise satisfy, as and
when due, all Liabilities relating to each of the following:

(a)

2019 Wyoming ad valorem taxes relating to the Properties, including payment
therefor to the appropriate Governmental Authorities in the applicable counties
in Wyoming, the total amount of which taxes, as of May 31, 2020, was
$1,037,977.51;

(b)

suspense funds relating to the Properties, including payment to those Persons
entitled to receive such suspense funds, the total amount of which, as of May
31, 2020, was $853,446.10;

(c)

vacation or other paid-time-off for certain employees of OpCo, including payment
therefor to the extent employees are entitled to receive it, up to a maximum of
four weeks per employee, the total amount not to exceed $350,214.27; and

(d)

the amount of uncollectible accounts receivable experienced by OpCo under the
Joint Operating Agreements between January 1, 2020 and the date upon which OpCo
resigns as operator of the Properties under the Operating Agreements (which date
is expected to be June 30, 2020); any such collectability shall be determined on
January 31, 2021 (the “Determination Date”), and any such accounts receivable
determined to be uncollectible as of such date shall be paid by the Partnership
to OpCo on the Determination Date, and if not paid on such date, interest shall
be paid on such amount from the Determination Date to the date paid at the
annual rate of 12%.

The Partnership shall pay the liabilities set forth in this Section 3 as they
become due.  If any such liability is not paid when due, then, until such
past-due liability is paid, the Partnership shall not pay any amounts to the
successor operator of the Properties.

The Parties acknowledge and agree that the assumption of liabilities under this
Section 3 will not be deemed to be a Transfer Tax as defined in the Contribution
Agreement of even date herewith among the Partnership and the Contributor
Parties thereto.

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4.

Electric Deposits.  The Parties acknowledge and agree that OpCo previously made
cash deposits with various electric companies, co-ops and other providers of
electric service (“Electric Companies”) to set up accounts for electric service
to the Properties, and that the aggregate amount of such deposits as of May 31,
2020 was $760,935.  The Parties agree to cooperate to cause the Electric
Companies to transfer sole responsibility for such accounts to the Partnership
or the successor operator of the Properties.  The Parties also agree to
cooperate to cause each Electric Company to return to OpCo the entire amount of
the deposit made by OpCo.  Alternatively, if one or more Electric Company
retains OpCo’s deposit in lieu of the Partnership providing its own deposit,
then the Partnership shall promptly pay to OpCo the amount of each such retained
deposit.

5.

Retention and Severance.  The Parties acknowledge and agree that OpCo plans to
provide retention and severance benefits to certain employees of OpCo who
provide services on behalf of the Partnership.  The Partnership and OpCo agree
to cooperate in connection with the design and budgeted amount for such
retention and severance benefits, and the Partnership agrees to fully and timely
pay, or reimburse OpCo for, all Liabilities relating thereto, as and when due,
up to a maximum aggregate amount of $155,000.00.

6.

Estimated Amount Due.  The Parties acknowledge and agree that, as of May 31,
2020, the estimated amount due from the Partnership to OpCo under the Joint
Operating Agreements and under the Services Agreement is not less than
$492,349.37, based on the calculation of joint interest billings by OpCo to the
Partnership for May 2020 of $2,500,000.  Such amount is the best estimate of the
Parties in good faith as of the execution of this Agreement, is subject to
verification and adjustment as appropriate, and shall be verified, adjusted and
paid on July 15, 2020.

7.

Release and Indemnity.  The Partnership hereby agrees to release, defend,
indemnify and hold harmless OpCo from and against the Liabilities assumed by the
Partnership, and the amounts to be paid by the Partnership, under this
Agreement.

8.

Miscellaneous Provisions.

(a)

Choice of Law; Submission to Jurisdiction.  This Agreement shall be subject to
and governed by the laws of the State of Oklahoma, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state. Each Party hereby
submits to the jurisdiction of the state and federal courts in the State of
Oklahoma and to venue in Tulsa, Oklahoma.

(b)

Entire Agreement.  This Agreement constitutes the entire agreement of the
Parties relating to the matters contained herein, superseding all prior
contracts or agreements, whether oral or written, relating to the matters
contained herein.

(c)

Jointly Drafted.  This Agreement, and all the provisions of this Agreement,
shall be deemed drafted by any of the Parties, and shall not be construed
against any Party on the basis of that Party’s role in drafting this Agreement.

(d)

Further Assurances.  In connection with this Agreement and all transactions
contemplated by this Agreement, each Party agrees to execute and deliver such
additional

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documents and instruments and to perform such additional acts as may be
necessary or appropriate to effectuate, carry out and perform all of the terms,
provisions and conditions of this Agreement and all such transactions.

(e)

Assignment.  This Agreement may not be assigned by any Party without the prior
written consent of the other Party. This Agreement shall be binding upon and
shall inure to the benefit of the Parties and their respective successors and
permitted assigns.

(f)

Relationship of the Parties.  Nothing in this Agreement shall be construed to
create a partnership or joint venture or give rise to any fiduciary or similar
relationship of any kind.

(g)

Amendment or Modification.  This Agreement may be amended, restated or modified
from time to time only by the written agreement of all Parties.

(h)

Severability.  If any provision of this Agreement or the application thereof to
any Person or circumstance shall be held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.

(i)

Counterparts.  This Agreement may be executed in any number of counterparts with
the same effect as if all signatory Parties had signed the same document. All
counterparts shall be construed together and shall constitute one and the same
instrument.

(j)

Attorneys’ Fees.  In any action or proceeding by a Party to enforce its rights
hereunder, the prevailing party shall be entitled to recover its costs relating
thereto, including reasonable attorney's fees and costs.

[Signature Page Follows]

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

MID-CON ENERGY OPERATING, LLC

By:/s/ Charles R. Olmstead
Charles R. Olmstead
Chief Executive Officer

 

MID-CON ENERGY PARTNERS, LP

By:    MID-CON ENERGY GP, LLC,

its general partner

By:/s/ Charles L. McLawhorn, III
Charles L. McLawhorn, III
Vice President, General Counsel and Secretary

Signature Page to Assignment and Assumption Agreement