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EXHIBIT 1
OPTION AND STANDSTILL AGREEMENT
This Option and Standstill Agreement (this "Agreement"), dated as of
July 17, 2000, is entered into by and between The Meridian Resource
Corporation, a Texas corporation ("TMRC"), and Shell Louisiana Onshore
Properties Inc., a Delaware corporation ("SLOPI").
W I T N E S S E T H
WHEREAS, SLOPI owns 12,082,030 shares of common stock, par value
$.01 per share, of TMRC ("Common Stock") and 3,982,906 shares of Series A
Cumulative Convertible Preferred Stock, par value $1.00 per share, of TMRC
("Preferred Stock");
WHEREAS, TMRC and SLOPI are parties to the Stock Rights and
Restrictions Agreement, dated as of June 30, 1998 (the "Restrictions
Agreement");
WHEREAS, SLOPI wishes to grant to TMRC an option to purchase
6,000,000 shares of the Common Stock held by SLOPI (the "Common Shares") and
all of the shares of Preferred Stock held by SLOPI (the "Preferred Shares" and,
collectively with the Common Shares, the "Shares") at an aggregate exercise
price of $114 million, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, TMRC and SLOPI hereby covenant and agree as follows:
SECTION 1.DEFINITIONS.
"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.
"CASH PAYMENT" shall have the meaning set forth in Section 2(a).
"CLOSING" shall have the meaning set forth in Section 3.
"CLOSING DATE" shall have the meaning set forth in Section 3.
"COMMON SHARES" shall have the meaning set forth in the preamble to
this Agreement.
"COMMON STOCK" shall have the meaning set forth in the preamble to
this Agreement.
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"CONSIDERATION SHARES" shall have the meaning set forth in Section
2(b).
"CONTRIBUTION AND ASSET AGREEMENTS" shall mean, collectively, the
Contribution Agreement, dated as of October 1, 1997, by and among Shell Western
E&P Inc., a Delaware corporation ("SWEPI"), SLOPI and Louisiana Onshore
Properties Inc., a Delaware corporation ("LOPI"); the Contribution Agreement,
dated as of October 1, 1997, by and among Shell Onshore Ventures Inc., a
Delaware corporation ("SOVI"), SLOPI and LOPI; the Asset Conveyance Agreement,
dated as of October 1, 1997, between SWEPI and LOPI; and the Asset Conveyance
Agreement, dated as of October 1, 1997, between SOVI and LOPI.
"DESIGNEE" shall have the meaning set forth in Section 2(c).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"EXERCISE NOTICE" shall have the meaning set forth in Section 3.
"EXISTING REGISTRATION RIGHTS AGREEMENT" shall mean the Registration
Rights Agreement, date June 30, 1998, by and between TMRC and SLOPI.
"MERGER AGREEMENT" shall mean the Agreement and Plan of Merger
dated as of May 27, 1998, by and among TMRC, SLOPI, LOPI Acquisition Corp., a
Delaware corporation, and Louisiana Onshore Properties Inc., a Delaware
corporation.
"NOTICE DATE" shall have the meaning set forth in Section 3.
"OPTION" shall have the meaning set forth in Section 2(a).
"OPTION PERIOD" shall have the meaning set forth in Section 2(a).
"PERSON" shall mean any individual, firm, partnership, association,
group (as such term is defined in Section 13(d)(3) of the Exchange Act, as in
effect on the date hereof), corporation, trust, business trust or other entity,
and includes any successor (by merger or otherwise) of any such entity.
"PREFERRED SHARES" shall have the meaning set forth in the preamble
to this Agreement.
"PREFERRED STOCK" shall have the meaning set forth in the preamble
to this Agreement.
"REMAINING SHARES" shall have the meaning set forth in Section 4(e).
"RESTRICTIONS AGREEMENT" shall have the meaning set forth in the
preamble to this Agreement.
"RIGHTS AGREEMENT" shall mean the Rights Agreement, dated as of May
5, 1999, by and between TMRC and American Stock Transfer & Trust Company, as
Rights Agent, as such agreement may be amended from time to time.
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"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SHARES" shall have the meaning set forth in the preamble to this
Agreement.
"SLOPI" shall have the meaning set forth in the preamble to this
Agreement.
"TMRC" shall have the meaning set forth in the preamble to this
Agreement.
SECTION 2.GRANT OF OPTION.
(a) Subject to the terms and conditions set forth herein, SLOPI
hereby grants to TMRC an irrevocable option (the "Option") to purchase, at any
time during the period commencing on the date hereof and ending at 3:00 p.m.
Central Time on January 31, 2001 (the "Option Period"), all, but not less than
all, of the Shares (as may be adjusted as set forth herein) for an aggregate
purchase price of $114 million in cash (the "Cash Payment").
(b) As consideration for the grant of the Option by SLOPI, TMRC
shall on the date hereof cause its transfer agent to issue to SLOPI a
certificate or certificates representing an aggregate of 1,000,000 newly issued
shares of Common Stock (the "Consideration Shares"). The certificate or
certificates representing the Consideration Shares shall have printed or typed
thereon the restrictive legend set forth in Section 4(d). If SLOPI breaches any
provision of this Agreement in any material respect, except for a breach of
Section 8, TMRC shall have the right to direct the transfer agent for the
Common Stock to cancel the Consideration Shares on the stock transfer records
of TMRC and SLOPI shall promptly return to TMRC the certificate or certificates
representing the Consideration Shares. During the period commencing on the date
hereof and ending on the earlier of (i) the exercise of the Option and (ii)
3:00 p.m., Houston, Texas time, on January 31, 2001, SLOPI shall not offer,
sell or contract to sell, or otherwise transfer, pledge, encumber or dispose
of, directly or indirectly, or announce an offering of, any of the
Consideration Shares, or any securities convertible into or exchangeable for
the Consideration Shares. The Consideration Shares shall not be subject to the
provisions of the Restrictions Agreement.
(c) TMRC shall have the right to designate one or more Persons (each
a "Designee") to exercise at Closing all or any part of the Option with respect
to the Common Shares on the same terms and conditions as set forth herein. At
the Closing, each such Designee shall execute and deliver to SLOPI and TMRC a
Stock Purchase Agreement in substantially the form attached hereto as Exhibit
A.
(d) If TMRC exercises its rights under Section 2(c) to designate one
or more Designees, TMRC shall indemnify, defend and hold harmless SLOPI, its
Affiliates and their respective officers, directors, employees, agents and
shareholders (each, an "indemnified party") from and against any claim, loss,
damage or liability to the extent that any such claim, loss, damage or
liability arises out of or is related to any assertion of misrepresentation of
material fact, failure to disclose any material fact, or fraud or deceit of any
nature with respect to the sale of Common Shares to any such Designee, except
for (i) any assertion of breach of any representation of SLOPI made in Section
2 of the Stock Purchase Agreement attached hereto as
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Exhibit A and (ii) any assertion of breach of any oral or other written
representation of SLOPI or any of its Affiliates in connection with the sale of
Common Shares to any such Designee. If TMRC exercises its rights under Section
2(c) to designate one or more Designees, SLOPI shall indemnify, defend and hold
harmless TMRC, its Affiliates and their respective officers, directors,
employees, agents and shareholders (each, an "indemnified party") from and
against any claim, loss, damage or liability to the extent that any such claim,
loss, damage or liability arises out of or is related to (i) any assertion of
breach of any representation of SLOPI made in Section 2 of the Stock Purchase
Agreement attached hereto as Exhibit A and (ii) any assertion of breach of any
oral or other written representation of SLOPI or any of its Affiliates in
connection with the sale of Common Shares to any such Designee. The
indemnification under this Section 2(d) shall be in force notwithstanding the
negligence of any indemnified party. If the indemnification provided for in
this Section 2(d) is unavailable to an indemnified party for any reason, then
TMRC and SLOPI shall each contribute to the indemnified party in a proportion
as appropriate to reflect the relative benefits to TMRC and to SLOPI from a
sale of the Common Shares to a Designee and the relative fault of TMRC and
SLOPI. TMRC acknowledges that, except as provided in this Agreement, it has the
responsibility to identify any Designee, arrange the sale of Common Shares to
such Designee and, except as otherwise specifically provided in Section 2 of
the Stock Purchase Agreement, to make any representations, warranties,
statements, and disclosures of information to the Designee or to the securities
markets generally.
(e) Notwithstanding anything in this Agreement to the contrary, TMRC
and its Designees, if any, may exercise the Option, in whole but not in part,
at only one time during the Option Period.
SECTION 3.NOTICE OF EXERCISE OF OPTION. If TMRC, or TMRC and its
Designee or Designees, as the case may be, wish to exercise the Option, TMRC
will send to SLOPI a written notice (an "Exercise Notice"; the date of which
being herein referred to as the "Notice Date") to that effect, which Exercise
Notice shall specify a date not later than the earlier of (x) 20 business days
from the Notice Date and (y) January 31, 2001 (the "Closing Date") for the
closing of the exercise of the Option (the "Closing") ; provided, however, that
if prior notification to or approval of any regulatory authority is required in
connection with the Closing and such approval has not yet been obtained, TMRC
and SLOPI shall promptly file the required notice or application for approval
and shall cooperate in the expeditious filing of such notice or application,
and the Closing shall be held as soon as practicable after the date on which,
as the case may be, (A) any required notification period has expired or been
terminated or (B) any required approval has been obtained, and in either event,
any requisite waiting period has expired or been terminated. The Closing shall
be held at 9:00 a.m. Central Time at the offices of Fulbright & Jaworski
L.L.P., 1301 McKinney, Suite 5100, Houston, Texas, on the Closing Date or at
such later date as may be necessary so as to comply with the provisions of this
Section 3.
SECTION 4.EXERCISE OF OPTION; PAYMENT AND DELIVERY OF CERTIFICATES.
(a) To exercise the Option, TMRC, or TMRC and its Designee or
Designees, as the case may be, shall, at the Closing:
(i) pay the aggregate Cash Payment to SLOPI in immediately
available funds by one or more wire transfers to a bank
account designated in writing by SLOPI;
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(ii) pay to SLOPI in immediately available funds by wire
transfer to a bank account designated in writing by SLOPI
any accrued and unpaid dividends payable with respect to
the Preferred Shares in accordance with the terms of the
Certificate of Designations, Preferences and Rights
related to the Preferred Shares;
(iii) deliver to SLOPI for each Designee, if any, a Stock
Purchase Agreement in substantially the form attached
hereto as Exhibit A, executed by TMRC and each such
Designee;
(iv) execute and deliver to SLOPI a Termination Agreement
in substantially the form attached hereto as Exhibit B;
(v) execute and deliver to SLOPI a Registration Rights
Agreement in substantially the form attached hereto as
Exhibit C; and
(vi) deliver to SLOPI a certificate dated the Closing Date
executed by an officer of TMRC stating that the
representations and warranties of TMRC in Section 6 are
true and correct as of the Closing Date.
(b) At the Closing, SLOPI shall:
(i) deliver to TMRC or its Designee or Designees, as the
case may be, certificates representing the Shares, which
Shares shall be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever;
(ii) if any Designee or Designees exercise any portion of
the Option, execute and deliver to TMRC and such Designee
or Designees the Stock Purchase Agreement or the Stock
Purchase Agreements referred to in Section 4(a)(iv);
(iii) execute and deliver to TMRC the Termination Agreement
referred to in Section 4(a)(v);
(iv) execute and deliver to TMRC the Registration Rights
Agreement referred to in Section 4(a)(vi); and
(v) deliver to TMRC a certificate dated the Closing Date
executed by an officer of SLOPI stating that the
representations and warranties of SLOPI in Section 7 are
true and correct as of the Closing Date.
(c) SLOPI acknowledges that, if TMRC exercises the Option, TMRC
shall enter into with American Stock Transfer & Trust Company Amendment No. 1
to Rights Agreement in substantially the form attached hereto as Exhibit D, and
that thereafter SLOPI shall be subject to the provisions of the Rights
Agreement, as so amended.
(d) Certificates for the Consideration Shares shall have typed or
printed thereon a restrictive legend that will read substantially as follows:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE CONVEYED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO RULE
144 UNDER THE ACT, UNLESS THE COMPANY SHALL HAVE BEEN
FURNISHED WITH AN OPINION OF COUNSEL, WHICH OPINION SHALL
BE REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY,
THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED."
It is understood and agreed that the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of
substitute certificate(s) without such reference if the Consideration Shares
have been registered pursuant to the Securities Act, have been sold in reliance
on and in accordance with Rule 144 under the Securities Act or SLOPI has
delivered to TMRC a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to TMRC and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act.
(e) If TMRC, or TMRC and its Designee or Designees, as the case may
be, exercises the Option, then at any time after the three month period
following the Closing Date, SLOPI may submit to TMRC a certificates or
certificates representing the shares of Common Stock held by SLOPI that were
acquired pursuant to the Merger Agreement and were not transferred pursuant to
the exercise of the Option (the "Remaining Shares"), accompanied by an opinion
of counsel in form and substance reasonably satisfactory to TMRC and its
counsel to the effect that SLOPI is not, and has not been during the three
months preceding the date of such opinion, an "affiliate" of TMRC within the
meaning of Rule 144 under the Securities Act. Upon receipt of such opinion and
such certificate or certificates for the Remaining Shares, TMRC shall cancel
such certificate or certificates and promptly cause to be reissued to SLOPI one
or more certificates representing, in the aggregate, the Remaining Shares, such
reissued certificate or certificates to be without any restrictive legends
thereon.
SECTION 5.STANDSTILL AND OTHER AGREEMENTS.
(a) SLOPI agrees that it shall not, during the period commencing on
the date hereof and ending on the earlier of (i) the exercise of the Option and
(ii) 3:00 p.m., Houston, Texas time, on January 31, 2001:
(I) exercise any of SLOPI's rights under Section 2.4, 2.6
or 2.7of the Restrictions Agreement; or
(II) exercise any of SLOPI's rights under the Existing
Registration Rights Agreement.
Notwithstanding anything in this Agreement to the contrary, SLOPI shall not be
released from any of its obligations under the Restrictions Agreement during
the period ending on the earlier of (A) the exercise of the Option and (B) 3:00
p.m., Houston, Texas time, on January 31, 2001,
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except that, in any event, SLOPI shall be permitted to transfer shares of
Common Stock to any person (other than SLOPI or an Affiliate of SLOPI) that
shall have commenced a tender or exchange offer for shares of Common Stock in
accordance with the rules and regulations of the Exchange Act if, and only if,
(i) the Board of Directors of TMRC shall have publicly recommended that the
shareholders of TMRC tender or exchange their shares of Common Stock to such
person in connection with such tender or exchange offer or (ii) the Board of
Directors of TMRC shall have taken action to exclude the party or parties
commencing or proposing the tender or exchange offer from the definition of
"Acquiring Person" in Section 1(a) of the Rights Agreement or from the
definition of "Person" and "Principal Party" in Section 13(d) of the Rights
Agreement.
(b) Without limiting the foregoing, SLOPI agrees that, except as
contemplated by this Agreement, it shall not, during the period commencing on
the date hereof and ending on the earlier of (i) the exercise of the Option and
(ii) 3:00 p.m. Central Time on January 31, 2001:
(I) acquire, or agree to acquire, offer, seek or propose
to acquire (or request permission to do so or to make any
proposal in such regards), ownership (including, but not
limited to, beneficial ownership as defined in Rule 13d-3
under the Exchange Act) of TMRC or any of the assets or
businesses of TMRC (except in transactions in the ordinary
course of business) or any securities issued by TMRC or
any rights or options to acquire such ownership (including
from a third party), or make any public announcement (or
request permission to make any such announcement) with
respect to any of the foregoing;
(II) except with respect to SLOPI's designee on TMRC's
board of directors, seek or propose to influence or
control in any manner the management or the policies of
TMRC or to obtain additional representation on TMRC's
board of directors, or solicit, or encourage or in any way
participate in, directly or indirectly, the solicitation
of, any proxies or consents with respect to any securities
of TMRC, or make any proposal or any public announcement
with respect to any of the foregoing or request permission
to do any of the foregoing with or without conditions;
(III) seek or propose any recapitalization, restructuring
or other extraordinary transaction with respect to TMRC or
any of its businesses;
(IV) enter into any discussions, negotiations, arrangements
or understandings with any third party with respect to
any of the foregoing; or
(V) take any action that might force TMRC to make a public
announcement regarding any of the foregoing.
To the extent any third party contacts SLOPI or, to the knowledge of any
officer or director of SLOPI, any of its Affiliates or makes any proposal to
SLOPI or, to the knowledge of any officer or director of SLOPI, any of its
Affiliates involving any of the matters covered by clauses (I) through (V)
above during the period specified in this Section 5(b), SLOPI shall promptly
notify TMRC and provide all details to TMRC with respect to the same. SLOPI
shall be responsible for any breach of this Section 5(b) by its Affiliates, but
TMRC shall be entitled to directly enforce the agreements of SLOPI's Affiliates
and to cause SLOPI to enforce such agreements.
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(c) Effective as of the Closing, SLOPI shall cause the SLOPI
designee to resign from TMRC's board of directors, and SLOPI and its Affiliates
shall relinquish, for a period of ten years after the Closing, any rights to
propose any candidates for election to TMRC's board of directors.
(d) For a period of ten years following the Closing, SLOPI shall
not, and shall cause its Affiliates not to, acquire any additional equity or
debt securities or other interests in TMRC or any of TMRC's subsidiaries,
unless any such acquisition is approved in advance by the board of directors of
TMRC.
(e) For a period of 90 days following the Closing, SLOPI shall not,
and SLOPI and TMRC shall cause their respective Affiliates not to, offer, sell
or contract to sell, or otherwise transfer or dispose of, directly or
indirectly, or announce an offering of, any shares of Common Stock, or any
securities convertible into or exchangeable for shares of Common Stock, except
that, in any event, any and all of the following shall be permitted:
(i) one or more transfers to any Affiliate of SLOPI,
provided that prior to any such transfer or transfers each
such Affiliate agrees in writing with TMRC to be bound by
the same restrictions as are applicable to SLOPI
hereunder; or
(ii) one or more transfers pursuant to a merger,
consolidation or compulsory share exchange, in which TMRC
is a constituent corporation and that involves transfers
of Common Stock by TMRC shareholders.
(f) Any attempt by SLOPI or its Affiliates to transfer any shares of
Common Stock or Preferred Stock other than in accordance with this Agreement
shall be null and void and neither TMRC nor any transfer agent for such
securities shall be required to give any effect to such attempted transfer in
its stock records.
SECTION 6.REPRESENTATIONS AND WARRANTIES OF TMRC.
(a) TMRC has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the board of
directors of TMRC, and no other corporate proceedings on the part of TMRC are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by TMRC, and
assuming this Agreement constitutes a valid and binding agreement of SLOPI,
this Agreement constitutes a valid and binding agreement of TMRC, enforceable
against TMRC in accordance with its terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, or by principles governing
the availability of equitable remedies).
(b) The Consideration Shares, upon issuance pursuant hereto, will be
duly and validly issued, fully paid and nonassessable and will be delivered
free and clear of all liens, claims, security interests, charges and
encumbrances, including without limitation any preemptive rights of any
shareholder of TMRC.
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SECTION 7.REPRESENTATIONS AND WARRANTIES OF SLOPI.
(a) SLOPI has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the board of
directors of SLOPI, and no other corporate proceedings on the part of SLOPI are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by SLOPI, and
assuming this Agreement constitutes a valid and binding agreement of TMRC, this
Agreement constitutes a valid and binding agreement of SLOPI, enforceable
against SLOPI in accordance with its terms (except insofar as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, or by principles
governing the availability of equitable remedies).
(b) SLOPI has, and will at the Closing convey to TMRC, or TMRC and
its Designee or Designees, as the case may be, good and valid title to the
Shares, free and clear of any liens, claims, security interests, encumbrances
or voting agreements, except with respect to the Restrictions Agreement.
SECTION 8.SUPPORT FOR OFFERINGS. SLOPI acknowledges that TMRC may
offer and sell equity securities, debt securities or a combination thereof,
through private placement or pursuant to registration under the Securities Act,
a portion of the proceeds of which may be used to fund all or a portion of the
Cash Payment. In connection with any such offers or sales, SLOPI hereby agrees
at TMRC's specific request to use reasonable efforts, and to cause its
Affiliates to use reasonable efforts, to support TMRC in its efforts to
consummate the sale of such securities by (a) making appropriate
representatives of SLOPI and its Affiliates available to participate in any
formal or informal "road show" relating to offers and sales of such securities
to discuss, and answer questions regarding, SLOPI's investment in TMRC, the
transactions contemplated by this Agreement and appropriate related matters,
(b) making such representatives accessible to TMRC and potential purchasers of
such securities to discuss, and answer questions regarding, SLOPI's investment
in TMRC, the transactions contemplated by this Agreement and appropriate
related matters and (c) reviewing and commenting on the portions of any
applicable registration statement, prospectus, offering circular, offering
memorandum or similar offering document that relate to SLOPI's investment in
TMRC, the transactions contemplated by this Agreement or appropriate related
matters. In connection with any such offers or sales, and prior to the delivery
of any applicable registration statement, prospectus, offering circular,
offering memorandum or similar offering document to potential purchasers, TMRC
will provide SLOPI with the opportunity to review and comment on the portions
of any such document that relate to SLOPI's investment in TMRC, the
transactions contemplated by this Agreement or appropriate related matters.
TMRC acknowledges and agrees that it is solely responsible for the preparation
and content of any applicable registration statement, prospectus, offering
circular, offering memorandum or similar offering document except for any
statements provided by SLOPI in writing to TMRC for the express purpose of
being included in any such document.
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SECTION 9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) In the event of any changes in the Common Stock by reason of a
stock dividend, stock split, reverse stock split, merger, recapitalization,
combination, exchange of shares, or similar transaction, the type and number of
shares or securities subject to the Option shall be adjusted appropriately, and
proper provision shall be made in the agreements governing such transaction, so
that TMRC or SLOPI, as the case may be, shall receive upon exercise of the
Option the number and class of shares or other securities or property that TMRC
or SLOPI, as the case may be, would have received if the Option had been
exercised immediately prior to such event or the record date therefor, as
applicable.
(b) If TMRC enters into an agreement (i) to consolidate with or
merge into any Person, other than SLOPI or one of its Affiliates, and TMRC
shall not be the continuing or surviving corporation in such consolidation or
merger, (ii) to permit any person, other than SLOPI or one of its Affiliates,
to merge into TMRC and TMRC shall be the continuing or surviving corporation,
but in connection with such merger, the shares of Common Stock outstanding
immediately prior to the consummation of such merger shall be changed into or
exchanged for stock or other securities of TMRC or any other Person or cash or
any other property, or the shares of Common Stock outstanding immediately prior
to the consummation of such merger will after such merger represent less than
50% of the outstanding voting securities of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
Person, other than SLOPI or one of its Affiliates, then, and in each such case,
the agreement governing such transaction shall make proper provision so that
the Option shall, upon the consummation of any such transaction and upon the
terms and conditions set forth herein, be converted into, or exchanged for, an
option with identical terms appropriately adjusted to acquire the number and
class of shares or other securities or property that TMRC or SLOPI, as the case
may be, would have received if the Option had been exercised immediately prior
to such consolidation, merger, sale, or transfer, or the record date therefor,
as applicable.
SECTION 10. MUTUAL RELEASE. In consideration of the promises and the
covenants of the parties set forth herein, each of the parties, on its own
behalf and, to the full extent permitted by law, on behalf of its respective
present and former Affiliates, officers, agents, employees and their insurers,
shall, effective upon Closing (if Closing occurs), RELEASE, ACQUIT and FOREVER
DISCHARGE the other party and, to the full extent permitted by law, such other
party's respective present and former Affiliates, officers, agents, employees
and its insurers, from all claims, demands and causes of action of whatever
kind, whether class, derivative or individual in nature, in law or in equity,
for all existing and future damages, including but not limited to actual
damages, exemplary or punitive damages, whether known or unknown, fixed or
contingent, pre-judgment and post-judgment interest, and attorneys' fees,
arising from or based upon the Merger Agreement. Notwithstanding anything in
this Agreement to the contrary, no claims, demands and causes of action that
the parties may have against each other based on Sections 9.10 (but ignoring
the transactions contemplated by this Agreement), 9.12 and 12.1(c) of the
Merger Agreement or under any other agreement, including, without limitation,
any of the Contribution and Asset Agreements, are released or discharged
pursuant to this Agreement.
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SECTION 11. MISCELLANEOUS.
(a) None of the actions of TMRC permitted or contemplated by this
Agreement, including but not limited to the exercise of the Option or any
public or private offering of debt or equity securities by TMRC during the
Option Period, shall be deemed to be a violation of any provision of the
Restrictions Agreement or the Existing Registration Rights Agreement, and TMRC
shall not be liable to SLOPI for any Deficiency Amount (as such term is defined
in the Restrictions Agreement) by virtue of or as a result of the exercise of
the Option or any such offerings commenced during the Option Period.
(b) This Agreement may be amended or any provision hereof waived
only by written instrument duly executed by the parties hereto.
(c) The parties hereto hereby acknowledge that in the event of a
breach by either of them of any material provision of this Agreement, the
aggrieved party may be without an adequate remedy at law. The parties therefore
agree that in the event of a breach of any material provision of this
Agreement, the aggrieved party may elect to institute and prosecute proceedings
in any court of competent jurisdiction to enforce specific performance or to
enjoin the continuing breach of such provision, as well as to obtain damages
for breach of this Agreement. By seeking or obtaining any such relief, the
aggrieved party will not be precluded from seeking or obtaining any other
relief to which it may be entitled in equity or at law.
(d) This Agreement and the legal relations between the parties shall
be governed by and construed in accordance with the laws of the State of Texas,
without regard to the principles of conflicts of law thereof.
(e) All notices, requests, demands or other communications required
or permitted by this Agreement shall be in writing and effective when received,
and delivery shall be made personally or by registered or certified mail,
return receipt requested, postage prepaid, or overnight courier or confirmed
facsimile transmission, addressed as follows:
(i) If to TMRC:
The Meridian Resource Corporation
1401 Enclave Parkway, Suite 300
Houston, Texas 77077
Attention: Joseph A. Reeves, Jr., Chairman and
Chief Executive Officer
Fax: (281) 558-5595
with a copy to:
Fouts & Moore, L.L.P.
1300 Post Oak Boulevard, 20th Floor
Houston, Texas 77056
Attention: Gary A. Messersmith
Fax: (713) 986-7299
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<PAGE> 12
and a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney Street, Suite 5100
Houston, Texas 77010
Attention: Charles L. Strauss
Fax: (713) 651-5246
(ii) If to SLOPI:
Shell Louisiana Onshore Properties Inc.
P.O. Box 7986
Newark, Delaware 19714
Attention: Corporate Secretary
with a copy to:
Shell Oil Company
P.O. Box 2463
Houston, Texas 77252
Attention: Duane C. King
Fax: (713) 241-5362
(f) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
(g) Except as otherwise expressly stated herein, this Agreement and
the exhibits hereto constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. Except as otherwise expressly permitted
or contemplated herein, the rights and obligations under this Agreement shall
not be assigned by operation of law or otherwise. Nothing in this Agreement
shall be construed as prohibiting TMRC from effecting a merger, consolidation
or other similar transaction with another entity, provided that (i) the
operative terms of this Agreement shall be applied in respect of any such
transaction and (ii) under the express terms of such transaction this Agreement
will be continued in effect by TMRC or any successor thereto.
(h) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement, except
as expressly otherwise contemplated herein.
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<PAGE> 13
(i) The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(j) This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
THE MERIDIAN RESOURCE CORPORATION
By: /s/ Joseph A. Reeves, Jr.
---------------------------------------
Name: Joseph A. Reeves, Jr.
-------------------------------------
Title: Chairman and CEO
------------------------------------
SHELL LOUISIANA ONSHORE PROPERTIES INC.
By: /s/ W. van de Vijver
---------------------------------------
Name: W. van de Vivjer
-------------------------------------
Title: President and CEO
-----------------------------------
14
<PAGE> 15
EXHIBIT A
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of
________, 200__, is entered into by and among The Meridian Resource
Corporation, a Texas corporation ("TMRC"), Shell Louisiana Onshore Properties
Inc., a Delaware corporation ("SLOPI"), and __________, a _______ [corporation]
("Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, SLOPI owns 12,082,030 shares of common stock, par value
$.01 per share, of TMRC ("Common Stock") and 3,982,906 shares of Series A
Cumulative Convertible Preferred Stock, par value $1.00 per share, of TMRC
("Preferred Stock");
WHEREAS, TMRC and SLOPI are parties to the Option and Standstill
Agreement, dated as of July __, 2000 (the "Option Agreement"), pursuant to
which SLOPI granted to TMRC an option (the "Option") to purchase 6,000,000
shares of the Common Stock held by SLOPI and all of the shares of Preferred
Stock held by SLOPI, subject to the terms and conditions set forth therein;
WHEREAS, TMRC has designated Purchaser to be a Designee (as such
term is defined in the Option Agreement), and as such Designee, Purchaser
wishes to purchase from SLOPI ______ shares of Common Stock (the "Shares") in
accordance with the terms and conditions of the Option Agreement and this
Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, TMRC, SLOPI and Purchaser hereby covenant and agree as follows:
SECTION 1.PURCHASE AND SALE OF SHARES.
(a) Subject to the terms and conditions set forth herein, SLOPI
shall sell to Purchaser, and Purchaser shall purchase from SLOPI, at the
Closing (as hereinafter defined), the Shares, and, in consideration for the
Shares, Purchaser will pay to SLOPI, in immediately available funds by wire
transfer to a bank account designated in writing by SLOPI, cash in the amount
of
$------------.
(b) The closing of the sale and purchase of the Shares hereunder
(the "Closing") shall be held at the offices of Fulbright & Jaworski L.L.P.,
1301 McKinney, Suite 5100, Houston, Texas, simultaneously with the exercise of
the Option pursuant to the Option Agreement.
(c) At the Closing, SLOPI shall deliver to Purchaser a certificate
or certificates representing the Shares against payment therefor by Purchaser
to SLOPI of the aggregate consideration set forth in Section 1(a) hereof. SLOPI
shall pay all stamp and other transfer taxes, if any, that may be payable in
respect of the sale and delivery of the Shares.
SECTION 2.REPRESENTATIONS AND WARRANTIES OF SLOPI. SLOPI represents
and warrants to TMRC and Purchaser as follows:
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<PAGE> 16
(a) SLOPI (i) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, (ii) has all
requisite corporate power to execute, deliver and perform this Agreement and
(iii) has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate,
conflict with or constitute a default under (i) SLOPI's certificate of
incorporation or bylaws, (ii) any agreement, indenture or other instrument to
which SLOPI is a party or by which SLOPI or its assets may be bound or (iii)
any law, regulation, order, arbitration, award, judgment or decree applicable
to SLOPI.
(c) SLOPI has, and will convey to Purchaser at the Closing, good and
valid title to the Shares, free and clear of any liens, claims, security
interests, encumbrances or voting agreements.
(d) There are no actions, suits, proceedings, arbitrations or
investigations pending or, to SLOPI's best knowledge, threatened in any court
or before any governmental agency or instrumentality or arbitration panel or
otherwise against or by SLOPI that seek to or could restrain, prohibit, rescind
or declare unlawful, or result in substantial damages in respect of, this
Agreement or the performance hereof by SLOPI (including, without limitation,
the delivery of the Shares).
SECTION 3.REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to TMRC and SLOPI as follows:
(a) Purchaser (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of ________, (ii) has all
requisite corporate power to execute, deliver and perform this Agreement and
(iii) has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate,
conflict with or constitute a default under (i) Purchaser's certificate of
incorporation, bylaws or similar organizational documents, (ii) any agreement,
indenture or other instrument to which Purchaser is a party or by which
Purchaser or its assets may be bound or (ii) any law, regulation, order,
arbitration, award, judgment or decree applicable to Purchaser.
(c) There are no actions, suits, proceedings, arbitrations or
investigations pending or, to Purchaser's best knowledge, threatened in any
court or before any governmental agency or instrumentality or arbitration panel
or otherwise against or by Purchaser that seek to or could restrain, prohibit,
rescind or declare unlawful, or result in substantial damages in respect of,
this Agreement or the performance hereof by Purchaser (including, without
limitation, the purchase of the Shares).
SECTION 4.REPRESENTATIONS AND WARRANTIES OF TMRC. TMRC represents
and warrants to SLOPI and Purchaser as follows:
(a) TMRC (i) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Texas, (ii) has all requisite
corporate power to execute, deliver and perform this Agreement and (iii) has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Agreement.
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<PAGE> 17
(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate,
conflict with or constitute a default under (i) TMRC's articles of
incorporation or bylaws, (ii) any agreement, indenture or other instrument to
which TMRC is a party or by which TMRC or its assets may be bound or (iii) any
law, regulation, order, arbitration, award, judgment or decree applicable to
TMRC.
(c) There are no actions, suits, proceedings, arbitrations or
investigations pending or, to TMRC's best knowledge, threatened in any court or
before any governmental agency or instrumentality or arbitration panel or
otherwise against or by TMRC that seek to or could restrain, prohibit, rescind
or declare unlawful, or result in substantial damages in respect of, this
Agreement or the performance hereof by TMRC.
(d) The Shares have been duly authorized and are validly issued,
fully paid and non-assessable.
(e) Neither TMRC nor any affiliate of TMRC has directly, or through
any agent, (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of any security that is or will be integrated with the
sale of the Shares in a manner that would require the registration of the
Shares under the Securities Act of 1933, as amended (the "Securities Act"), or
(ii) engaged in any form of general solicitation or general advertising in
connection with the offering of the Shares.
SECTION 5.RESTRICTIONS ON DISPOSITION OF THE SHARES.
(a) Purchaser acknowledges that Purchaser is acquiring the Shares
pursuant to a transaction exempt from registration under the Securities Act.
Purchaser represents and warrants to TMRC and SLOPI and agrees with TMRC and
SLOPI that the Shares acquired by Purchaser pursuant to this Agreement are
being acquired by Purchaser for investment without any intention of Purchaser
making a distribution thereof, or of Purchaser making any sale or other
disposition thereof that would be in violation of the Securities Act or any
applicable state securities law, and that Purchaser will not dispose of any of
the Shares, except in compliance with all provisions of the Securities Act and
all other applicable federal and state law regulating the issuance, sale and
distribution of securities. Until such time as the Shares are registered
pursuant to the provisions of the Securities Act or may be sold without
registration in accordance with Rule 144 under the Securities Act, any
certificate or certificates representing the Shares delivered pursuant to
Section 1 will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE CONVEYED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
PURSUANT TO RULE 144 UNDER THE ACT, UNLESS THE COMPANY SHALL HAVE
BEEN FURNISHED WITH AN OPINION OF COUNSEL, WHICH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT
REGISTRATION UNDER THE ACT IS NOT REQUIRED."
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<PAGE> 18
TMRC may place stop transfer orders against the registration or transfer of any
Shares evidenced by such a certificate or certificates until such time as the
requirements of the foregoing are satisfied.
(b) Purchaser understands that (i) the Shares (A) have not been
registered under the Securities Act or any state securities laws, (B) will be
issued in reliance upon an exemption from the registration and prospectus
delivery requirements of the Securities Act pursuant Section 4(2) thereof, (C)
will be issued in reliance upon exemptions from the registration and prospectus
delivery requirements of state securities laws that relate to private offerings
and (D) must be held by Purchaser indefinitely, and (ii) Purchaser must
therefore bear the economic risk of such investment indefinitely unless a
subsequent disposition thereof is registered under the Securities Act and
applicable state securities laws or is exempt therefrom. Purchaser further
understands that such exemptions depend upon, among other things, the bona fide
nature of the investment intent of Purchaser expressed herein.
(c) Purchaser represents and warrants that it has knowledge, skill
and experience in financial, business and investment matters relating to an
investment of this type and is capable of evaluating the merits and risks of
such investment and protecting Purchaser's interest in connection with the
acquisition of the Shares. Purchaser understands that the acquisition of the
Shares involves substantial risks and that Purchaser could lose Purchaser's
entire investment in the Shares. To the extent deemed necessary by Purchaser,
Purchaser has retained, at its own expense, and relied upon, appropriate
professional advice regarding the investment, tax and legal merits and
consequences of purchasing and owning the Shares. Purchaser has the ability to
bear the economic risks of Purchaser's investment in TMRC, including a complete
loss of the investment, and Purchaser has no need for liquidity in such
investment.
(d) Purchaser represents and warrants that TMRC has furnished
Purchaser all publicly available information (or provided Purchaser access to
all such information) regarding the business and financial condition of TMRC,
its expected plans for future business activities, the attributes of the Shares
and the merits and risks of an investment in the Shares that Purchaser has
requested or otherwise needs to evaluate the investment in the Shares.
(e) In making its proposed investment decision, Purchaser represents
and warrants that it is relying solely on investigations made by Purchaser and
Purchaser's representatives. The offer to sell the Shares was communicated to
Purchaser in such a manner that Purchaser was able to ask questions of and
receive answers from the management of TMRC concerning the terms and conditions
of the proposed transaction and that at no time was Purchaser presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general or public advertising or
solicitation.
(f) Purchaser acknowledges that TMRC is not under an obligation to
register the Shares under the Act or the securities laws of any state. In
addition, Purchaser acknowledges that Purchaser has been advised that:
THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
ANY REPRESENTATIONS BY TMRC. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<PAGE> 19
IN MAKING AN INVESTMENT DECISION, PURCHASER MUST RELY ON
ITS OWN EXAMINATION OF TMRC AND THE TERMS OF THE OFFERING, INCLUDING
THE MERITS AND RISKS INVOLVED. THE SHARES HAVE NOT BEEN RECOMMENDED
BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED
THE ACCURACY OR DETERMINED THE ADEQUACY OF ANY REPRESENTATION. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. PURCHASER IS AWARE
THAT PURCHASER MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
(g) Purchaser acknowledges and is aware that there has never been
any representation, guarantee or warranty made by TMRC or any officer,
director, employee, agent or representative of TMRC, expressly or by
implication, (i) as to the approximate or exact length of time that Purchaser
will be required to remain an owner of the Shares; (ii) as to the percentage of
profit and/or amount of or type of consideration, profit or loss to be
realized, if any, as a result of this investment; or (iii) that the past
performance or experience on the part of TMRC, or any future expectations, will
in any way indicate or predict the results of the ownership of Shares or the
overall financial performance of TMRC. Purchaser further acknowledges that
neither SLOPI nor any person acting on behalf of SLOPI has made any
representations or warranties with respect to the Shares or the transactions
contemplated hereby, except for those representations and warranties set forth
in Section 2 hereof.
(h) Purchaser agrees to furnish TMRC such other information as TMRC
may reasonably request to verify the accuracy of the information contained
herein and agrees to notify TMRC immediately of any material change in the
information provided herein that occurs prior to TMRC's acceptance of this
Stock Purchase Agreement.
The foregoing representations and warranties and undertakings are
made by Purchaser and on behalf of Purchaser with the intent that they be
relied upon in determining its suitability as an investor, and Purchaser hereby
agrees that such representations and warranties shall survive its purchase of
the Shares.
SECTION 6.MISCELLANEOUS.
(a) This Agreement may be amended or any provision hereof waived
only by written instrument duly executed by the parties hereto.
(b) All representations and warranties made by the parties hereto
in this Agreement shall survive the Closing.
(c) The parties hereto hereby acknowledge that in the event of a
breach by any of them of any material provision of this Agreement, the
aggrieved party may be without an adequate remedy at law. The parties therefore
agree that in the event of a breach of any material
5
<PAGE> 20
provision of this Agreement, the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to enforce
specific performance or to enjoin the continuing breach of such provision, as
well as to obtain damages for breach of this Agreement. By seeking or obtaining
any such relief, the aggrieved party will not be precluded from seeking or
obtaining any other relief to which it may be entitled in equity or at law.
(d) This Agreement and the legal relations between the parties shall
be governed by and construed in accordance with the laws of the State of Texas,
without regard to the principles of conflicts of law thereof.
(e) All notices, requests, demands or other communications required
or permitted by this Agreement shall be in writing and effective when received,
and delivery shall be made personally or by registered or certified mail,
return receipt requested, postage prepaid, or overnight courier or confirmed
facsimile transmission, addressed as follows:
(i) If to TMRC:
The Meridian Resource Corporation
1401 Enclave Parkway, Suite 300
Houston, Texas 77077
Attention: Joseph A. Reeves, Jr., Chairman and
Chief Executive Officer
Fax: (281) 558-5595
with a copy to:
Fouts & Moore, L.L.P.
1300 Post Oak Boulevard, 20th Floor
Houston, Texas 77056
Attention: Gary A. Messersmith
Fax: (713) 986-7299
and a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney Street, Suite 5100
Houston, Texas 77010
Attention: Charles L. Strauss
Fax: (713) 651-5246
(ii) If to SLOPI:
Shell Louisiana Onshore Properties Inc.
P.O. Box 7986
Newark, Delaware 19714
Attention: Corporate Secretary
6
<PAGE> 21
with a copy to:
Shell Oil Company
P.O. Box 2463
Houston, Texas 77252
Attention: Duane C. King
Fax: (713) 241-5362
(iii) If to Purchaser:
Attention: __________________
Fax: _______________________
with a copy to:
Attention: __________________
Fax: _______________________
(f) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
(g) Except as otherwise expressly stated herein, this Agreement and,
to the extent applicable, the Option Agreement, constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof. Except as otherwise
expressly permitted or contemplated herein, the rights and obligations under
this Agreement shall not be assigned by operation of law or otherwise.
(h) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement, except
as expressly otherwise contemplated herein.
(i) The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
7
<PAGE> 22
(j) This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
THE MERIDIAN RESOURCE CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
SHELL LOUISIANA ONSHORE PROPERTIES INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
[PURCHASER]
By:___________________________________________
Name:_________________________________________
Title:________________________________________
8
<PAGE> 23
EXHIBIT B
TERMINATION AGREEMENT
This Termination Agreement (this "Agreement") by and between The
Meridian Resource Corporation, a Texas corporation ("Meridian"), and Shell
Louisiana Onshore Properties Inc., a Delaware corporation ("SLOPI"), is entered
into this ___ day of _____, 200__.
W I T N E S S E T H
WHEREAS, Meridian and SLOPI entered into that certain Option and
Standstill Agreement dated July ___, 2000 (the "Option Agreement");
WHEREAS, in connection with Meridian's exercise of the Option (as
defined in the Option Agreement), Meridian and SLOPI propose to enter into
various agreements, including a Registration Rights Agreement dated the date
hereof;
WHEREAS, Meridian and SLOPI entered into that certain Stock Rights
and Restrictions Agreement dated June 30, 1998 (the "Stock Rights and
Restrictions Agreement"), a copy of which is attached to this Agreement as
ANNEX A, and that certain Registration Rights Agreement dated June 30, 1998
(the "1998 Registration Rights Agreement"), a copy of which is attached to this
Agreement as ANNEX B; and
WHEREAS, Meridian and SLOPI desire to terminate the Stock Rights and
Restrictions Agreement and the 1998 Registration Rights Agreement upon the
closing of the exercise of the Option (the "Effective Time").
NOW THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Meridian and SLOPI mutually agree that the Stock Rights and
Restrictions Agreement and the 1998 Registration Rights Agreement shall be
terminated and canceled and shall be of no further force and effect as of the
Effective Time. Meridian and SLOPI mutually agree that Section 2.1(c) of the
Stock Rights and Restrictions Agreement will not survive the termination of the
Stock Rights and Restrictions Agreement.
2. This Agreement constitutes the entire understanding and agreement
between Meridian and SLOPI with respect to the subject matter hereof and
supersedes all prior negotiations, understandings and agreements between them
relating to the same subject matter.
[SIGNATURES BEGIN ON NEXT PAGE]
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<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this agreement on the date first written above.
THE MERIDIAN RESOURCE CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
SHELL LOUISIANA ONSHORE PROPERTIES INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
2
<PAGE> 25
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated _________________, 200__ by and
between The Meridian Resource Corporation, a Texas corporation (the "Company"),
and Shell Louisiana Onshore Properties Inc., a Delaware corporation ("Security
Holder").
W I T N E S S E T H:
WHEREAS, the Company and Security Holder have entered into an Option
and Standstill Agreement dated July __, 2000 (the "Option Agreement"), which
provides, among other things, for the execution of this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and in the Option Agreement the parties hereto
agree as follows:
Section 1. Definitions. The terms defined in this Section 1, whenever used in
this Agreement, shall, unless the context otherwise requires, have the
respective meanings hereinafter specified. Terms not defined in this Agreement,
and defined in the Option Agreement have the meanings assigned them in the
Option Agreement.
"Agreement" shall mean this Registration Rights Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall mean the Company's authorized Common Stock, par
value $0.01 per share.
"Company" shall mean The Meridian Resource Corporation, a Texas
corporation, and any successor corporation by merger, consolidation or
otherwise and any parent corporation resulting from the merger or consolidation
of the Company with or into a subsidiary of another corporation.
"Eligible Stock" means the 7,082,030 shares of Common Stock issued
in the name of Security Holder, representing all equity shares of the Company
beneficially owned by Security Holder after giving effect to the transactions
contemplated by the Option Agreement.
"E&P Company" shall mean a Person that, directly or indirectly, has
as one of its material businesses the exploration, development or production of
crude oil or natural gas.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and
the rules and regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Permitted Transferee" shall mean any Person to which Security
Holder transfers all, but not a portion, of the Registrable Securities.
"Person" shall mean an individual, a corporation, a partnership, a
trust, an unincorporated organization or a government or any agency or
political subdivision thereof.
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<PAGE> 26
"Public Offering" shall mean a firm commitment underwritten public
offering pursuant to a registration statement under the Securities Act.
"Registrable Securities" shall mean the Eligible Stock and any
shares of Common Stock issued or issuable in respect of such shares by way of a
stock dividend or stock split or in connection with a combination or
subdivision of shares, reclassification, recapitalization, merger,
consolidation or other reorganization of the Company. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (c) disposition of
them shall not require registration or qualification of them under the
Securities Act or any similar law then in force or compliance with any rule or
regulation under the Securities Act or similar law, other than compliance with
any holding period required by such rule or regulation, (d) they shall have
been otherwise transferred to any Person other than a Permitted Transferee or
(e) they shall have ceased to be outstanding.
"Registration" shall mean the registration under the Securities Act
of Registrable Securities pursuant to either Section 2.A hereof or 2.B hereof.
"Registration Statement" shall mean a registration statement filed
under the Securities Act or a similar document filed pursuant to any other
statute then in effect corresponding to the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Security Holder" shall mean Shell Louisiana Onshore Properties
Inc., a Delaware corporation, its permitted assigns, or any affiliate thereof
holding Common Stock or any successor corporation to any of the foregoing by
merger or consolidation or otherwise.
Section 2. Registration Rights.
1. Demand Registrations. Subject to the provisions of Section 5 in
the event of assignment of this Agreement, if the Company shall receive a
written request from Security Holder requesting that the Company file a
Registration Statement relating to Registrable Securities, the Company will as
promptly as practicable prepare and file a Registration Statement and use
reasonable best efforts to cause the Registration Statement to become
effective; subject, however, to the following provisions:
(1) the Company shall be required to file no more than an aggregate
of two Registration Statements on behalf of Security Holder (or Permitted
Transferee in the event of an assignment of this Agreement) pursuant to
this Subsection A;
(2) the Company shall not be obligated (i) to file a requested
Registration in the event that the aggregate number of Registrable
Securities to be included in such requested Registration is less than
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<PAGE> 27
500,000 shares of the issued and outstanding Common Stock; or (ii) to
prepare or file such Registration Statement or an amendment or supplement
thereto, and may suspend sales, at any time when the Company reasonably
determines (by action of the Company's Board of Directors or an officer
duly authorized by the Board of Directors to make such decision) that the
filing thereof at the time requested, or the offering of Registrable
Securities pursuant thereto, would materially and adversely affect a
pending or proposed offering of securities of the Company, an 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 days
necessary to keep such Registration effective for permitted sales
thereunder for a term of 90 days. 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 120 days during any one year;
(3) a Registration Statement filed pursuant to a request of Security
Holder shall first include all Registrable Securities requested to be
included by Security Holder and, only after such inclusion, may, include
securities of the Company being sold for the account of the Company;
provided, however, that securities to be offered on behalf of the Company
will be included in such Registration Statement only to the extent that,
in the reasonable opinion of the managing underwriter for the Public
Offering of Registrable Securities on behalf of Security Holder, such
inclusion will not materially adversely affect the distribution of
Registrable Securities on behalf of Security Holder;
(4) the selection of an underwriter for a Public Offering of
Registrable Securities by Security Holder shall be subject to the approval
of the Company, which shall not be unreasonably withheld;
(5) for purposes of paragraph (1) of this Subsection A, if a
requested Registration Statement is filed and the Company otherwise
complies with its obligations hereunder, but the Registration Statement is
withdrawn by Security Holder due to a delay in the offering requested by
the Company for a period of more than 15 business days pursuant to
paragraph (2) of this Subsection A, then no requested Registration
Statement shall be deemed to have been filed; and
(6) no Other Holder (as defined below) shall be entitled to include
securities or piggyback in any Registration demanded by Security Holder.
2. Incidental/"Piggy-back" Registrations. If the Company at any time
proposes to file a Registration Statement (other than a Registration Statement
filed pursuant to Subsection A of this Section 2) under the Securities Act
relating to a Public Offering of Common Stock to be sold for cash that would
permit the registration of Registrable Securities, it will give Security Holder
as much advance notice, in writing, as is reasonably practicable under the
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<PAGE> 28
circumstances, but in any event not less than five days, before the filing with
the Commission of such Registration Statement, which notice shall set forth the
securities proposed to be registered. The notice shall offer to include in such
filing such amount of Registrable Securities as Security Holder may request. If
Security Holder wishes to have Registrable Securities registered for sale in
the Public Offering pursuant to this Subsection B, it shall advise the Company
in writing within 20 days after the date of receipt of such offer from the
Company (or such shorter period, but in any event not less than five days, as
the Company shall specify in its notice to Security Holder), setting forth the
amount of Registrable Securities for which registration is requested. If the
managing underwriter of the proposed Public Offering of Common Stock by the
Company shall advise the Company in writing that, in the reasonable opinion of
the managing underwriter, the distribution of the Registrable Securities
requested by Security Holder to be included in the Registration Statement
concurrently with securities being registered for sale by the Company would
materially adversely affect the distribution of such securities by the Company
and Security Holder, then the Company shall so advise Security Holder and the
number of securities that are entitled to be included in the registration and
underwriting shall be allocated as follows: (i) in the event a Registration
Statement is being filed in connection with the exercise of registration rights
by a security holder other than Security Holder (an "Other Holder"), all of any
Other Holder's shares of Common Stock shall be included in the registration and
the remaining number of securities that are entitled to be included in the
registration shall be allocated (A) 80% to the Company and any other
shareholders (not including the Other Holder or Security Holder) whose shares
are to be included in such Registration Statement and (B) 20% to Security
Holder, and (ii) in the event the registration is not being filed in connection
with the exercise of registration rights of any Other Holder (A) 80% to the
Company and any other shareholders (not including Security Holder) whose shares
are to be included in such Registration Statement and (B) 20% to Security
Holder. If any Person does not agree to the terms of any such underwriting,
such Person shall be excluded therefrom by written notice from the Company or
the underwriter.
Nothing contained in this Subsection B shall, however, limit the
Company's right to cancel, postpone or withdraw any such registration proposed
by the Company for any reason.
Any obligation of the Company to effect a Registration pursuant to
this Subsection B shall be conditioned upon Security Holder entering into an
underwriting agreement with the Company and the managing underwriters of the
registered offering of the type described in paragraph (10) of Subsection C of
this Section 2.
3. Registration Procedures. If the Company is required by the provisions
of Subsection A or Subsection B of this Section 2 to effect the Registration of
any of the Registrable Securities under the Securities Act, the Company will,
as soon as is reasonably practicable:
(1) Prepare and file with the Commission a Registration
Statement with respect to such securities and use its reasonable best
efforts to cause such Registration Statement to become and, subject
to paragraph (2) of this Subsection C, remain effective.
(2) Keep such Registration effective, and the prospectus used in
connection therewith current, for a period of 90 days or until
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<PAGE> 29
Security Holder has completed the distribution described in the
Registration Statement relating thereto, whichever first occurs (the
"Selling Period"); provided, however, that (a) the Selling Period
shall be extended for a period of time equal to any period that
Security Holder refrains from selling any securities included in such
registration pursuant to a suspension under paragraph (2) of
Subsection A of this Section 2.
(3) 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 such prospectus current in compliance with
Section 10 of the Securities Act, and to comply with the provisions
of the Securities Act with respect to the sale or other disposition
of all Common Stock covered by such Registration Statement; provided,
however, that the Company shall have no obligation under this
paragraph (3) after the period required by paragraph (2) of this
Subsection C has lapsed.
(4) Furnish to Security Holder such number of copies of such
Registration Statement and of each amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus included in such Registration Statement (including each
preliminary prospectus, summary prospectus and prospectus
supplement), in conformity with the requirements of the Securities
Act, and such other documents, as Security Holder may reasonably
require in order to facilitate the public offering, sale or other
disposition of the Registrable Securities owned by Security Holder.
(5) Use reasonable best efforts to register or qualify the
Common Stock covered by such Registration Statement under such other
securities or blue sky laws of jurisdictions in the United States of
America as Security Holder shall reasonably request (excluding
however any jurisdiction in which the filing would subject the
Company to additional tax liability, and any jurisdiction in which
the Company would be required to execute a general consent to service
of process in effecting such registration or qualification, which
consent would not be required but for this paragraph (5)), and do
such other acts and things as may be required to enable Security
Holder to consummate the public sale or other disposition in such
jurisdictions of the Registrable Securities owned by Security Holder.
(6) Otherwise use reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement that satisfies the provisions of Section 11(a)
of the Securities Act.
(7) Immediately notify Security Holder at any time when a
prospectus is required to be delivered under the Securities Act
within the Selling Period referred to in paragraph (2) of this
Subsection C, of the Company becoming aware that the prospectus
included in the Registration Statement, or as such prospectus may be
amended or supplemented, includes an untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading in light of the circumstances then existing, and at the
request of Security Holder to promptly prepare and furnish to
Security Holder a number of copies of an amended or supplemental
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<PAGE> 30
prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading in the light of the
circumstances then existing. In the event the Company shall give any
such notice, Security Holder shall immediately suspend use of the
prospectus and the Selling Period shall be extended by the number of
days during the period from and including the date of the giving of
such notice to and including the date when Security Holder shall have
received the copies of such supplemented or amended prospectus.
(8) In the event that the Company suspends use by Security
Holder of a prospectus relating to an offering of Registrable
Securities pursuant to a suspension under paragraph (2) of Subsection
A of this Section 2, because the Company is conducting negotiations
for a material business combination or due to pending material
developments or events that have not yet been publicly disclosed and
as to which the Company believes public disclosure will be
prejudicial to the Company, the Company shall deliver notice in
writing to the effect of the foregoing and, upon receipt of such
notice, Security Holder shall not use the prospectus, and the Selling
Period shall cease to run or will not commence, until Security Holder
has received copies of the supplemented or amended prospectus
provided for in paragraph (3) of this Subsection C, or until it is
advised in writing by the Company that the prospectus may be used,
and has received copies of any additional or supplemental filings
that are incorporated or deemed incorporated by reference in such
prospectus. The Company will use reasonable best efforts to ensure
that the use of the prospectus may be resumed, and the Selling Period
will commence, as promptly as is practicable and, in any event,
promptly after the earlier of (x) public disclosure of such material
business combination or pending material development or event
sufficient to permit an affiliate of the Company to sell Common Stock
or (y) in the judgment of the Company, public disclosure of such
material business combination or material development or event would
not be prejudicial to the Company.
(9) Use its reasonable best efforts to list such Registrable
Securities on the primary securities exchange or other trading market
on which the Common Stock is then listed, if such Registrable
Securities are not already so listed and if such listing is then
permitted under the rules of such exchange or other trading market,
and to provide a transfer agent and registrar for such Registrable
Securities covered by such Registration Statement not later than the
effective date of such Registration Statement.
(10) Enter into such agreements (including an underwriting
agreement in customary form and containing customary provisions
relating to legal opinions and accountants' letters and customary
representations and warranties and customary provisions for mutual
indemnification and contribution between the Company and the
underwriters for Security Holder) and take such other actions as
Security Holder may reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
(11) Make available for inspection by Security Holder, by any
underwriter participating in any disposition to be effected pursuant
to such Registration Statement and by any attorney, accountant or
other agent retained by Security Holder or any such underwriter, all
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<PAGE> 31
customary financial and other records, customary corporate documents
and properties of the Company, and cause all of the Company's
officers, directors and employees to supply all customary information
requested by Security Holder, such underwriter, attorney, accountant
or agent, as is reasonably needed in connection with such
Registration Statement; provided such parties execute confidentiality
agreements reasonably acceptable to the Company.
Underwriting discounts and commissions attributable to
securities offered on behalf of Security Holder plus the fees and expenses of
separate counsel for Security Holder incurred in connection with effecting a
Registration pursuant to this Section 2 shall be borne by Security Holder. All
other expenses incurred in connection with the Registration Statement shall be
borne by the Company.
It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Section 2 in respect of the
Registrable Securities that are to be registered at the request of Security
Holder that Security Holder shall furnish to the Company such information
regarding the securities held by it and the intended method of disposition
thereof as the Company shall reasonably request and as shall be required in
connection with the action taken by the Company.
4. Indemnification.
(1) In the event of any Registration of any Registrable Securities
under the Securities Act pursuant to this Section 2, the Company agrees to
indemnify and hold harmless Security Holder, its directors, officers and
employees, and each other Person, if any, who controls Security Holder
within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which
Security Holder or any such director, officer, employee or controlling
Person may become subject under the Securities Act or any other statute or
at common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any alleged
untrue statement of any material fact contained, on the effective date
thereof, in any Registration Statement under which Registrable Securities
were registered under the Securities Act at the request of Security
Holder, any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereto, or (ii) any alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and shall reimburse
Security Holder or such director, officer, employee or controlling Person
for reasonable legal or any other expenses reasonably incurred by Security
Holder or such director, officer, employee or controlling Person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon any alleged untrue
statement or alleged omission made in such Registration Statement,
preliminary prospectus, prospectus, or amendment or supplement in reliance
upon and in conformity with written information furnished to the Company
by Security Holder in writing for use therein; and provided, further, that
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission in the prospectus if such untrue statement or alleged
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<PAGE> 32
untrue statement or omission or alleged omission has been the subject of a
notice given to Security Holder pursuant to paragraph (7) of Subsection C
of this Section 2 if Security Holder after receipt of such notice and
prior to the receipt of a corrected prospectus sold a Registrable Security
to the Person asserting such loss, claim, damage, liability or expense who
purchased such Registrable Security that is the subject thereof from
Security Holder. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Security Holder or
such director, officer, employee or participating Person or controlling
Person, and shall survive the transfer of such securities by Security
Holder.
(2) Security Holder agrees to indemnify and hold harmless the
Company, its directors, officers and employees and each other Person, if
any, who controls the Company within the meaning of Section 15 of the
Securities Act against any losses, claims, damages or liabilities, joint
or several, to which the Company or any such director, officer, employee
or controlling Person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any alleged untrue statement of any material fact contained, on the
effective date thereof, in any Registration Statement under which
Registrable Securities were registered under the Securities Act at the
request of Security Holder, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or (ii) any
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such alleged untrue
statement or alleged omission was made in such Registration Statement,
preliminary prospectus, prospectus, amendment or supplement in reliance
upon and in conformity with written information furnished to the Company
in writing by Security Holder for use therein, and shall reimburse the
Company or such director, officer, employee or controlling Person for any
reasonable legal or any other expenses reasonably incurred by the Company
or such director, officer, employee or controlling Person in connection
with investigating or defending any such loss, claim, damage, liability or
action.
(3) Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Subsection D, such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, that the failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying
party of its obligation under this Subsection D to the extent the
indemnifying party is not materially prejudiced by such failure. In case
any such action is brought against an indemnified party, the indemnified
party shall permit the indemnifying party to assume the defense of such
action or proceeding, provided that counsel for the indemnifying party,
who shall conduct the defense of such action or proceeding, shall be
approved by the indemnified party (whose approval shall not be
unreasonably withheld) and the indemnified party may participate in such
defense at such indemnified party's expense unless in the opinion of
counsel to such indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim
that would prevent the indemnifying party's counsel from adequately
representing both parties, in which event the indemnifying party shall pay
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<PAGE> 33
the reasonable fees and expense of separate counsel for the indemnified
party. No indemnifying party will consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
The indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm for all indemnified parties. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent.
(4) Indemnification similar to that specified in the preceding
paragraphs of this Subsection D shall be given by the Company and Security
Holder (with such modifications as shall be appropriate) with respect to
liability related to any required registration or other qualification of
Registrable Securities under any Federal or state law or regulation of
governmental authority other than the Securities Act.
(5) If the indemnification provided for in this Subsection D is
unavailable or insufficient to hold harmless an indemnified party under
paragraphs (1) or (2) above, then the indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in paragraphs (1) or
(2) above, in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and Security Holder 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 Security Holder and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Company and
Security Holder agree that it would not be just and equitable if
contributions pursuant to this paragraph (5) 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 paragraph (5). The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first
sentence of this paragraph (5) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim (which shall be
limited as provided in paragraph (3) above if the indemnifying party has
assumed the defense of any such action in accordance with the provisions
thereof) that is the subject of this paragraph (5). Notwithstanding the
provisions of this paragraph (5), 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 Security Holder,
Security Holder shall not be required to contribute any amount in excess
of the amount by which the total price at which the Registrable Securities
offered by it and distributed to the public were offered to the public
exceeds the amount of any damages that Security Holder 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 Act) shall
be entitled to contribution from any Person who was not guilty of such
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<PAGE> 34
fraudulent misrepresentation. Promptly after receipt by an indemnified
party under this paragraph (5) 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 party under this paragraph (5), such
indemnified party shall notify the indemnifying party in writing of the
commencement thereof if the notice specified in paragraph (3) above has
not been given with respect to such action; but the omission so to notify
the indemnifying party shall not relieve it from any liability that it may
have to any indemnified party under this paragraph (5) to the extent such
omission is not prejudicial.
5. Public Availability of Information. The Company shall comply with all
public information reporting requirements of the Commission, to the extent
required from time to time to enable Security Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of Security Holder, the
Company will deliver to Security Holder a written statement as to whether it
has complied with such requirements.
6. Supplying Information. The Company shall cooperate with Security Holder
in supplying such information as may be necessary for Security Holder to
complete and file any information reporting forms presently or hereafter
required by the Commission as a condition to the availability of an exemption
from the Securities Act for the sale of any Registrable Securities.
7. Specific Performance. Each party hereto acknowledges and agrees that
each other party hereto would be irreparably harmed and would have no adequate
remedy of law if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly,
it is agreed that, in addition to any other remedies by law or in equity that
may be available, the parties hereto shall be entitled to obtain temporary and
permanent injunctive relief with respect to any breach or threatened breach of,
or otherwise obtain specific performance of the covenants and other agreements
contained in this Agreement.
Section 3. Representations and Warranties of the Company. The Company
represents and warrants to Security Holder that (a) the Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas and has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder, (b) the
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to authorize
this Agreement or any of the transactions contemplated hereby, and (c) this
Agreement has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, and, assuming this Agreement
constitutes a valid and binding obligation of Security Holder, is enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance and
similar laws affecting creditors' rights generally from time to time and to
general principles of equity, and except as the enforceability thereof may be
limited by considerations of public policy.
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<PAGE> 35
Section 4. Representations and Warranties of Security Holder. Security
Holder represents and warrants to the Company that (a) Security Holder is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder, (b) the
execution and delivery of this Agreement by Security Holder and the
consummation by Security Holder of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Security
Holder and no other corporate proceedings on the part of Security Holder are
necessary to authorize this Agreement or any of the transactions contemplated
hereby, and (c) this Agreement has been duly executed and delivered by Security
Holder and constitutes a valid and binding obligation of Security Holder, and,
assuming this Agreement constitutes a valid and binding obligation of the
Company, is enforceable against Security Holder in accordance with its terms
subject to applicable bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance and similar laws affecting creditors' rights generally
from time to time and to general principles of equity, and except as the
enforceability thereof may be limited by considerations of public policy.
Section 5. Assignment. As provided in the next sentence, this Agreement
may be assigned by Security Holder, in whole but not in part, in connection
with any transfer of all, but not a portion, of the Registrable Securities to a
Permitted Transferee except for transfers (i) in a Public Offering or (ii)
pursuant to Rule 144 or Rule 145 under the Securities Act. In order for such
transferee to be entitled to the benefits of this Agreement and thereby become
"Security Holder," such transferee must agree to be bound by this Agreement by
executing a counterpart of this Agreement. In the event of an assignment of
this Agreement pursuant to this Section 5, notices and requests to and from the
Company pursuant to this Agreement shall continue to be made only to and from
Security Holder until such time as Security Holder shall otherwise advise the
Company in writing from time to time that a transferee-Security Holder will
give and receive notices and requests.
In the event that any such transferee-Security Holder is an
E&P Company, then any underwriter for such E&P Company shall have customary
access to perform its due diligence obligations with respect to any
Registration Statement subject to confidentiality obligations that prohibit the
sharing or disclosure of information with such E&P Company, and no such E&P
Company shall, by virtue of this Agreement, have access to non-public
information of the Company.
No transfer or assignment of this Agreement shall increase the
number of Registrations that the Company is obligated to make under this
Agreement.
Section 6. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or transmitted
by telex, telegram or facsimile transmission or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
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<PAGE> 36
(a) if to Security Holder, to:
Shell Louisiana Onshore Properties Inc.
P.O. Box 7986
Newark, Delaware 19714
Attention: Corporate Secretary
with a copy to:
Shell Oil Company
P.O. Box 2463
Houston, Texas 77252
Attention: Duane C. King
Fax: 713-241-5362
(b) if to the Company, to:
The Meridian Resource Corporation
1401 Enclave Parkway, Suite 300
Houston, Texas 77077
Attention: Joseph A. Reeves, Jr., Chairman and
Chief Executive Officer
Fax: (281) 558-5595
with a copy to:
Fouts & Moore, L.L.P.
1300 Post Oak Boulevard, 20th Floor
Houston, Texas 77056
Attention: Gary A. Messersmith
Fax: (713) 986-7299
and a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney Street, Suite 5100
Houston, Texas 77010
Attention: Charles L. Strauss
Fax: (713) 651-5246
Section 7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 8. Counterparts. This Agreement may be executed in any number of
counterparts, which together shall constitute a single agreement.
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<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their officers thereunto duly authorized.
THE MERIDIAN RESOURCE CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
SHELL LOUISIANA ONSHORE PROPERTIES INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
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EXHIBIT D
===============================================================================
THE MERIDIAN RESOURCE CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST CO.
RIGHTS AGENT
AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
DATED AS OF _____________, 200__
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AMENDMENT NO. 1
TO RIGHTS AGREEMENT
This Amendment No. 1 dated ______, 200__ (this "Amendment") to the
Rights Agreement (the "Agreement") dated as of May 5, 1999, between The
Meridian Resource Corporation, a Texas corporation (the "Company"), and
American Stock Transfer & Trust Co. (the "Rights Agent").
The Board of Directors of the Company has authorized various
amendments to the Agreement.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1.CERTAIN DEFINITIONS. For purposes of this Amendment,
capitalized terms not otherwise defined in this Amendment shall have the
meanings assigned to them in the Agreement:
SECTION 2.AMENDMENT TO THE DEFINITION OF "ACQUIRING PERSON". The
definition of "Acquiring Person" contained in Section 1(a) of the Agreement is
hereby amended and restated in its entirety as follows:
"(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
then outstanding, but shall not include (i) the Company, (ii) any Subsidiary
(as such term is hereinafter defined) of the Company, (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company or (iv) any
Person holding Common Shares for or pursuant to the terms of any such plan to
the extent, and only to the extent, of the Common Shares so held.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Shares then
outstanding; provided, however, that if a Person becomes the Beneficial Owner
of 15% or more of the Common Shares then outstanding by reason of share
acquisitions by the Company and shall, after such share acquisitions by the
Company, become the Beneficial Owner of any additional Common Shares, then such
Person shall be deemed to be an "Acquiring Person". Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person", as defined pursuant
to the foregoing provisions of this Section 1(a), has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an "Acquiring
Person", as defined pursuant to the foregoing provisions of this Section 1(a),
then such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement."
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SECTION 3.REMOVAL OF CERTAIN DEFINITIONS. Sections 1(n), 1(o) and
1(p) of the Agreement are deleted in their entirety and Section 1(q) is
renumbered to be Section 1(n).
SECTION 4.AMENDMENT TO SECTION 13(B). Section 13(b) of the Agreement
is hereby amended and restated in its entirety as follows:
"(b) "Principal Party" shall mean
1. in the case of any transaction
described in clause (i) or (ii) of
the first sentence of Section 13(a),
the Person that is the issuer of any
securities into which Common Shares
are converted in such transaction,
and if no securities are so issued,
the Person that is the other party to
the transaction; and
2. in the case of any transaction
described in clause (iii) of the
first sentence in Section 13(a), the
Person that is the party receiving
the greatest portion of the assets or
earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (1) if the securities of such Person
are not at such time or have not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the securities of which are and
have been so registered, "Principal Party" shall mean such other Person; (2) in
case such Person is a Subsidiary, directly or indirectly, of more than one
other Person, the securities of two or more of which are and have been so
registered, "Principal Party" shall mean whichever of such other Persons is the
issuer of the securities so registered having the greatest aggregate market
value; and (3) in case such Person is owned, directly or indirectly, by a joint
venture formed by two or more other Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and (2) above shall
apply to each of the chains of ownership having an interest in such joint
venture as if such Person were a "Subsidiary" of both or all of such other
Persons and the Principal Parties in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as their direct and indirect
interests in such Person bear to the total of such interests."
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.
THE MERIDIAN RESOURCE CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
AMERICAN STOCK TRANSFER & TRUST CO.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
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