STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of July 21,
2004, is by and between The Meridian Resource Corporation, a Texas corporation
(the "Company"), and SWEPI LP, a Delaware limited partnership ("Shell") and
successor by merger to Shell Louisiana Onshore Properties Inc., a Delaware
corporation.
WHEREAS, Shell holds 7,082,030 shares (the "Shares") of the Company's
common stock, par value $.01 per share (the "Common Stock");
WHEREAS, the Company desires to increase the public float of the Common
Stock;
WHEREAS, Shell wishes to sell all or a portion of the Shares to the
Company, and the Company wishes to purchase all or a portion of the Shares from
Shell on the terms and conditions set forth herein;
WHEREAS, the Company anticipates making a public offering in July 2004 of
shares of Common Stock (the "Offering"), and the Company expects to use a
portion of the proceeds from the Offering to purchase all or a portion of the
Shares;
WHEREAS, in connection with the Offering, the Company anticipates entering
into an Underwriting Agreement with one or more investment banking firms (the
"Underwriting Agreement") to sell 12,000,000 shares of Common Stock in the
Offering, and the Company expects to grant to the underwriters an option to
purchase an additional 1,800,000 shares of Common Stock to cover over-allotments
(the "Over-allotment Option").
NOW THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Purchase of Shares. Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, Shell agrees to sell
the Shares to the Company, and the Company agrees to purchase the Shares from
Shell, at a purchase price per share (the "Purchase Price") determined by the
price per share paid by the underwriters to the Company for Common Stock
pursuant to the Underwriting Agreement. The Purchase Price will be determined
based on the gross public offering price per share less underwriting discounts
and commission not to exceed four percent (4%) but before any offering expenses.
(a) Primary Shares.
(i) Subject to the terms and conditions set forth herein, the
closing ("Primary Closing") of the purchase of 6,000,000 of the Shares (the
"Primary Shares") shall take place at the offices of Fulbright & Xxxxxxxx
L.L.P., 0000 XxXxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, at 9:00 A.M., local time,
immediately following the initial closing of the transactions contemplated by
the Underwriting Agreement (the "Initial Closing") or such other date as the
parties may agree (the "Primary Closing Date"). The Initial Closing shall occur
not later than the third (fourth if
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the pricing occurs after 4:30 p.m. New York City time) business day after the
date of the execution of the Underwriting Agreement.
(ii) At the Primary Closing, Shell shall deliver to the Company the
certificate or certificates representing the Primary Shares, duly endorsed in
blank or accompanied by separate stock powers so endorsed.
(iii) The Company shall direct the underwriters of the Offering to
pay the Purchase Price for the Primary Shares on the Primary Closing Date by
wire transfer of immediately available funds to an account designated by Shell
(the number for which account shall have been furnished to the Company at least
one business day prior to the Primary Closing Date).
(iv) The parties acknowledge that the Company expects to offer
12,000,000 shares of Common Stock in the Offering, excluding the Over-allotment
Option. Notwithstanding the foregoing or anything else in this Agreement to the
contrary, the number of Primary Shares to be purchased at the Primary Closing
shall be reduced in accordance with this Section 1(a)(iv), if and as applicable.
If the Company is unwilling or unable to sell all of such shares in the
Offering, the first $30,000,000 of net proceeds from the Offering after
underwriting discounts and commissions and expenses of the Offering shall be
solely for the account of the Company and shall not be used to purchase any of
the Shares. To the extent the net proceeds from the Offering after underwriting
discounts and commissions and expenses of the Offering exceed $30,000,000, but
are less than $60,000,000, such net proceeds in excess of $30,000,000 up to
$60,000,000, to the extent of such excess but subject to the following two
sentences, shall be used by the Company to purchase up to all of the Primary
Shares that can be purchased at the Purchase Price. To the extent the net
proceeds from the Offering exceed $60,000,000, one-half of the amount of such
net proceeds over $60,000,000 shall be used to purchase Primary Shares to the
extent not purchased pursuant to the preceding sentence. To the extent that net
proceeds from the Offering after underwriting discounts and commissions and
expenses of the Offering exceed $60,000,000, one-half of the amount of such net
proceeds over $60,000,000 shall be for the account of the Company and the
Company shall not be required to purchase Primary or Secondary Shares (as
defined below) with such one-half of the amount of net proceeds over
$60,000,000.
(b) Secondary Shares.
(i) If the underwriters advise the Company that there is
sufficient demand to exercise all or a portion of the Over-allotment Option, the
Company agrees that it will sell up to 1,082,030 shares of Common Stock to meet
such demand. The Company will not be under any obligations under this Agreement
to sell in excess of 1,082,030 shares of Common Stock in the exercise of the
Over-allotment Option.
(ii) If the underwriters exercise the Over-allotment Option under
the Underwriting Agreement, and subject to the terms and conditions set forth
herein, the secondary closing ("Secondary Closing") of the purchase of up to
1,082,030 of the Shares (the "Secondary Shares") shall take place at the offices
of Fulbright & Xxxxxxxx L.L.P., 0000 XxXxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, at
9:00 A.M., local time, immediately following the closing of the
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exercise of the Over-allotment Option or such other date as the parties may
agree (the "Secondary Closing Date"). The number of Secondary Shares to be
purchased at the Secondary Closing shall be reduced as the size of the exercise
of the Over-allotment Option is reduced, such that proceeds from the exercise of
the Over-allotment Option will be used by the Company to purchase the Secondary
Shares at the Purchase Price prior to retaining any proceeds for its own
account.
(iii) At the Secondary Closing, Shell shall deliver to the Company
the certificate or certificates representing the Secondary Shares, duly endorsed
in blank or accompanied by separate stock powers so endorsed.
(iv) The Company shall direct the underwriters of the Offering to
pay the Purchase Price for the Secondary Shares on the Secondary Closing Date by
wire transfer of immediately available funds to an account designated by Shell
(the number for which account shall have been furnished to the Company at least
one business day prior to the Secondary Closing Date).
(v) Notwithstanding the foregoing or anything else in this
Agreement to the contrary, the Company shall only be required to purchase
Secondary Shares to the extent that net proceeds from the exercise of the
Over-allotment Option are sufficient to do so. If all of the Secondary Shares
are purchased by the Company, net proceeds from the exercise of the
Over-allotment Option in excess of the amount necessary to purchase the
Secondary Shares at the Purchase Price shall be for the account of the Company,
and the Company shall not be required to use any such excess to purchase any
Primary Shares that were not purchased at the Primary Closing in accordance with
Section 1(a)(iv).
2. Representations and Warranties of Shell. Shell hereby represents and
warrants to the Company that:
(a) Shell is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
power and authority to execute and deliver this Agreement and consummate the
transactions and perform each of its obligations contemplated hereby.
(b) The execution and delivery of this Agreement by Shell, the
consummation by Shell of each of the transactions and the performance by Shell
of each of its obligations contemplated hereby have been duly and properly
authorized by all necessary corporate action on the part of Shell, and the
consummation of the transactions contemplated hereby are within its powers and
have been duly authorized by all necessary corporate action on its part. This
Agreement has been duly executed and delivered by Shell, and, assuming the
accuracy of the representations and warranties of the Company in Section 3
hereof, constitutes the valid and legally binding obligation of Shell,
enforceable against it in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium and other
similar laws of general applicability relating to or affecting creditors' rights
and to general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
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(c) The execution and delivery of this Agreement by Shell and the
consummation of each of the transactions and the performance of each of the
obligations contemplated hereby (i) do not conflict with or violate (whether
with or without notice or a lapse of time or both), require the consent of any
Person to or otherwise result in a material detriment to Shell under its
organizational documents or any agreement to which it is a party or any law or
order applicable to it, in each case in a manner that could reasonably be
expected to materially hinder or impair the completion of any of the
transactions contemplated hereby or have a material adverse effect on the
business, properties or condition (financial or otherwise) of Shell; and (ii) do
not impose any penalty or other onerous condition on Shell that could reasonably
be expected to materially hinder or impact the completion of any of the
transactions contemplated hereby. As used herein, the term "Person" means a
natural person, corporation, limited liability company, venture, partnership,
trust, unincorporated organization, association or other entity.
(d) No approval from any Governmental Entity is required by or with
respect to Shell in connection with the execution and delivery by Shell of this
Agreement or the consummation by Shell of the transactions contemplated hereby,
except for any such approval the failure of which to be made or obtained (i) has
not impaired and could not reasonably be expected to impair the ability of Shell
to perform its obligations under this Agreement in any material respect and (ii)
could not reasonably be expected to delay in any material respect or prevent the
consummation of any of the transactions contemplated by this Agreement. As used
herein, the term "Governmental Entity" means any agency, bureau, commission,
authority, department, official, political subdivision, tribunal or other
instrumentality of any government, whether (i) regulatory, administrative or
otherwise; (ii) federal, state or local or (iii) domestic or foreign.
(e) Shell is the record and beneficial owner of the Shares, free and
clear of any lien and any other limitation or restriction, and will transfer
and deliver to the Company on the Primary Closing Date, and if applicable, the
Secondary Closing Date, valid title to the Shares, free and clear of any lien
and any such other limitation or restriction. The Shares are all of the shares
of Common Stock owned by Shell or any of its affiliates.
(f) Shell (i) has the requisite knowledge, sophistication and
experience in order to fairly evaluate a disposition of the Shares, including
the risks associated therewith, and (ii) has adequate information and has made
its own independent investigation and evaluation to the extent it deems
necessary or appropriate concerning the properties, business and financial
condition of the Company to make an informed decision regarding the sale of the
Shares pursuant to this Agreement.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to Shell 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 all requisite
corporate power and authority to execute and deliver this Agreement and
consummate the transactions and perform each of its obligations contemplated
hereby.
(b) The execution and delivery of this Agreement by the Company, the
consummation by the Company of each of the transactions and the performance by
the Company
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of each of its obligations contemplated hereby have been duly and properly
authorized by all necessary corporate action on the part of the Company, and the
consummation of the transactions contemplated hereby are within its powers and
have been duly authorized by all necessary corporate action on its part. This
Agreement has been duly executed and delivered by it and, assuming the accuracy
of the representations and warranties of Shell in Section 2 hereof, constitutes
the valid and legally binding obligation of the Company, enforceable against it
in accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by the Company and the
consummation of each of the transactions and the performance of each of the
obligations contemplated hereby (i) do not conflict with or violate (whether
with or without notice or a lapse of time or both), require the consent of any
Person to or otherwise result in a material detriment to the Company under its
organizational documents or any agreement to which it is a party or any law or
order applicable to it, in each case in a manner that could reasonably be
expected to materially hinder or impair the completion of any of the
transactions contemplated hereby or have a material adverse effect on the
business, properties or condition (financial or otherwise) of the Company; and
(ii) do not impose any penalty or other onerous condition on the Company that
could reasonably be expected to materially hinder or impact the completion of
any of the transactions contemplated hereby.
(d) No approval from any Governmental Entity is required by or with
respect to the Company in connection with the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except for any such approval the failure of which to be
made or obtained (i) has not impaired and could not reasonably be expected to
impair the ability of the Company to perform its obligations under this
Agreement in any material respect and (ii) could not reasonably be expected to
delay in any material respect or prevent the consummation of any of the
transactions contemplated by this Agreement.
4. Conditions to Closing.
(a) Conditions to Obligations of the Company. The obligation of the
Company to consummate the transactions contemplated hereby is subject to the
satisfaction of the following conditions:
(i) The Initial Closing of the Offering shall have been
consummated and the Company shall have received proceeds from the Offering, net
of underwriting discounts and commissions and expenses of the Offering, in
excess of $30,000,000, without regard to any exercise of the Over-allotment
Option;
(ii) Shell shall have performed in all material respects all of its
obligations hereunder required to be performed by it on or prior to the Primary
Closing Date or Secondary Closing Date, as applicable;
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(iii) The representations and warranties of Shell contained in this
Agreement and in any certificate or other writing delivered by Shell pursuant
hereto shall be true in all material respects at and as of the Primary Closing
Date or Secondary Closing Date, as applicable, as if made at and as of such
date; and
(iv) The Company shall have received a certificate signed by a duly
authorized officer or attorney-in-fact of Shell to the effect set forth in
clauses (ii) and (iii) above.
(b) Conditions to Obligations of Shell. The obligation of Shell to
consummate the transactions contemplated hereby is subject to the satisfaction
of the following conditions:
(i) The Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it on or prior to the
Primary Closing Date or Secondary Closing Date, as applicable;
(ii) The representations and warranties of the Company contained in
this Agreement and in any certificate or other writing delivered by the Company
pursuant hereto shall be true in all material respects at and as of the Primary
Closing Date or Secondary Closing Date, as applicable, as if made at and as of
such date; and
(iii) Shell shall have received a certificate signed by a duly
authorized officer or attorney-in-fact of the Company to the effect set forth in
clauses (i) and (ii) above.
5. Lock-up. Subject to Section 7 hereof, for a period commencing on the date
hereof and ending 45 days after the date of the Underwriting Agreement, Shell
will not (i) offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any of the Shares or any other shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Shares, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of the Shares
or other shares of Common Stock or such other securities, in cash or otherwise,
without the prior written consent of the Company, other than the Shares to be
sold hereunder.
6. Governmental Filings. Shell shall make all filings with any Governmental
Entity required by Shell in connection with the execution and delivery by Shell
of this Agreement or the consummation by Shell of the transactions contemplated
hereby, including without limitation, all filings with the Securities and
Exchange Commission ("SEC") required pursuant to the Securities Exchange Act of
1934, as amended. Notwithstanding the foregoing, the Company shall file with the
SEC within one business day after the date hereof a preliminary prospectus
supplement relating to the Offering, and Shell shall not make any filings with
any Governmental Entity or otherwise publicly announce entering into this
Agreement or the sale of the Shares hereunder prior to the time the Company
files such preliminary prospectus supplement or otherwise publicly announces the
Offering.
7. Public Offering; Termination.
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(a) The Company may, in its sole discretion, enter into the Underwriting
Agreement and make a public offering of securities, which offering will be made
at prices determined solely by the Company and its underwriters. Nothing in this
Agreement shall be construed to require the Company to enter into the
Underwriting Agreement or to make any public offering of Common Stock or any
other securities, nor shall it be construed to require the Company to receive
any minimum price for its securities thereunder.
(b) If the execution of the Underwriting Agreement shall not have
occurred on or before July 31, 2004, this Agreement shall terminate and be of no
further force and effect.
(c) If the Company purchases a portion of but less than all Primary
Shares in accordance with Section 1(a)(iv), Section 5 hereof shall terminate and
be of no further force and effect.
(d) Shell may terminate this Agreement at any time prior to the time
that the Company executes the Underwriting Agreement. At least one hour prior to
entering into the Underwriting Agreement, the Company shall notify at least one
of the following designated Shell representatives in person or by telephone as
to the Purchase Price to be contained in the Underwriting Agreement: Xxxxx
Xxxxxxx (281/544-5063 or 713/254-6395); Xxxx Xxxxxx (281/544-4585 or
832/282-8941) or Xxxxx Xxxx (281/544-4544). If the Company is unable to speak
with any of such Shell representatives after one hour of reasonable efforts to
do so, Shell shall be deemed to have accepted such Purchase Price.
Notwithstanding anything contained in this Agreement to the contrary, if Shell
terminates this Agreement in accordance with this Section 7(d), Section 5 hereof
shall remain in effect in accordance with its terms.
8. Expenses. Each of the Company and Shell shall pay its own expenses
incurred in connection with the transactions contemplated hereby.
9. Miscellaneous.
(a) All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be
given:
If to Shell, to:
SWEPI LP
000 X. Xxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx
Fax: (000) 000-0000
With a copy to:
Shell Oil Company
000 X. Xxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx
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Fax: (000) 000-0000
If to the Company, to:
The Meridian Resource Corporation
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Fulbright & Xxxxxxxx L.L.P.
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5:00 p.m. in
the place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding business day in the place of receipt. By
notice given in accordance with this Section 8 to the other party, either party
may change its address for the receipt of notices under this Agreement.
(b) Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(c) Neither party may assign this Agreement without the prior written
consent of the other party. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(d) This Agreement shall be governed by and construed in accordance with
the law of the State of Texas, without reference to its conflict of laws
principles.
(e) Each of the parties hereto agrees that, except as may be required by
applicable law or any listing agreement with any national securities exchange,
such party will not issue any press release or make any public statement with
respect to this Agreement or the transactions contemplated hereby without
obtaining the prior written consent of the other party.
(f) The captions and headings appearing at the beginning of the various
sections of this Agreement are for convenience of reference only and shall not
be given any effect whatsoever in the construction or interpretation of this
Agreement.
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(g) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Any party may execute this Agreement by the
delivery of a facsimile signature, which signature shall have the same force and
effect as an original signature. Any party that delivers a facsimile signature
shall promptly thereafter deliver an originally executed signature to the other
party; provided, however, that the failure to deliver an original signature page
shall not affect the validity of any signature delivered by facsimile.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer as of the date first written
above.
THE MERIDIAN RESOURCE CORPORATION
By:
----------------------------------------
Name:
Title:
SWEPI LP
By:
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Name:
Title:
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