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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): JUNE 29, 1999
THE MERIDIAN RESOURCE CORPORATION
(Exact name of registrant as specified in charter)
TEXAS 1-10671 76-0319553
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
15995 N. BARKERS LANDING, SUITE 300
HOUSTON, TEXAS 77079
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 558-8080
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Exhibit Index Appears on Page 4
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ITEM 5. OTHER EVENTS.
During June 1999, The Meridian Resource Corporation, a Texas
corporation (the "Company"), completed private placements of an aggregate of
$20 million of its 9 1/2% convertible subordinated noted due June 18, 2005 (the
"Notes"). The Notes are unsecured and contain customary events of default, but
do not contain any maintenance or other restrictive covenants.
Interest is payable on a quarterly basis.
The Notes are convertible at any time by the holders of the Notes
into shares of the Company's common stock, $.01 par value ("Common Stock"),
utilizing a conversion price of $7.00 per share (the "Conversion Price"). The
Conversion Price is subject to customary anti-dilution provisions. The holders
of the Notes have been granted registration rights with respect to the shares
of Common Stock that are issued upon conversion of the Notes or issuance of the
warrants discussed below.
The Notes may be prepaid by the Company at any time without penalty
or premium; however, in the event the Company redeems or prepays the Notes on
or before June 21, 2001, the Company will issue to the holders of the Notes
warrants to purchase that number of shares of Common Stock into which such
Notes would have been convertible on the date of prepayment. Such warrants will
have exercise prices equal to the Conversion Price in effect on the date of
issuance and will expire on June 21, 2001, regardless of the date such warrants
are issued.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
4.1 - Note Purchase Agreement dated June 18, 1999, between
the Company and Kayne Anderson Energy Fund, L.P.
4.2 - Note Purchase Agreement dated June 22, 1999, between
the Company and Eos Partners, L.P.
4.3 - 9 1/2% Subordinated Note due June 18, 2001, payable
by the Company to Kayne Anderson Energy Fund, L.P.
4.4 - 9 1/2% Subordinated Note due June 18, 2001, payable
by the Company to Eos Partners, L.P.
4.5 - Form of warrant attached as Annex A to Exhibits 4.3
and 4.4.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE MERIDIAN RESOURCE CORPORATION
Dated: June 29, 1999 By: /s/ P. Richard Gessinger
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P. Richard Gessinger
Chief Financial Officer
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INDEX TO EXHIBITS
Number Exhibit
4.1 - Note Purchase Agreement dated June 18, 1999, between the Company
and Kayne Anderson Energy Fund, L.P.
4.2 - Note Purchase Agreement dated June 22, 1999, between the Company
and Eos Partners, L.P.
4.3 - 9 1/2% Subordinated Note due June 18, 2001, payable by the Company
to Kayne Anderson Energy Fund, L.P.
4.4 - 9 1/2% Subordinated Note due June 18, 2001, payable by the Company
to Eos Partners, L.P.
4.5 - Form of warrant attached as Annex A to Exhibits 4.3 and 4.4.
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EXHIBIT 4.1
CONVERTIBLE NOTE PURCHASE AGREEMENT
This CONVERTIBLE NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of
June 18, 1999, between The Meridian Resource Corporation, a Texas corporation
(the "Company"), and Kayne Anderson Energy Fund, L.P., a Delaware limited
partnership ("Purchaser");
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the Company to issue and sell to the Purchaser certain
securities of the Company, subject to the terms and conditions of this
Agreement;
WHEREAS, the Company and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
sale of certain securities of the Company to the Purchaser;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Unless otherwise specifically stated in the text of this Agreement,
the following terms shall have the following meanings:
"Affiliate" shall mean, with respect to any specified Person, any
other Person, directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes
of this definition, "control" (including, with correlative meanings,
"controlling," "controlled by" and "under common control with") means the power
to direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise and, with respect to a corporation or partnership,
control shall mean direct or indirect ownership of more than 50% of the voting
stock or general partnership interest or voting interest in any such
corporation or partnership.
"Closing Date" shall mean the date hereof.
"Commission" shall have the meaning subscribed thereto in Section
3.1 hereof.
"Conversion Price" shall have the meaning assigned to it in the
Notes.
"Credit Agreement" means the Amended and Restated Credit Agreement
dated May 22, 1998, among the Company, the several lenders from time to time
party thereto (the "Lenders"), The Chase Manhattan Bank, as administrative
agents, Bankers Trust Company, as Syndication Agent, Chase Securities, Inc., as
Advisor, Chase Securities Inc., B T Alex. Brown Incorporated, Toronto Dominion
(Texas), Inc. and Credit Lyonnais New York Branch, as Co-arrangers, and Toronto
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Dominion (Texas), Inc. and Credit Lyonnais New York Branch, as Co-Documentation
Agents, as amended.
"Exhibit" shall refer to the Exhibits to this Agreement, unless
otherwise stated, and an Exhibit may be attached to this Agreement or set forth
in a separate document denoted as an Exhibit to this Agreement.
"Governmental Authority" shall mean any and all foreign, federal,
state or local governments, governmental institutions, public authorities and
governmental entities of any nature whatsoever, and any subdivisions or
instrumentalities thereof, including, but not limited to, departments, boards,
bureaus, commissions, agencies, courts, administrations and panels, and any
divisions or instrumentalities thereof, whether permanent or ad hoc and whether
now or hereafter constituted and existing.
"Governmental Requirement" shall mean any and all laws (including,
but not limited to, applicable common law principles), statutes, ordinances,
codes, rules, regulations, interpretations, guidelines, directions, orders,
judgments, writs, injunctions, decrees, decisions or similar items or
pronouncements that are promulgated, issued, passed or set forth by any
Governmental Authority.
"Notes" shall mean the $15 million in principal amount of
subordinated convertible notes, which shall be in substantially the form
attached hereto as Exhibit A.
"Person" shall mean any natural person, any Governmental Authority
and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, limited liabilities companies, joint ventures,
joint stock companies, trusts, estates, companies and associations, whether
organized for profit or otherwise.
"Purchaser" shall have the meaning ascribed thereto in the
introduction to this Agreement.
"Purchase Price" shall have the meaning ascribed thereto in Section
2.2 hereof.
"Registering Parties" or "Registering Party" have the meaning
ascribed thereto in Section 8.4(a).
"SEC Documents" shall have the meaning ascribed thereto in Section
4.5 hereof.
"Securities Act" shall have the meaning ascribed thereto in Section
3.1 hereof.
"TMRC Common Stock" shall mean the common stock, $0.01 per value, of
the Company.
"TMRC Converted Shares" shall mean any TMRC Common Stock that the
Purchaser holds as a result of a conversion of the Notes into TMRC Common Stock
or as a result of the exercise of the Warrants.
"Warrants" shall mean the stock purchase warrants described on
Annex A to the Notes.
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ARTICLE II
AUTHORIZATION, PURCHASE AND SALE OF THE NOTES
Section 2.1 Authorization of the Notes. The Company has authorized
the issuance and sale of up to $25 million principal amount of Notes.
Section 2.2 Sale and Purchase of the Notes. Subject to the terms and
conditions hereof and in reliance upon the representations, warranties and
agreements contained herein, on the Closing Date, the Company will issue and
sell to the Purchaser, and the Purchaser will purchase from the Company, $15
million in principal amount of Notes at a purchase price equal to the principal
amount of such Notes (the "Purchase Price").
Section 2.3 Purchase Price. The Company shall deliver, upon receipt
of the Purchase Price, to the Purchaser, Notes in the principal amount of $15
million. Each Purchaser shall deliver to the Company the Purchase Price, by
cash, check, wire transfer or any combination of the foregoing as designated by
the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company that:
Section 3.1 Investment Purpose; Accredited Investor. Such Purchaser
(i) is an accredited investor as that term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), and (ii) is acquiring the Notes for its own account, for investment
purposes and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act, except pursuant to a valid registration statement under the Securities Act
declared effective by the Securities and Exchange Commission (the "Commission")
or pursuant to a valid exemption from registration under the Securities Act.
Section 3.2 Restrictions on Resale. The Purchaser acknowledges that
the Notes and any shares of TMRC Converted Shares (if and when issued) must be
held indefinitely unless and until they are subsequently registered under the
Securities Act or an exemption from such registration is available and that all
certificates representing TMRC Converted Shares if and when issued, unless such
shares have been registered under the Securities Act, shall have endorsed
thereon the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SHARES
ARE REGISTERED UNDER SUCH ACT, OR SUCH STATE LAWS, OR AN OPINION OF
COUNSEL IS FURNISHED TO THE COMPANY (WHICH OPINION AND COUNSEL
RENDERING SAME SHALL BE REASONABLY SATISFACTORY TO THE
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COMPANY) TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
The Purchaser also acknowledges that the Notes will bear a legend substantially
in the form included in the form of Note attached hereto as Exhibit A. The
legends contained on the Notes and the certificates representing TMRC Converted
Shares shall be removed by the Company upon delivery to it of an opinion of
counsel to the Company (which opinion and counsel rendering same shall be
reasonably satisfactory to the Company) that a registration statement under the
Securities Act is at the time effective with respect to the transfer of the
legended security or that such security may be transferred without such
registration statement being in effect and without the requirements of a legend
on the certificate in the hands of the transferee.
3.3 Access to Data. The Purchaser has had an opportunity to review
the SEC Documents and is not subscribing for the Notes as a result of any
advertisement, article, notice or other communication published in any
newspaper, newswire, magazine or similar media or broadcast over television,
radio or any electronic media (including the internet).
3.4 Authorization. The Purchaser has full power and authority to
enter into and to perform this Agreement in accordance with its terms. All
action (corporate or otherwise) on the part of the Purchaser necessary for the
authorization, execution, delivery and performance by the Purchaser of this
Agreement and the consummation of the transactions contemplated herein has been
taken. This Agreement is a valid and binding obligation of the Purchaser,
enforceable in accordance with its terms except as limited by applicable
bankruptcy, moratorium, insolvency or other similar laws affecting generally
the rights of creditors or by principles of equity.
3.5 NYSE Affiliate. The Purchaser and its Affiliates (after issuance
of the Notes to the Purchaser hereunder) will not beneficially own (as defined
under Rule 13d-3 promulgated pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) 15% or more of the outstanding TMRC Common
Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser that:
Section 4.1 Due Incorporation and Qualification and Capital
Structure. The Company is a corporation duly incorporated and validly existing
under the laws of the state of Texas and has all requisite corporate power to
carry on its business as now being conducted. The Company is qualified to do
business in each other jurisdiction in which its failure to so qualify would
materially and adversely affect the Company or its financial condition,
business or ability to perform the transactions contemplated by this Agreement.
Section 4.2 Performance of Agreement.
(a) The Company has all necessary corporate power and
authority to enter into and carry out the transactions contemplated by this
Agreement, to issue the Notes, to execute and
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deliver the Warrants, and to issue the TMRC Converted Shares pursuant to the
Notes or the Warrants, as the case may be.
(b) The Company's execution, delivery and performance of
this Agreement, the issuance of the Notes, the execution and delivery of the
Warrants, and the issuance of the TMRC Converted Shares pursuant to the Notes
or the Warrants, as the case may be, have been duly and validly authorized and
approved by all necessary corporate action on the part of the Company.
(c) The execution, delivery and performance of this
Agreement by the Company, and the transactions contemplated hereby, the
issuance of the Notes, the execution and delivery of the Warrants, and the
issuance of the TMRC Converted Shares pursuant to the Notes or the Warrants, as
the case may be, will not violate (i) any provision of the articles of
incorporation or bylaws of the Company, (ii) any material agreement or
instrument to which the Company is a party or by which the Company is bound,
(iii) any judgment, order, ruling or decree applicable to the Company as a
party in interest or (iv) any Governmental Requirement applicable to the
Company.
(d) This Agreement is, and each Note and Warrant, if and
when executed and delivered by the Company, will be, a valid and binding
agreement and obligation of the Company, enforceable against the Company in
accordance with its terms, except as limited by (i) applicable bankruptcy,
moratorium, insolvency or other similar laws affecting generally the rights of
creditors, (ii) general principles of equity or (iii) the indemnification
provisions contained in this Agreement being subject to limitations under
public policy.
Section 4.3 Brokers and Finders. No agent, broker, investment
banker, person or firm acting on behalf of the Company or under its authority
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee directly or indirectly from the Purchaser in connection with any
of the transactions contemplated hereby.
Section 4.4 Authorization for TMRC Common Stock. The Company has
taken all necessary corporate action to permit it to issue the number of shares
of TMRC Common Stock to be issued upon conversion of the Notes or exercise of
the Warrants. The shares of TMRC Common Stock to be issued upon conversion of
the Notes or exercise of the Warrants will, when issued pursuant to the terms
of this Agreement, the Notes and the Warrants, as the case may be, be validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Section 4.5 SEC Documents. The Company has provided or made
available to the Purchaser the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 (the "10-K"), Amendment No. 1 to the 10-K on Form
10-K/A, the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999, the Company's Current Report on Form 8-K dated May 5, 1999, and the
Company's proxy statement with respect to its Annual Meeting of Shareholders
for 1999 (such documents collectively referred to herein as the "SEC
Documents"). As of their respective dates, (i) the SEC Documents complied in
all material respects with the requirements of the Exchange Act, and the rules
and regulations of the Commission promulgated thereunder applicable to such SEC
Documents, and (ii) none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were
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made, not misleading. The consolidated financial statements of the Company
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended. Since March 31, 1999,
other than as discussed in the SEC Documents, there has been no material
adverse change in the business of the Company and its subsidiaries, taken as a
whole.
Section 4.6 Adequate Security. The Mortgages (as defined in the
Credit Agreement) and Additional Mortgages (as defined in the Credit Agreement)
constitute adequate security for the outstanding borrowings under the Credit
Agreement. The Company covenants and agrees that it will not challenge the
adequacy of the Mortgages or Additional Mortgages that secure the outstanding
borrowings under the Credit Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser hereunder are subject to
satisfaction of the conditions set out in this Article V at or before the
Closing Date.
Section 5.1 Opinion of Counsel. The Purchaser shall have received
the opinion of counsel to the Company in a form reasonably satisfactory to the
Purchaser.
Section 5.2 Performance and Obligations of the Company. All of the
terms and conditions of this Agreement to be complied with and performed by the
Company at or before the Closing Date shall have been complied with and
performed in all material respects.
Section 5.3 Absence of Litigation. No suit, action or other
proceeding by a third party or governmental entity shall have been instituted
or threatened before any court, Governmental Authority or legislative body to
enjoin, restrain or prohibit, or to obtain substantial damages in respect of,
or which is related to or arises out of, this Agreement or the consummation of
the transactions contemplated hereby, which, in the reasonable judgment of the
Purchaser, would make it inadvisable to consummate such transactions.
Section 5.4 Representations and Warranties. All of the
representations and warranties of the Company shall be true and correct on the
Closing Date.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company hereunder are subject to satisfaction
of the conditions set out in this Article VI at or before the Closing Date.
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Section 6.1 Absence of Litigation. No suit, action or other
proceeding by a third party or governmental entity shall have been instituted
or threatened before any court, Governmental Authority or legislative body to
enjoin, restrain or prohibit, or to obtain substantial damages in respect of,
or which is related to or arises out of, this Agreement or the consummation of
the transactions contemplated hereby, which, in the reasonable judgment of the
Company, would make it inadvisable to consummate such transactions.
Section 6.2 Performance and Obligations of the Purchaser. All of the
terms and conditions of this Agreement to be complied with and performed by the
Purchaser at or before the Closing Date hereof shall have been complied with
and performed in all material respects.
Section 6.3 Representations and Warranties. The representations and
warranties of each of the Purchaser shall be true and correct on the Closing
Date.
ARTICLE VII
NATURE OF STATEMENTS AND SURVIVAL
Section 7.1 Representations and Warranties. The several
representations and warranties of the parties shall survive the execution and
delivery of this Agreement for three years.
Section 7.2 Effect of Investigation. All representations,
warranties, covenants and agreements made by the parties shall not be affected
by any investigation heretofore or hereafter made by and on behalf of any of
them and shall not be deemed merged into any instruments or agreements
delivered in connection with this Agreement or otherwise in connection with the
transactions contemplated hereby.
Section 7.3 Survival of Covenants and Agreements. The covenants and
agreements entered into pursuant to this Agreement shall survive the execution
and delivery of this Agreement without limitation.
ARTICLE VIII
REGISTRATION
Section 8.1 Demand Rights. On three occasions during the period
ending on the first anniversary of the date of this Agreement and on one
occasion after the first anniversary of the date of this Agreement, the
Purchaser may request in writing (on behalf of itself and all of its Affiliates
to whom rights under this Agreement have been assigned pursuant to Section 9.1
and in the aggregate as a group) to the Company (a "Demand Request"), pursuant
to this Section 8.1, that the Company register under the Securities Act any
TMRC Converted Shares owned by the Purchaser and its Affiliates pursuant to a
non-underwritten offering, having a period of distribution not to exceed 60
days; provided, however, the Company shall not be obligated to prepare and file
any registration statement pursuant to this Section 8.1, or prepare or file any
amendment or supplement thereto, and may suspend sales thereunder, at any time
when the Company reasonably believes that the filing thereof at the time
requested, or the offering of securities pursuant thereto, would materially and
adversely affect a pending or proposed public offering of securities of the
Company, a proposed
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acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction relating to the Company or negotiations, discussions or pending
proposals with respect thereto or require premature disclosure of information
not otherwise required to be disclosed to the potential detriment of the
Company; provided, however, that such period of sale or distribution shall
resume after any such suspension for a number of additional days necessary so
that such registration has been kept effective for permitted sales thereunder
for an aggregate term of 60 days. In the event the filing of a registration
statement, or any amendment or supplement thereto, by the Company is deferred,
or the sale and distribution of shares is suspended, in each case pursuant to
the foregoing provisions, for more than 15 business days, then the Purchaser
(on behalf of itself and its Affiliates) may (only in the event the Purchaser
or its Affiliates have not yet sold more than 50% of the TMRC Converted Shares
owned by any of them that are included in the registration statement) give the
Company written notice of the Purchaser's and its Affiliates' intent to abandon
the registration, and, in such circumstance, no additional TMRC Converted
Shares owned by the Purchaser or its Affiliates may be sold by the Purchaser or
its Affiliates pursuant to such registration statement and the registration or
request for registration shall not be considered one of the Purchaser's and its
Affiliates' Demand Requests permitted by this Section 8.1. Any Demand Request
made by the Purchaser (on behalf of itself and its Affiliates) during the
period ending on the first anniversary of the date of this Agreement must be
for registration of a minimum of 250,000 shares of TMRC Converted Shares owned
by the Purchaser or its Affiliates. Any Demand Request made by the Purchaser
(on behalf of itself and its Affiliates) at any time after the first
anniversary of the date of this Agreement must be for registration of a minimum
of 500,000 shares of TMRC Converted Shares owned by the Purchaser or its
Affiliates. The filing of a registration statement, or any amendment or
supplement thereto, by the Company may not be deferred, and the sale and
distribution of shares may not be suspended, in each case pursuant to the
foregoing provisions, for more than 60 days after the abandonment or
consummation (or the completion of the distribution of securities in the case
of a public offering) of any of the proposals or transactions described therein
or, in any event, for more than 180 days during any one year.
Section 8.2 Piggyback Rights. If, at any time after the date hereof,
the Company proposes to register under the Securities Act any shares of TMRC
Common Stock for sale by it pursuant to an underwritten public offering of TMRC
Common Stock (except with respect to registration statements (a) filed on Forms
S-4, S-8 or such other forms as shall be prescribed under the Securities Act
for the same purposes as such form or (b) registration statements filed
pursuant to demand registration rights contained in the SLOPI Registration
Rights Agreement (as hereinafter defined)) or a non-underwritten public
offering of TMRC Common Stock filed pursuant to a demand request made by
another Purchaser and its Affiliates pursuant to this Agreement, the Company
will at each such time, prior to the filing of any such registration statement,
give written notice to each Purchaser (other than a Purchaser making a Demand
Request) (which also shall be deemed to be notice to the Purchaser's
Affiliates) of the Company's intention to do so, regardless of whether any the
Purchaser and its Affiliates have previously exercised piggyback registration
rights or demand registration rights as to any other shares of TMRC Common
Stock owned by them, and, upon the written request (which must specify the
number of shares of TMRC Converted Shares that the Purchaser and its Affiliates
propose to include in such offering) from the Purchaser (on behalf of itself
and each of its Affiliates) delivered to the Company within 20 days (or such
shorter period, but in any event not less than five days, as the Company shall
specify in its notice to the Purchaser) of the Purchaser's receipt of the
Company's notice, the Company will use commercially reasonable efforts to cause
any TMRC Converted Shares as to which registration shall have been so requested
to be
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included in the shares to be covered by the registration statement proposed to
be filed by the Company. Nothing contained in this Section 8.2 shall, however,
limit the Company's right to cancel, postpone or withdraw any such proposed
registration for any reason (except in connection with a registration pursuant
to a Demand Request, in which case the terms of Section 8.1 hereof shall
apply). Any request by a Purchaser and its Affiliates (through the Purchaser)
pursuant to this Section 8.2 to register TMRC Converted Shares for sale in an
underwritten offering shall be on the same terms and conditions as the other
shares of TMRC Common Stock to be registered and sold through the underwriters
under such registration; provided, however, that as a condition to such
inclusion each the Purchaser and its Affiliates shall execute an underwriting
agreement acceptable to the underwriters and, if requested, a custody agreement
having such customary terms as the underwriters shall request, including
indemnification, and if the managing underwriter determines and advises in
writing that the inclusion in the underwriting of all TMRC Converted Shares
proposed to be included by the Purchaser and its Affiliates and any other
shares of TMRC Common Stock sought to be registered by any other shareholder of
the Company exercising rights comparable to those of the Purchaser and its
Affiliates under this Section 8.2 would, in the reasonable and good faith
judgment of the underwriters, interfere with the successful marketing of the
securities proposed to be registered for underwriting by the Company or by any
holder of TMRC Common Stock having the right to require the Company to register
such TMRC Common Stock (the "Other Common Stock"), then the number of TMRC
Converted Shares and Other Common Stock requested to be included in the
underwriting shall be reduced (subject to the rights of Shell Louisiana Onshore
Properties Inc. and its Affiliates and assignees ("SLOPI") under that certain
Registration Rights Agreement between the Company and SLOPI dated June 30, 1998
(the "SLOPI Registration Rights Agreement")) pro rata among the Purchaser and
its Affiliates and the holders of Other Common Stock requesting such
registration and inclusion in the underwriting and may, in the determination of
such managing underwriter and consistent with pro rata reduction, be reduced to
zero. In the event any Purchaser or its Affiliates elects pursuant to this
Section 8.2 to include TMRC Converted Shares in a registration statement being
filed pursuant to a Demand Request, such inclusion shall be considered as the
use of one of the Demand Requests under Section 8.1 hereof.
Section 8.3 Procedure. If and whenever the Company is requested
pursuant to the provisions of this Agreement to effect the registration of any
TMRC Converted Shares under the Securities Act, the Company will, subject to
the other provisions of this Article VIII, including the rights of the Company
pursuant to Section 8.1 hereof to delay, or suspend sales under, any such
registration):
(a) as expeditiously as reasonably practicable after
demand therefor, prepare and file with the Commission a registration statement
on the appropriate form with respect to such TMRC Converted Shares and seek to
cause such registration statement to become and remain effective;
(b) as expeditiously as reasonably practicable, prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective and to comply with
the provisions of the Securities Act with respect to the disposition of such
TMRC Converted Shares covered by such registration statement in accordance with
the intended method of distribution set forth in such registration statement;
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(c) as expeditiously as reasonably practicable, furnish to
each Purchaser (in the event the Purchaser or its Affiliates is participating
in the registration) (on behalf of the Purchaser and its Affiliates) such
number of copies of final prospectuses and preliminary prospectuses in
conformity with the requirements of the Securities Act, and such other
documents as the Purchaser (or behalf of itself and its Affiliates) may
reasonably request, in order to facilitate the public sale or other disposition
of such TMRC Converted Shares; provided, however, that the obligation of the
Company to deliver copies of final prospectuses or preliminary prospectuses to
the Purchaser (on behalf of itself and its Affiliates) shall be subject to the
receipt by the Company of reasonable assurances from the the Purchaser and its
Affiliates participating in such offering that they will comply with the
applicable provisions of the Securities Act and of such other securities laws
as may be applicable in connection with any use by the Purchaser and its
Affiliates of any final prospectuses or preliminary prospectuses;
(d) as expeditiously as practicable, use its best efforts
to register or qualify TMRC Converted Shares covered by such registration
statement under such other securities laws of such United States jurisdictions
as a Purchaser (on behalf of the Purchaser and its Affiliates) shall reasonably
request (considering the nature and size of the offering) and do any and all
other acts and things that may be necessary or desirable to enable the
Purchaser and its Affiliates participating in such offering to consummate the
public sale or other disposition in such jurisdictions of TMRC Converted
Shares; provided, however, that the Company shall not be required to qualify to
transact business as a foreign corporation in any jurisdiction in which it
would otherwise not be required to be so qualified or to take any action that
would subject it to general service of process in any jurisdiction in which it
is not then so subject;
(e) bear all Registration Expenses (as defined below) in
connection with all registrations hereunder; provided, however, that all
Selling Expenses (as defined below) of TMRC Converted Shares and all fees and
disbursements of counsel for the Purchaser and its Affiliates participating in
the registration in connection with each registration pursuant to this Article
8 shall be borne by the Purchaser and its Affiliates. Expenses incurred by the
Company in complying with this Article 8, including, without limitation: (i)
all registration and filing fees; (ii) all printing expenses; (iii) all fees
and disbursements of counsel for the Company; (iv) all blue sky fees and
expenses; and (v) all fees and expenses of accountants for the Company, are
herein referred to as "Registration Expenses". All underwriting fees and
discounts and brokerage and selling commissions relating to TMRC Converted
Shares to be registered for sale by the Purchaser and its Affiliates
participating in the registration and fees and expenses of the counsel for the
Purchaser and its Affiliates and any underwriter's counsel (only to the extent
the underwriting agreement relating to such registration requires underwriter's
counsel's fees and expenses to be paid by the Company and the Purchaser and its
Affiliates and only to the extent of the Purchaser's and its Affiliates' pro
rata portion of such fees based upon the ratio the number of shares being sold
by the Purchaser and its Affiliates bears to the total number of shares being
offered) applicable to the sales by the Purchaser and its Affiliates in
connection with any such registration are herein referred to as "Selling
Expenses"; and
(f) keep each registration pursuant to Section 8.1 hereof
effective for a period of up to 60 days or such shorter period of time until
the transfer or sale of all TMRC Converted Shares so registered has been
completed.
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Section 8.4 Indemnification.
(a) In the event of a registration of any TMRC Converted
Shares under the Securities Act pursuant to this Article 8, the Company will
indemnify and hold harmless the Purchaser and their Affiliates participating in
the registration (the "Registering Parties" and each a "Registering Party") and
any other Person, if any, who controls any of the Registering Parties within
the meaning of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which the Registering Parties or
such controlling Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities or actions in
respect thereof arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the effective date thereof,
in any registration statement under which such TMRC Converted Shares were
registered under the Securities Act, any preliminary prospectus distributed
with the consent of the Company or final prospectus contained in such
registration statement, or any amendment thereof or supplement thereto,
including all documents incorporated by reference therein, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Registering Parties and each such
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, such preliminary prospectus, such final prospectus or
such amendment or supplement, including all documents incorporated by reference
therein, in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Registering Party or a controlling Person
of any Registering Party specifically for use in the preparation thereof.
(b) In the event of any registration of any TMRC Converted
Shares under the Securities Act pursuant to this Agreement, each Registering
Party shall indemnify and hold harmless the Company and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities
Act, each officer of the Company who signs the registration statement, each
director of the Company and each underwriter (if any) and each Person who
controls any underwriter (if any) within the meaning of Section 15 of the
Securities Act, against any and all such losses, claims, damages, liabilities
or actions that the Company or such officer, director, underwriter (if any) or
controlling Person may become subject under the Securities Act or otherwise,
and will reimburse the Company and each such officer, director, underwriter and
controlling Person for any legal or any other expenses reasonably incurred by
such party in connection with investigating or defending any such loss, claim,
damage, liability or action, if (a) such loss, claim, damage, liability or
action in respect thereof arises out of or is based upon any untrue statement
or alleged untrue statement of any material fact contained in any such
registration statement or any such preliminary or final prospectus, or any
amendment thereof or supplement thereto, or arises out of or is based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
any such statement or omission of a material fact was made in reliance upon and
in conformity with written information furnished to the Company by or on behalf
of such Registering Party or a controlling Person of such Registering Party
specifically for use in connection with the preparation of such registration
statement or preliminary or final prospectus, or amendment or supplement
thereto, or (b) such loss, claim, damage, liability or action in respect
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<PAGE> 12
thereof arises out of or is based upon the Purchaser's or its Affiliates'
failure to deliver any required prospectus or otherwise comply with applicable
laws regarding the same. In connection with any transaction contemplated by
Section 8.2 hereof, each Registering Party also agree to indemnify each such
underwriter and each Person who controls any such underwriter within the
meaning of Section 15 of the Securities Act as may reasonably and customarily
be requested by the underwriters in connection with any underwritten offering
of such TMRC Converted Shares. Each Registering Party's obligations to
indemnify pursuant to this Section 8.4(b) shall be capped at the net proceeds
received by such Registering Party from the sale of securities pursuant to such
registration.
(c) If the indemnification provided for in this Section
8.4 is unavailable or insufficient to hold harmless an indemnified Person under
paragraph (a) or (b) above, then the indemnifying Person shall contribute to
the amount paid or payable by such indemnified Person as a result of the
losses, claims, damages or liabilities referred to in paragraphs (a) and (b)
above, in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and the Registering Parties on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equity
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Registering Parties and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and each Purchaser (on
behalf of itself and its Affiliates) agree that it would not be just and
equitable if contributions pursuant to this Section 8.4(c) were to be
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in the first
sentence of this Section 8.4(c). The amount paid by an indemnified Person as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this Section 8.4(c) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified Person in connection with
investigating or defending any action or claim (which shall be limited as
provided in Section 8.4(d) hereof if the indemnifying Person has assumed the
defense of any such action in accordance with the provisions thereof) that is
the subject of this Section 8.4(c). Notwithstanding the provisions of this
Section 8.4(c), in respect of any loss, claim, damage or liability based upon
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact that relates to information other
than information supplied by a Registering Party, such Registering Party shall
not be required to contribute any amount in excess of the amount by which the
total price at which the TMR Converted Shares offered by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such Registering Party has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Promptly after receipt by an
indemnified Person under this Section 8.4(c) of notice of the commencement of
any action against such party in respect of which a claim for contribution may
be made against an indemnifying Person under this Section 8.4(c), such
indemnified party shall notify the indemnifying Person in writing of the
commencement thereof if the notice specified in Section 8.4(d) hereof has not
been given with respect to such action; provided, however, that the omission so
to notify the indemnifying Person shall not relieve it from any liability that
it may have to any indemnified Person under this Section 8.4(c) to the extent
such omission is not prejudicial.
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<PAGE> 13
(d) Promptly after any indemnified Person receives notice
of any claim or commencement of any action in respect of which indemnity is to
be sought against an indemnifying Person pursuant to this Agreement, such
indemnified Person shall notify the indemnifying Person in writing of such
claim or of the commencement of such action, and, subject to provisions
hereinafter stated, in case any such action shall be brought against an
indemnified Person and such indemnifying Person shall have been notified of the
same, such indemnifying Person shall be entitled to participate therein and, to
the extent it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified Person, and after notice from the
indemnifying Person to such indemnified Person of its election to assume the
defense thereof, such indemnifying Person shall not be liable to such
indemnified Person, in connection with the defense thereof; provided, however,
if there exists or will exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the indemnified Person for the same
counsel to represent both the indemnified Person and such indemnifying Person
then such indemnified Person shall be entitled to retain its own counsel at the
expense of such indemnifying Person; provided further, however, the
indemnifying Person shall not be required to pay for more than one separate
counsel for all of the indemnified Persons in addition to any local counsel.
Section 8.5 Termination. If Rule 144 or Rule 145 promulgated under
the Securities Act or any successor or similar rule or statute shall permit the
sale by the Purchaser or its Affiliates of TMRC Converted Shares in compliance
with the conditions thereof without volume limitations, the rights of the
Purchaser and its Affiliates and any of their permitted assignees as to
registration provided for in this Agreement as to TMRC Converted Shares shall
terminate immediately.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Binding Agreement. All the provisions, covenants,
representations, warranties and conditions of this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and assigns. After the Closing Date, no party may
assign its rights hereunder except to an Affiliate of such party (with written
notice of the assignment being given to the other party), provides that such
Affiliate acknowledges in writing to the Company that such Affiliate shall be
bound by the terms and obligations of this Agreement as if such Affiliate was
originally a signatory hereto.
Section 9.2 Notices. All notices, requests, waivers and other
communications required or permitted to be given pursuant to this Agreement
shall be in writing and shall be deemed to have been duly given upon receipt by
personal delivery, messenger delivery, first-class mail or telecopier, at the
addresses set forth below (or at such other address for the Purchaser as the
Purchaser shall specify by like notice):
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<PAGE> 14
- if to Kayne Anderson Energy Fund, L. P., to:
c/o Kayne Anderson Investment Management
1800 Avenue of the Stars, Suite 200
Los Angeles, California 90067
Attention: Robert V. Sinnott
Telecopier No.: (310) 284-6444
with copies to: David Shladovsky
c/o Kayne Anderson Investment Management
1800 Avenue of the Stars, Suite 200
Los Angeles, California 90067
Telecopier No.: (310) 284-6444
- if to the Company, to: The Meridian Resource Corporation
15885 N. Barkers Landing, Suite 300
Houston, Texas 77079
Attention: Joseph A. Reeves, Jr.
Telecopier No.: (281) 558-5595
with copies to: Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010
Attention: Charles L. Strauss
Telecopier No.: (713) 651-5246
In the event the Purchaser assigns all or part of its right under this
Agreement to one or more of its Affiliates pursuant to Section 9.1, any
required notices or communications required to be made to any such Affiliates
to whom rights under this Agreement have been assigned shall be deemed to have
been properly given when delivered to the Purchaser at the addresses (or
telecopier numbers) set forth above.
Section 9.3 Entire Agreement. This Agreement is the entire agreement
among the parties with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, written and oral, the parties hereto with
respect to the subject matter hereof.
Section 9.4 Expenses. Except as otherwise provided herein, each
party shall be solely responsible for all expenses incurred by it in connection
with this transaction (including, without limitation, fees and expenses of its
own counsel and accountants).
Section 9.5 Severability. If any term or other provision of this
Agreement is held invalid, illegal or incapable of being enforced under any
rule or law, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in a
materially adverse manner with respect to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement
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<PAGE> 15
so as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 9.6 Waivers. The failure of any party at any time to require
performance of any provision hereof shall not affect its right later to require
such performance. No waiver in any one or more instances shall (except as
otherwise stated therein) be deemed to be a further or continuing waiver of any
such condition or breach in other instances or a waiver of any condition or
breach of any other term, covenant, representation or warranty.
Section 9.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 9.8 Headings. The headings preceding the text of articles
and sections of this Agreement are for convenience only and are not part of
this Agreement.
Section 9.9 Applicable Law. This Agreement is governed by and shall
be construed and enforced in accordance with the internal laws of the State
of Texas.
Section 9.10 Construction of Agreement. This Agreement constitutes a
negotiated agreement among the parties and the fact that one party or the other
shall have drafted a particular provision or provisions shall not be material
in the construction of any provision. All Exhibits referred to in this
Agreement are a part of this Agreement.
Section 9.11 References to Articles, Sections and Exhibits. Unless
the context otherwise requires, all references herein to Articles, Sections and
Exhibits shall be to the Articles, Sections and Exhibits of and to this
Agreement.
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<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
THE MERIDIAN RESOURCE CORPORATION
By: /s/ P. Richard Gessinger
----------------------------------------
Name: P. Richard Gessinger
Title: Executive Vice President and Chief
Financial Officer
KAYNE ANDERSON ENERGY FUND, L.P.
By KAIM NON-TRADITIONAL, L.P.
its general partner,
By /s/ Robert V. Sinnott
-----------------------------------------
Name: Robert V. Sinnott
Title: Managing Director
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<PAGE> 1
EXHIBIT 4.2
CONVERTIBLE NOTE PURCHASE AGREEMENT
This CONVERTIBLE NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of
June 22, 1999, between The Meridian Resource Corporation, a Texas corporation
(the "Company"), and EOS Partners, L.P., a Delaware limited partnership
("Purchaser");
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has determined that it is
in the best interests of the Company to issue and sell to the Purchaser certain
securities of the Company, subject to the terms and conditions of this
Agreement;
WHEREAS, the Company and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
sale of certain securities of the Company to the Purchaser;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Unless otherwise specifically stated in the text of this Agreement,
the following terms shall have the following meanings:
"Affiliate" shall mean, with respect to any specified Person, any
other Person, directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes
of this definition, "control" (including, with correlative meanings,
"controlling," "controlled by" and "under common control with") means the power
to direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise and, with respect to a corporation or partnership,
control shall mean direct or indirect ownership of more than 50% of the voting
stock or general partnership interest or voting interest in any such
corporation or partnership.
"Closing Date" shall mean the date hereof.
"Commission" shall have the meaning subscribed thereto in Section
3.1 hereof.
"Conversion Price" shall have the meaning assigned to it in the
Notes.
"Credit Agreement" means the Amended and Restated Credit Agreement
dated May 22, 1998, among the Company, the several lenders from time to time
party thereto (the "Lenders"), The Chase Manhattan Bank, as administrative
agents, Bankers Trust Company, as Syndication Agent, Chase Securities, Inc., as
Advisor, Chase Securities Inc., B T Alex. Brown Incorporated, Toronto Dominion
(Texas), Inc. and Credit Lyonnais New York Branch, as Co-arrangers, and Toronto
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<PAGE> 2
Dominion (Texas), Inc. and Credit Lyonnais New York Branch, as Co-Documentation
Agents, as amended.
"Exhibit" shall refer to the Exhibits to this Agreement, unless
otherwise stated, and an Exhibit may be attached to this Agreement or set forth
in a separate document denoted as an Exhibit to this Agreement.
"Governmental Authority" shall mean any and all foreign, federal,
state or local governments, governmental institutions, public authorities and
governmental entities of any nature whatsoever, and any subdivisions or
instrumentalities thereof, including, but not limited to, departments, boards,
bureaus, commissions, agencies, courts, administrations and panels, and any
divisions or instrumentalities thereof, whether permanent or ad hoc and whether
now or hereafter constituted and existing.
"Governmental Requirement" shall mean any and all laws (including,
but not limited to, applicable common law principles), statutes, ordinances,
codes, rules, regulations, interpretations, guidelines, directions, orders,
judgments, writs, injunctions, decrees, decisions or similar items or
pronouncements that are promulgated, issued, passed or set forth by any
Governmental Authority.
"Notes" shall mean the $5 million in principal amount of
subordinated convertible notes, which shall be in substantially the form
attached hereto as Exhibit A.
"Person" shall mean any natural person, any Governmental Authority
and any entity the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, limited liabilities companies, joint ventures,
joint stock companies, trusts, estates, companies and associations, whether
organized for profit or otherwise.
"Purchaser" shall have the meaning ascribed thereto in the
introduction to this Agreement.
"Purchase Price" shall have the meaning ascribed thereto in Section
2.2 hereof.
"Registering Parties" or "Registering Party" have the meaning
ascribed thereto in Section 8.4(a).
"SEC Documents" shall have the meaning ascribed thereto in Section
4.5 hereof.
"Securities Act" shall have the meaning ascribed thereto in Section
3.1 hereof.
"TMRC Common Stock" shall mean the common stock, $0.01 per value, of
the Company.
"TMRC Converted Shares" shall mean any TMRC Common Stock that the
Purchaser holds as a result of a conversion of the Notes into TMRC Common Stock
or as a result of the exercise of the Warrants.
"Warrants" shall mean the stock purchase warrants described on Annex
A to the Notes.
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<PAGE> 3
ARTICLE II
AUTHORIZATION, PURCHASE AND SALE OF THE NOTES
Section 2.1 Authorization of the Notes. The Company has authorized
the issuance and sale of up to $25 million principal amount of Notes.
Section 2.2 Sale and Purchase of the Notes. Subject to the terms and
conditions hereof and in reliance upon the representations, warranties and
agreements contained herein, on the Closing Date, the Company will issue and
sell to the Purchaser, and the Purchaser will purchase from the Company, $5
million in principal amount of Notes at a purchase price equal to the principal
amount of such Notes (the "Purchase Price").
Section 2.3 Purchase Price. The Company shall deliver, upon receipt
of the Purchase Price, to the Purchaser, Notes in the principal amount of $5
million. Each Purchaser shall deliver to the Company the Purchase Price, by
cash, check, wire transfer or any combination of the foregoing as designated by
the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company that:
Section 3.1 Investment Purpose; Accredited Investor. Such Purchaser
(i) is an accredited investor as that term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), and (ii) is acquiring the Notes for its own account, for investment
purposes and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act, except pursuant to a valid registration statement under the Securities Act
declared effective by the Securities and Exchange Commission (the "Commission")
or pursuant to a valid exemption from registration under the Securities Act.
Section 3.2 Restrictions on Resale. The Purchaser acknowledges that
the Notes and any shares of TMRC Converted Shares (if and when issued) must be
held indefinitely unless and until they are subsequently registered under the
Securities Act or an exemption from such registration is available and that all
certificates representing TMRC Converted Shares if and when issued, unless such
shares have been registered under the Securities Act, shall have endorsed
thereon the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SHARES
ARE REGISTERED UNDER SUCH ACT, OR SUCH STATE LAWS, OR AN OPINION OF
COUNSEL IS FURNISHED TO THE COMPANY (WHICH OPINION AND COUNSEL
RENDERING SAME SHALL BE REASONABLY SATISFACTORY TO THE
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<PAGE> 4
COMPANY) TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED.
The Purchaser also acknowledges that the Notes will bear a legend substantially
in the form included in the form of Note attached hereto as Exhibit A. The
legends contained on the Notes and the certificates representing TMRC Converted
Shares shall be removed by the Company upon delivery to it of an opinion of
counsel to the Company (which opinion and counsel rendering same shall be
reasonably satisfactory to the Company) that a registration statement under the
Securities Act is at the time effective with respect to the transfer of the
legended security or that such security may be transferred without such
registration statement being in effect and without the requirements of a legend
on the certificate in the hands of the transferee.
3.3 Access to Data. The Purchaser has had an opportunity to review
the SEC Documents and is not subscribing for the Notes as a result of any
advertisement, article, notice or other communication published in any
newspaper, newswire, magazine or similar media or broadcast over television,
radio or any electronic media (including the internet).
3.4 Authorization. The Purchaser has full power and authority to
enter into and to perform this Agreement in accordance with its terms. All
action (corporate or otherwise) on the part of the Purchaser necessary for the
authorization, execution, delivery and performance by the Purchaser of this
Agreement and the consummation of the transactions contemplated herein has been
taken. This Agreement is a valid and binding obligation of the Purchaser,
enforceable in accordance with its terms except as limited by applicable
bankruptcy, moratorium, insolvency or other similar laws affecting generally
the rights of creditors or by principles of equity.
3.5 NYSE Affiliate. The Purchaser and its Affiliates (after issuance
of the Notes to the Purchaser hereunder) will not beneficially own (as defined
under Rule 13d-3 promulgated pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) 5% or more of the outstanding TMRC Common
Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser that:
Section 4.1 Due Incorporation and Qualification and Capital
Structure. The Company is a corporation duly incorporated and validly existing
under the laws of the state of Texas and has all requisite corporate power to
carry on its business as now being conducted. The Company is qualified to do
business in each other jurisdiction in which its failure to so qualify would
materially and adversely affect the Company or its financial condition,
business or ability to perform the transactions contemplated by this Agreement.
Section 4.2 Performance of Agreement.
(a) The Company has all necessary corporate power and
authority to enter into and carry out the transactions contemplated by this
Agreement, to issue the Notes, to execute and
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<PAGE> 5
deliver the Warrants, and to issue the TMRC Converted Shares pursuant to the
Notes or the Warrants, as the case may be.
(b) The Company's execution, delivery and performance of
this Agreement, the issuance of the Notes, the execution and delivery of the
Warrants, and the issuance of the TMRC Converted Shares pursuant to the Notes
or the Warrants, as the case may be, have been duly and validly authorized and
approved by all necessary corporate action on the part of the Company.
(c) The execution, delivery and performance of this
Agreement by the Company, and the transactions contemplated hereby, the
issuance of the Notes, the execution and delivery of the Warrants, and the
issuance of the TMRC Converted Shares pursuant to the Notes or the Warrants, as
the case may be, will not violate (i) any provision of the articles of
incorporation or bylaws of the Company, (ii) any material agreement or
instrument to which the Company is a party or by which the Company is bound,
(iii) any judgment, order, ruling or decree applicable to the Company as a
party in interest or (iv) any Governmental Requirement applicable to the
Company.
(d) This Agreement is, and each Note and Warrant, if and
when executed and delivered by the Company, will be, a valid and binding
agreement and obligation of the Company, enforceable against the Company in
accordance with its terms, except as limited by (i) applicable bankruptcy,
moratorium, insolvency or other similar laws affecting generally the rights of
creditors, (ii) general principles of equity or (iii) the indemnification
provisions contained in this Agreement being subject to limitations under
public policy.
Section 4.3 Brokers and Finders. No agent, broker, investment
banker, person or firm acting on behalf of the Company or under its authority
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee directly or indirectly from the Purchaser in connection with any
of the transactions contemplated hereby.
Section 4.4 Authorization for TMRC Common Stock. The Company has
taken all necessary corporate action to permit it to issue the number of shares
of TMRC Common Stock to be issued upon conversion of the Notes or exercise of
the Warrants. The shares of TMRC Common Stock to be issued upon conversion of
the Notes or exercise of the Warrants will, when issued pursuant to the terms
of this Agreement, the Notes and the Warrants, as the case may be, be validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Section 4.5 SEC Documents. The Company has provided or made
available to the Purchaser the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 (the "10-K"), Amendment No. 1 to the 10-K on Form
10-K/A, the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999, the Company's Current Report on Form 8-K dated May 5, 1999, and the
Company's proxy statement with respect to its Annual Meeting of Shareholders
for 1999 (such documents collectively referred to herein as the "SEC
Documents"). As of their respective dates, (i) the SEC Documents complied in
all material respects with the requirements of the Exchange Act, and the rules
and regulations of the Commission promulgated thereunder applicable to such SEC
Documents, and (ii) none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were
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<PAGE> 6
made, not misleading. The consolidated financial statements of the Company
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended. Since March 31, 1999,
other than as discussed in the SEC Documents, there has been no material
adverse change in the business of the Company and its subsidiaries, taken as a
whole.
Section 4.6 Adequate Security. The Mortgages (as defined in the
Credit Agreement) and Additional Mortgages (as defined in the Credit Agreement)
constitute adequate security for the outstanding borrowings under the Credit
Agreement. The Company covenants and agrees that it will not challenge the
adequacy of the Mortgages or Additional Mortgages that secure the outstanding
borrowings under the Credit Agreement.
Section 4.7 Other Notes. The Company will not repurchase, prepay or
redeem all or any part of the outstanding principal under that certain 9 1/2%
Subordinated Note dated June 18, 1999 (the "Kayne Note") payable to Kayne
Anderson Energy Fund, L.P. ("Kayne") in the principal amount of $15,000,000,
which was issued pursuant to that certain Note Purchase Agreement dated June
18, 1999 between the Company and Kayne (the "Kayne Note Purchase Agreement")
unless the Company redeems all or part (in the same proportion that the Kayne
Note is redeemed) of the Note.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser hereunder are subject to
satisfaction of the conditions set out in this Article V at or before the
Closing Date.
Section 5.1 Opinion of Counsel. The Purchaser shall have received
the opinion of counsel to the Company in a form reasonably satisfactory to the
Purchaser.
Section 5.2 Performance and Obligations of the Company. All of the
terms and conditions of this Agreement to be complied with and performed by the
Company at or before the Closing Date shall have been complied with and
performed in all material respects.
Section 5.3 Absence of Litigation. No suit, action or other
proceeding by a third party or governmental entity shall have been instituted
or threatened before any court, Governmental Authority or legislative body to
enjoin, restrain or prohibit, or to obtain substantial damages in respect of,
or which is related to or arises out of, this Agreement or the consummation of
the transactions contemplated hereby, which, in the reasonable judgment of the
Purchaser, would make it inadvisable to consummate such transactions.
Section 5.4 Representations and Warranties. All of the
representations and warranties of the Company shall be true and correct on the
Closing Date.
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ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company hereunder are subject to satisfaction
of the conditions set out in this Article VI at or before the Closing Date.
Section 6.1 Absence of Litigation. No suit, action or other
proceeding by a third party or governmental entity shall have been instituted
or threatened before any court, Governmental Authority or legislative body to
enjoin, restrain or prohibit, or to obtain substantial damages in respect of,
or which is related to or arises out of, this Agreement or the consummation of
the transactions contemplated hereby, which, in the reasonable judgment of the
Company, would make it inadvisable to consummate such transactions.
Section 6.2 Performance and Obligations of the Purchaser. All of the
terms and conditions of this Agreement to be complied with and performed by the
Purchaser at or before the Closing Date hereof shall have been complied with
and performed in all material respects.
Section 6.3 Representations and Warranties. The representations and
warranties of each of the Purchaser shall be true and correct on the Closing
Date.
ARTICLE VII
NATURE OF STATEMENTS AND SURVIVAL
Section 7.1 Representations and Warranties. The several
representations and warranties of the parties shall survive the execution and
delivery of this Agreement for three years.
Section 7.2 Effect of Investigation. All representations,
warranties, covenants and agreements made by the parties shall not be affected
by any investigation heretofore or hereafter made by and on behalf of any of
them and shall not be deemed merged into any instruments or agreements
delivered in connection with this Agreement or otherwise in connection with the
transactions contemplated hereby.
Section 7.3 Survival of Covenants and Agreements. The covenants and
agreements entered into pursuant to this Agreement shall survive the execution
and delivery of this Agreement without limitation.
ARTICLE VIII
REGISTRATION
Section 8.1 Demand Rights. On three occasions during the period
ending on the first anniversary of the date of this Agreement and on one
occasion after the first anniversary of the date of this Agreement, the
Purchaser may request in writing (on behalf of itself and all of its Affiliates
to whom rights under this Agreement have been assigned pursuant to Section 9.1
and in the aggregate as a group) to the Company (a "Demand Request"), pursuant
to this Section 8.1, that the Company
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<PAGE> 8
register under the Securities Act any TMRC Converted Shares owned by the
Purchaser and its Affiliates pursuant to a non-underwritten offering, having a
period of distribution not to exceed 60 days; provided, however, the Company
shall not be obligated to prepare and file any registration statement pursuant
to this Section 8.1, or prepare or file any amendment or supplement thereto,
and may suspend sales thereunder, at any time when the Company reasonably
believes that the filing thereof at the time requested, or the offering of
securities pursuant thereto, would materially and adversely affect a pending or
proposed public offering of securities of the Company, a proposed acquisition,
merger, recapitalization, consolidation, reorganization or similar transaction
relating to the Company or negotiations, discussions or pending proposals with
respect thereto or require premature disclosure of information not otherwise
required to be disclosed to the potential detriment of the Company; provided,
however, that such period of sale or distribution shall resume after any such
suspension for a number of additional days necessary so that such registration
has been kept effective for permitted sales thereunder for an aggregate term of
60 days. In the event the filing of a registration statement, or any amendment
or supplement thereto, by the Company is deferred, or the sale and distribution
of shares is suspended, in each case pursuant to the foregoing provisions, for
more than 15 business days, then the Purchaser (on behalf of itself and its
Affiliates) may (only in the event the Purchaser or its Affiliates have not yet
sold more than 50% of the TMRC Converted Shares owned by any of them that are
included in the registration statement) give the Company written notice of the
Purchaser's and its Affiliates' intent to abandon the registration, and, in
such circumstance, no additional TMRC Converted Shares owned by the Purchaser
or its Affiliates may be sold by the Purchaser or its Affiliates pursuant to
such registration statement and the registration or request for registration
shall not be considered one of the Purchaser's and its Affiliates' Demand
Requests permitted by this Section 8.1. Any Demand Request made by the
Purchaser (on behalf of itself and its Affiliates) during the period ending on
the first anniversary of the date of this Agreement must be for registration of
a minimum of 250,000 shares of TMRC Converted Shares owned by the Purchaser or
its Affiliates. Any Demand Request made by the Purchaser (on behalf of itself
and its Affiliates) at any time after the first anniversary of the date of this
Agreement must be for registration of a minimum of 500,000 shares of TMRC
Converted Shares owned by the Purchaser or its Affiliates. The filing of a
registration statement, or any amendment or supplement thereto, by the Company
may not be deferred, and the sale and distribution of shares may not be
suspended, in each case pursuant to the foregoing provisions, for more than 60
days after the abandonment or consummation (or the completion of the
distribution of securities in the case of a public offering) of any of the
proposals or transactions described therein or, in any event, for more than 180
days during any one year.
Section 8.2 Piggyback Rights. If, at any time after the date hereof,
the Company proposes to register under the Securities Act (i) any shares of
TMRC Common Stock for sale by it pursuant to an underwritten public offering of
TMRC Common Stock (except with respect to registration statements (a) filed on
Forms S-4, S-8 or such other forms as shall be prescribed under the Securities
Act for the same purposes as such form or (b) registration statements filed
pursuant to demand registration rights contained in the SLOPI Registration
Rights Agreement (as hereinafter defined)) or a non-underwritten public
offering of TMRC Common Stock filed pursuant to a demand request made by
another Purchaser and its Affiliates pursuant to this Agreement; or (ii) TMRC
Common Stock issued pursuant to the terms and provisions of the Kayne Note (or
warrant attached as Annex A to the Kayne Note), the Company will at each such
time, prior to the filing of any such registration statement, give written
notice to each Purchaser (other than a Purchaser making a Demand Request)
(which also shall be deemed to be notice to the Purchaser's Affiliates) of the
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<PAGE> 9
Company's intention to do so, regardless of whether any the Purchaser and its
Affiliates have previously exercised piggyback registration rights or demand
registration rights as to any other shares of TMRC Common Stock owned by them,
and, upon the written request (which must specify the number of shares of TMRC
Converted Shares that the Purchaser and its Affiliates propose to include in
such offering) from the Purchaser (on behalf of itself and each of its
Affiliates) delivered to the Company within 20 days (or such shorter period,
but in any event not less than five days, as the Company shall specify in its
notice to the Purchaser) of the Purchaser's receipt of the Company's notice,
the Company will use commercially reasonable efforts to cause any TMRC
Converted Shares as to which registration shall have been so requested to be
included in the shares to be covered by the registration statement proposed to
be filed by the Company. Nothing contained in this Section 8.2 shall, however,
limit the Company's right to cancel, postpone or withdraw any such proposed
registration for any reason (except in connection with a registration pursuant
to a Demand Request, in which case the terms of Section 8.1 hereof shall
apply). Any request by a Purchaser and its Affiliates (through the Purchaser)
pursuant to this Section 8.2 to register TMRC Converted Shares for sale in an
underwritten offering shall be on the same terms and conditions as the other
shares of TMRC Common Stock to be registered and sold through the underwriters
under such registration; provided, however, that as a condition to such
inclusion each the Purchaser and its Affiliates shall execute an underwriting
agreement acceptable to the underwriters and, if requested, a custody agreement
having such customary terms as the underwriters shall request, including
indemnification, and if the managing underwriter determines and advises in
writing that the inclusion in the underwriting of all TMRC Converted Shares
proposed to be included by the Purchaser and its Affiliates and any other
shares of TMRC Common Stock sought to be registered by any other shareholder of
the Company exercising rights comparable to those of the Purchaser and its
Affiliates under this Section 8.2 would, in the reasonable and good faith
judgment of the underwriters, interfere with the successful marketing of the
securities proposed to be registered for underwriting by the Company or by any
holder of TMRC Common Stock having the right to require the Company to register
such TMRC Common Stock (the "Other Common Stock"), then the number of TMRC
Converted Shares and Other Common Stock requested to be included in the
underwriting shall be reduced (subject to the rights of Shell Louisiana Onshore
Properties Inc. and its Affiliates and assignees ("SLOPI") under that certain
Registration Rights Agreement between the Company and SLOPI dated June 30, 1998
(the "SLOPI Registration Rights Agreement")) pro rata among the Purchaser and
its Affiliates and the holders of Other Common Stock requesting such
registration and inclusion in the underwriting and may, in the determination of
such managing underwriter and consistent with pro rata reduction, be reduced to
zero. In the event any Purchaser or its Affiliates elects pursuant to this
Section 8.2 to include TMRC Converted Shares in a registration statement being
filed pursuant to a "demand request" made pursuant to the Kayne Note Purchase
Agreement, such inclusion shall be considered as the use of one of the Demand
Requests under Section 8.1 hereof.
Section 8.3 Procedure. If and whenever the Company is requested
pursuant to the provisions of this Agreement to effect the registration of any
TMRC Converted Shares under the Securities Act, the Company will, subject to
the other provisions of this Article VIII, including the rights of the Company
pursuant to Section 8.1 hereof to delay, or suspend sales under, any such
registration):
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<PAGE> 10
(a) as expeditiously as reasonably practicable after
demand therefor, prepare and file with the Commission a registration statement
on the appropriate form with respect to such TMRC Converted Shares and seek to
cause such registration statement to become and remain effective;
(b) as expeditiously as reasonably practicable, prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective and to comply with
the provisions of the Securities Act with respect to the disposition of such
TMRC Converted Shares covered by such registration statement in accordance with
the intended method of distribution set forth in such registration statement;
(c) as expeditiously as reasonably practicable, furnish to
each Purchaser (in the event the Purchaser or its Affiliates is participating
in the registration) (on behalf of the Purchaser and its Affiliates) such
number of copies of final prospectuses and preliminary prospectuses in
conformity with the requirements of the Securities Act, and such other
documents as the Purchaser (or behalf of itself and its Affiliates) may
reasonably request, in order to facilitate the public sale or other disposition
of such TMRC Converted Shares; provided, however, that the obligation of the
Company to deliver copies of final prospectuses or preliminary prospectuses to
the Purchaser (on behalf of itself and its Affiliates) shall be subject to the
receipt by the Company of reasonable assurances from the the Purchaser and its
Affiliates participating in such offering that they will comply with the
applicable provisions of the Securities Act and of such other securities laws
as may be applicable in connection with any use by the Purchaser and its
Affiliates of any final prospectuses or preliminary prospectuses;
(d) as expeditiously as practicable, use its best efforts
to register or qualify TMRC Converted Shares covered by such registration
statement under such other securities laws of such United States jurisdictions
as a Purchaser (on behalf of the Purchaser and its Affiliates) shall reasonably
request (considering the nature and size of the offering) and do any and all
other acts and things that may be necessary or desirable to enable the
Purchaser and its Affiliates participating in such offering to consummate the
public sale or other disposition in such jurisdictions of TMRC Converted
Shares; provided, however, that the Company shall not be required to qualify to
transact business as a foreign corporation in any jurisdiction in which it
would otherwise not be required to be so qualified or to take any action that
would subject it to general service of process in any jurisdiction in which it
is not then so subject;
(e) bear all Registration Expenses (as defined below) in
connection with all registrations hereunder; provided, however, that all
Selling Expenses (as defined below) of TMRC Converted Shares and all fees and
disbursements of counsel for the Purchaser and its Affiliates participating in
the registration in connection with each registration pursuant to this Article
8 shall be borne by the Purchaser and its Affiliates. Expenses incurred by the
Company in complying with this Article 8, including, without limitation: (i)
all registration and filing fees; (ii) all printing expenses; (iii) all fees
and disbursements of counsel for the Company; (iv) all blue sky fees and
expenses; and (v) all fees and expenses of accountants for the Company, are
herein referred to as "Registration Expenses". All underwriting fees and
discounts and brokerage and selling commissions relating to TMRC Converted
Shares to be registered for sale by the Purchaser and its Affiliates
participating in the registration and fees and expenses of the counsel for the
Purchaser and its
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<PAGE> 11
Affiliates and any underwriter's counsel (only to the extent the underwriting
agreement relating to such registration requires underwriter's counsel's fees
and expenses to be paid by the Company and the Purchaser and its Affiliates and
only to the extent of the Purchaser's and its Affiliates' pro rata portion of
such fees based upon the ratio the number of shares being sold by the Purchaser
and its Affiliates bears to the total number of shares being offered)
applicable to the sales by the Purchaser and its Affiliates in connection with
any such registration are herein referred to as "Selling Expenses"; and
(f) keep each registration pursuant to Section 8.1 hereof
effective for a period of up to 60 days or such shorter period of time until
the transfer or sale of all TMRC Converted Shares so registered has been
completed.
Section 8.4 Indemnification.
(a) In the event of a registration of any TMRC Converted
Shares under the Securities Act pursuant to this Article 8, the Company will
indemnify and hold harmless the Purchaser and their Affiliates participating in
the registration (the "Registering Parties" and each a "Registering Party") and
any other Person, if any, who controls any of the Registering Parties within
the meaning of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which the Registering Parties or
such controlling Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities or actions in
respect thereof arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the effective date thereof,
in any registration statement under which such TMRC Converted Shares were
registered under the Securities Act, any preliminary prospectus distributed
with the consent of the Company or final prospectus contained in such
registration statement, or any amendment thereof or supplement thereto,
including all documents incorporated by reference therein, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Registering Parties and each such
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, such preliminary prospectus, such final prospectus or
such amendment or supplement, including all documents incorporated by reference
therein, in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Registering Party or a controlling Person
of any Registering Party specifically for use in the preparation thereof.
(b) In the event of any registration of any TMRC Converted
Shares under the Securities Act pursuant to this Agreement, each Registering
Party shall indemnify and hold harmless the Company and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities
Act, each officer of the Company who signs the registration statement, each
director of the Company and each underwriter (if any) and each Person who
controls any underwriter (if any) within the meaning of Section 15 of the
Securities Act, against any and all such losses, claims, damages, liabilities
or actions that the Company or such officer, director, underwriter (if any) or
controlling Person may become subject under the Securities Act or otherwise,
and will reimburse the
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Company and each such officer, director, underwriter and controlling Person for
any legal or any other expenses reasonably incurred by such party in connection
with investigating or defending any such loss, claim, damage, liability or
action, if (a) such loss, claim, damage, liability or action in respect thereof
arises out of or is based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement or any such
preliminary or final prospectus, or any amendment thereof or supplement
thereto, or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and any such statement or omission
of a material fact was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Registering Party
or a controlling Person of such Registering Party specifically for use in
connection with the preparation of such registration statement or preliminary
or final prospectus, or amendment or supplement thereto, or (b) such loss,
claim, damage, liability or action in respect thereof arises out of or is based
upon the Purchaser's or its Affiliates' failure to deliver any required
prospectus or otherwise comply with applicable laws regarding the same. In
connection with any transaction contemplated by Section 8.2 hereof, each
Registering Party also agrees to indemnify each such underwriter and each
Person who controls any such underwriter within the meaning of Section 15 of
the Securities Act as may reasonably and customarily be requested by the
underwriters in connection with any underwritten offering of such TMRC
Converted Shares. Each Registering Party's obligations to indemnify pursuant to
this Section 8.4(b) shall be capped at the net proceeds received by such
Registering Party from the sale of securities pursuant to such registration.
(c) If the indemnification provided for in this Section
8.4 is unavailable or insufficient to hold harmless an indemnified Person under
paragraph (a) or (b) above, then the indemnifying Person shall contribute to
the amount paid or payable by such indemnified Person as a result of the
losses, claims, damages or liabilities referred to in paragraphs (a) and (b)
above, in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and the Registering Parties on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equity
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Registering Parties and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and each Purchaser (on
behalf of itself and its Affiliates) agree that it would not be just and
equitable if contributions pursuant to this Section 8.4(c) were to be
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in the first
sentence of this Section 8.4(c). The amount paid by an indemnified Person as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this Section 8.4(c) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified Person in connection with
investigating or defending any action or claim (which shall be limited as
provided in Section 8.4(d) hereof if the indemnifying Person has assumed the
defense of any such action in accordance with the provisions thereof) that is
the subject of this Section 8.4(c). Notwithstanding the provisions of this
Section 8.4(c), in respect of any loss, claim, damage or liability based upon
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact that relates to information other
than information supplied by a Registering Party, such Registering Party shall
not be required to contribute any amount in excess of the amount by which the
total price at which the TMR Converted Shares offered by it and
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distributed to the public were offered to the public exceeds the amount of any
damages that such Registering Party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. Promptly
after receipt by an indemnified Person under this Section 8.4(c) of notice of
the commencement of any action against such party in respect of which a claim
for contribution may be made against an indemnifying Person under this Section
8.4(c), such indemnified party shall notify the indemnifying Person in writing
of the commencement thereof if the notice specified in Section 8.4(d) hereof
has not been given with respect to such action; provided, however, that the
omission so to notify the indemnifying Person shall not relieve it from any
liability that it may have to any indemnified Person under this Section 8.4(c)
to the extent such omission is not prejudicial.
(d) Promptly after any indemnified Person receives notice
of any claim or commencement of any action in respect of which indemnity is to
be sought against an indemnifying Person pursuant to this Agreement, such
indemnified Person shall notify the indemnifying Person in writing of such
claim or of the commencement of such action, and, subject to provisions
hereinafter stated, in case any such action shall be brought against an
indemnified Person and such indemnifying Person shall have been notified of the
same, such indemnifying Person shall be entitled to participate therein and, to
the extent it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified Person, and after notice from the
indemnifying Person to such indemnified Person of its election to assume the
defense thereof, such indemnifying Person shall not be liable to such
indemnified Person, in connection with the defense thereof; provided, however,
if there exists or will exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the indemnified Person for the same
counsel to represent both the indemnified Person and such indemnifying Person
then such indemnified Person shall be entitled to retain its own counsel at the
expense of such indemnifying Person; provided further, however, the
indemnifying Person shall not be required to pay for more than one separate
counsel for all of the indemnified Persons in addition to any local counsel.
Section 8.5 Termination. If Rule 144 or Rule 145 promulgated under
the Securities Act or any successor or similar rule or statute shall permit the
sale by the Purchaser or its Affiliates of TMRC Converted Shares in compliance
with the conditions thereof without volume limitations, the rights of the
Purchaser and its Affiliates and any of their permitted assignees as to
registration provided for in this Agreement as to TMRC Converted Shares shall
terminate immediately.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Binding Agreement. All the provisions, covenants,
representations, warranties and conditions of this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by, the parties hereto and
their respective successors and assigns. After the Closing Date, no party may
assign its rights hereunder except to an Affiliate of such party (with written
notice of the assignment being given to the other party), provided that such
Affiliate acknowledges in writing to the Company that such Affiliate shall be
bound by the terms and obligations of this Agreement as if such Affiliate was
originally a signatory hereto.
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<PAGE> 14
Section 9.2 Notices. All notices, requests, waivers and other
communications required or permitted to be given pursuant to this Agreement
shall be in writing and shall be deemed to have been duly given upon receipt by
personal delivery, messenger delivery, first-class mail or telecopier, at the
addresses set forth below (or at such other address for the Purchaser as the
Purchaser shall specify by like notice):
- if to Eos Partners, L. P., to:
Eos Partners, L.P.
320 Park Avenue, 22nd Floor
New York, New York 10022
Attention: Brian D. Young
Telecopier No.: (212) 832-5815
- if to the Company, to: The Meridian Resource Corporation
15885 N. Barkers Landing, Suite 300
Houston, Texas 77079
Attention: Joseph A. Reeves, Jr.
Telecopier No.: (281) 558-5595
with copies to: Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010
Attention: Charles L. Strauss
Telecopier No.: (713) 651-5246
In the event the Purchaser assigns all or part of its right under this
Agreement to one or more of its Affiliates pursuant to Section 9.1, any
required notices or communications required to be made to any such Affiliates
to whom rights under this Agreement have been assigned shall be deemed to have
been properly given when delivered to the Purchaser at the addresses (or
telecopier numbers) set forth above.
Section 9.3 Entire Agreement. This Agreement is the entire agreement
among the parties with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, written and oral, the parties hereto with
respect to the subject matter hereof.
Section 9.4 Expenses. Except as otherwise provided herein, each
party shall be solely responsible for all expenses incurred by it in connection
with this transaction (including, without limitation, fees and expenses of its
own counsel and accountants).
Section 9.5 Severability. If any term or other provision of this
Agreement is held invalid, illegal or incapable of being enforced under any
rule or law, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in a
materially adverse manner with respect to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement
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<PAGE> 15
so as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 9.6 Waivers. The failure of any party at any time to require
performance of any provision hereof shall not affect its right later to require
such performance. No waiver in any one or more instances shall (except as
otherwise stated therein) be deemed to be a further or continuing waiver of any
such condition or breach in other instances or a waiver of any condition or
breach of any other term, covenant, representation or warranty.
Section 9.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 9.8 Headings. The headings preceding the text of articles
and sections of this Agreement are for convenience only and are not part of
this Agreement.
Section 9.9 Applicable Law. This Agreement is governed by and shall
be construed and enforced in accordance with the internal laws of the State of
Texas.
Section 9.10 Construction of Agreement. This Agreement constitutes a
negotiated agreement among the parties and the fact that one party or the other
shall have drafted a particular provision or provisions shall not be material
in the construction of any provision. All Exhibits referred to in this
Agreement are a part of this Agreement.
Section 9.11 References to Articles, Sections and Exhibits. Unless
the context otherwise requires, all references herein to Articles, Sections and
Exhibits shall be to the Articles, Sections and Exhibits of and to this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
THE MERIDIAN RESOURCE CORPORATION
By: /s/ P. Richard Gessinger
-----------------------------------------
Name: P. Richard Gessinger
Title: Executive Vice President and Chief
Financial Officer
EOS PARTNERS, L.P.
By /s/ Authorized Signatory
-----------------------------------------
Name:
Title:
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EXHIBIT 4.3
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE
THEREWITH.
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN
THE NOTE PURCHASE AGREEMENT DATED AS OF JUNE 18, 1999, AMONG THE
ISSUER OF THIS SECURITY AND KAYNE ANDERSON ENERGY FUND, L.P., A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
MERIDIAN RESOURCE CORPORATION, AS REGISTRAR, AND WHICH RESTRICTIONS
REQUIRE, AS A CONDITION TO ANY TRANSFER, APPROPRIATE DOCUMENTATION
TO EVIDENCE COMPLIANCE WITH APPLICABLE SECURITIES LAWS, INCLUDING AN
OPINION OF COUNSEL WITH RESPECT THERETO.
NO REGISTRATION OF TRANSFER OF THIS SECURITY WILL BE EFFECTED ON
THE BOOKS OF THE REGISTRAR UNLESS AND UNTIL SUCH RESTRICTIONS
ARE COMPLIED WITH.
THE MERIDIAN RESOURCE CORPORATION
9 1/2% SUBORDINATED NOTE DUE JUNE 18, 2005
NO. 1 $15,000,000 JUNE 18, 1999
1. GENERAL TERMS.
(a) Principal and Interest. FOR VALUE RECEIVED, the
undersigned, THE MERIDIAN RESOURCE CORPORATION, a Delaware corporation, (the
"ISSUER" or the "COMPANY"), hereby promises to pay to Kayne Anderson Energy
Fund, L.P., a Delaware limited partnership, or registered assigns (the
"Holders", and each a "Holder"), the principal sum of fifteen million dollars
(the "Principal Amount") on June 18, 2005, with interest (computed on the basis
of a 360-day of twelve 30-day months) on the unpaid balance thereof at the rate
of 9 1/2% per annum from the date hereof, payable quarterly, on the 15th day of
March, June, September and December of each year, commencing with September 15,
1999, until the principal hereof shall have become due and payable (provided,
however,notwithstanding anything in this Note to the contrary, interest shall
not begin to accrue under this Note until June 21, 1999).
(b) Payments. Payments of principal of and interest on
with respect to this Note are to be made in lawful money of the United States
of America by the method and to the address or account specified with respect
to the holder hereof pursuant to Section 9.1 of the Note Purchase Agreement
referred to below.
(c) Note Purchase Agreement. This Note is one of a series
of Subordinated Notes (herein called the "NOTES") issued pursuant to the Note
Purchase Agreement dated as of June 18, 1999 (as the same may be amended,
supplemented or otherwise modified from time to time, the "NOTE PURCHASE
AGREEMENT"; capitalized terms used herein and not otherwise defined herein have
the meanings set forth in the Note Purchase
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Agreement), among the Issuer and Kayne Anderson Energy Fund, L.P. Each holder
of this Note (a "Holder") will be deemed, by its acceptance hereof, to have
made the representation set forth in Sections 3.1, 3.2 and 3.5 of the Note
Purchase Agreement on the date of transfer of this Note to such Holder.
(d) Registrar. The Issuer hereby acknowledges and makes
this Note a registered obligation for United States withholding tax purposes.
The Issuer shall be the registrar for this Note (the "Registrar") with full
power of substitution. In the event the Registrar becomes unable or unwilling
to act as registrar under this Agreement, the Company shall reasonably
designate a successor Registrar. Each Holder who is a foreign person, by its
acceptance of this Note, hereby agrees to provide the Issuer with a completed
Internal Service Form W-8 (Certificate of Foreign Status) or a substantially
similar form for such Holder, participants or other affiliates who are holders
of beneficial interests in this Note. Notwithstanding any contrary provision
contained in this Note or the Note Purchase Agreement, neither this Note nor
any interests therein may be sold, transferred, hypothecated, participated or
assigned to any Person except upon satisfaction of the conditions specified in
this paragraph. Each Holder, by acceptance of this Note, agrees to be bound by
the provisions of this paragraph and to indemnify and hold harmless the
Registrar against any and all loss or liability arising from the disposition by
such Holder of this Note or any interest therein in violation of this
paragraph. The Registrar shall keep at its principal executive office (or an
office or agency designated by it by notice to the last registered Holder) a
ledger, in which, subject to such reasonable regulations as it may prescribe,
but at its expense (except as specified below), it shall provide for the
registration and transfer of this Note. No sale, transfer, hypothecation,
participation or assignment of this Note or any interest herein shall be
effective for any purpose until it shall be registered on the books of the
Registrar to be maintained for such purpose. The Registrar shall record the
transfer of this Note on the books maintained for this purpose upon receipt by
the Registrar at the office or agency designated by the Registrar of (a) a
written assignment of this Note (or the applicable interest therein), (b) funds
sufficient to pay any transfer taxes payable upon the making of such transfer
as well as the cost of reviewing the documents presented to the Registrar, and
(c) such evidence of due execution as the Registrar shall reasonably require.
The Registrar shall record the transfer of this Note on the books maintained
for such purpose at the cost and expense of the assignee.
(e) Optional Redemption. The Company, at its option at any
time following the date of issuance, may redeem this Note, in whole or in part,
from time to time at a redemption price equal to the principal amount of this
Note then outstanding, plus accrued and unpaid interest to and including the
date fixed for the redemption. In addition, if such redemption occurs on or
before June 18, 2001, the Company also shall issue to the record holder of this
Note a warrant to purchase at the Conversion Price (as defined in Section 4(c))
a number of shares of Common Stock equal to the number of shares of Common
Stock into which this Note would be convertible on the date of redemption
pursuant to Section 4, which warrant shall have terms and conditions
substantially similar to the form of warrant attached hereto as Annex A (the
"Warrant"). The redemption price as determined in this paragraph, including the
Warrant, shall be hereinafter referred to as the "Redemption Price".
Notwithstanding anything herein to the contrary, the Company may not redeem
less than one-half of the outstanding principal amount of this Note at any one
time.
Not more than 60 nor less than 10 days before the
redemption date, notice by first class mail, postage prepaid, shall be given to
the Holders of record of this Note to be redeemed, addressed to such Holders at
their last addresses as shown on the books of the Registrar. Each such notice
of redemption shall specify the date fixed for redemption, the Redemption
Price, the place or places of payment, that payment will be made upon
presentation and surrender of this Note, that on and after the redemption date
interest will cease to accumulate on this Note, the then-effective Conversion
Price pursuant to Section 4 and that the right of Holders
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to convert pursuant to Section 4 shall terminate at the close of business on
the fifth business day prior to the redemption date.
Any notice that is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder of
this Note receives such notice; and failure properly to give such notice by
mail, or any defect in such notice, to the Holders of this Note designated for
redemption shall not affect the validity of the proceedings for the redemption
of this Note. On or after the date fixed for redemption as stated in such
notice, each Holder of this Note shall surrender the certificate evidencing
this Note to the Company at the place designated in such notice and shall
thereupon be entitled to receive payment of the Redemption Price. If less than
all outstanding principal of this Note is redeemed, a new certificate shall be
issued representing the unredeemed portion of this Note. If, on the date fixed
for redemption, funds necessary for the redemption shall be available therefor
and shall have been irrevocably deposited or set aside, then, notwithstanding
that the certificates evidencing this Note shall not have been surrendered, the
interest with respect to this Note so called shall cease to accrue after the
date fixed for redemption, the Note (or portion thereof so redeemed) shall no
longer be deemed outstanding, and all rights whatsoever with respect to the
Note (or portion thereof) so called for redemption (except the right of the
holders to receive the Redemption Price without interest upon surrender of
their certificates therefor) shall terminate.
2. SUBORDINATION. (a) The Holder of this Note hereby subordinates
all liabilities and obligations of any nature, whether primary, secondary,
absolute, contingent, sole, joint, several or joint and several and all
interest thereon (including, without limitation, interest accruing after the
filing of any petition in bankruptcy or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company) and all fees, costs
and expenses (including attorney's fees and other legal expenses) related
thereto, now or at any time or times hereafter existing, contracted or
incurred, under this Note (collectively, "Subordinated Debt")principal of and
interest on borrowed money of the Company and all other obligations and
liabilities of the Company (including, without limitation, interest accruing
after the filing of any petition in bankruptcy or the commencement of any
insolvency, reorganization or like proceeding relating to the Company, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether primary, secondary, absolute, contingent, sole, joint,
several or joint and several, now or at any time or times hereafter existing,
contracted or incurred, which may arise under, on, or in connection with, such
borrowed money of the Company whether on account of principal, interest, fees,
indemnitees, costs, expenses or otherwise (including, without limitation all
fees and disbursements of legal counsel) (collectively, "Senior Debt"),
including under the Credit Agreement (as defined in the Note Purchase
Agreement). Until the Senior Debt is satisfied (or a written waiver from the
holders of the Senior Debt is received in accordance with the terms of the
Senior Debt), (i) the Company will not make and the Holders of this Note will
not accept, either directly or indirectly, payment (of any kind or character)
of all or any part of the principal of, premium, if any, on or any claim or
amount with respect to any of the Subordinated Debt, except that, so long as
there is no Default or Event of Default (as such terms are defined in the Chase
Facility) under the Chase Facility or default in any payment obligations under
any other Senior Debt, the Company may make, and the Holder of the Note may
receive, interest on this Note as provided for herein; and (ii) the Holders of
this Note will not demand or accelerate any of the Subordinated Debt, institute
any court proceedings against the Company to collect any Subordinated Debt, or
exercise any rights or remedies against the Company or its assets; provided
however the Holders of this Note may declare it due and payable upon the
occurrence of any of the events described in Section 3(a)(iii)(B) or Section
3(a)(iv). In addition, no part of the Subordinated Debt shall have any claim to
the assets of the Company on a parity with or prior to the claim of the Senior
Debt.
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(b) The expression "satisfied", "prior payment in full," "payment in
full," "paid in full" and any other similar terms or phrases when used herein
with respect to the Senior Debt shall mean the payment, in immediately
available funds, of all of the Senior Debt.
(c) The Holders of the Subordinated Debt and the Company agree that
upon the occurrence of any event described in Section 3(a)(iii) or (iv):
(i) all Senior Debt shall be paid in full before any
payment or distribution is made with respect to the Subordinated
Debt; and
(ii) any payment or distribution of assets of the Company,
whether in cash, property or securities, to which any Holder of
Subordinated Debt would be entitled except for the provisions
hereof, shall be paid or delivered by the Company, or any receiver,
trustee in bankruptcy, liquidating trustee, disbursing agent or
other Person making such payment or distribution, directly to the
holders of the Senior Debt, to the extent necessary to pay in full
all Senior Debt, before any payment or distribution shall be made to
any Holder of Subordinated Debt.
(d) If any payment or distribution, whether consisting of money,
property or securities, be collected or received by any Holder of Subordinated
Debt in respect of the Subordinated Debt, except payments permitted to be made
at the time of payment as provided in paragraph (a) above, such Holder of
Subordinated Debt forthwith shall deliver the same to the holders of the Senior
Debt, in the form received, duly indorsed, if required, to be applied to the
payment or prepayment of the Senior Debt until the Senior Debt is paid in full.
Until so delivered, such payment or distribution shall be held in trust by such
Holder of Subordinated Debt as the property of the holders of Senior Debt,
segregated from other funds and property held by such Holder of Subordinated
Debt. In the event the Holder of Subordinated Debt is required to remit funds
received by it from the Company to the holders of Senior Debt pursuant to the
provisions of this Section 2, then such amounts remitted to the Senior Debt
shall be considered not having been paid to the holders of the Subordinated
Debt by the Company and such amounts shall be considered due and payable by the
Company to the holders of the Subordinated Debt and shall thereafter constitute
Subordinated Debt of the Company to the Holder.
(e) The Senior Debt shall be deemed to have been created, contracted
or incurred in reliance upon these subordination provisions and these
subordination provisions may not be modified or terminated without the consent
of the holders of Senior Debt.
3. EVENT OF DEFAULT. (a) Definition. An "Event of Default" shall
exist if any of the following conditions or events shall occur and be
continuing:
(i) the Company defaults in the payment of any principal
on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(ii) the Company defaults in the payment of any interest
on any Note for more than five Business Days after the same becomes
due and payable; or
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(iii) the Company (A) is generally not paying, or admits
in writing its inability to pay, its debts as they become due, (B)
files, or consents by answer or otherwise to the filing against it
of, a petition for relief or reorganization or arrangement or any
other petition in bankruptcy, for liquidation or to take advantage
of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (C) makes a general assignment for
the benefit of its creditors, (D) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its
property, (E) is adjudicated as insolvent or to be liquidated, or
(F) takes corporate action for the purpose of any of the foregoing;
or
(iv) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the
Company, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other
petition in bankruptcy or for liquidation or to take advantage of
any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company, or any
such petition shall be filed against the Company and such petition
shall not be dismissed within 60 days; or
(b) Remedies on Event of Default, Etc.
(i) Acceleration. If an Event of Default has
occurred, this Note shall automatically become immediately
due and payable.
Upon this Note becoming due and payable under
this Section 3, the Note will forthwith mature and the
entire unpaid principal amount of this Note, plus all
accrued and unpaid interest thereon (to the full extent
permitted by applicable law), shall all be immediate ly
due and payable, in each and every case without
presentment, demand, protest or further notice, all of
which are hereby waived.
(ii) Other Remedies. If any Event of Default has
occurred and is continuing, and the Holders of this Note
at the time outstanding may proceed to protect and enforce
the rights of such Holder by an action at law, suit in
equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or
in any Note, or for an injunction against a violation of
any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law
or otherwise.
(iii) Rescission. At any time after any Notes
have been declared due and payable the Holders of this
Note, by written notice to the Company, may rescind and
annul any such declaration and its consequences if (a) the
Company has paid all overdue interest on this Note, (b)
all Events of Default, other than non-payment of amounts
that have become due solely by reason of such declaration,
have been cured or have been waived, and (c) no judgment
or de cree has been entered for the payment of any monies
due pursuant hereto or to the Notes. No rescission and
annulment under this Section 3 will extend to or affect
any subsequent Event of Default or impair any right
consequent thereon.
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4. CONVERSION PRIVILEGE.
(a) Right of Conversion. This Note shall be convertible at
the option of the Holder, at any time prior to the close of business on the
fifth business day prior to date fixed for repayment of the Note as herein
provided, into the number of fully paid and nonassessable shares of Common
Stock equal to the Principal Amount divided by the Conversion Price (as defined
in Section 4(c)) in effect from time to time.
For the purpose of this Section 4, the term "Common Stock"
shall initially mean the class designated as Common Stock, par value $.01 per
share, of the Company, as of June 18, 1999, subject to adjustment as
hereinafter provided.
(b) Conversion Procedures. Any Holder desiring to convert
this Note shall surrender this Note at the office of the Registrar, which
certificate or certificates, if the Company shall so require, shall be duly
endorsed to the Company or in blank, or accompanied by proper instruments of
transfer to the Company or in blank, accompanied by irrevocable written notice
to the Company that the holder elects so to convert this Note and specifying
the name or names (with address) in which a certificate or certificates for
Common Stock are to be issued.
Upon the conversion of this Note, the Company shall pay
the holder surrendering such shares cash in an amount equal to any accrued but
unpaid interest to the date of conversion of this Note.
The Company will, as soon as practicable (but in no event
later than ten (10) business days) after such deposit of this Note accompanied
by the written notice and compliance with any other conditions herein
contained, deliver at such office of such transfer agent to the person for
whose account this Note were so surrendered, or to his nominee or nominees,
certificates for the number of full shares of Common Stock to which he shall be
entitled as aforesaid, together with a cash adjustment of any fraction of a
share as hereinafter provided. Subject to the following provisions of this
paragraph, such conversion shall be deemed to have been made as of the date of
such surrender of this Note to be converted, and the person or persons entitled
to receive the Common Stock deliverable upon conversion of this Note shall be
treated for all purposes as the record holder or holders of such Common Stock
on such date; provided, however, that the Company shall not be required to
convert this Note while the stock transfer books of the Company are closed for
any purpose, but the surrender of this Note for conversion during any period
while such books are so closed shall become effective for conversion
immediately upon the reopening of such books as if the surrender had been made
on the date of such reopening, and the conversion shall be at the Conversion
Price in effect on such date.
(c) Conversion Price. The conversion price for determining
the number of shares of Common Stock deliverable upon conversion of this Note
(the "Conversion Price") shall initially be $7.00 per share of Common Stock.
The Conversion Price shall be subject to adjustment from time to time as
follows:
(i) In case the Company shall (A) pay a dividend
to all holders of its Common Stock or make a distribution
on the Common Stock to all holders of the Common Stock,
which is paid or made (I) in other shares of stock of the
Company or (II) in rights to purchase stock or other
securities if such rights are not separable from the
Common Stock except upon the occurrence of a contingency,
(B) subdivide its outstanding shares of Common Stock into
a greater number of shares or (C) combine its outstanding
shares of Common Stock into a smaller number of shares,
then in each such case the Conversion Price in effect
immediately prior thereto and the securities issuable
shall be adjusted retroactively as provided below so
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that the holder of this Note thereafter surrendered for
conversion shall be entitled to receive the number of
shares of Common Stock and other shares and rights to
purchase stock or other securities that such holder would
have owned or have been entitled to receive after the
happening of any of the events described above had this
Note been converted immediately prior to the happening of
such event. In the event of the redemption of any shares
or rights referred to clause (A), such holder shall have
the right to receive, in lieu of any such shares or
rights, any cash, property or securities paid in respect
of such redemption; provided, however, that if the value
of such cash, property or securities is less than $.10 per
share of Common Stock, such holder shall not be entitled
to such cash, property or securities. An adjustment made
pursuant to this subparagraph (i) shall become effective
immediately after the record date in the case of a
dividend or distribution and shall become effective
immediately after the effective date in the case of a
subdivision or combination.
(ii) In case the Company shall issue rights or
warrants to all holders of the Common Stock entitling them
(for a period expiring within 45 days after the date fixed
for determination mentioned below) to subscribe for or
purchase shares of Common Stock at a price per share less
than the current market price per share (determined as
provided below) of the Common Stock on the date fixed for
the determination of shareholders entitled to receive such
rights or warrants, then the Conversion Price in effect at
the opening of business on the day following the date
fixed for such determination shall be reduced by
multiplying such conversion price by a fraction of which
the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase and
the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of
Common Stock that the aggregate of the offering price of
the total number of shares of Common Stock so offered for
subscription or purchase would purchase at such current
market price, such reduction to become effective
immediately after the opening of business on the day
following the date fixed for such determination; provided,
however, in the event that all the shares of Common Stock
offered for subscription or purchase are not delivered
upon the exercise of such rights or warrants, upon the
expiration of such rights or warrants the conversion price
shall be readjusted to the conversion price that would
have been in effect had the denominator and the numerator
of the foregoing fraction and the resulting adjustment
been made based upon the number of shares of Common Stock
actually delivered upon the exercise of such rights or
warrants rather than upon the number of shares of Common
Stock offered for sub scription or purchase. For the
purposes of this subparagraph (ii), the number of shares
of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company.
(iii) If the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness, cash (excluding regular
quarterly cash dividends in a per share amount
(appropriately adjusted for stock splits and stock
dividends) not in excess of 200% of the amount most
recently paid ("Regular Cash Dividends")), other assets or
rights or warrants to subscribe for or purchase any
security (excluding those referred to in subparagraphs (i)
and (ii) above), then in each such case the conversion
price shall be adjusted retroactively so that the same
shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close
of business on the date fixed for the
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determination of shareholders entitled to receive such
distribution by a fraction of which the denominator shall
be the current market price per share (determined as
provided below) of the Common Stock on the date fixed for
such determination and the numerator shall be such current
market price per share of the Common Stock less the amount
of cash and the then fair market value (as determined by
the Board of Directors in good faith, whose determination
shall be conclusive and described in a resolution of the
Board of Directors) of the portion of the assets, rights
or evidences of indebtedness so distributed applicable to
one share of Common Stock, such adjustment to become
effective immediately prior to the opening of business on
the day following the date fixed for the determination of
holders entitled to receive such distribution.
(iv) If (i) the Company shall ever, in
connection with a merger, consolidation, share exchange,
or acquisition of a business or properties or similar
transaction, or in a private placement of securities, sell
or issue or commit to sell or issue 1,000,000 (as adjusted
for stock splits, reverse splits, reclassifications, and
similar actions) or more shares of Common Stock or
options, warrants or other securities exchangeable or
convertible into Common Stock (other than securities
issued pursuant to employee benefit plans and similar
arrangements or pursuant to contractual and other
arrangements existing on the date of this Statement of
Designation) that, at the time of issuance, sale or
commitment and assuming full conversion, exchange or
exercise thereof, represent 1,000,000 (as adjusted for
stock splits, reverse splits, reclassifications, and
similar actions) or more shares of Common Stock and (ii)
at or prior to the meeting of the Company's Board of
Directors approving any such transaction, the Company's
Board of Directors shall not have received an opinion
letter from an investment banking firm of national
recognition or "Big 5" accounting firm to the effect that
the contemplated transaction is fair, from a financial
point of view, to the Company, then, and in each such
case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect on the
day immediately prior to the date (the "Date") of approval
by the Board of Directors of the issuance or sale by a
fraction (x) the numerator of which shall be the sum of
all of the outstanding shares of Common Stock on such date
plus the number of additional shares of Common Stock to be
issued or issued (or the maximum number into which such
convertible or exchangeable securities initially may
convert or exchange or for which such options, warrants or
other rights initially may be exercised) and (y) the
denominator of which shall be the sum of the number of
shares of Common Stock outstanding on the date plus the
number of shares of Common Stock plus the number of shares
of Common Stock that an investment banking firm of
national recognition or "Big 5" public accounting firm
determines in good faith would need to be issued (or into
which such convertible or exchangeable securities
initially should convert or be exchange for or for which
such options, warrants or other rights initially should be
exercised) in order for the transaction in question to be
fair to the Company from a financial point of view. If any
shares of Common Stock or convertible or exchangeable
securities, options, warrants or other rights (or any
portions thereof) that shall have given rise to an
adjustment pursuant to this Section (iv) shall have never
been issued or shall have expired or terminated without
the exercise thereof and/or if by reason of the terms of
such shares of Common Stock or convertible or exchangeable
securities, options, warrants or other rights there shall
have been an increase or increases, with the passage of
time or otherwise, in the price payable upon the purchase,
exercise or conversion thereof, then the Conversion Price
hereunder shall be readjusted (but to no greater extent
than originally adjusted) on the basis of (x) eliminating
from the
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computation any additional shares of Common Stock
corresponding to such shares of Common Stock or
convertible or exchangeable securities, options, warrants
or other rights as having been issued for the
consideration actually received and receivable therefor
and (z) treating any of such shares of Common Stock,
convertible or exchangeable securities, options, warrants
or other rights that remain outstanding as being subject
to exercise or conversion on the basis of such exercise or
conversion price as shall be in effect at this time.
(v) For the purpose of any computation under
subparagraphs (ii) and (iii), the current market price per
share of Common Stock on any date shall be deemed to be
the average of the daily closing prices for the 30
consecutive trading days commencing with the 45th trading
day before the day in question. The closing price for each
day shall be the reported last sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices
regular way, in either case on the New York Stock Exchange
or, if the Common Stock is not listed or admitted to
trading on such Exchange, on the principal national
securities exchange on which the Common Stock is listed or
admitted to trading (based on the aggregate dollar value
of all securities listed or admitted to trading) or, if
not listed or admitted to trading on any national
securities exchange, on the NASDAQ National Market System
or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on
the NASDAQ National Market System, the average of the
closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member
firm selected from time to time by the Company for that
purpose, or, if such prices are not available, the fair
market value set by, or in a manner established by, the
Board of Directors of the Company in good faith. "Trading
day" shall mean a day on which the national securities
exchange or the NASDAQ National Market System used to
determine the closing price is open for the transaction of
business or the reporting of trades or, if the closing
price is not so determined, a day on which the New York
Stock Exchange is open for the transaction of business.
(vi) No adjustment in the Conversion Price shall
be required unless such adjustment would require an
increase or decrease of at least 1% in such price;
provided, however, that the Company may make any such
adjustment at its election; and provided, further, that
any adjustments that by reason of this subparagraph (vi)
are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 5 shall be made to the
nearest cent or to the nearest one-hundredth of a share,
as the case may be.
(vii) Whenever the Conversion Price is adjusted
as provided in any provision of this Section 5:
(1) the Company shall compute the
adjusted Conversion Price in accordance with
this Section 5 and shall prepare a certificate
signed by the principal financial officer of the
Company setting forth the adjusted Conversion
Price and showing in reasonable detail the facts
upon that such adjustment is based, and such
certificate shall forthwith be filed with the
Registrar of this Note; and
(2) a notice stating that the
Conversion Price has been adjusted and setting
forth the adjusted conversion price shall
forthwith be required, and as soon as
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<PAGE> 10
practicable after it is required, such notice
shall be mailed by the Company to all record
holders of this Note at their last addresses as
they shall appear in the stock transfer books of
the Company.
(viii) If at any time, as a result of any
adjustment made pursuant to this Section 5, the holder of
this Note thereafter surrendered for conversion shall
become entitled to receive any shares of the Company other
than shares of Common Stock or to receive any other
securities, the number of such other shares or securities
so receivable upon conversion of this Note shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the
provisions contained in this Section 5 with respect to the
Common Stock.
(d) No Fractional Shares. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon conversion
of this Note. If more than one certificate representing Notes shall be
surrendered for conversion at one time by the same holder, the number of full
shares issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of Notes so surrendered. Instead of any fractional
share of Common Stock that would otherwise be issuable upon conversion of
Notes, the Company will pay a cash adjustment in respect of such fractional
interest in an amount equal to the same fraction of the closing price per share
of Common Stock (determined in accordance with subparagraph (c)(v)) at the
close of business on the day of conversion.
(e) Reclassification, Consolidation, Merger or Sale of
Assets. In case of any reclassification of the Common Stock, any consolidation
of the Company with, or merger of the Company into, any other person, any
merger of another person into the Company (other than a merger that does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Company), any sale or transfer of all
or substantially all of the assets of the Company or any compulsory share
exchange pursuant to which share exchange the Common Stock is converted into
other securities, cash or other property, the lawful provision shall be made as
part of the terms of such transaction whereby the holder of this Note shall
have the right thereafter, during the period such share shall be convertible
hereunder, to convert this Note only into the kind and amount of securities,
cash and other property receivable upon such reclassification, consolidation,
merger, sale, transfer or share exchange by a holder of the number of shares of
Common Stock of the Company into which this Note might have been converted
immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange assuming such holder of Common Stock of the Company
(i) is not a person with which the Company consolidated or into which the
Company merged or that merged into the Company, to which such sale or transfer
was made or a party to such share exchange, as the case may be ("constituent
person"), or an affiliate of a constituent person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash
and other property receivable upon such reclassi fication, consolidation,
merger, sale, transfer or share exchange (provided that if the kind or amount
of securities, cash and other property receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange is not the same for
each share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent person or
an affiliate thereof and in respect of which such rights of election shall not
have been exercised ("non-electing share"), then the kind and amount of
securities, cash and other property receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange by each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The Company, the person formed by such
consolidation or resulting from such merger or that acquires such assets or
that acquires the Company's shares, as the case may be, shall make provisions
in its certificate or articles of incorporation or other constituent document
to
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<PAGE> 11
establish such right. Such certificate or articles of incorporation or other
constituent document shall provide for adjustments that, for events subsequent
to the effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 5. The above provisions shall
similarly apply to successive reclassifications, consolidations, mergers,
sales, transfers or share exchanges.
(f) Reservation of Shares; Transfer Taxes; Etc. The
Company shall at all times reserve and keep available, out of its authorized
and unissued stock, solely for the purpose of effecting the conversion of this
Note, such number of shares of its Common Stock free of preemptive rights as
shall from time to time be sufficient to effect the conversion of this Note
from time to time outstanding. The Company shall from time to time, in
accordance with the laws of the State of Texas, increase the authorized number
of shares of Common Stock if at any time the number of shares of Common Stock
not outstanding shall not be sufficient to permit the conversion of this Note.
If any shares of Common Stock required to be reserved for
purposes of conversion of this Note hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be issued upon conversion, the Company will in good faith and
as expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be. If the Common Stock is listed on
the New York Stock Exchange or any other national securities exchange, the
Company will, if permitted by the rules of such exchange, as soon as
practicable following issuance of this Note, list and keep listed on such
exchange, upon official notice of issuance, all shares of Common Stock issuable
upon conversion of this Note.
The Company will pay any and all issue or other taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion of this Note. The Company shall not, however, be required to pay any
tax that may be payable in respect of any transfer involved in the issue or
delivery of Common Stock (or other securities or assets) in a name other than
that in which this Note so converted were registered, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of such tax or has established, to the
satisfaction of the Company, that such tax has been paid.
Before taking any action that would cause an adjustment
reducing the Conversion Price to less than the then par value of the Common
Stock, the Company will take any corporate action that may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and non assessable shares of Common Stock at the conversion
price as so adjusted.
(g) Prior Notice of Certain Events. In case:
(i) the Company shall (1) declare any dividend
(or any other distribution) on its Common Stock, other
than (A) a dividend payable in shares of Common Stock or
(B) Regular Cash Dividends or (2) declare or authorize a
redemption or repurchase of in excess of 20% of the
then-outstanding shares of Common Stock; or
(ii) the Company shall authorize the granting to
the holders of Common Stock of rights or warrants to
subscribe for or purchase any shares of stock of any class
or of any other rights or warrants (other than any rights
specified in paragraph (c)(i)(1)(B) of this Section 5); or
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<PAGE> 12
(iii) of any reclassification of Common Stock
(other than a subdivision or combination of the
outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which the
Company is a party and for which approval of any
stockholders of the Company shall be required, or of the
sale or transfer of all or substantially all of the assets
of the Company or of any compulsory share exchange whereby
the Common Stock is converted into other securities, cash
or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be mailed to the holder of this Note, at its
last address as they shall appear upon the Registrar's books, at least 15 days
prior to the applicable record date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption or granting of rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, redemption, rights or warrants are
to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(h) Other Changes in Conversion Price. The Company may
make reductions in the Conversion Price, in addition to those required or
allowed by this Section 4, as shall be determined by it, as evidenced by a
resolution of the Board of Directors, to be advisable in order to avoid or
diminish any income tax to holders of Common Stock resulting from any dividend
or distribution of stock or issuance of rights or warrants to purchase or
subscribe for stock or from any event treated as such for income tax purposes.
Whenever the Conversion Price is so reduced, the Company shall mail to holders
of record of this Note a notice of the reduction at least 10 days before the
date the reduced Conversion Price takes effect, and such notice shall state the
reduced Conversion Price and the period it will be in effect.
5. GOVERNING LAW. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of Texas excluding choice-of-law principles of the law of such State
that would require the application of the laws of a jurisdiction other than
such State.
6. USURY SAVINGS CLAUSE Notwithstanding anything to the contrary
contained elsewhere in this Note or in the Note Purchase Agreement, the Issuer
and the Holder of this Note hereby agree that all agreements among them under
this Note and the Note Purchase Agreement, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
such Holder for the use, forbearance, or detention of the money loaned to the
Issuer and evidenced hereby or thereby or for the performance or payment of any
covenant or obligation contained herein or therein, exceed the Highest Lawful
Rate. If due to any circumstance whatsoever, fulfillment of any provisions of
this Note or the Note Purchase Agreement at the time performance of such
provision shall be due shall exceed the Highest Lawful Rate, then,
automatically, the obligation to be fulfilled shall be modified or reduced to
the extent necessary to limit such interest to the Highest Lawful Rate, and if
from any such circumstance the Holder should ever receive anything of value
deemed interest by applicable
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<PAGE> 13
law which would exceed the Highest Lawful Rate, such excessive interest shall
be applied to the reduction of the principal amount then outstanding hereunder
and not to the payment of interest, or if such excessive interest exceeds the
principal unpaid balance then outstanding hereunder and such excess shall be
refunded to the Issuer. All sums paid or agreed to be paid to such Holder for
the use, forbearance, or detention of indebtedness of the Issuer to the
Holders, to the extent permitted by applicable law, shall be amortized,
prorated, allocated or spread throughout the entire term of such indebtedness.
For purpose of this paragraph, "HIGHEST LAWFUL RATE" means, at any given time
during which principal shall be outstanding hereunder, the maximum nonusurious
interest rate that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the obligations hereunder, under the
laws of the State of Texas (or the law of any other jurisdiction whose laws may
be mandatorily applicable notwithstanding other provisions of this Note), or
under applicable federal laws which may presently or hereafter be in effect and
which allow a higher maximum nonusurious interest rate than under the laws of
the State of Texas (or such other jurisdiction's law), in any case after taking
into account, to the extent permitted by applicable law, any and all relevant
payments or charges under this Note, and any available exemptions, exceptions
and exclusions. The terms and provisions of this paragraph shall control every
other provision of this Note.
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<PAGE> 14
IN WITNESS WHEREOF, the Issuer has executed this Note on the date
first written above.
THE MERIDIAN RESOURCE CORPORATION
By: /s/ P. Richard Gessinger
--------------------------------
Name: P. Richard Gessinger
Title: Executive Vice President
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<PAGE> 1
EXHIBIT 4.4
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE
THEREWITH.
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN
THE NOTE PURCHASE AGREEMENT DATED AS OF JUNE 22, 1999, AMONG THE
ISSUER OF THIS SECURITY AND EOS PARTNERS, L.P., A COPY OF WHICH IS
ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE MERIDIAN RESOURCE
CORPORATION, AS REGISTRAR, AND WHICH RESTRICTIONS REQUIRE, AS A
CONDITION TO ANY TRANSFER, APPROPRIATE DOCUMENTATION TO EVIDENCE
COMPLIANCE WITH APPLICABLE SECURITIES LAWS, INCLUDING AN OPINION OF
COUNSEL WITH RESPECT THERETO.
NO REGISTRATION OF TRANSFER OF THIS SECURITY WILL BE EFFECTED ON
THE BOOKS OF THE REGISTRAR UNLESS AND UNTIL SUCH RESTRICTIONS
ARE COMPLIED WITH.
THE MERIDIAN RESOURCE CORPORATION
9 1/2% SUBORDINATED NOTE DUE JUNE 18, 2005
NO. 1 $5,000,000 JUNE 22, 1999
1. GENERAL TERMS.
(a) Principal and Interest. FOR VALUE RECEIVED, the
undersigned, THE MERIDIAN RESOURCE CORPORATION, a Delaware corporation, (the
"ISSUER" or the "COMPANY"), hereby promises to pay to Eos Partners, L.P., a
Delaware limited partnership, or registered assigns (the "Holders", and each a
"Holder"), the principal sum of five million dollars (the "Principal Amount")
on June 18, 2005, with interest (computed on the basis of a 360-day of twelve
30-day months) on the unpaid balance thereof at the rate of 9 1/2% per annum
from the date hereof, payable quarterly, on the 15th day of March, June,
September and December of each year, commencing with September 15, 1999, until
the principal hereof shall have become due and payable.
(b) Payments. Payments of principal of and interest on
with respect to this Note are to be made in lawful money of the United States
of America by the method and to the address or account specified with respect
to the holder hereof pursuant to Section 9.1 of the Note Purchase Agreement
referred to below.
(c) Note Purchase Agreement. This Note is one of a series
of Subordinated Notes (herein called the "NOTES") issued pursuant to the Note
Purchase Agreement dated as of June 22, 1999 (as the same may be amended,
supplemented or otherwise modified from time to time, the "NOTE PURCHASE
AGREEMENT"; capitalized terms used herein and not otherwise defined herein have
the meanings set forth in the Note Purchase Agreement), among the Issuer and
Eos Partners, L.P. Each holder of this Note (a "Holder") will be deemed,
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<PAGE> 2
by its acceptance hereof, to have made the representation set forth in Sections
3.1, 3.2 and 3.5 of the Note Purchase Agreement on the date of transfer of this
Note to such Holder.
(d) Registrar. The Issuer hereby acknowledges and makes
this Note a registered obligation for United States withholding tax purposes.
The Issuer shall be the registrar for this Note (the "Registrar") with full
power of substitution. In the event the Registrar becomes unable or unwilling
to act as registrar under this Agreement, the Company shall reasonably
designate a successor Registrar. Each Holder who is a foreign person, by its
acceptance of this Note, hereby agrees to provide the Issuer with a completed
Internal Service Form W-8 (Certificate of Foreign Status) or a substantially
similar form for such Holder, participants or other affiliates who are holders
of beneficial interests in this Note. Notwithstanding any contrary provision
contained in this Note or the Note Purchase Agreement, neither this Note nor
any interests therein may be sold, transferred, hypothecated, participated or
assigned to any Person except upon satisfaction of the conditions specified in
this paragraph. Each Holder, by acceptance of this Note, agrees to be bound by
the provisions of this paragraph and to indemnify and hold harmless the
Registrar against any and all loss or liability arising from the disposition by
such Holder of this Note or any interest therein in violation of this
paragraph. The Registrar shall keep at its principal executive office (or an
office or agency designated by it by notice to the last registered Holder) a
ledger, in which, subject to such reasonable regulations as it may prescribe,
but at its expense (except as specified below), it shall provide for the
registration and transfer of this Note. No sale, transfer, hypothecation,
participation or assignment of this Note or any interest herein shall be
effective for any purpose until it shall be registered on the books of the
Registrar to be maintained for such purpose. The Registrar shall record the
transfer of this Note on the books maintained for this purpose upon receipt by
the Registrar at the office or agency designated by the Registrar of (a) a
written assignment of this Note (or the applicable interest therein), (b) funds
sufficient to pay any transfer taxes payable upon the making of such transfer
as well as the cost of reviewing the documents presented to the Registrar, and
(c) such evidence of due execution as the Registrar shall reasonably require.
The Registrar shall record the transfer of this Note on the books maintained
for such purpose at the cost and expense of the assignee.
(e) Optional Redemption. The Company, at its option at
any time following the date of issuance, may redeem this Note, in whole or in
part, from time to time at a redemption price equal to the principal amount of
this Note then outstanding, plus accrued and unpaid interest to and including
the date fixed for the redemption. In addition, if such redemption occurs on or
before June 18, 2001, the Company also shall issue to the record holder of this
Note a warrant to purchase at the Conversion Price (as defined in Section 4(c))
a number of shares of Common Stock equal to the number of shares of Common
Stock into which this Note would be convertible on the date of redemption
pursuant to Section 4, which warrant shall have terms and conditions
substantially similar to the form of warrant attached hereto as Annex A (the
"Warrant"). The redemption price as determined in this paragraph, including the
Warrant, shall be hereinafter referred to as the "Redemption Price".
Notwithstanding anything herein to the contrary, the Company may not redeem
less than one-half of the outstanding principal amount of this Note at any one
time.
Not more than 60 nor less than 10 days before the
redemption date, notice by first class mail, postage prepaid, shall be given to
the Holders of record of this Note to be redeemed, addressed to such Holders at
their last addresses as shown on the books of the Registrar. Each such notice
of redemption shall specify the date fixed for redemption, the Redemption
Price, the place or places of payment, that payment will be made upon
presentation and surrender of this Note, that on and after the redemption date
interest will cease to accumulate on this Note, the then-effective Conversion
Price pursuant to Section 4 and that the right of Holders to convert pursuant
to Section 4 shall terminate at the close of business on the fifth business day
prior to the redemption date.
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<PAGE> 3
Any notice that is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder of
this Note receives such notice; and failure properly to give such notice by
mail, or any defect in such notice, to the Holders of this Note designated for
redemption shall not affect the validity of the proceedings for the redemption
of this Note. On or after the date fixed for redemption as stated in such
notice, each Holder of this Note shall surrender the certificate evidencing
this Note to the Company at the place designated in such notice and shall
thereupon be entitled to receive payment of the Redemption Price. If less than
all outstanding principal of this Note is redeemed, a new certificate shall be
issued representing the unredeemed portion of this Note. If, on the date fixed
for redemption, funds necessary for the redemption shall be available therefor
and shall have been irrevocably deposited or set aside, then, notwithstanding
that the certificates evidencing this Note shall not have been surrendered, the
interest with respect to this Note so called shall cease to accrue after the
date fixed for redemption, the Note (or portion thereof so redeemed) shall no
longer be deemed outstanding, and all rights whatsoever with respect to the
Note (or portion thereof) so called for redemption (except the right of the
holders to receive the Redemption Price without interest upon surrender of
their certificates therefor) shall terminate.
2. SUBORDINATION. (a) The Holder of this Note hereby subordinates
all liabilities and obligations of any nature, whether primary, secondary,
absolute, contingent, sole, joint, several or joint and several and all
interest thereon (including, without limitation, interest accruing after the
filing of any petition in bankruptcy or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company) and all fees, costs
and expenses (including attorney's fees and other legal expenses) related
thereto, now or at any time or times hereafter existing, contracted or
incurred, under this Note (collectively, "Subordinated Debt") principal of and
interest on borrowed money of the Company and all other obligations and
liabilities of the Company (including, without limitation, interest accruing
after the filing of any petition in bankruptcy or the commencement of any
insolvency, reorganization or like proceeding relating to the Company, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether primary, secondary, absolute, contingent, sole, joint,
several or joint and several, now or at any time or times hereafter existing,
contracted or incurred, which may arise under, on, or in connection with, such
borrowed money of the Company whether on account of principal, interest, fees,
indemnitees, costs, expenses or otherwise (including, without limitation all
fees and disbursements of legal counsel) (collectively, "Senior Debt"),
including under the Credit Agreement (as defined in the Note Purchase
Agreement); provided, however, Senior Debt shall not include principal of and
interest on the 9 1/2% Subordinated Note of the Company dated June 18, 1999 in
the principal amount of $15,000,000 that is payable to Kayne Anderson Energy
Fund, L.P. (the "Kayne Note"), and all other obligations and liabilities of the
Company (including, without limitation, interest accruing after the filing of
any petition in bankruptcy or the commencement of any insolvency,
reorganization or like proceeding relating to the Company, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether primary, secondary, absolute, contingent, sole, joint, several or joint
and several, now or at any time or times hereafter existing, contracted or
incurred, which may arise under, on, or in connection with, the Kayne Note,
whether on account of principal, interest, fees, indemnitees, costs, expenses
or otherwise (including, without limitation all fees and disbursements of legal
counsel) (collectively, "Kayne Debt"), it being understood and agreed that the
Subordinated Debt shall rank pari passu with the Kayne Debt in all respects .
Until the Senior Debt is satisfied (or a written waiver from the holders of the
Senior Debt is received in accordance with the terms of the Senior Debt), (i)
the Company will not make and the Holders of this Note will not accept, either
directly or indirectly, payment (of any kind or character) of all or any part
of the principal of, premium, if any, on or any claim or amount with respect to
any of the Subordinated Debt, except that, so long as there is no Default or
Event of Default (as such terms are defined in the Chase Facility) under the
Chase Facility or default in any payment obligations under any other Senior
Debt, the Company may make, and the Holder of the Note may receive, interest on
this Note as
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<PAGE> 4
provided for herein; and (ii) the Holders of this Note will not demand or
accelerate any of the Subordinated Debt, institute any court proceedings
against the Company to collect any Subordinated Debt, or exercise any rights or
remedies against the Company or its assets; provided however the Holders of
this Note may declare it due and payable upon the occurrence of any of the
events described in Section 3(a)(iii)(B) or Section 3(a)(iv). In addition, no
part of the Subordinated Debt shall have any claim to the assets of the Company
on a parity with or prior to the claim of the Senior Debt.
(b) The expression "satisfied", "prior payment in full," "payment in
full," "paid in full" and any other similar terms or phrases when used herein
with respect to the Senior Debt shall mean the payment, in immediately
available funds, of all of the Senior Debt.
(c) The Holders of the Subordinated Debt and the Company agree that
upon the occurrence of any event described in Section 3(a)(iii) or (iv):
(i) all Senior Debt shall be paid in full before any
payment or distribution is made with respect to the Subordinated
Debt; and
(ii) any payment or distribution of assets of the Company,
whether in cash, property or securities, to which any Holder of
Subordinated Debt would be entitled except for the provisions
hereof, shall be paid or delivered by the Company, or any receiver,
trustee in bankruptcy, liquidating trustee, disbursing agent or
other Person making such payment or distribution, directly to the
holders of the Senior Debt, to the extent necessary to pay in full
all Senior Debt, before any payment or distribution shall be made to
any Holder of Subordinated Debt.
(d) If any payment or distribution, whether consisting of money,
property or securities, be collected or received by any Holder of Subordinated
Debt in respect of the Subordinated Debt, except payments permitted to be made
at the time of payment as provided in paragraph (a) above, such Holder of
Subordinated Debt forthwith shall deliver the same to the holders of the Senior
Debt, in the form received, duly endorsed, if required, to be applied to the
payment or prepayment of the Senior Debt until the Senior Debt is paid in full.
Until so delivered, such payment or distribution shall be held in trust by such
Holder of Subordinated Debt as the property of the holders of Senior Debt,
segregated from other funds and property held by such Holder of Subordinated
Debt. In the event the Holder of Subordinated Debt is required to remit funds
received by it from the Company to the holders of Senior Debt pursuant to the
provisions of this Section 2, then such amounts remitted to the Senior Debt
shall be considered not having been paid to the holders of the Subordinated
Debt by the Company and such amounts shall be considered due and payable by the
Company to the holders of the Subordinated Debt and shall thereafter constitute
Subordinated Debt of the Company to the Holder.
(e) The Senior Debt shall be deemed to have been created, contracted
or incurred in reliance upon these subordination provisions and these
subordination provisions may not be modified or terminated without the consent
of the holders of Senior Debt.
3. EVENT OF DEFAULT. (a) Definition. An "Event of Default" shall
exist if any of the following conditions or events shall occur and be
continuing:
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<PAGE> 5
(i) the Company defaults in the payment of any principal
on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(ii) the Company defaults in the payment of any interest
on any Note for more than five Business Days after the same becomes
due and payable; or
(iii) the Company (A) is generally not paying, or admits
in writing its inability to pay, its debts as they become due, (B)
files, or consents by answer or otherwise to the filing against it
of, a petition for relief or reorganization or arrangement or any
other petition in bankruptcy, for liquidation or to take advantage
of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (C) makes a general assignment for
the benefit of its creditors, (D) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its
property, (E) is adjudicated as insolvent or to be liquidated, or
(F) takes corporate action for the purpose of any of the foregoing;
or
(iv) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the
Company, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other
petition in bankruptcy or for liquidation or to take advantage of
any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company, or any
such petition shall be filed against the Company and such petition
shall not be dismissed within 60 days; or
(b) Remedies on Event of Default, Etc.
(i) Acceleration. If an Event of Default has
occurred, this Note shall automatically become immediately
due and payable.
Upon this Note becoming due and payable under
this Section 3, the Note will forthwith mature and the
entire unpaid principal amount of this Note, plus all
accrued and unpaid interest thereon (to the full extent
permitted by applicable law), shall all be immediate ly
due and payable, in each and every case without
presentment, demand, protest or further notice, all of
which are hereby waived.
(ii) Other Remedies. If any Event of Default has
occurred and is continuing, and the Holders of this Note
at the time outstanding may proceed to protect and enforce
the rights of such Holder by an action at law, suit in
equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or
in any Note, or for an injunction against a violation of
any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law
or otherwise.
(iii) Rescission. At any time after any Notes
have been declared due and payable the Holders of this
Note, by written notice to the Company, may rescind and
annul any such declaration and its consequences if (a) the
Company has paid all overdue interest on this Note, (b)
all Events of Default, other than non-payment of amounts
that have become due solely by reason of such declaration,
have been cured or have been waived, and (c) no judgment
or de-
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<PAGE> 6
cree has been entered for the payment of any monies
due pursuant hereto or to the Notes. No rescission and
annulment under this Section 3 will extend to or affect
any subsequent Event of Default or impair any right
consequent thereon.
4. CONVERSION PRIVILEGE.
(a) Right of Conversion. This Note shall be convertible at
the option of the Holder, at any time prior to the close of business on the
fifth business day prior to date fixed for repayment of the Note as herein
provided, into the number of fully paid and nonassessable shares of Common
Stock equal to the Principal Amount divided by the Conversion Price (as defined
in Section 4(c)) in effect from time to time.
For the purpose of this Section 4, the term "Common Stock"
shall initially mean the class designated as Common Stock, par value $.01 per
share, of the Company, as of June 18, 1999, subject to adjustment as
hereinafter provided.
(b) Conversion Procedures. Any Holder desiring to convert
this Note shall surrender this Note at the office of the Registrar, which
certificate or certificates, if the Company shall so require, shall be duly
endorsed to the Company or in blank, or accompanied by proper instruments of
transfer to the Company or in blank, accompanied by irrevocable written notice
to the Company that the holder elects so to convert this Note and specifying
the name or names (with address) in which a certificate or certificates for
Common Stock are to be issued.
Upon the conversion of this Note, the Company shall pay
the holder surrendering such shares cash in an amount equal to any accrued but
unpaid interest to the date of conversion of this Note.
The Company will, as soon as practicable (but in no event
later than ten (10) business days) after such deposit of this Note accompanied
by the written notice and compliance with any other conditions herein
contained, deliver at such office of such transfer agent to the person for
whose account this Note were so surrendered, or to his nominee or nominees,
certificates for the number of full shares of Common Stock to which he shall be
entitled as aforesaid, together with a cash adjustment of any fraction of a
share as hereinafter provided. Subject to the following provisions of this
paragraph, such conversion shall be deemed to have been made as of the date of
such surrender of this Note to be converted, and the person or persons entitled
to receive the Common Stock deliverable upon conversion of this Note shall be
treated for all purposes as the record holder or holders of such Common Stock
on such date; provided, however, that the Company shall not be required to
convert this Note while the stock transfer books of the Company are closed for
any purpose, but the surrender of this Note for conversion during any period
while such books are so closed shall become effective for conversion
immediately upon the reopening of such books as if the surrender had been made
on the date of such reopening, and the conversion shall be at the Conversion
Price in effect on such date.
(c) Conversion Price. The conversion price for determining
the number of shares of Common Stock deliverable upon conversion of this Note
(the "Conversion Price") shall initially be $7.00 per share of Common Stock.
The Conversion Price shall be subject to adjustment from time to time as
follows:
(i) In case the Company shall (A) pay a dividend
to all holders of its Common Stock or make a distribution
on the Common Stock to all holders of the Common Stock,
which is paid or made (I) in other shares of stock of the
Company or (II) in rights to purchase stock or other
securities if such rights are not separable from the
Common Stock except upon the
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<PAGE> 7
occurrence of a contingency, (B) subdivide its outstanding
shares of Common Stock into a greater number of shares or
(C) combine its outstanding shares of Common Stock into a
smaller number of shares, then in each such case the
Conversion Price in effect immediately prior thereto and
the securities issuable shall be adjusted retroactively as
provided below so that the holder of this Note thereafter
surrendered for conversion shall be entitled to receive
the number of shares of Common Stock and other shares and
rights to purchase stock or other securities that such
holder would have owned or have been entitled to receive
after the happening of any of the events described above
had this Note been converted immediately prior to the
happening of such event. In the event of the redemption of
any shares or rights referred to clause (A), such holder
shall have the right to receive, in lieu of any such
shares or rights, any cash, property or securities paid in
respect of such redemption; provided, however, that if the
value of such cash, property or securities is less than
$.10 per share of Common Stock, such holder shall not be
entitled to such cash, property or securities. An
adjustment made pursuant to this subparagraph (i) shall
become effective immediately after the record date in the
case of a dividend or distribution and shall become
effective immediately after the effective date in the case
of a subdivision or combination.
(ii) In case the Company shall issue rights or
warrants to all holders of the Common Stock entitling them
(for a period expiring within 45 days after the date fixed
for determination mentioned below) to subscribe for or
purchase shares of Common Stock at a price per share less
than the current market price per share (determined as
provided below) of the Common Stock on the date fixed for
the determination of shareholders entitled to receive such
rights or warrants, then the Conversion Price in effect at
the opening of business on the day following the date
fixed for such determination shall be reduced by
multiplying such conversion price by a fraction of which
the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase and
the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of
Common Stock that the aggregate of the offering price of
the total number of shares of Common Stock so offered for
subscription or purchase would purchase at such current
market price, such reduction to become effective
immediately after the opening of business on the day
following the date fixed for such determination; provided,
however, in the event that all the shares of Common Stock
offered for subscription or purchase are not delivered
upon the exercise of such rights or warrants, upon the
expiration of such rights or warrants the conversion price
shall be readjusted to the conversion price that would
have been in effect had the denominator and the numerator
of the foregoing fraction and the resulting adjustment
been made based upon the number of shares of Common Stock
actually delivered upon the exercise of such rights or
warrants rather than upon the number of shares of Common
Stock offered for sub scription or purchase. For the
purposes of this subparagraph (ii), the number of shares
of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company.
(iii) If the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness, cash (excluding regular
quarterly cash dividends in a per share amount
(appropriately adjusted for stock splits and stock
dividends) not in excess of 200% of the amount most
recently paid ("Regular Cash Dividends")), other
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<PAGE> 8
assets or rights or warrants to subscribe for or purchase
any security (excluding those referred to in subparagraphs
(i) and (ii) above), then in each such case the conversion
price shall be adjusted retroactively so that the same
shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close
of business on the date fixed for the determination of
shareholders entitled to receive such distribution by a
fraction of which the denominator shall be the current
market price per share (determined as provided below) of
the Common Stock on the date fixed for such determination
and the numerator shall be such current market price per
share of the Common Stock less the amount of cash and the
then fair market value (as determined by the Board of
Directors in good faith, whose determination shall be
conclusive and described in a resolution of the Board of
Directors) of the portion of the assets, rights or
evidences of indebtedness so distributed applicable to one
share of Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day
following the date fixed for the determination of holders
entitled to receive such distribution.
(iv) If (i) the Company shall ever, in
connection with a merger, consolidation, share exchange,
or acquisition of a business or properties or similar
transaction, or in a private placement of securities, sell
or issue or commit to sell or issue 1,000,000 (as adjusted
for stock splits, reverse splits, reclassifications, and
similar actions) or more shares of Common Stock or
options, warrants or other securities exchangeable or
convertible into Common Stock (other than securities
issued pursuant to employee benefit plans and similar
arrangements or pursuant to contractual and other
arrangements existing on the date of this Statement of
Designation) that, at the time of issuance, sale or
commitment and assuming full conversion, exchange or
exercise thereof, represent 1,000,000 (as adjusted for
stock splits, reverse splits, reclassifications, and
similar actions) or more shares of Common Stock and (ii)
at or prior to the meeting of the Company's Board of
Directors approving any such transaction, the Company's
Board of Directors shall not have received an opinion
letter from an investment banking firm of national
recognition or "Big 5" accounting firm to the effect that
the contemplated transaction is fair, from a financial
point of view, to the Company, then, and in each such
case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect on the
day immediately prior to the date (the "Date") of approval
by the Board of Directors of the issuance or sale by a
fraction (x) the numerator of which shall be the sum of
all of the outstanding shares of Common Stock on such date
plus the number of additional shares of Common Stock to be
issued or issued (or the maximum number into which such
convertible or exchangeable securities initially may
convert or exchange or for which such options, warrants or
other rights initially may be exercised) and (y) the
denominator of which shall be the sum of the number of
shares of Common Stock outstanding on the date plus the
number of shares of Common Stock plus the number of shares
of Common Stock that an investment banking firm of
national recognition or "Big 5" public accounting firm
determines in good faith would need to be issued (or into
which such convertible or exchangeable securities
initially should convert or be exchange for or for which
such options, warrants or other rights initially should be
exercised) in order for the transaction in question to be
fair to the Company from a financial point of view. If any
shares of Common Stock or convertible or exchangeable
securities, options, warrants or other rights (or any
portions thereof) that shall have given rise to an
adjustment pursuant to this Section (iv) shall have never
been issued or shall have expired or terminated without
the exercise thereof and/or if by reason of the terms of
such shares of Common Stock or convertible or
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<PAGE> 9
exchangeable securities, options, warrants or other rights
there shall have been an increase or increases, with the
passage of time or otherwise, in the price payable upon
the purchase, exercise or conversion thereof, then the
Conversion Price hereunder shall be readjusted (but to no
greater extent than originally adjusted) on the basis of
(x) eliminating from the computation any additional shares
of Common Stock corresponding to such shares of Common
Stock or convertible or exchangeable securities, options,
warrants or other rights as having been issued for the
consideration actually received and receivable therefor
and (z) treating any of such shares of Common Stock,
convertible or exchangeable securities, options, warrants
or other rights that remain outstanding as being subject
to exercise or conversion on the basis of such exercise or
conversion price as shall be in effect at this time.
(v) For the purpose of any computation under
subparagraphs (ii) and (iii), the current market price per
share of Common Stock on any date shall be deemed to be
the average of the daily closing prices for the 30
consecutive trading days commencing with the 45th trading
day before the day in question. The closing price for each
day shall be the reported last sales price regular way or,
in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices
regular way, in either case on the New York Stock Exchange
or, if the Common Stock is not listed or admitted to
trading on such Exchange, on the principal national
securities exchange on which the Common Stock is listed or
admitted to trading (based on the aggregate dollar value
of all securities listed or admitted to trading) or, if
not listed or admitted to trading on any national
securities exchange, on the NASDAQ National Market System
or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on
the NASDAQ National Market System, the average of the
closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member
firm selected from time to time by the Company for that
purpose, or, if such prices are not available, the fair
market value set by, or in a manner established by, the
Board of Directors of the Company in good faith. "Trading
day" shall mean a day on which the national securities
exchange or the NASDAQ National Market System used to
determine the closing price is open for the transaction of
business or the reporting of trades or, if the closing
price is not so determined, a day on which the New York
Stock Exchange is open for the transaction of business.
(vi) No adjustment in the Conversion Price shall
be required unless such adjustment would require an
increase or decrease of at least 1% in such price;
provided, however, that the Company may make any such
adjustment at its election; and provided, further, that
any adjustments that by reason of this subparagraph (vi)
are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 5 shall be made to the
nearest cent or to the nearest one-hundredth of a share,
as the case may be.
(vii) Whenever the Conversion Price is adjusted
as provided in any provision of this Section 5:
(1) the Company shall compute the
adjusted Conversion Price in accordance with
this Section 5 and shall prepare a certificate
signed by the principal financial officer of the
Company setting forth the adjusted Conversion
Price and
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<PAGE> 10
showing in reasonable detail the facts upon that
such adjustment is based, and such certificate
shall forthwith be filed with the Registrar of
this Note; and
(2) a notice stating that the
Conversion Price has been adjusted and setting
forth the adjusted conversion price shall
forthwith be required, and as soon as
practicable after it is required, such notice
shall be mailed by the Company to all record
holders of this Note at their last addresses as
they shall appear in the stock transfer books of
the Company.
(viii) If at any time, as a result of any
adjustment made pursuant to this Section 5, the holder of
this Note thereafter surrendered for conversion shall
become entitled to receive any shares of the Company other
than shares of Common Stock or to receive any other
securities, the number of such other shares or securities
so receivable upon conversion of this Note shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the
provisions contained in this Section 5 with respect to the
Common Stock.
(d) No Fractional Shares. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon conversion
of this Note. If more than one certificate representing Notes shall be
surrendered for conversion at one time by the same holder, the number of full
shares issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of Notes so surrendered. Instead of any fractional
share of Common Stock that would otherwise be issuable upon conversion of
Notes, the Company will pay a cash adjustment in respect of such fractional
interest in an amount equal to the same fraction of the closing price per share
of Common Stock (determined in accordance with subparagraph (c)(v)) at the
close of business on the day of conversion.
(e) Reclassification, Consolidation, Merger or Sale of
Assets. In case of any reclassification of the Common Stock, any consolidation
of the Company with, or merger of the Company into, any other person, any
merger of another person into the Company (other than a merger that does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Company), any sale or transfer of all
or substantially all of the assets of the Company or any compulsory share
exchange pursuant to which share exchange the Common Stock is converted into
other securities, cash or other property, the lawful provision shall be made as
part of the terms of such transaction whereby the holder of this Note shall
have the right thereafter, during the period such share shall be convertible
hereunder, to convert this Note only into the kind and amount of securities,
cash and other property receivable upon such reclassification, consolidation,
merger, sale, transfer or share exchange by a holder of the number of shares of
Common Stock of the Company into which this Note might have been converted
immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange assuming such holder of Common Stock of the Company
(i) is not a person with which the Company consolidated or into which the
Company merged or that merged into the Company, to which such sale or transfer
was made or a party to such share exchange, as the case may be ("constituent
person"), or an affiliate of a constituent person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash
and other property receivable upon such reclassi fication, consolidation,
merger, sale, transfer or share exchange (provided that if the kind or amount
of securities, cash and other property receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange is not the same for
each share of Common Stock of the Company held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent person or
an affiliate thereof and in respect of which such rights of election shall not
have been exercised ("non-electing share"), then the kind and
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<PAGE> 11
amount of securities, cash and other property receivable upon such
reclassification, consolidation, merger, sale, transfer or share exchange by
each non-electing share shall be deemed to be the kind and amount so receivable
per share by a plurality of the non-electing shares). The Company, the person
formed by such consolidation or resulting from such merger or that acquires
such assets or that acquires the Company's shares, as the case may be, shall
make provisions in its certificate or articles of incorporation or other
constituent document to establish such right. Such certificate or articles of
incorporation or other constituent document shall provide for adjustments that,
for events subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 5. The above
provisions shall similarly apply to successive reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
(f) Reservation of Shares; Transfer Taxes; Etc. The
Company shall at all times reserve and keep available, out of its authorized
and unissued stock, solely for the purpose of effecting the conversion of this
Note, such number of shares of its Common Stock free of preemptive rights as
shall from time to time be sufficient to effect the conversion of this Note
from time to time outstanding. The Company shall from time to time, in
accordance with the laws of the State of Texas, increase the authorized number
of shares of Common Stock if at any time the number of shares of Common Stock
not outstanding shall not be sufficient to permit the conversion of this Note.
If any shares of Common Stock required to be reserved for
purposes of conversion of this Note hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be issued upon conversion, the Company will in good faith and
as expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be. If the Common Stock is listed on
the New York Stock Exchange or any other national securities exchange, the
Company will, if permitted by the rules of such exchange, as soon as
practicable following issuance of this Note, list and keep listed on such
exchange, upon official notice of issuance, all shares of Common Stock issuable
upon conversion of this Note.
The Company will pay any and all issue or other taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion of this Note. The Company shall not, however, be required to pay any
tax that may be payable in respect of any transfer involved in the issue or
delivery of Common Stock (or other securities or assets) in a name other than
that in which this Note so converted were registered, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of such tax or has established, to the
satisfaction of the Company, that such tax has been paid.
Before taking any action that would cause an adjustment
reducing the Conversion Price to less than the then par value of the Common
Stock, the Company will take any corporate action that may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and non assessable shares of Common Stock at the conversion
price as so adjusted.
(g) Prior Notice of Certain Events. In case:
(i) the Company shall (1) declare any dividend
(or any other distribution) on its Common Stock, other
than (A) a dividend payable in shares of Common Stock or
(B) Regular Cash Dividends or (2) declare or authorize a
redemption or repurchase of in excess of 20% of the
then-outstanding shares of Common Stock; or
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<PAGE> 12
(ii) the Company shall authorize the granting to
the holders of Common Stock of rights or warrants to
subscribe for or purchase any shares of stock of any class
or of any other rights or warrants (other than any rights
specified in paragraph (c)(i)(1)(B) of this Section 5); or
(iii) of any reclassification of Common Stock
(other than a subdivision or combination of the
outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which the
Company is a party and for which approval of any
stockholders of the Company shall be required, or of the
sale or transfer of all or substantially all of the assets
of the Company or of any compulsory share exchange whereby
the Common Stock is converted into other securities, cash
or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be mailed to the holder of this Note, at its
last address as they shall appear upon the Registrar's books, at least 15 days
prior to the applicable record date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption or granting of rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, redemption, rights or warrants are
to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
(h) Other Changes in Conversion Price. The Company may
make reductions in the Conversion Price, in addition to those required or
allowed by this Section 4, as shall be determined by it, as evidenced by a
resolution of the Board of Directors, to be advisable in order to avoid or
diminish any income tax to holders of Common Stock resulting from any dividend
or distribution of stock or issuance of rights or warrants to purchase or
subscribe for stock or from any event treated as such for income tax purposes.
Whenever the Conversion Price is so reduced, the Company shall mail to holders
of record of this Note a notice of the reduction at least 10 days before the
date the reduced Conversion Price takes effect, and such notice shall state the
reduced Conversion Price and the period it will be in effect.
5. GOVERNING LAW. This Note shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of Texas excluding choice-of-law principles of the law of such State
that would require the application of the laws of a jurisdiction other than
such State.
6. USURY SAVINGS CLAUSE Notwithstanding anything to the contrary
contained elsewhere in this Note or in the Note Purchase Agreement, the Issuer
and the Holder of this Note hereby agree that all agreements among them under
this Note and the Note Purchase Agreement, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
such Holder for the use, forbearance, or detention of the money loaned to the
Issuer and evidenced hereby or thereby or for the performance or payment of any
covenant or obligation
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<PAGE> 13
contained herein or therein, exceed the Highest Lawful Rate. If due to any
circumstance whatsoever, fulfillment of any provisions of this Note or the Note
Purchase Agreement at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance the
Holder should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied to the reduction of the principal amount then outstanding hereunder and
not to the payment of interest, or if such excessive interest exceeds the
principal unpaid balance then outstanding hereunder and such excess shall be
refunded to the Issuer. All sums paid or agreed to be paid to such Holder for
the use, forbearance, or detention of indebtedness of the Issuer to the
Holders, to the extent permitted by applicable law, shall be amortized,
prorated, allocated or spread throughout the entire term of such indebtedness.
For purpose of this paragraph, "HIGHEST LAWFUL RATE" means, at any given time
during which principal shall be outstanding hereunder, the maximum nonusurious
interest rate that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the obligations hereunder, under the
laws of the State of Texas (or the law of any other jurisdiction whose laws may
be mandatorily applicable notwithstanding other provisions of this Note), or
under applicable federal laws which may presently or hereafter be in effect and
which allow a higher maximum nonusurious interest rate than under the laws of
the State of Texas (or such other jurisdiction's law), in any case after taking
into account, to the extent permitted by applicable law, any and all relevant
payments or charges under this Note, and any available exemptions, exceptions
and exclusions. The terms and provisions of this paragraph shall control every
other provision of this Note.
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<PAGE> 14
IN WITNESS WHEREOF, the Issuer has executed this Note on the date
first written above.
THE MERIDIAN RESOURCE CORPORATION
By: /s/ P. Richard Gessinger
----------------------------------
Name: P. Richard Gessinger
Title: Executive Vice President
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<PAGE> 1
EXHIBIT 4.5
ANNEX A TO NOTE FOR THE PURCHASE OF _______________ SHARES
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE LAWS OF ANY STATE AND IS NOT TRANSFERRABLE.
STOCK PURCHASE WARRANT TO PURCHASE SHARES OF
COMMON STOCK OF THE MERIDIAN RESOURCE CORPORATION
This certifies that, for value received, _________________________
(the "Holder"), is entitled, subject to the terms and conditions of this
Warrant, at any time or from time to time during the Exercise Period (as
hereinafter defined), to purchase up to ______________ shares (subject to
adjustment pursuant to Section 9 below) of common stock, $.01 par value
("Common Stock"), of The Meridian Resource Corporation, a Texas corporation
(the "Company") (the shares of Common Stock issuable upon exercise of this
Warrant, as adjusted under Section 9, being referred to herein as the "Warrant
Shares"). This is one of the Warrants issued pursuant to the terms and
conditions of the Notes dated June 18, 1999 (the "Notes") pursuant to that
certain Note Purchase Agreement dated June 18, 1999 among the Company and Kayne
Anderson Energy Fund, L.P. (the "Note Purchase Agreement").
1. FORM OF ELECTION.
The form of election to purchase shares of Common Stock
(the "Form of Election") shall be substantially as set forth in Exhibit A
attached hereto. The price per Warrant Share and the number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment upon the
occurrence of certain events, all as hereinafter provided.
2. EXERCISE PERIOD; EXERCISE OF WARRANT.
2.1 Exercise Period. Subject to the terms of this Warrant,
the Holder shall have the right, which may be exercised at any time
or from time to time during the Exercise Period, to purchase from
the Company the number of fully paid and nonassessable Warrant
Shares this Warrant at the time represents the right to purchase,
and, in the event that this Warrant is exercised in respect of fewer
than all of the Warrant Shares purchasable on such exercise, a new
warrant evidencing the remaining Warrant Shares that may be
purchased shall be promptly signed, issued and delivered by the
Company to the Holder pursuant to the provisions of this Section 2.
The term "Exercise Period" shall mean the period commencing on the
date hereof (the date of issuance of this Warrant) and ending on
June 21, 2001.
2.2 Exercise of Warrant. This Warrant may be exercised
upon surrender to the Company at its principal office (as designated
in Section 12) of this Warrant, together with the Form of Election
duly completed and signed, stating therein the election of such
holder to exercise the Warrant in the manner provided in the Form of
Election; (ii) payment in full of the Warrant Price (as hereinafter
defined) (A) in cash or by certified bank check for all Warrant
Shares purchased hereunder, or (B) through a "cashes" or "net-issue"
exercise of each such Warrant ("Cashless Exercise"); the holder
shall exchange each Warrant subject to a Cashes Exercise for that
number of Warrant Shares
A-1
<PAGE> 2
determined by multiplying the number of Warrant Shares issuable
hereunder by a fraction, the numerator of which shall be the
difference between (x) the Market Price (as hereinafter defined) and
(y) the Warrant Price for each such Warrant, and the denominator of
which shall be the Market Price; the Form of Election shall set
forth the calculation upon which the Cashes Exercise is based. The
Warrant shall be deemed to be exercised on the date of receipt by
the Company of the Form of Election, accompanied by payment for the
Warrant Shares and surrender of the Warrant, as aforesaid, and such
date is referred to herein as the "Exercise Date". Market Price
shall mean the last reported closing price for the Common Stock as
reported on the New York Stock Exchange (or other principal exchange
or national quotation system if not traded on the New York Stock
Exchange) prior to the Exercise Date.
Subject to Section 6 hereof, upon the surrender of this
Warrant and payment of the Warrant Price as set forth above, the
Company shall issue and cause to be delivered to the Holder or, upon
the written order of the Holder, to and in such name or names as the
Holder may designate, a certificate or certificates for the number
of full Warrant Shares so purchased upon the exercise of this
Warrant. Such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall
be deemed to have become a holder of record of such Warrant Shares
as of the date of the surrender of this Warrant (together with the
duly completed and signed Form of Election) and payment of the
Warrant Price, as aforesaid.
3. WARRANT PRICE.
The price per share at which each of the Warrant Shares
shall be purchasable upon exercise of this Warrant initially shall be
$__________ (the Conversion Price (as defined in the Notes) existing on the
date hereof), which price shall be subject to adjustment pursuant to Section 9
hereof (such prices as so adjusted are referred to herein as the "Warrant
Price").
4. EXCHANGE OF WARRANT.
This Warrant may be exchanged at the option of the Holder
when surrendered at the principal office of the Company for another warrant, or
other warrants of different denominations, of like tenor and representing in
the aggregate the right to purchase a like number of Warrant Shares as this
Warrant then entitles the Holder to purchase. Any Holder desiring to exchange
this Warrant shall make such request in writing delivered to the Company, and
shall surrender this Warrant for exchange. Thereupon, the Company shall
promptly sign and deliver to the person entitled thereto a new warrant or
warrants, as the case may be, as so requested.
5. NO REGISTRATION OF WARRANT.
This Warrant has not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), or any applicable state
securities laws. The Holder represents and agrees that this Warrant has been,
and, upon exercise hereof, any Warrant Shares will be, acquired for investment
and not with a view to distribution or resale. The Holder further acknowledges
and agrees that this Warrant may not be transferred, and the Warrant Shares,
upon exercise of this Warrant, may not be transferred, without an effective
registration statement therefor under the Securities Act and applicable state
securities laws or an opinion of counsel satisfactory to the Company that
registration is not required thereunder. Unless registered, any Warrant Shares
shall bear the following legend:
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<PAGE> 3
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH SHARES
ARE REGISTERED UNDER SUCH ACT, OR SUCH STATE LAWS, OR AN OPINION OF
COUNSEL IS FURNISHED TO THE COMPANY (WHICH OPINION AND COUNSEL
RENDERING SAME SHALL BE REASONABLY SATISFACTORY TO THE COMPANY) TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
6. PAYMENT OF TAXES.
The Company will pay when due and payable any and all U.S.
federal and state transfer taxes and charges that may be payable in respect of
the issuance or delivery of this Warrant or of any Warrant Shares upon the
exercise of this Warrant. The Company shall not, however, be required to (i)
pay any transfer tax that may be payable in respect of any transfer involved in
the issuance or delivery of certificates for Warrant Shares in the name other
than that of the Holder or (ii) issue or deliver any certificates for Warrant
Shares upon the exercise of this Warrant until such tax shall have been paid
(any such tax being payable by the Holder at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax is due.
7. MUTILATED OR MISSING WARRANT.
In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall execute, issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the lost, stolen or destroyed Warrant, a new warrant of
like tenor and representing an equivalent right or interest, but only upon
receipt of evidence satisfactory to the Company of such loss, theft or
destruction of this Warrant and indemnity, if requested, satisfactory to the
Company. The Holder requesting such a substitute warrant shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
8. RESERVATION OF WARRANT SHARES; PURCHASE OF WARRANT BY THE
COMPANY.
8.1 Reservation of Warrant Shares. The Company shall at
all times reserve for issuance from its authorized and unissued
shares of Common Stock the number of shares of Common Stock needed
for issuance upon the exercise of this Warrant. The Company
covenants that all shares of Common Stock issuable as herein
provided shall, when so issued, be duly and validly issued, fully
paid and nonassessable.
8.2 Purchase of Warrant by the Company. The Company shall
not be prohibited, except as limited by applicable law, any other
agreement or herein, from offering to purchase, purchasing or
otherwise acquiring this Warrant from any holder thereof at such
times, in such manner and for such consideration as the Company and
such holder may agree to.
8.3 Cancellation of Purchased or Acquired Warrant. In the
event the Company shall purchase or otherwise acquire this Warrant,
the same shall thereupon be canceled and retired.
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9. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT SHARES.
The Warrant Price shall be subject to adjustment from time
to time as follows:
9.1 Certain Adjustments.
(a) In case the Company shall (1) pay a dividend
to all holders of its Common Stock or make a distribution on its
Common Stock to all holders of its Common Stock, which is paid or
made (A) in other shares of stock of the Company or (B) in rights to
purchase stock or other securities if such rights are not separable
from the Common Stock except upon the occurrence of a contingency,
(2) subdivide its outstanding shares of Common Stock into a greater
number of shares or (3) combine its outstanding shares of Common
Stock into a smaller number of shares, then in each such case the
Warrant Price in effect immediately prior thereto and the securities
issuable shall be adjusted retroactively as provided below so that
the Holder of this Warrant shall be entitled to receive the number
of shares of Common Stock of the Company and other shares and rights
to purchase stock or other securities which such holder would have
owned or have been entitled to receive after the happening of any of
the events described above had such Warrant been exercised
immediately prior to the happening of such event. In the event of
the redemption of any shares or rights referred to clause (1), such
Holder shall have the right to receive, in lieu of any such shares
or rights, any cash, property or securities paid in respect of such
redemption; provided, however, that if the value of such cash,
property or securities is less than $.10 per share of Common Stock,
such holder shall not be entitled to such cash, property or
securities. An adjustment made pursuant to this subparagraph (a)
shall become effective immediately after the record date in the case
of a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision or
combination.
(b) In case the Company shall issue rights or
warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after the date fixed for
determination mentioned below) to subscribe for or purchase shares
of Common Stock at a price per share less than the current market
price per share (determined as provided below) of the Common Stock
on the date fixed for the determination of shareholders entitled to
receive such rights or warrants, then the Warrant Price in effect at
the opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such Warrant Price by
a fraction of which the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase and the numerator shall be the
number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of
shares of Common Stock that the aggregate of the offering price of
the total number of shares of Common Stock so offered for
subscription or purchase would purchase at such current market
price, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such
determination; provided, however, in the event that all the shares
of Common Stock offered for subscription or purchase are not
delivered upon the exercise of such rights or warrants, upon the
expiration of such rights or warrants the Warrant Price shall be
readjusted to the Warrant Price that would have been in effect had
the denominator and the numerator of the foregoing fraction and the
resulting adjustment been made based upon the number of shares of
Common Stock actually delivered upon the exercise of such rights or
warrants rather than upon the number of shares of Common Stock
offered for subscription or purchase. For the purposes of this
subparagraph (b), the
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number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company.
(c) If the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock evidences
of its indebtedness, cash (excluding regular quarterly cash
dividends in a per share amount (appropriately adjusted for stock
splits and stock dividends) not in excess of 200% of the amount most
recently paid ("Regular Cash Dividends")), other assets or rights or
warrants to subscribe for or purchase any security (excluding those
referred to in subparagraphs (i) and (ii) above), then in each such
case the Warrant Price shall be adjusted retroactively so that the
same shall equal the price determined by multiplying the Warrant
Price in effect immediately prior to the close of business on the
date fixed for the determination of shareholders entitled to receive
such distribution by a fraction of which the denominator shall be
the current market price per share (determined as provided below) of
the Common Stock on the date fixed for such determination and the
numerator shall be such current market price per share of the Common
Stock less the amount of cash and the then fair market value (as
determined by the Board of Directors in good faith, whose
determination shall be conclusive and described in a resolution of
the Board of Directors) of the portion of the assets, rights or
evidences of indebtedness so distributed applicable to one share of
Common Stock, such adjustment to become effective immediately prior
to the opening of business on the day following the date fixed for
the deter mination of shareholders entitled to receive such
distribution.
(d) If (i) the Company shall ever, in connection
with a merger, consolidation, share exchange, or acquisition of a
business or properties or similar transaction, or in a private
placement of securities, sell or issue or commit to sell or issue
1,000,000 (as adjusted for stock splits, reverse splits,
reclassifications, and similar actions) or more shares of Common
Stock or options, warrants or other securities exchangeable or
convertible into Common Stock (other than securities issued pursuant
to employee benefit plans and similar arrangements or pursuant to
contractual and other arrangements existing on the date of issuance
of this Warrant) that, at the time of issuance, sale or commitment
and assuming full conversion, exchange or exercise thereof,
represent 1,000,000 (as adjusted for stock splits, reverse splits,
reclassifications, and similar actions) or more shares of Common
Stock and (ii) at or prior to the meeting of the Company's Board of
Directors approving any such transaction the Company's Board of
Directors shall not have received an opinion letter from an
investment banking firm of national recognition to the effect that
the contemplated transaction is fair, from a financial point of
view, to the Company, then, and in each such case, the Warrant Price
then in effect shall be adjusted by dividing the Warrant Price in
effect on the day immediately prior to the date (the "Date") of
approval by the Board of Directors of the issuance or sale by a
fraction (x) the numerator of which shall be the sum of all of the
outstanding shares of Common Stock on such date plus the number of
additional shares of Common Stock to be issued or issued (or the
maximum number into which such convertible or exchangeable
securities initially may convert or exchange or for which such
options, warrants or other rights initially may be exercised) and
(y) the denominator of which shall be the sum of the number of
shares of Common Stock outstanding on the date plus the number of
shares of Common Stock plus the number of shares of Common Stock
that an investment banking firm of national recognition or "Big 5"
public accounting firm determines in good faith would need to be
issued (or into which such convertible or exchangeable securities
initially should convert or be exchange for or for which such
options, warrants or other rights initially should be exercised) in
order for the transaction in question to be fair to the Company from
a financial point of view. If any convertible or exchangeable
securities, options, warrants or other rights (or any portions
thereof) which shall have given rise to an adjustment pursuant to
this Section (d) shall have expired or terminated
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without the exercise thereof and/or if by reason of the terms of
such convertible or exchangeable securities, options, warrants or
other rights there shall have been an increase or increases, with
the passage of time or otherwise, in the price payable upon the
exercise or conversion thereof, then the Warrant Price hereunder
shall be readjusted (but to no greater extent than originally
adjusted) on the basis of (x) eliminating from the computation any
additional shares of Common Stock corresponding to such convertible
or exchangeable securities, options, warrants or other rights as
having been issued for the consideration actually received and
receivable therefor and (z) treating any of such convertible or
exchangeable securities, options, warrants or other rights which
remain outstanding as being subject to exercise or conversion on the
basis of such exercise or conversion rice as shall be in effect at
this time.
(e) For the purpose of any computation under
subparagraphs (b) and (c) or Section 9, the current market price per
share of Common Stock on any date shall be deemed to be the average
of the daily closing prices for the 30 consecutive trading days
commencing with the 45th trading day before the day in question. The
closing price for each day shall be the reported last sales price
regular way or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock Exchange or, if
the Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading (based on the
aggregate dollar value of all securities listed or admitted to
trading) or, if not listed or admitted to trading on any national
securities exchange, on the NASDAQ National Market System or, if the
Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on the NASDAQ National Market System,
the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by the Company for that
purpose, or, if such prices are not available, the fair market value
set by, or in a manner established by, the Board of Directors of the
Company in good faith. "Trading day" shall mean a day on which the
national securities exchange or the NASDAQ National Market System
used to determine the closing price is open for the transaction of
business or the reporting of trades or, if the closing price is not
so determined, a day on which the New York Stock Exchange is open
for the transaction of business.
(f) No adjustment in the Warrant Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in such price; provided, however, that the
Company may make any such adjustment at its election; and provided,
further, that any adjustments which by reason of this subparagraph
(f) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under
this Section 9 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
(g) Whenever the Warrant Price is adjusted as
provided in any provision of this Section 9, the Company shall
compute the adjusted Warrant Price in accordance with this Section 9
and shall prepare a certificate signed by the principal financial
officer of the Company setting forth the adjusted Warrant Price and
showing in reasonable detail the facts upon which such adjustment is
based, and such certificate shall be mailed to the Holder of this
Warrant.
(h) If at any time, as a result of any
adjustment made pursuant to this Section 9, the Holder of this
Warrant, upon exercise, shall become entitled to receive any shares
of the Company other than shares of Common Stock or to receive any
other securities, the number of such other shares
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or securities so receivable upon exercise of this Warrant shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions contained in this
Section 9 with respect to the Common Stock.
9.2 Reclassification, Consolidation, Merger or Sale of
Assets. In case of any reclassification of the Common Stock, any
consolidation of the Company with, or merger of the Company into,
any other person, any merger of another person into the Company
(other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common
Stock of the Company), any sale or transfer of all or substantially
all of the assets of the Company or any compulsory share exchange
pursuant to which share exchange the Common Stock is converted into
other securities, cash or other property, then lawful provision
shall be made as part of the terms of such transaction whereby the
Holder of this Warrant shall have the right thereafter, upon
exercise of this Warrant, to receive only the amount of securities,
cash and other prop erty receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange by a holder
of the number of shares of Common Stock of the Company that the
Holder of this Warrant would have been entitled to receive upon
exercise immediately prior to such reclassification, consolidation,
merger, sale, transfer or share exchange assuming such Holder of
this Warrant(i) is not a person with which the Company consolidated
or into which the Company merged or which merged into the Company,
to which such sale or transfer was made or a party to such share
exchange, as the case may be ("constituent person"), or an affiliate
of a constituent person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and
other property receivable upon such reclassification, consolidation,
merger, sale, transfer or share exchange (provided that if the kind
or amount of securities, cash and other property receivable upon
such reclassification, consolidation, merger, sale, transfer or
share exchange is not the same for each share of Common Stock of the
Company held immediately prior to such consolidation, merger, sale
or transfer by other than a constituent person or an affiliate
thereof and in respect of which such rights of election shall not
have been exercised ("non-electing share"), then the kind and amount
of securities, cash and other property receivable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange by each non-electing share shall be deemed to be the kind
and amount so receivable per share by a plurality of the
non-electing shares). The Company, the person formed by such
consolidation or resulting from such merger or which acquires such
assets or which acquires the Company's shares, as the case may be,
shall make provisions in its certificate or articles of
incorporation or other constituent document to establish such right.
Such certificate or articles of incorporation or other constituent
document shall provide for adjustments which, for events subsequent
to the effective date of such certificate or articles of in Company
or other constituent document, shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 9.2.
The above provisions shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or
share exchanges.
9.3 Reservation of Shares; Transfer Taxes; Etc. (a) The
Company shall at all times reserve and keep available, out of its
authorized and unissued stock, solely for the purpose of effecting
the exercise of this Warrant, such number of shares of its Common
Stock free of preemptive rights as shall from time to time be
sufficient to effect the exercise of this Warrant. The Company shall
from time to time, in accordance with the laws of the State of
Texas, increase the authorized number of shares of Common Stock if
at any time the number of shares of Common Stock not outstanding
shall not be sufficient to permit the exercise of this Warrant.
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(b) If any shares of Common Stock required to be
reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under
any Federal or State law before such shares may be issued upon
conversion, the Company will in good faith and as expeditiously as
possible endeavor to cause such shares to be duly registered or
approved, as the case may be. If the Common Stock is listed on the
New York Stock Exchange or any other national securities exchange,
the Company will, if permitted by the rules of such exchange, as
soon as practicable following exercise of this Warrant, list and
keep listed on such exchange, upon official notice of issuance, all
shares of Common Stock issuable upon conversion of the Convertible
Preferred Stock.
(c) The Company will pay any and all issue or
other taxes that may be payable in respect of any issue or delivery
of shares of Common Stock on exercise of this Warrant. The Company
shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue or delivery of
Common Stock (or other securities or assets) in a name other than
that of the Holder of this Warrant, and no such issue or delivery
shall be made unless and until the person requesting such issue has
paid to the Company the amount of such tax or has established, to
the satisfaction of the Company, that such tax has been paid.
(d) Before taking any action which would cause
an adjustment reducing the Warrant Price to less than the then par
value of the Common Stock, the Company will take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at the Warrant Price as so
adjusted.
9.4 Prior Notice of Certain Events. In case:
(i) the Company shall (1) declare any dividend (or any
other distribution) on its Common Stock, other than (A) a dividend
payable in shares of Common Stock or (B) Regular Cash Dividends or
(2) declare or authorize a redemption or repurchase of in excess of
20% of the then-outstanding shares of Common Stock; or
(ii) the Company shall authorize the granting to the
holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights or
warrants (other than any rights specified in paragraph
9.1(a)(i)(1)(B) of this Section 9); or
(iii) of any reclassification of Common Stock (other than
a subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which
the Company is a party and for which approval of any shareholders of
the Company shall be required, or of the sale or transfer of all or
substantially all of the assets of the Company or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; then the Company shall
cause to be mailed to the Holder of this Warrant at least 15 days
prior to the applicable record date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the
purpose of such dividend, distribution, redemption or granting of
rights or warrants or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled
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to such dividend, distribution, redemption, rights or warrants are
to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution,
liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up (but no failure to
mail such notice or any defect therein or in the mailing thereof
shall affect the validity of the corporate action required to be
specified in such notice).
9.5 Other Changes in Warrant Price. The Company from time
to time may reduce the Warrant Price by any amount for any period of
time. Whenever the Warrant Price is so reduced, the Company shall
mail to holders of record of the Convertible Preferred Stock a
notice of the reduction at least 10 days before the date the reduced
Warrant Price takes effect, and such notice shall state the reduced
Warrant Price and the period it will be in effect. The Company may
make such reductions in the Warrant Price, in addition to those
required or allowed by this Section 9, as shall be determined by it,
as evidenced by a resolution of the Board of Directors, to be
advisable in order to avoid or diminish any income tax to holders of
Common Stock resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes.
10. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional
Warrant Shares on the exercise of this Warrant and the number of Warrant Shares
issuable upon such exercise shall be rounded down to the nearest whole share.
11. NO RIGHTS AS SHAREHOLDERS; NOTICES TO HOLDER.
Nothing contained in this Warrant shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent to or receive notice as a stockholder in respect of any meeting of
stockholders for the election of directors of the Company or any other matter,
or any rights whatsoever as a stockholder of the Company. If, however, at any
time during the Exercise Period:
(a) the Company shall declare any dividend
payable in any securities upon shares of Common Stock or
make any distribution (other than a cash dividend or a
dividend payable in additional shares of Common Stock) to
the holders of shares of Common Stock;
(b) the Company shall offer to the holders of
shares of Common Stock any additional shares of Common
Stock or securities convertible or exchangeable into
shares of Common Stock or any right to subscribe to shares
of Common Stock or securities convertible or exchangeable
into shares of Common Stock; or
(c) a dissolution, liquidation or winding up of
the Company (other than in connection with a
consolidation, merger or sale of all or substantially all
of its property, assets and business as an entirety) shall
be proposed;
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then in any one or more of such events, the Company shall give notice in
writing of such event to the Holder as provided in Section 12 hereof at least
10 days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the shareholders entitled to such
dividend, distribution or subscription rights, or for the determination of
shareholders entitled to vote on such proposed dissolution, liquidation or
winding up. Such notice shall specify such record date or date of the closing
of the transfer books, as the case may be. Failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of any
action taken in connection with such dividend, distribution or subscription
rights, or proposed dissolution, liquidation or winding up.
12. NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first class, postage prepaid:
(i) if to the Holder at:
-----------------------------
-----------------------------
-----------------------------
(ii) if to the Company at:
The Meridian Resource Corporation
Attn: President
-----------------------------
-----------------------------
or to such other address or addresses as the Holder or the Company may
designate from time to time for itself by a notice pursuant hereto.
13. SUCCESSORS.
No party hereto may assign its rights or obligations
hereunder without the prior written consent of the other party; provided,
however, the Holder may assign this Warrant in whole or in part to one or more
affiliates, upon prior written notice to the Company.
14. APPLICABLE LAW.
This Warrant shall be governed by and construed in
accordance with the laws of the State of Texas.
15. BENEFITS OF WARRANT.
Nothing in this Warrant shall give or be construed to give
any person or corporation other than the Company and the Holder any legal or
equitable right, remedy or claim under this Warrant. This Warrant shall be for
the sole and exclusive benefit of the Company and the Holder.
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16. CAPTIONS.
The captions of the sections of this Warrant have been
inserted for convenience only and shall have no substantive effect.
SIGNATURES BEGIN ON THE FOLLOWING PAGE
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant to
be duly executed as of the ___ day of ___, 19___.
THE MERIDIAN RESOURCE CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
---------------------------
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EXHIBIT A
FORM OF ELECTION
To be Executed by the Holder
to Exercise Warrant
The Meridian Resource Corporation
The undersigned hereby exercises the right to purchase shares of
common stock covered by this Warrant according to the conditions thereof and
herewith makes payment in full of the Warrant Price of such shares. If payment
of the Warrant Price shall be by Cashes Exercise. A calculation upon which the
Cashes Exercise is based is attached to this Form of Election.
[INDIVIDUAL]
Signature
----------------------------
Name:
---------------------------
Address
---------------------------
---------------------------
---------------------------
Dated: ____________, ____.
[CORPORATION OR PARTNERSHIP OR TRUST]
----------------------------------
(Name of Entity)
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Address
---------------------------
---------------------------
---------------------------
Dated: ____________, ____.
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