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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Ocean Energy, Inc.
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(Name of Issuer)
Common Stock, Par Value $0.01 per Share
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(Title of Class and Securities)
674812102
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(CUSIP Number of Class of Securities)
John B. Brock
Chairman of the Board and
Chief Executive Officer
United Meridian Corporation
1201 Louisiana, Suite 1400
Houston, Texas 77002
(713) 654-9110
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
Copy to:
Michael E. Dillard, P.C.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
(214) 969-2800
December 22, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Statement because of
Rule 13d-1(b)(3) or (4), check the following: (_)
<PAGE> 2
SCHEDULE 13D
CUSIP No. 674812102
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
United Meridian Corporation (75-2160316)
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS
WC, BK, OO
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) (__)
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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(7) SOLE VOTING POWER
2,267,300 1
NUMBER OF
SHARES ------------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY 4,668,911 2
EACH
REPORTING ------------------------------------------------------------
PERSON (9) SOLE DISPOSITIVE POWER
WITH 2,267,300 1
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(10) SHARED DISPOSITIVE POWER
None
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,936,211 1,2
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES (__)
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
27.6% 3
- ---------------------------------------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON
CO, HC
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</TABLE>
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1. 2,267,300 of the shares of common stock of Ocean Energy, Inc.
("Issuer") covered by this report are purchasable by United Meridian
Corporation ("UMC") upon exercise of an option (the "Option") granted
to UMC pursuant to the Stock Option Agreement, dated as of December
22, 1997, between Issuer and UMC (the "Stock Option Agreement") and
described in Item 4 of this report. Other than set forth in footnote 2
below, prior to the exercise of the Option, UMC is not entitled to any
rights as a stockholder of the Issuer as to the shares covered by the
Option. In the event of any changes in common stock of the Issuer by
reason of a stock dividend, stock split, reverse stock split, merger,
recapitalization, combination, exchange of shares, or similar
transaction, the type and number of shares of common stock of the
Issuer purchasable by UMC under the Option, and the purchase price
therefor, shall be adjusted appropriately so that UMC shall receive
upon exercise of the Option the number and class of shares or other
securities or property that UMC would have received with respect to
common stock of the Issuer if the Option had been exercised
immediately prior to such event or the record date therefor. The
Option may only be exercised upon the happening of certain events,
none of which has occurred as of the date hereof. Prior to such
exercise, UMC expressly disclaims beneficial ownership of the shares
of common stock of the Issuer which are purchasable by UMC upon
exercise of the Option. The number of shares subject to the Option
represents approximately 9.9% of the total outstanding shares of
common stock of the Issuer as of December 22, 1997, excluding shares
issuable upon exercise of the Option, as represented by the Issuer in
the Agreement and Plan of Merger, dated as of December 22, 1997, among
OEI Holding Corporation, a Delaware corporation ("Newco"), UMC and the
Issuer, pursuant to which (i) Newco will merge with and into Issuer
and (ii) UMC will merge with and into Issuer (together, the
"Mergers").
2. As of December 22, 1997, UMC entered into an Agreement to Vote and
Proxy (the "Voting Agreements") with each of James C. Flores and the
Flores Family Limited Partnership (together, the "Stockholders"),
pursuant to which the Stockholders agreed to vote, and granted proxies
to vote, an aggregate of 4,668,911 shares of common stock of the
Issuer beneficially owned by the Stockholders in favor of the Mergers.
See Item 4. The Stockholders entered into the Voting Agreements in
consideration of UMC entering into the Merger Agreement.
3. Adjusted to reflect the issuance by the Issuer of 2,267,300 shares of
common stock of the Issuer upon exercise of the Option as described
herein.
Item 1. Security and Issuer
This Schedule 13D relates to the common stock, par value $0.01 per
share (the "Common Stock," an individual share of which is a "Share"), of Ocean
Energy, Inc., a Delaware corporation (the "Issuer"). The principal offices of
the Issuer are located at 8440 Jefferson Highway, Suite 420, Baton Rouge,
Louisiana 70809.
1
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Item 2. Identity and Background
This Schedule 13D is filed by United Meridian Corporation, a Delaware
corporation ("UMC"). UMC is a leading independent energy company engaged in
the exploration, development, production, and acquisition of oil and gas in
North America and certain international regions. UMC's principal executive
offices are located at 1201 Louisiana, Suite 1400, Houston, Texas 77002.
During the last five years, neither UMC nor, to the knowledge of UMC,
any executive officer or director of UMC has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction resulting in a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding violation with respect to such laws. Certain
information concerning the directors and executive officers of UMC is set forth
in Schedule A to this Schedule 13D and is incorporated herein by reference.
Item 3. Source and Amount of Funds or Other Consideration
This statement relates to (i) an option granted to UMC by the Issuer
to purchase shares of Common Stock from the Issuer (the "Option") and (ii)
shares of Common Stock subject to certain voting agreements between UMC and
certain of the Issuer's stockholders, all described in Item 4 below.
The Option entitles UMC to purchase up to 2,267,300 Shares (the
"Option Shares") under the circumstances specified in the Stock Option
Agreement, dated as of December 22, 1997, between UMC and the Issuer (the
"Stock Option Agreement") and as described in Item 4 below for a purchase price
of $49-13/16 per Share (the "Purchase Price"). In the event of any changes in
Common Stock of the Issuer by reason of a stock dividend, stock split, reverse
stock split, merger, recapitalization, combination, exchange of shares, or
similar transaction, the type and number of shares of Common Stock of the
Issuer purchasable by UMC under the Option, and the Purchase Price therefor,
shall be adjusted appropriately so that UMC shall receive upon exercise of the
Option the number and class of shares or other securities or property that UMC
would have received with respect to Common Stock of the Issuer if the Option
had been exercised immediately prior to such event or the record date therefor.
Reference is made to the Stock Option Agreement, a copy of which is filed as
Exhibit 1 hereto and is incorporated herein by reference, for the full text of
its terms, including the conditions upon which it may be exercised.
As set forth in the Stock Option Agreement, the Option was granted by
the Issuer as a condition and an inducement to UMC's willingness to enter into
the Agreement and Plan of Merger, dated as of December 22, 1997, among OEI
Holding Corporation, a Delaware corporation ("Newco"), UMC and the Issuer (the
"Merger Agreement"). A copy of the Merger Agreement is attached hereto as
Exhibit 2 and is incorporated herein by reference. Pursuant to the Merger
Agreement and subject to the terms and conditions set forth therein (including
approval by the stockholders of the Issuer), Newco will merge with and into
Issuer (the "Newco
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<PAGE> 5
Merger"), with the Issuer continuing as the surviving corporation. Pursuant to
the Merger Agreement and subject to the terms and conditions set forth therein
(including approval by the stockholders of UMC and the Issuer), UMC will merge
with and into the Issuer (the "UMC Merger" and, together with the Newco Merger,
the "Mergers"), with the Issuer continuing as the surviving corporation. Upon
consummation of the Mergers, the Issuer will be the surviving corporation and
the identity and separate existence of UMC will cease. If the Mergers are
consummated in accordance with the terms of the Merger Agreement, the Option
will not be exercised. No monetary consideration was paid by UMC to the Issuer
for the Option.
If UMC elects to exercise the Option, it currently anticipates that
the funds needed to pay the Purchase Price will be generated by a combination
of available working capital, bank or other borrowings and/or the sale, in
whole or in part, of Option Shares following such exercise.
Pursuant to the terms of the Agreement to Vote and Proxy, dated as of
December 22, 1997 (the "Flores Voting Agreement"), between UMC and James C.
Flores ("Flores"), and the Agreement to Vote and Proxy, dated as of December
22, 1997 (the "FFLP Voting Agreement" and, together with the Flores Voting
Agreement, the "Voting Agreements"), between UMC and the Flores Family Limited
Partnership ("FFLP"), UMC acquired shared voting control of 4,668,911 Shares.
Under the Voting Agreements, Flores and FFLP (the "Stockholders") have agreed
to vote, and granted proxies to vote with respect to, the shares of Common
Stock either (i) owned by or (ii) for which they have the right to vote or
direct the vote of, in favor of the Mergers and the Merger Agreement. The
information set forth in each of the Flores Voting Agreement and the FFLP
Voting Agreement, which are attached hereto as Exhibit 3 and 4, respectively,
is incorporated herein by reference. The Stockholders entered into the Voting
Agreements in consideration of UMC entering into the Merger Agreement.
Item 4. Purpose of Transaction
As stated above, the Option was granted to UMC in connection with the
execution of the Merger Agreement. As an inducement to the Issuer to enter
into the Merger Agreement, UMC granted to the Issuer a reciprocal option (the
"Reciprocal Option") to purchase up to 3,543,000 shares of common stock, par
value $0.01 per share, of UMC ("UMC Common Stock") under the circumstances
specified in the Stock Option Agreement, dated as of December 22, 1997, between
UMC, as issuer, and the Issuer, as grantee, for a purchase price of $32-3/16
per share (the "UMC Stock Option Agreement"), a copy of which is filed as
Exhibit 5 hereto and is incorporated herein by reference.
The Option shall become exercisable upon the occurrence of certain
events set forth in Section 2 of the Stock Option Agreement, none of which has
occurred at the time of this filing. The exercise of the Option in all events
is subject to the expiration or termination of the waiting period pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and UMC expects to promptly file under the HSR Act.
3
<PAGE> 6
UMC has the right to cause the Issuer to prepare and file up to two
registration statements under the Securities Act of 1933, as amended, in order
to permit the sale by UMC of any Option Shares purchased under the Option.
Pursuant to the Voting Agreements, UMC acquired the voting rights of
4,668,911 shares of Common Stock to vote in favor of the UMC Merger. UMC and
Flores, an individual, Chairman of the Board, President, Chief Executive
Officer and stockholder of the Issuer, entered into the Flores Voting Agreement
pursuant to which Flores agreed to vote, and granted to UMC a proxy to vote, in
favor of the Mergers and the Merger Agreement (i) 1,656,511 shares of Common
Stock owned by Flores, representing approximately 7.2% of the outstanding
Common Stock, and (ii) 1,600,000 shares of Common Stock, or approximately 7.0%
of the outstanding Common Stock, that Flores has the right to vote or direct to
vote pursuant to an irrevocable proxy granted to Flores by William W. Rucks,
IV, Catherine May Rucks and the Rucks Family Partnership. UMC and FFLP, a
stockholder of the Issuer, entered into the FFLP Voting Agreement pursuant to
which FFLP agreed to vote, and granted to UMC a proxy to vote, 1,412,400 shares
of Common Stock, representing an additional 6.2% of the outstanding Common
Stock, in favor of the Mergers and the Merger Agreement.
Upon the effectiveness of the UMC Merger, the separate existence of
UMC shall cease and Issuer, as the surviving corporation in the UMC Merger,
shall continue its corporate existence and succeed to all of the rights,
assets, liabilities and obligations of UMC. In addition, if the Mergers are
consummated in accordance with the terms of the Merger Agreement, the Board of
Directors of Issuer shall consist of no more than 14 members and will be
divided into three classes. The Issuer will designate seven directors, and UMC
will designate seven directors. The current Chairman of the Board, President
and Chief Executive Officer of the Issuer will be a director, President and
Chief Executive Officer of the Issuer after the consummation of the Mergers,
and the current Chairman of the Board of UMC will be Chairman of the Board of
Issuer after the consummation of the Mergers.
The descriptions herein of (i) the Stock Option Agreement, the Merger
Agreement and the UMC Stock Option Agreement, copies of which are attached
hereto as Exhibits 1, 2, and 5, respectively, and which are incorporated herein
by reference, and (ii) each of the Voting Agreements, copies of which are
attached hereto as Exhibits 3 and 4, respectively, and which are incorporated
herein by reference, are qualified in their entirety by reference to such
agreements. Other than as described above, UMC has no plans or proposals which
relate to, or may result in, any of the matters listed in Items 4(a)-(j) of
Schedule 13D.
Item 5. Interest in Securities of the Issuer
As a result of the execution of the Voting Agreements, UMC may be
deemed pursuant to Rule 13d-3 ("Rule 13d-3") promulgated under the Securities
and Exchange Act of 1934, as amended, to be the beneficial owner of 4,668,911
Shares and will have shared voting power with respect to such Shares. As a
result of the issuance of the Option, UMC may be deemed pursuant to Rule 13d-3
to be the beneficial owner of 2,267,300 Shares. If the Option is exercised,
UMC will have sole voting and dispositive power with respect to 2,267,300
Shares. Nothing herein
4
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shall be deemed an admission by UMC as to the beneficial ownership of any of
the Option Shares, and, prior to exercise of the Option, UMC disclaims
beneficial ownership of all Option Shares.
The number of Shares subject to the Option and the Voting Agreements,
in the aggregate, represent approximately 27.6% of the Issuer's Common Stock
calculated in accordance with Rule 13d-3 (based on the number of Shares
outstanding on December 22, 1997, as set forth in the Merger Agreement, and
adjusted to reflect the issuance of the Option Shares upon exercise of the
Option).
Except as described herein, neither UMC nor, to the knowledge of UMC,
any other person referred to in Schedule A attached hereto, beneficially owns
or has acquired or disposed of any Shares of the Issuer during the past 60
days.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Except for the Merger Agreement, the Stock Option Agreement, the UMC
Stock Option Agreement and the Voting Agreements, none of the persons named in
Item 2 has any contracts, arrangements, understandings or relationships (legal
or otherwise) with any persons with respect to any securities of the Issuer,
including, but not limited to, transfers or voting of any securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.
Item 7. Materials to be Filed as Exhibits
Exhibit Description
1* Stock Option Agreement, dated as of December 22,
1997, between Ocean Energy, Inc., as Issuer, and
United Meridian Corporation, as Grantee.
2 Agreement and Plan of Merger, dated as of December
22, 1997, between OEI Holding Corporation, United
Meridian Corporation, and Ocean Energy, Inc.,
incorporated by reference to Exhibit 2.1 to United
Meridian Corporation's Current Report on Form 8-K,
filed with the Securities and Exchange Commission on
December 23, 1997.
3* Agreement to Vote and Proxy, dated as of December 22,
1997, between United Meridian Corporation and James
C. Flores.
4* Agreement to Vote and Proxy, dated as of December 22,
1997, between United Meridian Corporation and the
Flores Family Limited Partnership.
5* Stock Option Agreement, dated as of December 22,
1997, between United Meridian Corporation, as Issuer,
and Ocean Energy, Inc., as Grantee.
__________________________
*Filed herewith
5
<PAGE> 8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 13D is true, complete
and accurate.
December 31, 1997 UNITED MERIDIAN CORPORATION
By: /s/ John B. Brock
----------------------------
Name: John B. Brock
Title: Chairman of the Board of
Directors and Chief Executive
Officer
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Schedule A
The name, business address and principal occupation of each executive
officer and director of United Meridian Corporation ("UMC") are set forth
below. Unless otherwise indicated, each occupation set forth opposite an
executive officer's name refers to employment with UMC. Unless otherwise
indicated, each of the persons listed below is a United States citizen.
<TABLE>
<CAPTION>
Name Principal Occupation and Business Address
- ---- -----------------------------------------
<S> <C>
John B. Brock* Chairman of the Board, Chief Executive Officer and Director
James L. Dunlap* President, Chief Operating Officer and Director
Jonathan M. Clarkson* Executive Vice President and Chief Financial Officer
James E. Smitherman, III* Executive Vice President - International Exploration and Production
Lee B. Backsen* Senior Vice President - Gulf Coast Division
Gary R. McGregor* Senior Vice President - Denver Division
Terry D. Svarich* President, UMC Resources Canada Ltd.
John J. Patton* Senior Vice President and General Counsel
Christopher E. Cragg* Vice President - Controller, and Chief Accounting Officer
Daniel P. Foley* Vice President and Group Manager - Capital Planning
Kevin D. McMillan* Vice President and Treasurer
Marya Ingram* Corporate Secretary
</TABLE>
___________________
* The director's or officer's address is United Meridian Corporation
1201 Louisiana, Suite 1400, Houston, Texas 77002.
<TABLE>
<CAPTION>
Name Principal Occupation and Business or Residence Address
- ---- ------------------------------------------------------
<S> <C>
J. Dennis Bonney Director
Independent Businessman
555 Market Street, Suite 1429
San Francisco, CA 94105
</TABLE>
7
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<TABLE>
<S> <C>
Charles R. Carson Director
Independent Consultant
5262 Parkcrest Lane
Columbus, OH 43220
Robert H. Dedman Director
Chairman and Chief Executive Officer
Club Corporation International
3030 LBJ Freeway, Suite 700
Dallas, TX 75234-7395
Robert L. Howard Director
Retired President - Shell Offshore, Inc.
5413 Sturbridge Drive
Houston, TX 77056
Robert V. Lindsay Director
Retired President - J.P. Morgan & Co.
c/o J.P. Morgan & Co.
23 Wall Street
New York, NY 10260-0023
Elvis L. Mason Director
Managing Partner
Mason Best Company
2121 San Jacinto Street, Suite 1000
Dallas, TX 75201
James L. Murdy Director
Executive Vice President, Finance and Administration
and Chief Financial Officer
Allegheny Teledyne Incorporated
1000 Six PPG Place
Pittsburgh, PA 15222
David K. Newbigging** Director
Chairman
Kennedy Financial Services Limited
Wah Kwong House, 9th Floor
10 Albert Embankment
London SE1 7SP, England
</TABLE>
8
<PAGE> 11
<TABLE>
<S> <C>
Matthew R. Simmons Director
Chairman and President
Simmons & Company International
700 Louisiana, Suite 5000
Houston, TX 77002
Donald D. Wolf Director
Chairman, President and Chief Executive Officer
Westport Oil and Gas Corporation
410 17th Street, Suite 2300
Denver, CO 80202
</TABLE>
___________________
** The director is a citizen of the United Kingdom.
9
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
1* Stock Option Agreement, dated as of December 22, 1997, between Ocean Energy, Inc., as Issuer,
and United Meridian Corporation, as Grantee.
2 Agreement and Plan of Merger, dated as of December 22, 1997, between OEI Holding Corporation,
United Meridian Corporation, and Ocean Energy, Inc., incorporated by reference to Exhibit 2.1
to United Meridian Corporation's Current Report on Form 8-K, filed with the Securities and
Exchange Commission on December 23, 1997.
3* Agreement to Vote and Proxy, dated as of December 22, 1997, between United Meridian Corporation
and James C. Flores.
4* Agreement to Vote and Proxy, dated as of December 22, 1997, between United Meridian Corporation
and the Flores Family Limited Partnership.
5* Stock Option Agreement, dated as of December 22, 1997, between United Meridian Corporation, as
Issuer, and Ocean Energy, Inc., as Grantee.
</TABLE>
__________________________
*Filed herewith
10
<PAGE> 1
EXHIBIT 1
OCEAN ENERGY, INC.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 22, 1997 (the
"Agreement"), between OCEAN ENERGY, INC., a Delaware corporation ("Issuer"),
and UNITED MERIDIAN CORPORATION, a Delaware corporation ("Grantee").
RECITALS
WHEREAS, Issuer, Grantee and OEI Holding Corporation, a Delaware
corporation ("Newco"), have entered into an Agreement and Plan of Merger, dated
as of the date hereof (the "Merger Agreement"; defined terms used but not
otherwise defined herein have the meanings set forth in the Merger Agreement),
providing for, among other things, the merger of (i) Newco with Issuer and (ii)
Grantee with Issuer;
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Merger Agreement and the UMC Option Agreement (as defined
below), Grantee has requested that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness to
enter into the Merger Agreement and this Agreement, Issuer has requested that
Grantee agree, and Grantee has agreed to, grant Issuer an option to purchase
shares of Grantee's common stock on substantially the same terms as the Option
(the "UMC Option Agreement").
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
1. Grant of Option. Subject to the terms and conditions set
forth herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 2,267,300 (as adjusted as set forth herein) shares
(the "Option Shares") of Common Stock, par value $0.01 per share ("Issuer
Common Stock"), of Issuer at a purchase price of $49-13/16 (as adjusted as set
forth herein) per Option Share (the "Purchase Price").
2. Exercise of Option. (a) Grantee may exercise the Option, in
whole but not in part, at any one time after the occurrence of any event as a
result of which Grantee is entitled to receive the Termination Fee pursuant to
the Merger Agreement (a "Purchase Event"); provided, however, that except as
provided in the last sentence of this Section 2(a), the Option shall terminate
and be of no further force and effect upon the earliest to occur of (A) the
Effective Time, (B) 18 months after the first occurrence of a Purchase Event,
and (C) termination of the Merger Agreement in accordance with its terms prior
to the occurrence of a Purchase Event, unless Grantee has the right to receive
a Termination Fee following such termination upon the occurrence of certain
events, in which case the Option shall not terminate until the later of (x) six
<PAGE> 2
months following the time such Termination Fee becomes payable and (y) the
expiration of the period in which Grantee has such right to receive a
Termination Fee. Notwithstanding the termination of the Option, Grantee shall
be entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option, and
the termination of the Option will not affect any rights hereunder which by
their terms do not terminate or expire prior to or as of such termination.
(b) In the event that Grantee wishes to exercise the Option, it
will send to Issuer a written notice (an "Exercise Notice"; the date of which
being herein referred to as the "Notice Date") to that effect, which Exercise
Notice shall specify the number of Option Shares, if any, Grantee wishes to
purchase pursuant to this Section 2(b), the denominations of the certificate or
certificates evidencing the Option Shares which Grantee wishes to purchase
pursuant to this Section 2(b) and a date not earlier than three business days
nor later than 20 business days from the Notice Date for the closing of such
purchase (an "Option Closing Date"); provided, however, that (i) if a closing
of the purchase and sale pursuant to the Option (an "Option Closing") cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation related to such Option Closing has expired or been terminated and
(ii) without limiting the foregoing, if prior notification to or approval of
any regulatory authority is required in connection with any such purchase,
Grantee and Issuer shall promptly file the required notice or application for
approval and shall cooperate in the expeditious filing of such notice or
application, and the period of time that otherwise would run pursuant to this
sentence with respect to any Option Closing, shall run instead from the date on
which, as the case may be, (A) any required notification period has expired or
been terminated or (B) any required approval has been obtained, and in either
event, any requisite waiting period has expired or been terminated. Any Option
Closing will be at an agreed location and time in New York, New York on the
applicable Option Closing Date or at such later date as may be necessary so as
to comply with the provisions of this Section 2(b).
3. Payment and Delivery of Certificates. (a) At any Option
Closing, Grantee will pay to Issuer in immediately available funds by wire
transfer to a bank account designated in writing by Issuer an amount equal to
the Purchase Price multiplied by the number of Option Shares.
(b) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer shall deliver
to Grantee a certificate or certificates representing the Option Shares to be
purchased at such Option Closing, which Option Shares will be free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever. If at the
time of issuance of Option Shares pursuant to an exercise of the Option
hereunder, Issuer shall have issued and outstanding rights under a shareholder
rights plan or similar securities, then each Option Share issued pursuant to
such exercise will also represent such a corresponding right with terms
substantially the same as and at least as favorable to Grantee as are provided
under any Issuer shareholder rights agreement or any similar agreement then in
effect.
(c) Certificates for the Option Shares delivered at an Option
Closing shall have typed or printed thereon a restrictive legend which will
read substantially as follows:
<PAGE> 3
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE."
It is understood and agreed that the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have
been registered pursuant to the Securities Act, such Option Shares have been
sold in reliance on and in accordance with Rule 144 under the Securities Act or
Grantee has delivered to Issuer a copy of a letter from the staff of the SEC,
or an opinion of counsel in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is not required for
purposes of the Securities Act.
4. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Corporate Authorization. Issuer has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Issuer, and
no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
Issuer, and assuming this Agreement constitutes a valid and binding
agreement of Grantee, this Agreement constitutes a valid and binding
agreement of Issuer, enforceable against Issuer in accordance with its
terms (except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
(b) Authorized Stock. Issuer has taken all necessary
corporate and other action to authorize and reserve and, subject to
the expiration or termination of any required waiting period under the
HSR Act, to permit it to issue, and, at all times from the date hereof
until the obligation to deliver Option Shares upon the exercise of the
Option terminates, shall have reserved for issuance, upon exercise of
the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant
to Section 6 upon exercise of the Option. The shares of Issuer Common
Stock to be issued upon due exercise of the Option, including all
additional shares of Issuer Common Stock or other securities which may
be issuable upon exercise of the Option or any other securities which
may be issued pursuant to Section 6, upon issuance pursuant hereto,
will be duly and validly issued, fully paid and nonassessable and will
be delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including without
limitation any preemptive rights of any stockholder of Issuer.
<PAGE> 4
5. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Corporate Authorization. Grantee has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Grantee, and
no other corporate proceedings on the part of Grantee are necessary to
authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
Grantee, and assuming this Agreement constitutes a valid and binding
agreement of Issuer, this Agreement constitutes a valid and binding
agreement of Grantee, enforceable against Grantee in accordance with
its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles
governing the availability of equitable remedies).
(b) Purchase Not for Distribution. Any Option Shares or
other securities acquired by Grantee upon exercise of the Option will
not be transferred or otherwise disposed of except in a transaction
registered, or exempt from registration, under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc. (a) In the
event of any changes in Issuer Common Stock by reason of a stock dividend,
stock split, reverse stock split, merger, recapitalization, combination,
exchange of shares, or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Grantee shall receive upon exercise of the
Option the number and class of shares or other securities or property that
Grantee would have received with respect to Issuer Common Stock if the Option
had been exercised immediately prior to such event or the record date therefor,
as applicable.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, in the event that the Issuer enters into an
agreement (i) to consolidate with or merge into any person, other than Grantee
or one of its subsidiaries, and Issuer shall not be the continuing or surviving
corporation in such consolidation or merger, (ii) to permit any person, other
than Grantee or one of its subsidiaries, to merge into Issuer and Issuer shall
be the continuing or surviving corporation, but in connection with such merger,
the shares of Issuer Common Stock outstanding immediately prior to the
consummation of such merger shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property,
or the shares of Issuer Common Stock outstanding immediately prior to the
consummation of such merger will, after such merger represent less than 50% of
the outstanding voting securities of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option
<PAGE> 5
shall, upon the consummation of any such transaction and upon the terms and
condition set forth herein, be converted into, or exchanged for, an option with
identical terms appropriately adjusted to acquire the number and class of
shares or other securities or property that Grantee would have received in
respect of Issuer Common Stock if the Option had been exercised immediately
prior to such consolidation, merger, sale, or transfer, or the record date
therefor, as applicable.
(c) If, prior to the termination of the Option in accordance with
Section 2, Issuer enters into any agreement (x) pursuant to which all
outstanding shares of Issuer Common Stock are to be purchased for, or converted
into the right to receive in whole or in part (other than in respect of
fractional shares) cash or (y) with respect to any transaction described in
clauses (i), (ii) and (iii) of Section 6(b) (each of (x) and (y), a
"Transaction"), the Issuer covenants that proper provision shall be made in
such agreement to provide that, if the Option shall not theretofore have been
exercised, then upon the consummation of the Transaction (which in the case of
a Transaction involving a tender offer shall be when shares of Issuer Common
Stock are accepted for payment), Grantee shall have the right, at its election,
by not less than two business days' prior written notice to Issuer, to receive
in exchange for cancellation of the remaining Option an amount in cash equal to
the Spread. For purposes of this Agreement, the term "Spread" means the number
of Option Shares multiplied by the excess of (A) the closing sales price per
share of Issuer Common Stock on the principal securities exchange or quotation
system on which Issuer Common Stock is then listed or traded, as reported by
The Wall Street Journal, on the day immediately prior to the consummation of
such Transaction, over (B) the Purchase Price. Notwithstanding the foregoing,
the amount of the Spread, when added to any Termination Fee paid or payable to
Grantee, shall not exceed $50 million.
(d) Following exercise of the Option by Grantee, in the event that
Grantee sells, pledges or otherwise disposes of (including, without limitation,
by merger or exchange) any of the Option Shares (a "Sale"), then;
(i) any Termination Fee due and payable by Issuer
following such time shall be reduced by an amount, if any, equal to
the excess of (1) the total of (A) the Termination Fee and (B) the
excess of (w) the aggregate amounts received (whether in cash,
securities or otherwise) by Grantee in all such Sales, over (x) the
aggregate Purchase Price of the Option Shares sold in such Sales (such
excess in this sub-clause (B) being the "Offset Amounts") over (2) $50
million;
(ii) if Issuer has paid to Grantee the Termination Fee
prior to a Sale, then Grantee shall immediately remit to Issuer, as
additional Purchase Price for the Option Shares, the excess, if any,
of (y) the total of the Termination Fee and the Offset Amounts of all
Sales over (z) $50 million; and
(iii) if a Sale or Sales occur prior to the payment of the
Termination Fee to Grantee by Issuer, and the aggregate amount
received (whether in cash, securities or otherwise) by Grantee in such
Sales exceeds $50 million, Grantee shall remit to Issuer the aggregate
amount received in excess of $50 million and deliver to Issuer for
cancellation any remaining Option Shares owned by Grantee.
<PAGE> 6
(e) Notwithstanding anything to the contrary in this Agreement or
the Merger Agreement, in no event shall the aggregate of any Termination Fee,
all Offset Amounts and the Spread exceed $50 million, and to the extent such
items would otherwise exceed $50 million, Grantee, at its sole election, shall
either (i) reduce the number of Option Shares subject to the Option, (ii)
deliver to Issuer for cancellation Option Shares previously purchased by
Grantee, (iii) pay cash to issuer or (iv) take a combination of any of the
foregoing actions.
7. Registration Rights. Issuer shall, if requested by Grantee at
any time and from time to time within two years after the date of the exercise
of an Option, as expeditiously as possible prepare and file up to two
registration statements under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all
securities that have been acquired by Grantee upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Grantee, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such securities under any applicable state securities laws.
Grantee agrees to use reasonable efforts to cause, and to cause any
underwriters of any sale or other disposition to cause, any sale or other
disposition pursuant to such registration statement to be effected on a widely
distributed basis. Issuer shall use reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers
of other parties which are required therefor, and to keep such registration
statement effective for such period not in excess of 90 calendar days from the
day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness
may be suspended for one or more periods of time not exceeding 90 calendar days
in the aggregate if the Board of Directors of Issuer shall have determined that
the filing of such registration statement or the maintenance of its
effectiveness would require premature disclosure of material nonpublic
information that would materially and adversely affect Issuer. Any
registration statement prepared and filed under this Section 7, and any sale
covered thereby, shall be at Issuer's expense except for underwriting discounts
or commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If, during the time periods referred to in the first sentence of
this Section 7, Issuer effects a registration under the Securities Act of
Issuer Common Stock for its own account or for any other stockholders of Issuer
(other than on Form S-4 or Form S-8, or any successor form), it shall allow
Grantee the right to participate in such registration, and such participation
will not affect the obligation of Issuer to effect demand registration
statements for Grantee under this Section 7; provided that, if the managing
underwriters of such offering advise Issuer in writing that in their opinion
the number of shares of Issuer Common Stock requested to be included in such
registration exceeds the number which can be sold in such offering, priority
shall be given to the securities intended to be included therein by the Issuer
for its own account and, thereafter, Issuer will include the securities
requested to be included therein by Grantee pro rata with the securities
intended to be included therein by other security holders of the Issuer. In
connection with any registration pursuant to this Section 7, Issuer and Grantee
shall provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and contribution in
<PAGE> 7
connection with such registration. The registration rights set forth in this
Section 7 are subject to any other registration rights in effect on the date
hereof.
8. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NYSE (or any other
national securities exchange or national securities quotation system), Issuer,
upon the request of Grantee, shall promptly file an application to list the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE (and any such other national securities exchange or
national securities quotation system) and shall use reasonable efforts to
obtain approval of such listing as promptly as practicable.
9. Loss or Mutilation. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer shall execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed, or mutilated shall at any time
be enforceable by anyone.
10. Miscellaneous. (a) Expenses. Except as otherwise provided
herein or in the Merger Agreement, each of the parties hereto will pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to
waive any provision of this Agreement, or to extend the time for performance,
will be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise will not constitute a waiver of such
rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the UMC Option Agreement, the Merger Agreement (including the
documents and instruments attached thereto as exhibits or schedules or
delivered in connection therewith) and the Confidentiality Agreement (i)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement, and (ii) except as provided in Section 9.9 of
the Merger Agreement, are not intended to confer upon any person other than the
parties hereto any rights or remedies.
(e) Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
<PAGE> 8
(f) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and will be deemed given
if delivered personally, telecopied (which is confirmed), or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
To Issuer:
Ocean Energy, Inc.
8440 Jefferson Highway, Suite 420
Baton Rouge, Louisiana 70809
Attention: Chairman and Chief Executive Officer
Telecopy: (504) 927-1109
copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: John F. Wombwell
Telecopy: (713) 220-4285
To Grantee:
United Meridian Corporation
1201 Louisiana, Suite 1400
Houston, Texas 77002
Attention: Chairman and Chief Executive Officer
Telecopy: (713) 653-5024
copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Michael E. Dillard, P.C.
Telecopy: (214) 969-4343
(g) Assignment. Neither this Agreement, the Option nor any of the
rights, interests, or obligations under this Agreement may be assigned,
transferred or delegated, in whole or in part, by operation of law or
otherwise, by Issuer or Grantee without the prior written consent of the other.
Any assignment, transfer or delegation in violation of the preceding sentence
will be void. Subject to the first and second sentences of this Section 10(g),
this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and permitted
assigns.
<PAGE> 9
(h) Further Assurances. In the event of any exercise of the Option
by Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(i) ENFORCEMENT. THE PARTIES AGREE THAT IRREPARABLE DAMAGE WOULD
OCCUR AND THAT THE PARTIES WOULD NOT HAVE ANY ADEQUATE REMEDY AT LAW IN THE
EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN
ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT IS
ACCORDINGLY AGREED THAT THE PARTIES WILL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY FEDERAL COURT LOCATED IN THE
STATE OF DELAWARE OR IN DELAWARE STATE COURT, THE FOREGOING BEING IN ADDITION
TO ANY OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY. IN
ADDITION, EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO THE
PERSONAL JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR
ANY DELAWARE STATE COURT IN THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (B) AGREES THAT IT
WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR
OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (C) AGREES THAT IT WILL NOT
BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A FEDERAL COURT SITTING
IN THE STATE OF DELAWARE OR A DELAWARE STATE COURT.
(j) Counterparts; Effectiveness. This Agreement may be executed in
two or more counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered (by telecopy or otherwise) to the other
parties.
[The remainder of this page is intentionally left blank.]
<PAGE> 10
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the day
and year first above written.
OCEAN ENERGY, INC.
By: /s/ James C. Flores
---------------------------------------------
Name: James C. Flores
Title: Chairman of the Board, President, and
Chief Executive Officer
UNITED MERIDIAN CORPORATION
By: /s/ John B. Brock
---------------------------------------------
Name: John B. Brock
Title: Chairman of the Board and
Chief Executive Officer
<PAGE> 1
EXHIBIT 3
UNITED MERIDIAN CORPORATION
AGREEMENT TO VOTE AND PROXY
THIS AGREEMENT TO VOTE AND PROXY (this "Agreement") dated as of
December 22, 1997, is by and between James C. Flores ("Stockholder"), and
United Meridian Corporation, a Delaware corporation ("UMC").
RECITALS
A. OEI Holding Corporation, a Delaware corporation ("Newco"), UMC
and Ocean Energy, Inc., a Delaware corporation ("OEI"), are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
pursuant to which (i) Newco shall be merged with and into OEI (the "Newco
Merger") and (ii) UMC shall be merged with and into OEI (the "UMC Merger" and,
together with the Newco Merger, the "Mergers").
B. As of the date hereof, Stockholder (i) owns 1,656,511 shares,
or approximately 7.2% of the outstanding common stock, par value $.01 per
share, of OEI (the "Common Stock") or (ii) has the right to vote or direct the
vote of 1,600,000 shares, or approximately 7.0%, of Common Stock pursuant to
that certain Irrevocable Proxy, dated September 25, 1997, executed by William
W. Rucks, IV, Catherine May Rucks and the Rucks Family Partnership in favor of
Stockholder (such shares of Common Stock referred to in clauses (i) and (ii)
above and any additional shares of Common Stock owned in the future by
Stockholder being herein referred to as the "Shares").
C. In consideration of UMC's agreement to enter into the Merger
Agreement, Stockholder (i) agrees to vote the Shares in favor of the Mergers
(subject to the irrevocable proxy provided for in Section 2 hereof (the
"Proxy")), and (ii) grants to UMC the Proxy covering the Shares to vote in
favor of the Mergers, all in accordance with the terms set forth in this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
1. Voting Agreement.
1.1 Agreement to Support Merger. Stockholder agrees to
vote the Shares in favor of the Mergers, pursuant to the terms of the Merger
Agreement, at the OEI Stockholders Meeting (as defined in the Merger
Agreement).
<PAGE> 2
1.2 Applicability of Voting Agreement. The voting
agreement contained in Section 1.1 shall apply to the Shares whether or not
owned by Stockholder.
2. Proxy with Respect to Shares. Stockholder hereby irrevocably
appoints UMC as its attorney and proxy, with full power of substitution, to
vote in such manner as such attorney and proxy or its substitute shall, in its
sole discretion, deem proper, and otherwise act with respect to all of the
Shares which it is entitled to vote at any meeting of stockholders (whether
annual or special and whether or not an adjourned meeting) of OEI; provided,
however, that Stockholder grants a proxy hereunder only with respect to the
following matters that may be presented to the stockholders of OEI (the
"Designated Matters"): (i) votes with respect to the Mergers and the Merger
Agreement; (ii) votes with respect to any action or agreement that would result
in a breach of any covenant, representation or warranty or any other obligation
or agreement of OEI under the Merger Agreement; (iii) votes with respect to
any action or agreement that would impede, interfere with, delay, postpone or
attempt to discourage the Mergers and the Merger Agreement, including, but not
limited to, (a) any reorganization or liquidation involving OEI, (b) any change
in the board of directors of OEI, except as otherwise agreed to in writing by
UMC, or (c) any material change in the present capitalization of OEI; (iv)
votes relating to any other material change in the corporate structure or
business of OEI; and (v) votes in favor and approval of the matter Stockholder
has agreed to vote in favor of in Section 1.1 hereof. This proxy is
irrevocable, is coupled with an interest sufficient in law to support an
irrevocable proxy and is granted in consideration of and as an inducement to
cause UMC to enter into the transactions contemplated by the Merger Agreement.
This proxy shall revoke any other proxy granted by Stockholder at any time with
respect to the Shares and no subsequent proxies will be given by Stockholder
with respect to the Shares while the Proxy is in effect. In addition, if
subsequent to the date hereof Stockholder is entitled to vote the Shares for
any purpose, it shall take all actions necessary to vote the Shares pursuant to
instructions received from UMC; provided, however, that the provisions of this
sentence shall only apply to the Designated Matters. This proxy shall apply to
the Shares whether or not owned by Stockholder.
3. Legends. The stock certificates representing the Shares shall
bear the following legend until the voting agreement contained in Section 1.1
terminates:
"The shares represented by this Certificate are subject to a voting
agreement and proxy pursuant to an Agreement to Vote and Proxy, dated
December 22, 1997, between James C. Flores and United Meridian
Corporation, and any amendments thereof. A copy of such agreement is
on file at the principal place of business of Ocean Energy, Inc.
("OEI") and a copy will be provided to the holder hereof at no cost
upon written request to the corporate secretary of OEI."
4. Representations and Warranties of Stockholder. Stockholder
represents and warrants to UMC as follows:
4.1 Ownership of Shares. On the date hereof, the Shares
are all of the shares of OEI's Common Stock currently beneficially owned by
Stockholder. Stockholder does not
2
<PAGE> 3
have any rights to acquire any additional shares of OEI's Common Stock. Until
the termination of this Agreement, Stockholder shall not sell or otherwise
transfer any of the Shares. Stockholder has good, valid and marketable title
to the Shares, free and clear of all liens, encumbrances, restrictions,
options, warrants, rights to purchase and claims of every kind (other than the
encumbrances created by this Agreement, bona fide loan transactions and
restrictions on transfer under applicable Federal and state securities laws.
4.2 Power; Binding Agreement. Stockholder has the full
legal right, power and authority to enter into and perform all of Stockholder's
obligations under this Agreement. The board of directors of OEI has taken all
necessary action to approve the transactions contemplated by this Agreement
pursuant to Section 203(a) of the Delaware General Corporation Law. The
execution and delivery of this Agreement by Stockholder has been authorized by
Stockholder and will not violate any other agreement to which Stockholder is a
party, including, without limitation, any voting agreement, stockholders
agreement, voting trust or proxy. This Agreement has been duly executed and
delivered by Stockholder and constitutes a legal, valid and binding agreement
of Stockholder, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or hereafter in
effect affecting creditors' rights and remedies generally or general principles
of equity. Neither the execution nor delivery of this Agreement nor the
consummation by Stockholder of the transactions contemplated hereby will (i)
require any consent or approval of or filing with any governmental or other
regulatory body except for filings on Schedule 13D under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or (ii) constitute a
violation of, conflict with or constitute a default under, any contract,
commitment, agreement, understanding, arrangement or other restriction of any
kind to which Stockholder is a party or by which Stockholder is bound.
4.3 Absence of Certain Agreements. Neither Stockholder
nor any of its representatives has entered into any agreement, letter of intent
or similar agreement (whether written or oral) with any party other than UMC
whereby Stockholder has agreed to support, directly or indirectly, any proposal
or offer (whether or not in writing and whether or not delivered to the
stockholders of OEI generally) for a merger or other business combination
involving OEI or to acquire in any manner, directly or indirectly, a material
equity interest in, any voting securities of, or a substantial portion of the
assets of OEI, other than the transactions contemplated by the Merger
Agreement.
4.4 Finder's Fees. No person is, or will be, entitled to
any commission or finder's fees from Stockholder in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission
or finder's fees referred to in the Merger Agreement.
5. Termination. This Agreement (other than Sections 6, 7, and
8.3) shall terminate on the earliest of:
(a) the date on which UMC and Stockholder
mutually consent to terminate this Agreement in writing;
3
<PAGE> 4
(b) upon the consummation of the transactions
contemplated by the Merger Agreement; or
(c) prior to the consummation of the transactions
contemplated by the Merger Agreement, upon the termination of the Merger
Agreement pursuant to its terms.
6. Expenses. Each party hereto will pay all of its expenses in
connection with the transactions contemplated by this Agreement.
7. Confidentiality. Stockholder recognizes that consummation of
the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to these matters, and that OEI has executed a
Confidentiality Agreement with respect to the transactions contemplated by the
Merger Agreement. In this connection, pending public disclosure, Stockholder
agrees that it will be bound by the terms of such Confidentiality Agreement,
except for filings required pursuant to the Exchange Act and the rules and
regulations thereunder or disclosures Stockholder's legal counsel advises in
writing are necessary in order to fulfill Stockholder's obligations imposed by
law, in which events Stockholder shall give prompt prior written notice of such
disclosure to UMC.
8. Certain Covenants of Stockholder.
8.1 No Shop. Except in accordance with the provisions of
this Agreement, Stockholder agrees, while this Agreement is in effect, not to
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to the Shares; or
(c) take any action which would, if taken by OEI,
constitute a violation of Section 6.9 of the Merger Agreement.
8.2 Notice re Additional Shares. Stockholder agrees,
while this Agreement is in effect, to notify UMC promptly of the number of any
shares of OEI's Common Stock acquired by Stockholder after the date hereof.
9. Notices. All notices or other communications required or
permitted hereunder shall be in writing (except as otherwise provided herein)
and shall be deemed duly given when received by delivery in person, by telecopy
or by certified mail, postage prepaid, or by an overnight courier service,
addressed as follows:
4
<PAGE> 5
If to UMC:
United Meridian Corporation
1201 Louisiana, Suite 1400
Houston, Texas 77002
Attention: Chairman and Chief Executive Officer
Telecopy: (713) 653-5024
with copies to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
Attention: Michael E. Dillard, P.C.
Telecopy: (214) 969-4343
If to Stockholder:
James C. Flores
Ocean Energy, Inc.
8440 Jefferson Highway, Suite 420
Baton Rouge, Louisiana 70809
Telecopy: (504) 927-1109
with copies to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: John F. Wombwell
Telecopy: (713) 220-4285
10. Entire Agreement; Amendment. This Agreement, together with
the documents expressly referred to herein, constitutes the entire agreement
among the parties hereto with respect to the subject matter contained herein
and supersedes all prior agreements and understandings among the parties with
respect to such subject matter. This Agreement may not be modified, amended,
altered or supplemented except by an agreement in writing executed by the party
against whom such modification, amendment, alteration or supplement is sought
to be enforced.
11. Assigns. This Agreement shall be binding upon, and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties.
5
<PAGE> 6
12. Governing Law. This Agreement, and all matters relating
hereto, shall be governed by, and construed in accordance with the laws of the
State of Delaware without giving effect to the principles of conflicts of laws
thereof.
13. Injunctive Relief. The parties agree that in the event of a
breach of any provision of this Agreement, the aggrieved party may be without
an adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party may elect to
institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of such
provision, as well as to obtain damages for breach of this Agreement and such
aggrieved party may take any such actions without the necessity of posting a
bond. By seeking or obtaining such relief, the aggrieved party will not be
precluded from seeking or obtaining any other relief to which it may be
entitled.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same document.
15. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable such provision shall be
interpreted to be only so broad as is enforceable.
16. Further Assurances. Each party hereto shall execute and
deliver such additional documents as may be necessary or desirable to
consummate the transactions contemplated by this Agreement.
17. Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, shall be construed to give any person other than the
parties hereto any legal or equitable right, remedy or claim under or by reason
of this Agreement or any provision contained herein.
[The remainder of this page is intentionally left blank.]
6
<PAGE> 7
IN WITNESS WHEREOF, UMC and Stockholder have each caused this
Agreement to be executed by their duly authorized officers as of the date and
year first above written.
UNITED MERIDIAN CORPORATION
By: /s/ John B. Brock
----------------------------------
Name: John B. Brock
Title: Chairman of the Board and
Chief Executive Officer
/s/ James C. Flores
----------------------------------------
James C. Flores
7
<PAGE> 1
EXHIBIT 4
UNITED MERIDIAN CORPORATION
AGREEMENT TO VOTE AND PROXY
THIS AGREEMENT TO VOTE AND PROXY (this "Agreement") dated as of
December 22, 1997, is by and between the Flores Family Limited Partnership
("Stockholder"), and United Meridian Corporation., a Delaware corporation
("UMC").
RECITALS
A. OEI Holding Corporation, a Delaware corporation ("Newco"), UMC
and Ocean Energy, Inc., a Delaware corporation ("OEI"), are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
pursuant to which (i) Newco shall be merged with and into OEI (the "Newco
Merger") and (ii) UMC shall be merged with and into OEI (the "UMC Merger" and,
together with the Newco Merger, the "Mergers").
B. As of the date hereof, Stockholder owns 1,412,400 shares, or
approximately 6.2% of the outstanding common stock, par value $.01 per share,
of OEI (the "Common Stock") (such shares of Common Stock and any additional
shares of Common Stock owned in the future by Stockholder being herein referred
to as the "Shares").
C. In consideration of UMC's agreement to enter into the Merger
Agreement, Stockholder (i) agrees to vote the Shares in favor of the Mergers
(subject to the irrevocable proxy provided for in Section 2 hereof (the
"Proxy")), and (ii) grants to UMC the Proxy covering the Shares to vote in
favor of the Mergers, all in accordance with the terms set forth in this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
1. Voting Agreement.
1.1 Agreement to Support Merger. Stockholder agrees to
vote the Shares in favor of the Mergers, pursuant to the terms of the Merger
Agreement, at the OEI Stockholders Meeting (as defined in the Merger
Agreement).
1.2 Applicability of Voting Agreement. The voting
agreement contained in Section 1.1 shall apply to the Shares whether or not
owned by Stockholder.
2. Proxy with Respect to Shares. Stockholder hereby irrevocably
appoints UMC as its attorney and proxy, with full power of substitution, to
vote in such manner as such attorney
<PAGE> 2
and proxy or its substitute shall, in its sole discretion, deem proper, and
otherwise act with respect to all of the Shares which it is entitled to vote at
any meeting of stockholders (whether annual or special and whether or not an
adjourned meeting) of OEI; provided, however, that Stockholder grants a proxy
hereunder only with respect to the following matters that may be presented to
the stockholders of OEI (the "Designated Matters"): (i) votes with respect to
the Mergers and the Merger Agreement; (ii) votes with respect to any action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of OEI under the Merger
Agreement; (iii) votes with respect to any action or agreement that would
impede, interfere with, delay, postpone or attempt to discourage the Mergers
and the Merger Agreement, including, but not limited to, (a) any reorganization
or liquidation involving OEI, (b) any change in the board of directors of OEI,
except as otherwise agreed to in writing by UMC, or (c) any material change in
the present capitalization of OEI; (iv) votes relating to any other material
change in the corporate structure or business of OEI; and (v) votes in favor
and approval of the matter Stockholder has agreed to vote in favor of in
Section 1.1 hereof. This proxy is irrevocable, is coupled with an interest
sufficient in law to support an irrevocable proxy and is granted in
consideration of and as an inducement to cause UMC to enter into the
transactions contemplated by the Merger Agreement. This proxy shall revoke any
other proxy granted by Stockholder at any time with respect to the Shares and
no subsequent proxies will be given by Stockholder with respect to the Shares
while the Proxy is in effect. In addition, if subsequent to the date hereof
Stockholder is entitled to vote the Shares for any purpose, it shall take all
actions necessary to vote the Shares pursuant to instructions received from
UMC; provided, however, that the provisions of this sentence shall only apply
to the Designated Matters. This proxy shall apply to the Shares whether or not
owned by Stockholder.
3. Legends. The stock certificates representing the Shares shall
bear the following legend until the voting agreement contained in Section 1.1
terminates:
"The shares represented by this Certificate are subject to a voting
agreement and proxy pursuant to an Agreement to Vote and Proxy, dated
December 22, 1997, between the Flores Family Limited Partnership and
United Meridian Corporation, and any amendments thereof. A copy of
such agreement is on file at the principal place of business of Ocean
Energy, Inc. ("OEI") and a copy will be provided to the holder hereof
at no cost upon written request to the corporate secretary of OEI."
4. Representations and Warranties of Stockholder. Stockholder
represents and warrants to UMC as follows:
4.1 Ownership of Shares. On the date hereof, the Shares
are all of the shares of OEI's Common Stock currently beneficially owned by
Stockholder. Stockholder does not have any rights to acquire any additional
shares of OEI's Common Stock. Until the termination of this Agreement,
Stockholder shall not sell or otherwise transfer any of the Shares.
Stockholder has good, valid and marketable title to the Shares, free and clear
of all liens, encumbrances, restrictions, options, warrants, rights to purchase
and claims of every kind (other
<PAGE> 3
than the encumbrances created by this Agreement, bona fide loan transactions
and restrictions on transfer under applicable Federal and state securities
laws.
4.2 Power; Binding Agreement. Stockholder has the full
legal right, power and authority to enter into and perform all of Stockholder's
obligations under this Agreement. The board of directors of OEI has taken all
necessary action to approve the transactions contemplated by this Agreement
pursuant to Section 203(a) of the Delaware General Corporation Law. The
execution and delivery of this Agreement by Stockholder has been authorized by
Stockholder and will not violate any other agreement to which Stockholder is a
party, including, without limitation, any voting agreement, stockholders
agreement, voting trust or proxy. This Agreement has been duly executed and
delivered by Stockholder and constitutes a legal, valid and binding agreement
of Stockholder, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws, now or hereafter in
effect affecting creditors' rights and remedies generally or general principles
of equity. Neither the execution nor delivery of this Agreement nor the
consummation by Stockholder of the transactions contemplated hereby will (i)
require any consent or approval of or filing with any governmental or other
regulatory body except for filings on Schedule 13D under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or (ii) constitute a
violation of, conflict with or constitute a default under, any contract,
commitment, agreement, understanding, arrangement or other restriction of any
kind to which Stockholder is a party or by which Stockholder is bound.
4.3 Absence of Certain Agreements. Neither Stockholder
nor any of its representatives has entered into any agreement, letter of intent
or similar agreement (whether written or oral) with any party other than UMC
whereby Stockholder has agreed to support, directly or indirectly, any proposal
or offer (whether or not in writing and whether or not delivered to the
stockholders of OEI generally) for a merger or other business combination
involving OEI or to acquire in any manner, directly or indirectly, a material
equity interest in, any voting securities of, or a substantial portion of the
assets of OEI, other than the transactions contemplated by the Merger
Agreement.
4.4 Finder's Fees. No person is, or will be, entitled to
any commission or finder's fees from Stockholder in connection with this
Agreement or the transactions contemplated hereby exclusive of any commission
or finder's fees referred to in the Merger Agreement.
5. Termination. This Agreement (other than Sections 6, 7, and
8.3) shall terminate on the earliest of:
(a) the date on which UMC and Stockholder
mutually consent to terminate this Agreement in writing;
(b) upon the consummation of the transactions
contemplated by the Merger Agreement; or
<PAGE> 4
(c) prior to the consummation of the transactions
contemplated by the Merger Agreement, upon the termination of the Merger
Agreement pursuant to its terms.
6. Expenses. Each party hereto will pay all of its expenses in
connection with the transactions contemplated by this Agreement.
7. Confidentiality. Stockholder recognizes that consummation of
the transactions contemplated by this Agreement may be dependent upon
confidentiality with respect to these matters, and that OEI has executed a
Confidentiality Agreement with respect to the transactions contemplated by the
Merger Agreement. In this connection, pending public disclosure, Stockholder
agrees that it will be bound by the terms of such Confidentiality Agreement,
except for filings required pursuant to the Exchange Act and the rules and
regulations thereunder or disclosures Stockholder's legal counsel advises in
writing are necessary in order to fulfill Stockholder's obligations imposed by
law, in which events Stockholder shall give prompt prior written notice of such
disclosure to UMC.
8. Certain Covenants of Stockholder.
8.1 No Shop. Except in accordance with the provisions of
this Agreement, Stockholder agrees, while this Agreement is in effect, not to
directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares;
(b) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to the Shares; or
(c) take any action which would, if taken by OEI,
constitute a violation of Section 6.9 of the Merger Agreement.
8.2 Notice re Additional Shares. Stockholder agrees,
while this Agreement is in effect, to notify UMC promptly of the number of any
shares of OEI's Common Stock acquired by Stockholder after the date hereof.
9. Notices. All notices or other communications required or
permitted hereunder shall be in writing (except as otherwise provided herein)
and shall be deemed duly given when received by delivery in person, by telecopy
or by certified mail, postage prepaid, or by an overnight courier service,
addressed as follows:
<PAGE> 5
If to UMC:
United Meridian Corporation
1201 Louisiana, Suite 1400
Houston, Texas 77002
Attention: Chairman and Chief Executive Officer
Telecopy: (713) 653-5024
with copies to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
Attention: Michael E. Dillard, P.C.
Telecopy: (214) 969-4343
If to Stockholder:
Flores Family Limited Partnership
c/o James C. Flores
Ocean Energy, Inc.
8440 Jefferson Highway, Suite 420
Baton Rouge, Louisiana 70809
Telecopy: (504) 927-1109
with copies to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: John F. Wombwell
Telecopy: (713) 220-4285
10. Entire Agreement; Amendment. This Agreement, together with
the documents expressly referred to herein, constitutes the entire agreement
among the parties hereto with respect to the subject matter contained herein
and supersedes all prior agreements and understandings among the parties with
respect to such subject matter. This Agreement may not be modified, amended,
altered or supplemented except by an agreement in writing executed by the party
against whom such modification, amendment, alteration or supplement is sought
to be enforced.
11. Assigns. This Agreement shall be binding upon, and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other parties.
<PAGE> 6
12. Governing Law. This Agreement, and all matters relating
hereto, shall be governed by, and construed in accordance with the laws of the
State of Delaware without giving effect to the principles of conflicts of laws
thereof.
13. Injunctive Relief. The parties agree that in the event of a
breach of any provision of this Agreement, the aggrieved party may be without
an adequate remedy at law. The parties therefore agree that in the event of a
breach of any provision of this Agreement, the aggrieved party may elect to
institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of such
provision, as well as to obtain damages for breach of this Agreement and such
aggrieved party may take any such actions without the necessity of posting a
bond. By seeking or obtaining such relief, the aggrieved party will not be
precluded from seeking or obtaining any other relief to which it may be
entitled.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same document.
15. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable such provision shall be
interpreted to be only so broad as is enforceable.
16. Further Assurances. Each party hereto shall execute and
deliver such additional documents as may be necessary or desirable to
consummate the transactions contemplated by this Agreement.
17. Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, shall be construed to give any person other than the
parties hereto any legal or equitable right, remedy or claim under or by reason
of this Agreement or any provision contained herein.
[The remainder of this page is intentionally left blank.]
<PAGE> 7
IN WITNESS WHEREOF, UMC and Stockholder have each caused this
Agreement to be executed by their duly authorized officers as of the date and
year first above written.
UNITED MERIDIAN CORPORATION
By: /s/ John B. Brock
-------------------------------------------
Name: John B. Brock
Title: Chairman of the Board and
Chief Executive Officer
FLORES FAMILY LIMITED PARTNERSHIP
By: /s/ James C. Flores
-------------------------------------------
James C. Flores, General Partner
<PAGE> 1
EXHIBIT 5
UNITED MERIDIAN CORPORATION
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 22, 1997 (the
"Agreement"), between UNITED MERIDIAN CORPORATION, a Delaware corporation
("Issuer"), and OCEAN ENERGY, INC., a Delaware corporation ("Grantee").
RECITALS
WHEREAS, Issuer, Grantee and OEI Holding Corporation, a Delaware
corporation ("Newco"), have entered into an Agreement and Plan of Merger, dated
as of the date hereof (the "Merger Agreement"; defined terms used but not
otherwise defined herein have the meanings set forth in the Merger Agreement),
providing for, among other things, the merger of (i) Newco with Grantee and
(ii) Issuer with Grantee;
WHEREAS, as a condition and inducement to Grantee's willingness to
enter into the Merger Agreement and the OEI Option Agreement (as defined
below), Grantee has requested that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as defined below); and
WHEREAS, as a condition and inducement to Issuer's willingness to
enter into the Merger Agreement and this Agreement, Issuer has requested that
Grantee agree, and Grantee has agreed to, grant Issuer an option to purchase
shares of Grantee's common stock on substantially the same terms as the Option
(the "OEI Option Agreement").
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
1. Grant of Option. Subject to the terms and conditions set
forth herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 3,543,000 (as adjusted as set forth herein) shares
(the "Option Shares") of common stock, par value $0.01 per share ("Issuer
Common Stock"), of Issuer at a purchase price of $32-3/16 (as adjusted as set
forth herein) per Option Share (the "Purchase Price").
2. Exercise of Option. (a) Grantee may exercise the Option, in
whole but not in part, at any one time after the occurrence of any event as a
result of which Grantee is entitled to receive the Termination Fee pursuant to
the Merger Agreement (a "Purchase Event"); provided, however, that except as
provided in the last sentence of this Section 2(a), the Option shall terminate
and be of no further force and effect upon the earliest to occur of (A) the
Effective Time, (B) 18 months after the first occurrence of a Purchase Event,
and (C) termination of the Merger Agreement in accordance with its terms prior
to the occurrence of a Purchase Event, unless Grantee has the right to receive
a Termination Fee following such termination upon the occurrence of certain
events, in which case the Option shall not terminate until the later of (x) six
<PAGE> 2
months following the time such Termination Fee becomes payable and (y) the
expiration of the period in which Grantee has such right to receive a
Termination Fee. Notwithstanding the termination of the Option, Grantee shall
be entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option, and
the termination of the Option will not affect any rights hereunder which by
their terms do not terminate or expire prior to or as of such termination.
(b) In the event that Grantee wishes to exercise the Option, it
will send to Issuer a written notice (an "Exercise Notice"; the date of which
being herein referred to as the "Notice Date") to that effect, which Exercise
Notice shall specify the number of Option Shares, if any, Grantee wishes to
purchase pursuant to this Section 2(b), the denominations of the certificate or
certificates evidencing the Option Shares which Grantee wishes to purchase
pursuant to this Section 2(b) and a date not earlier than three business days
nor later than 20 business days from the Notice Date for the closing of such
purchase (an "Option Closing Date"); provided, however, that (i) if a closing
of the purchase and sale pursuant to the Option (an "Option Closing") cannot be
consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation related to such Option Closing has expired or been terminated and
(ii) without limiting the foregoing, if prior notification to or approval of
any regulatory authority is required in connection with any such purchase,
Grantee and Issuer shall promptly file the required notice or application for
approval and shall cooperate in the expeditious filing of such notice or
application, and the period of time that otherwise would run pursuant to this
sentence with respect to any Option Closing, shall run instead from the date on
which, as the case may be, (A) any required notification period has expired or
been terminated or (B) any required approval has been obtained, and in either
event, any requisite waiting period has expired or been terminated. Any Option
Closing will be at an agreed location and time in New York, New York on the
applicable Option Closing Date or at such later date as may be necessary so as
to comply with the provisions of this Section 2(b).
3. Payment and Delivery of Certificates. (a) At any Option
Closing, Grantee will pay to Issuer in immediately available funds by wire
transfer to a bank account designated in writing by Issuer an amount equal to
the Purchase Price multiplied by the number of Option Shares.
(b) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer shall deliver
to Grantee a certificate or certificates representing the Option Shares to be
purchased at such Option Closing, which Option Shares will be free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever. If at the
time of issuance of Option Shares pursuant to an exercise of the Option
hereunder, Issuer shall have issued and outstanding rights under a shareholder
rights plan or similar securities, then each Option Share issued pursuant to
such exercise will also represent such a corresponding right with terms
substantially the same as and at least as favorable to Grantee as are provided
under any Issuer shareholder rights agreement or any similar agreement then in
effect.
(c) Certificates for the Option Shares delivered at an Option
Closing shall have typed or printed thereon a restrictive legend which will
read substantially as follows:
<PAGE> 3
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE."
It is understood and agreed that the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have
been registered pursuant to the Securities Act, such Option Shares have been
sold in reliance on and in accordance with Rule 144 under the Securities Act or
Grantee has delivered to Issuer a copy of a letter from the staff of the SEC,
or an opinion of counsel in form and substance reasonably satisfactory to
Issuer and its counsel, to the effect that such legend is not required for
purposes of the Securities Act.
4. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Corporate Authorization. Issuer has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Issuer, and
no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
Issuer, and assuming this Agreement constitutes a valid and binding
agreement of Grantee, this Agreement constitutes a valid and binding
agreement of Issuer, enforceable against Issuer in accordance with its
terms (except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies).
(b) Authorized Stock. Issuer has taken all necessary
corporate and other action to authorize and reserve and, subject to
the expiration or termination of any required waiting period under the
HSR Act, to permit it to issue, and, at all times from the date hereof
until the obligation to deliver Option Shares upon the exercise of the
Option terminates, shall have reserved for issuance, upon exercise of
the Option, shares of Issuer Common Stock necessary for Grantee to
exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant
to Section 6 upon exercise of the Option. The shares of Issuer Common
Stock to be issued upon due exercise of the Option, including all
additional shares of Issuer Common Stock or other securities which may
be issuable upon exercise of the Option or any other securities which
may be issued pursuant to Section 6, upon issuance pursuant hereto,
will be duly and validly issued, fully paid and nonassessable and will
be delivered free and clear of all liens, claims, charges and
encumbrances of any kind or nature whatsoever, including without
limitation any preemptive rights of any stockholder of Issuer.
<PAGE> 4
5. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
(a) Corporate Authorization. Grantee has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of Grantee, and
no other corporate proceedings on the part of Grantee are necessary to
authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
Grantee, and assuming this Agreement constitutes a valid and binding
agreement of Issuer, this Agreement constitutes a valid and binding
agreement of Grantee, enforceable against Grantee in accordance with
its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles
governing the availability of equitable remedies).
(b) Purchase Not for Distribution. Any Option Shares or
other securities acquired by Grantee upon exercise of the Option will
not be transferred or otherwise disposed of except in a transaction
registered, or exempt from registration, under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc. (a) In the
event of any changes in Issuer Common Stock by reason of a stock dividend,
stock split, reverse stock split, merger, recapitalization, combination,
exchange of shares, or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Grantee shall receive upon exercise of the
Option the number and class of shares or other securities or property that
Grantee would have received with respect to Issuer Common Stock if the Option
had been exercised immediately prior to such event or the record date therefor,
as applicable.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, in the event that the Issuer enters into an
agreement (i) to consolidate with or merge into any person, other than Grantee
or one of its subsidiaries, and Issuer shall not be the continuing or surviving
corporation in such consolidation or merger, (ii) to permit any person, other
than Grantee or one of its subsidiaries, to merge into Issuer and Issuer shall
be the continuing or surviving corporation, but in connection with such merger,
the shares of Issuer Common Stock outstanding immediately prior to the
consummation of such merger shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property,
or the shares of Issuer Common Stock outstanding immediately prior to the
consummation of such merger will, after such merger represent less than 50% of
the outstanding voting securities of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option
<PAGE> 5
shall, upon the consummation of any such transaction and upon the terms and
condition set forth herein, be converted into, or exchanged for, an option with
identical terms appropriately adjusted to acquire the number and class of
shares or other securities or property that Grantee would have received in
respect of Issuer Common Stock if the Option had been exercised immediately
prior to such consolidation, merger, sale, or transfer, or the record date
therefor, as applicable.
(c) If, prior to the termination of the Option in accordance with
Section 2, Issuer enters into any agreement (x) pursuant to which all
outstanding shares of Issuer Common Stock are to be purchased for, or converted
into the right to receive in whole or in part (other than in respect of
fractional shares) cash or (y) with respect to any transaction described in
clauses (i), (ii) and (iii) of Section 6(b) (each of (x) and (y), a
"Transaction"), the Issuer covenants that proper provision shall be made in
such agreement to provide that, if the Option shall not theretofore have been
exercised, then upon the consummation of the Transaction (which in the case of
a Transaction involving a tender offer shall be when shares of Issuer Common
Stock are accepted for payment), Grantee shall have the right, at its election,
by not less than two business days' prior written notice to Issuer, to receive
in exchange for cancellation of the remaining Option an amount in cash equal to
the Spread. For purposes of this Agreement, the term "Spread" means the number
of Option Shares multiplied by the excess of (A) the closing sales price per
share of Issuer Common Stock on the principal securities exchange or quotation
system on which Issuer Common Stock is then listed or traded, as reported by
The Wall Street Journal, on the day immediately prior to the consummation of
such Transaction, over (B) the Purchase Price. Notwithstanding the foregoing,
the amount of the Spread, when added to any Termination Fee paid or payable to
Grantee, shall not exceed $50 million.
(d) Following exercise of the Option by Grantee, in the event that
Grantee sells, pledges or otherwise disposes of (including, without limitation,
by merger or exchange) any of the Option Shares (a "Sale"), then;
(i) any Termination Fee due and payable by Issuer
following such time shall be reduced by an amount, if any, equal to
the excess of (1) the total of (A) the Termination Fee and (B) the
excess of (w) the aggregate amounts received (whether in cash,
securities or otherwise) by Grantee in all such Sales, over (x) the
aggregate Purchase Price of the Option Shares sold in such Sales (such
excess in this sub-clause (B) being the "Offset Amounts") over (2) $50
million;
(ii) if Issuer has paid to Grantee the Termination Fee
prior to a Sale, then Grantee shall immediately remit to Issuer, as
additional Purchase Price for the Option Shares, the excess, if any,
of (y) the total of the Termination Fee and the Offset Amounts of all
Sales over (z) $50 million; and
(iii) if a Sale or Sales occur prior to the payment of the
Termination Fee to Grantee by Issuer, and the aggregate amount
received (whether in cash, securities or otherwise) by Grantee in such
Sales exceeds $50 million, Grantee shall remit to Issuer the aggregate
amount received in excess of $50 million and deliver to Issuer for
cancellation any remaining Option Shares owned by Grantee.
<PAGE> 6
(e) Notwithstanding anything to the contrary in this Agreement or
the Merger Agreement, in no event shall the aggregate of any Termination Fee,
all Offset Amounts and the Spread exceed $50 million, and to the extent such
items would otherwise exceed $50 million, Grantee, at its sole election, shall
either (i) reduce the number of Option Shares subject to the Option, (ii)
deliver to Issuer for cancellation Option Shares previously purchased by
Grantee, (iii) pay cash to issuer or (iv) take a combination of any of the
foregoing actions.
7. Registration Rights. Issuer shall, if requested by Grantee at
any time and from time to time within two years after the date of the exercise
of an Option, as expeditiously as possible prepare and file up to two
registration statements under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all
securities that have been acquired by Grantee upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Grantee, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such securities under any applicable state securities laws.
Grantee agrees to use reasonable efforts to cause, and to cause any
underwriters of any sale or other disposition to cause, any sale or other
disposition pursuant to such registration statement to be effected on a widely
distributed basis. Issuer shall use reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers
of other parties which are required therefor, and to keep such registration
statement effective for such period not in excess of 90 calendar days from the
day such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. The obligations of Issuer
hereunder to file a registration statement and to maintain its effectiveness
may be suspended for one or more periods of time not exceeding 90 calendar days
in the aggregate if the Board of Directors of Issuer shall have determined that
the filing of such registration statement or the maintenance of its
effectiveness would require premature disclosure of material nonpublic
information that would materially and adversely affect Issuer. Any
registration statement prepared and filed under this Section 7, and any sale
covered thereby, shall be at Issuer's expense except for underwriting discounts
or commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If, during the time periods referred to in the first sentence of
this Section 7, Issuer effects a registration under the Securities Act of
Issuer Common Stock for its own account or for any other stockholders of Issuer
(other than on Form S-4 or Form S-8, or any successor form), it shall allow
Grantee the right to participate in such registration, and such participation
will not affect the obligation of Issuer to effect demand registration
statements for Grantee under this Section 7; provided that, if the managing
underwriters of such offering advise Issuer in writing that in their opinion
the number of shares of Issuer Common Stock requested to be included in such
registration exceeds the number which can be sold in such offering, priority
shall be given to the securities intended to be included therein by the Issuer
for its own account and, thereafter, Issuer will include the securities
requested to be included therein by Grantee pro rata with the securities
intended to be included therein by other security holders of the Issuer. In
connection with any registration pursuant to this Section 7, Issuer and Grantee
shall provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and contribution in
<PAGE> 7
connection with such registration. The registration rights set forth in this
Section 7 are subject to any other registration rights in effect on the date
hereof.
8. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NYSE (or any other
national securities exchange or national securities quotation system), Issuer,
upon the request of Grantee, shall promptly file an application to list the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE (and any such other national securities exchange or
national securities quotation system) and shall use reasonable efforts to
obtain approval of such listing as promptly as practicable.
9. Loss or Mutilation. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer shall execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed, or mutilated shall at any time
be enforceable by anyone.
10. Miscellaneous. (a) Expenses. Except as otherwise provided
herein or in the Merger Agreement, each of the parties hereto will pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) Amendment. This Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to
waive any provision of this Agreement, or to extend the time for performance,
will be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise will not constitute a waiver of such
rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the OEI Option Agreement, the Merger Agreement (including the
documents and instruments attached thereto as exhibits or schedules or
delivered in connection therewith) and the Confidentiality Agreement (i)
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement, and (ii) except as provided in Section 9.9 of
the Merger Agreement, are not intended to confer upon any person other than the
parties hereto any rights or remedies.
(e) Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
<PAGE> 8
(f) Notices. All notices, requests, claims, demands, and other
communications under this Agreement must be in writing and will be deemed given
if delivered personally, telecopied (which is confirmed), or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
To Issuer:
United Meridian Corporation
1201 Louisiana, Suite 1400
Houston, Texas 77002
Attention: Chairman and Chief Executive Officer
Telecopy: (713) 653-5024
copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Michael E. Dillard, P.C.
Telecopy: (214) 969-4343
To Grantee:
Ocean Energy, Inc.
8440 Jefferson Highway, Suite 420
Baton Rouge, Louisiana 70809
Attention: Chairman and Chief Executive Officer
Telecopy: (504) 927-1109
copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: John F. Wombwell
Telecopy: (713) 220-4285
(g) Assignment. Neither this Agreement, the Option nor any of the
rights, interests, or obligations under this Agreement may be assigned,
transferred or delegated, in whole or in part, by operation of law or
otherwise, by Issuer or Grantee without the prior written consent of the other.
Any assignment, transfer or delegation in violation of the preceding sentence
will be void. Subject to the first and second sentences of this Section 10(g),
this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and permitted
assigns.
<PAGE> 9
(h) Further Assurances. In the event of any exercise of the Option
by Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(i) ENFORCEMENT. THE PARTIES AGREE THAT IRREPARABLE DAMAGE WOULD
OCCUR AND THAT THE PARTIES WOULD NOT HAVE ANY ADEQUATE REMEDY AT LAW IN THE
EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN
ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT IS
ACCORDINGLY AGREED THAT THE PARTIES WILL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY FEDERAL COURT LOCATED IN THE
STATE OF DELAWARE OR IN DELAWARE STATE COURT, THE FOREGOING BEING IN ADDITION
TO ANY OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY. IN
ADDITION, EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO THE
PERSONAL JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR
ANY DELAWARE STATE COURT IN THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (B) AGREES THAT IT
WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR
OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (C) AGREES THAT IT WILL NOT
BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A FEDERAL COURT SITTING
IN THE STATE OF DELAWARE OR A DELAWARE STATE COURT.
(j) Counterparts; Effectiveness. This Agreement may be executed in
two or more counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered (by telecopy or otherwise) to the other
parties.
[The remainder of this page is intentionally left blank.]
<PAGE> 10
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the day
and year first above written.
UNITED MERIDIAN CORPORATION
By: /s/ John B. Brock
-------------------------------
Name: John B. Brock
Title: Chairman of the Board and
Chief Executive Officer
OCEAN ENERGY, INC.
By: /s/ James C. Flores
-------------------------------
Name: James C. Flores
Title: Chairman of the Board,
President, and Chief
Executive Officer
