Exhibit 10.1
COMMON STOCK PURCHASE AGREEMENT
dated as of July 20, 2005
between
ABRAXAS PETROLEUM CORPORATION
and
THE PURCHASERS NAMED IN THIS AGREEMENT
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT ("Agreement") is made and entered
into as of the 20th day of July, 2005, by and between Abraxas Petroleum
Corporation, a Nevada corporation (the "Issuer"), and each of the persons listed
on Schedule 1 attached to this Agreement (each a "Purchaser" and collectively
the "Purchasers").
W I T N E S S E T H
WHEREAS, the Issuer desires to issue and to sell to the Purchasers, and
the Purchasers desire to purchase from the Issuer, the Common Stock (as
hereinafter defined), all in accordance with the terms and provisions of this
Agreement; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
1. Agreement to Purchase Securities. Subject to the terms and conditions set
forth in this Agreement, each Purchaser hereby agrees, severally and not
jointly, to purchase at the Closing, and the Issuer agrees to sell and issue to
each Purchaser at the Closing at a price of $3.00 per share, the number of
shares of the Issuer's Common Stock, par value $.01 per share (the "Common
Stock"), shown opposite such Purchaser's name on Schedule 1, for an aggregate
purchase price (the "Purchase Price") to be paid by such Purchaser in the amount
shown opposite such Purchaser's name on Schedule 1.
2. Closing. Subject to the satisfaction or waiver of the conditions in this
Agreement, the purchase and sale of the Common Stock shall take place at the
Issuer's offices at 000 Xxxxx Xxxx 0000 Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxx
00000, at 10:00 a.m. (local time), on the date that all of the conditions of
Closing (as hereinafter defined) set forth in Sections 5 and 6 of this Agreement
have been satisfied or waived in writing, or at such other time and place and in
such other manner as the Issuer and the Purchasers acquiring, in the aggregate,
a majority of the shares of Common Stock to be sold pursuant to this Agreement
agree upon orally or in writing (which time and date are designated as the
"Closing"). At the Closing, the Issuer shall deliver to each Purchaser a
certificate representing the shares of Common Stock that such Purchaser is
purchasing in the name and to the address specified by each Purchaser on
Schedule 1 against payment of the Purchase Price therefor by wire transfer of
immediately available funds.
3. Purchasers' Representations and Warranties. Each Purchaser hereby represents
and warrants to the Issuer that:
3.1 Investment Intent. Such Purchaser is acquiring the Common Stock
solely for the Purchaser's own account for investment purposes, and not with a
view to, or for offer or sale in connection with, any distribution of the Common
Stock in violation of the Securities Act of 1933, as amended (the "Securities
Act"). No other person has a beneficial interest in the Common Stock, and that
no other person has furnished or will furnish directly or indirectly, any part
of or guarantee the payment of any part of the Purchase Price. Such Purchaser
does not intend to dispose of all or any part of the Common Stock except in
compliance with the provisions of the Securities Act and applicable state
securities laws, and understands that the Common Stock is being offered pursuant
to one or more specific exemptions under the provisions of the Securities Act,
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which exemption(s) depend(s), among other things, upon compliance with the
provisions of the Securities Act.
3.2 Access to Information. Such Purchaser has received a copy of each
of the documents set forth on Schedule 3.2 (collectively, the "Reports") and has
reviewed the Reports carefully, including, without limitation, the risk factors
set forth therein. If desired, the Purchaser has also sought and obtained from
the Issuer's management such additional information concerning the Issuer's
business, management and financial affairs as the Purchaser has deemed necessary
or appropriate in evaluating an investment in the Issuer and determining whether
or not to purchase the Common Stock.
3.3 Accredited Investor. By completing the Accredited Investor
Certification attached as Exhibit A, such Purchaser represents and warrants that
it is an accredited investor, as defined by Rule 501(a) of Regulation D
promulgated under the Securities Act.
3.4 Knowledge and Experience. Such Purchaser is experienced in
evaluating and investing in the securities of businesses in the Issuer's
industry, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment
in the Common Stock and of protecting its interests in connection with an
acquisition of the Common Stock. Such Purchaser understands that the acquisition
of the Common Stock is a speculative investment and involves substantial risks
and the Purchaser could lose its entire investment in the Common Stock.
3.5 Suitability and Reliance on Own Advisors. Such Purchaser has
carefully considered, and has, to the extent the Purchaser deems it necessary,
discussed with the Purchaser's own professional legal, tax and financial
advisers the suitability of an investment in the Common Stock for the
Purchaser's particular tax and financial situation, and the Purchaser has
determined that the Common Stock are a suitable investment for the Purchaser.
Such Purchaser has not relied upon the Issuer or its advisers for legal or tax
advice.
3.6 Ability to Bear Risk of Loss. Such Purchaser is financially able to
hold the Common Stock subject to restrictions on transfer for an indefinite
period of time, and is capable of bearing the economic risk of losing up to the
entire amount of its investment in the Common Stock.
3.7 Non-Registered Common Stock. Such Purchaser acknowledges that the
offer and sale of the Common Stock have not been registered under the Securities
Act or any state securities laws and the Common Stock may be resold only if
registered pursuant to the provisions thereunder or if an exemption from
registration is available. Such Purchaser understands that the offer and sale of
the Common Stock are intended to be exempt from registration under the
Securities Act, based, in part, upon the representations, warranties and
agreements of such Purchaser contained in this Agreement.
3.8 Truth and Accuracy. All representations and warranties made by such
Purchaser in this Agreement are true and accurate as of the date hereof and
shall be true and accurate as of the date the Issuer issues the Common Stock. If
at any time prior to the issuance of the Common Stock any representation or
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warranty shall not be true and accurate in any respect, such Purchaser shall so
notify the Issuer.
3.9 Authority. The individual(s) executing and delivering this
Agreement on behalf of such Purchaser have been duly authorized to execute and
deliver this Agreement and enter into the transactions contemplated hereby on
behalf of such Purchaser, the signature of such individual(s) is binding upon
such Purchaser, such Purchaser is duly organized, validly subsisting and in good
standing under the laws of the jurisdiction in which it was organized, and such
Purchaser was not formed for the specific purpose of acquiring the Common Stock.
3.10 No Violation. The execution and delivery of this Agreement and the
consummation of the transactions or performance of the obligations contemplated
by this Agreement do not and will not violate any term of such Purchaser's
organizational documents.
3.11 Enforceability. Such Purchaser has duly executed and delivered
this Agreement and (subject to its execution by the Issuer) it constitutes a
valid and binding agreement of such Purchaser enforceable in accordance with its
terms against such Purchaser, except as such enforceability may be limited by
principles of public policy, and subject to laws of general application relating
to bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
3.12 Scope of Business. Such Purchaser has been advised and understands
that the Issuer will be exposed to numerous investment opportunities in all
areas of the oil and gas industry and may therefore pursue various types of
transactions and opportunities, even if they do not fit within the primary focus
of the Issuer's current business plan.
3.13 Brokers or Finders. Such Purchaser has not dealt with any broker
or finder other than Energy Capital Solutions, LP in connection with the
transactions contemplated by the Agreement, and has not incurred, and shall not
incur, directly or indirectly, any liability for any brokerage or finders' fees
or agent's commissions or any similar charges in connection with the
transactions contemplated by the Agreement.
3.14 Short Sales. As of the date of this Agreement, such Purchaser and
its affiliates do not have, and during the 30-day period prior to the date of
this Agreement such Purchaser and its affiliates have not entered into, any "put
equivalent position" as such term is defined in Rule 16a-1 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or short sale positions
with respect to the Common Stock of the Issuer.
4. Issuer's Representations and Warranties. The Issuer hereby represents and
warrants to the Purchasers that:
4.1 Corporate Existence; Authority. The Issuer is a corporation duly
organized, validly existing and in good standing under the laws of Nevada, and
it has all requisite corporate power and authority to carry on its business as
it is now being conducted. The individual executing and delivering this
Agreement on behalf of the Issuer has been duly authorized to execute and
deliver this Agreement on behalf of the Issuer, and the signature of such
individual is binding upon the Issuer.
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4.2 Enforceability. The Issuer has duly executed and delivered this
Agreement and (subject to its execution by the Purchasers) it constitutes a
valid and binding agreement of the Issuer enforceable in accordance with its
terms against the Issuer, except as such enforceability may be limited by
principles of public policy, and subject to laws of general application relating
to bankruptcy, insolvency and the relief of debtors generally and general
principles of equity governing specific performance, injunctive relief or other
equitable remedies.
4.3 Capitalization. The authorized capital of the Issuer consists, or
will consist immediately prior to the Closing, of:
(a) Preferred Stock. 1,000,000 shares of Preferred Stock, par value
$0.01 per share, of which (i) 100,000 shares have been designated Series A
Preferred Stock, par value $100.00 per share (the "Series A Preferred Stock"),
of which no shares are issued and outstanding; (ii) 45,741 shares have been
designated Series B 8% Cumulative Convertible Preferred Stock, par value $100.00
per share (the "Series B Preferred Stock"), of which no shares are issued or
outstanding; and (iii) 45,471 shares have been designated as Series 1995-B 8%
Cumulative Convertible Preferred Stock, par value $.01 per share, of which no
shares are issued and outstanding.
(b) Common Stock. 200,000,000 shares of Common Stock of which
37,937,000 shares are issued and outstanding as of the date of this Agreement.
(c) All of the outstanding shares of Common Stock of the Issuer
have been duly and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights. The Common Stock has been duly
authorized and when issued and delivered to the Purchasers against payment
therefor as provided by this Agreement, will be validly issued, fully paid and
non-assessable and the issuance of such Common Stock will not be subject to any
preemptive or similar rights.
(d) Prior to giving effect to the transactions set forth herein,
there are no outstanding subscriptions, options, warrants, convertible
securities, calls, commitments, agreements or rights to purchase or otherwise
acquire from the Issuer any shares of, or any securities convertible into, the
capital stock of the Issuer except as set forth on Schedule 4.3(d).
(e) Except as set forth on Schedule 4.3(e), no stockholders of the
Issuer have any right to require the registration of any securities of the
Issuer or to participate in any such registration.
4.4 No Conflicts. The issuance and sale of the Common Stock to the
Purchasers as contemplated hereby and the performance of this Agreement will not
violate or conflict with the Issuer's Articles of Incorporation, as amended, or
Bylaws, as amended, or any material agreements to which the Issuer is a party or
by which it is otherwise bound or, to the Issuer's knowledge, any statute, rule
or regulation (federal, state, local or foreign) to which it is subject.
4.5 SEC Documents. The Issuer has provided the Reports, including the
annual report on Form 10-K for the year ended December 31, 2004 (the "Annual
Report") and the quarterly report on Form 10-Q for the three months ended March
31, 2005 (the "Quarterly Report") to the Purchasers. As of the date thereof, the
Annual Report and the Quarterly Report did not contain any untrue statement of a
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material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Issuer included in the Annual Report and the Quarterly Report heretofore
delivered to the Purchasers, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except (i) as may be indicated in the notes thereto or otherwise, or
(ii) as to the Quarterly Report, to the extent it may exclude footnotes or may
include condensed or summary statements) and fairly present in all material
respects the financial position of the Issuer as of the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end adjustments). The Issuer
has included in the Annual Report a list of all material agreements, contracts
and other documents that it reasonably believes are required to be filed as
exhibits to the Annual Report.
4.6 Litigation. Except as set forth in Schedule 4.6, there is no
litigation or other legal, administrative or governmental proceeding pending or,
to the knowledge of the Issuer, threatened against or relating to the Issuer or
its properties or business, that if determined adversely to the Issuer could
reasonably be expected to have a material adverse effect on the operations or
financial condition of the Issuer.
4.7 No Material Adverse Change. Since the date of the Quarterly Report,
there has not been any material adverse change in the business, operations,
properties, prospects, assets, or condition of the Issuer, and no event has
occurred or circumstance exists that may result in such a material adverse
change except for such changes are may have occurred in the oil and gas industry
generally in the national or world economy or from the operation by Issuer of
its business in the ordinary course and consistent with just practice.
4.8 Compliance with Laws, Other Instruments. The execution, delivery
and performance by the Issuer of this Agreement will not (a) contravene, result
in any breach of, or constitute a default under or result in the creation of any
lien in respect of any property of the Issuer under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
bylaws, or any other material agreement or instrument to which the Issuer is
bound or by which the Issuer or any of its respective properties may be bound or
affected, (b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or governmental authority applicable to the Issuer or (c) materially
violate any provision of any statute or other rule or regulation of any
governmental authority applicable to the Issuer.
4.9 Observance of Agreements, Statutes and Orders. The Issuer is not in
default under any term of any agreement or instrument to which it is a party or
by which it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or governmental authority or is in violation of any applicable law,
ordinance, rule or regulation (including without limitation environmental laws)
of any governmental authority which default or violation could reasonably be
expected to have a material adverse effect upon the operations or financial
condition of the Issuer.
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4.10 Brokers or Finders. Except for Energy Capital Solutions, LP (which
has acted as a finder for the transactions contemplated by the Agreement), the
Issuer has not dealt with any broker or finder in connection with the
transactions contemplated by the Agreement, and except for certain fees and
expenses payable by the Issuer to Energy Capital Solutions, LP, the Issuer has
not incurred, and shall not incur, directly or indirectly, any liability for any
brokerage of finders' fees or agents commissions or any similar charges in
connection with the transactions contemplated by the Agreement.
5. Conditions of Purchasers' Obligations at Closing. The obligations of each
Purchaser under Section 1 and Section 2 are subject to the fulfillment on or
before the Closing of each of the following conditions, the waiver of which
shall not be effective against any Purchaser who does not consent in writing to
such waiver:
5.1 Representations and Warranties. The representations and warranties
of the Issuer contained in Section 4 shall be true and correct in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing (other than representations and warranties that relate only to a certain
date, which shall be true in all material respects as of such date).
5.2 Performance. The Issuer shall have performed and complied with the
covenants and agreements in this Agreement that are required to be performed or
complied with by it on or before the Closing in all material respects.
5.3 Proceedings and Documents. All corporate and other proceedings in
connection with the Agreement contemplated to be effected at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to such Purchaser's counsel, and such Purchaser shall have received
all such counterpart original and certified or other copies of such documents as
such Purchaser may reasonably request.
5.4 Opinion of Issuer's Counsel. Each Purchaser shall have received
from Xxx Xxxxx Xxxxxxxx Incorporated, counsel for the Issuer, an opinion, dated
as of the Closing, substantially in the form of Exhibit B.
5.5 Consents, Permits, and Waivers. The Issuer shall have obtained any
and all consents, permits and waivers necessary or appropriate for consummation
of the transactions contemplated by the Agreement.
5.6 Secretary's Certificate. Purchasers shall have received from the
Issuer's Secretary or Assistant Secretary, a certificate having attached thereto
(i) the Articles of Incorporation as in effect at the time of the Closing, (ii)
the Issuer's Bylaws as in effect at the time of the Closing, (iii) resolutions
approved by the Board of Directors authorizing the transactions contemplated
hereby, and (iv) good standing certificates (including tax good standing) with
respect to the Issuer from the applicable authorities in Nevada and Texas.
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6. Conditions of the Issuer's Obligations at Closing. The obligations of the
Issuer to each Purchaser under this Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions:
6.1 Representations and Warranties. The representations and warranties
of the Purchaser contained in Section 3 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the Closing.
6.2 Payment of Purchase Price. Such Purchaser shall have delivered the
Purchase Price specified in Section 1, and the Purchasers shall have delivered
Purchase Prices equal to at least $12 million in aggregate.
6.3 Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Common Stock pursuant to this Agreement shall be duly obtained and effective as
of the Closing.
7. Restrictions on Transfer.
7.1 Resale Restrictions. Each Purchaser understands that the offer and
sale of the Common Stock to the Purchasers have not been registered under the
Securities Act or under any state laws. Each Purchaser agrees not to offer, sell
or otherwise transfer the Common Stock, or any interest in the Common Stock,
unless (i) the offer and sale is registered under the Securities Act, (ii) the
Common Stock may be sold in accordance with the applicable requirements and
limitations of Rule 144 under the Securities Act and any applicable state laws
and, if the Issuer reasonably requests, such Purchaser delivers to the Issuer an
opinion of counsel to such effect, or (iii) such Purchaser delivers to the
Issuer an opinion of counsel reasonably satisfactory to the Issuer that the
offer and sale is otherwise exempt from Securities Act registration.
Notwithstanding the foregoing subsections (ii) and (iii), no opinion shall be
required for transfers by a Purchaser to its affiliates.
7.2 Restrictive Legend. Each Purchaser understands and agrees that a
legend in substantially the following form will be placed on the certificates or
other documents representing the Common Stock:
"THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT COVERING SUCH SHARES UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE OFFER AND SALE IS
EXEMPT FROM SECURITIES ACT REGISTRATION, AND THE TERMS OF SECTION 7.1
OF THE COMMON STOCK PURCHASE AGREEMENT PURSUANT TO WHICH THE SHARES OF
COMMON STOCK WERE ORIGINALLY PURCHASED AND APPLICABLE STATE SECURITIES
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LAWS HAVE BEEN COMPLIED WITH. A COPY OF THE COMMON STOCK PURCHASE
AGREEMENT IS ON FILE AT THE CORPORATE OFFICE OF THE CORPORATION."
7.3 Illiquid Investment. Each Purchaser acknowledges and agrees that it
must bear the economic risk of its investment in the Common Stock for an
indefinite period of time, until such time as the Common Stock are registered or
an exemption from registration is available. Each Purchaser acknowledges that
the soonest that the Rule 144 exemption from registration could become available
would be after such Purchaser has paid for and held the Common Stock for one
year.
8. Registration of the Common Stock; Compliance with the Securities Act.
8.1 Registration Procedures and Other Matters. The Issuer shall:
(a) subject to receipt of necessary information from the Purchasers
after prompt request from the Issuer to the Purchasers to provide such
information, promptly following the Closing but no later than August 31, 2005
(the "Filing Date"), prepare and file with the Securities and Exchange
Commission (the "SEC") a registration statement on Form S-3 or such other
successor form (except that if the Issuer is not then eligible to register for
resale the Common Stock on Form S-3, in which case such registration shall be on
Form S-1 or any successor form) (a "Registration Statement") to enable the
resale of the Common Stock, by the Purchasers or their transferees from time to
time over the American Stock Exchange or any other national exchange on which
the Issuer's Common Stock is then traded, or in privately-negotiated
transactions. No Purchaser may include any shares of Common Stock in the
Registration Statement pursuant to this Agreement unless such Purchaser
furnishes to the Issuer in writing within five business days after receipt of
request therefor, such requested information;
(b) use its commercially reasonable efforts, subject to receipt of
necessary information from the Purchasers after prompt request from the Issuer
to the Purchasers to provide such information, to cause the Registration
Statement to become effective as soon as practicable;
(c) use its commercially reasonable efforts to cause such
Registration Statement to remain continuously effective and prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the prospectus used in connection therewith (the "Prospectus") (and the
applicable Exchange Act reports incorporated therein by reference, so filed on a
timely basis) as may be necessary to keep the Registration Statement current,
effective and free from any material misstatement or omission to state a
material fact for a period ending on the date that is, with respect to each
Purchaser's Common Stock purchased hereunder, the earlier of (i) the date on
which the Purchaser may sell all shares of Common Stock then held by the
Purchaser without restriction under Rule 144(k), or (ii) such time as all shares
of Common Stock purchased by such Purchaser pursuant to this Agreement have been
sold or otherwise transferred pursuant to a registration statement or otherwise;
(d) so long as a Purchaser holds shares of Common Stock purchased
pursuant to this Agreement, provide copies to and permit single legal counsel
designated by the Purchasers to review the Registration Statement and all
amendments and supplements thereto, no fewer than three business days prior to
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their filing with the SEC, and not file any Registration Statement, amendment or
supplement thereto to which a holder of the Common Stock reasonably objects in
writing within such three business day period;
(e) furnish to the Purchasers with respect to the shares of Common
Stock included in the Registration Statement such number of copies of the
Registration Statement, Prospectuses and preliminary Prospectuses ("Preliminary
Prospectuses" and individually, "Preliminary Prospectus") in conformity with the
requirements of the Securities Act and such other documents as the Purchasers
may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the shares of Common Stock by the Purchasers;
provided, however, that the obligation of the Issuer to deliver copies of
Prospectuses or Preliminary Prospectuses to the Purchasers shall be subject to
the receipt by the Issuer of reasonable assurances from the Purchasers that the
Purchasers will comply with the applicable prospectus delivery requirements
under the Securities Act and of such other securities or blue sky laws as may be
applicable in connection with any use of such Prospectuses or Preliminary
Prospectuses;
(f) file documents required of the Issuer for customary blue sky
clearance in states specified in writing by the Purchasers and use its
commercially reasonable efforts to maintain such blue sky qualifications during
the period the Issuer is required to maintain the effectiveness of the
Registration Statement pursuant to Section 8.1(b); provided, however, that the
Issuer shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented;
(g) promptly notify the Purchasers after it receives notice of the
time when the Registration Statement has been declared effective by the SEC, or
when a supplement or amendment to any Registration Statement has been filed with
the SEC; and
(h) advise the Purchasers, promptly: (i) after it shall receive
notice or obtain knowledge of the issuance of any stop order by the SEC delaying
or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its commercially reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal at the earliest possible moment if such stop
order should be issued; and (ii) at any time when a Prospectus relating to the
shares of Common Stock is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of an event as a result of which, the
Prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
8.2 Failure of Registration Statement to Become Effective. The Issuer
and the Purchasers agree that the Purchasers will suffer damages if the
Registration Statement is not declared effective on or prior to the one hundred
twentieth (120th) day following the Closing Date. The Issuer and the Purchasers
further agree that it would not be feasible to ascertain the extent of such
damages with precision. Accordingly, if the Registration Statement is not
declared effective within one hundred twenty (120) days after the Closing Date,
the Issuer shall pay liquidated damages in additional shares of the Common Stock
for such failure and not as a penalty to each Purchaser of a number of shares
equal to two percent (2%) of such Purchaser's Purchase Price for Common Stock
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purchased at the Closing and then outstanding pursuant to the Agreement divided
by the 10-day average closing price of the Common Stock prior to the date that
the payment is due and two percent (2%) of such Purchaser's Purchase Price for
Common Stock purchased and then outstanding pursuant to the Agreement divided by
the prior 10-day average closing price of the Common Stock prior to the date
that the payment is due for each subsequent thirty (30) day period (which shall
be pro rated for such periods less than thirty (30) days) until the Registration
Statement is declared effective. In no event shall the Issuer be required to
issue fractional shares pursuant to the terms of this Section 8.2 and all
fractional shares shall be rounded down to the next lowest number of whole
shares. The parties agree that the amounts set forth in this Section 8.2
represent a reasonable estimate on the part of the parties, as of the date of
this Agreement, of the amount of damages that will be incurred by the Purchasers
if the Registration Statement is not declared effective on or prior to the one
hundred twentieth (120th) day following the Closing Date. Notwithstanding
anything to the contrary set forth in this Agreement, in no event shall the
total number of shares of Common Stock that the Issuer shall be required to
issue pursuant to this Agreement exceed the maximum number of shares of Common
Stock that the Issuer can issue without stockholder approval pursuant to any
rule of the American Stock Exchange, or any other national exchange on which the
Issuer's Common Stock is then traded including, without limitation, Section 713
of the American Stock Exchange Listing Standards, Policies and Requirements,
subject to equitable adjustments from time to time for stock-splits, stock
dividends, combinations, capital reorganizations and similar events relating to
the Common Stock occurring after the date of this Agreement.
8.3 Transfer of Shares After Registration; Suspension.
(a) Each Purchaser agrees that it will not effect any disposition
of the Common Stock that would constitute a sale within the meaning of the
Securities Act except as contemplated in the Registration Statement referred to
in Section 8.1 and as described below or as otherwise permitted by law, and that
it will promptly notify the Issuer in writing of any changes in the information
set forth in the Registration Statement regarding the Purchaser or its plan of
distribution.
(b) Except in the event that paragraph (c) below applies, the
Issuer shall if deemed necessary by the Issuer: (i) prepare and file from time
to time with the SEC a post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that such Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and so that, as thereafter delivered to
purchasers of the Common Stock being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, (ii)
provide the Purchasers copies of any documents filed pursuant to Section
8.3(b)(i), and (iii) inform each Purchaser that the Issuer has complied with its
obligations in Section 8.3(b)(i) (or that, if the Issuer has filed a
post-effective amendment to the Registration Statement which has not yet been
declared effective, the Issuer will notify the Purchasers to that effect, will
use its commercially reasonable efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
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Purchaser pursuant to Section 8.3(b)(i) hereof when the amendment has become
effective).
(c) In the event of (i) any request by the SEC or any other federal
or state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to a Registration Statement
or related Prospectus or for additional information; (ii) the issuance by the
SEC or any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose; (iii) the receipt by the Issuer of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the shares of Common Stock for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (iv) any event or circumstance which, upon the advice of its
counsel, necessitates the making of any changes in the Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein by
reference, so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, then the Issuer shall promptly deliver a notice in writing to the
Purchasers (the "Suspension Notice") to the effect of the foregoing and, upon
receipt of such Suspension Notice, the Purchasers will refrain from selling any
shares of Common Stock pursuant to the Registration Statement (a "Suspension")
until the Purchasers' receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Issuer, or until the Purchasers are advised in writing
by the Issuer that the current Prospectus may be used, and have received copies
of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in any such Prospectus. In the event of any
Suspension, the Issuer will use its commercially reasonable efforts to cause the
use of the Prospectus so suspended to be resumed as promptly as practicable
after the delivery of a Suspension Notice to the Purchasers. Notwithstanding the
foregoing, the Issuer shall not be required to amend or supplement the
Registration Statement, any related Prospectus or any document incorporated
therein by reference in the event that, and for a period (a "Black Out Period")
not to exceed, for so long as this Agreement is in effect, 60 days consecutively
and 120 days in any 12-month period if either (A) any action by the Issuer
pursuant to this Section 8.3(c) would violate applicable law or (B) (x) an event
occurs and is continuing as a result of which the Registration Statement, any
related Prospectus or any document incorporated therein by reference as then
amended or supplemented would, in the Issuer's good faith judgment, contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (y) (1) the Issuer determines in good
faith that the disclosure of such event at such time would have a material
adverse effect on the business, operations or prospects of the Issuer or (2) the
disclosure otherwise relates to a material business transaction which has not
yet been publicly disclosed in any relevant jurisdiction.
(d) Provided that a Suspension or a Black Out Period is not then in
effect, the Purchasers may sell shares of Common Stock purchased pursuant to
this Agreement under the Registration Statement in the manner set forth under
the caption "Plan of Distribution" in the Prospectus, provided that each
arranges for delivery of a current Prospectus to the transferee of such Common
11
Stock. Upon receipt of a request therefor, the Issuer agrees to provide an
adequate number of current Prospectuses to the Purchasers and to supply copies
to any other parties requiring such Prospectuses.
8.4 Indemnification.
(a) For the purpose of this Section 8.4:
(i) the term "Selling Stockholder" shall include the
Purchasers and their respective affiliates;
(ii) the term "Registration Statement" shall include the
Prospectus in the form first filed with the SEC pursuant to Rule 424(b) of the
Securities Act or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required, any exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 8.1; and
(iii) the term "untrue statement" shall include any untrue
statement or alleged untrue statement of a material fact in the Registration
Statement, or any omission or alleged omission to state in the Registration
Statement a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(b) The Issuer agrees to indemnify and hold harmless each Selling
Stockholder and its officers, directors, members and their respective successors
and assigns (collectively, the "Selling Stockholder Indemnified Parties") from
and against any third party losses, claims, damages or liabilities to which such
Selling Stockholder Indemnified Parties may become subject (under the Securities
Act or otherwise) insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon (i)
any breach of the representations or warranties of the Issuer contained herein,
or failure to comply with the covenants and agreements of the Issuer contained
herein, (ii) any untrue statement of a material fact contained in the
Registration Statement as amended at the time of effectiveness or any omission
of a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or (iii) any failure by the Issuer to fulfill any undertaking
included in the Registration Statement as amended at the time of effectiveness,
and the Issuer will reimburse such Selling Stockholder Indemnified Parties for
any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim, provided,
however, that the Issuer shall not be liable in any such case to the extent that
such loss, claim, damage or liability arises out of, or is based upon, (1) an
untrue statement made in such Registration Statement or any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading in reliance upon and in conformity with written
information furnished to the Issuer by or on behalf of such Selling Stockholder
Indemnified Parties specifically for use in preparation of the Registration
Statement, (2) a breach of any representations or warranties made by such
Selling Stockholder herein, or the failure of such Selling Stockholder
Indemnified Parties to comply with its covenants and agreements contained in
this Agreement hereof or (3) the use by the Selling Stockholder Indemnified
Party of an outdated or defective Prospectus after the Issuer has notified such
12
Selling Stockholder Indemnified Party in writing that the Prospectus is outdated
or defective and prior to the receipt by such Selling Stockholder Indemnified
Party of a supplemented Prospectus or written notice from the Issuer that the
use of the applicable Prospectus may be resumed. The Issuer shall reimburse each
Selling Stockholder Indemnified Party for the amounts provided for herein on
demand as such expenses are incurred.
(c) Each Purchaser agrees to indemnify and hold harmless the Issuer
(and each person, if any, who controls the Issuer within the meaning of Section
15 of the Securities Act, each officer of the Issuer who signs the Registration
Statement and each director of the Issuer) from and against any third party
losses, claims, damages or liabilities to which the Issuer (or any such officer,
director or controlling person) may become subject (under the Securities Act or
otherwise), insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of, or are based upon, (i) any
breach of the representations and warranties of such Purchaser contained herein,
(ii) any failure to comply with the covenants and agreements of such Purchaser
contained herein, or (iii) any untrue statement of a material fact contained in
the Registration Statement or any omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such untrue statement or omission was made in reliance upon and in conformity
with written information furnished by or on behalf of such Purchaser
specifically for use in preparation of the Registration Statement, and such
Purchaser will reimburse the Issuer (or such officer, director or controlling
person), as the case maybe, for any reasonable legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that such Purchaser's obligation
to indemnify the Issuer or any other persons hereunder shall be limited to the
amount by which the net amount received by such Purchaser from the sale of the
Common Stock to which such loss relates exceeds the amount of any damages which
such Purchaser has otherwise been required to pay by reason of such untrue
statement or omission, provided further that, with respect to any
indemnification obligation arising under clause (iii) of this paragraph (b),
such obligation shall be limited to the net amount received by such Purchaser
from the sale of the Common Stock included in the Registration Statement in
question.
(d) Promptly after receipt by any indemnified person of a notice of
a claim or the commencement of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 8.4, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, but the omission to so notify the
indemnifying person will not relieve it from any liability which it may have to
any indemnified person under this Section 8.4 (except to the extent that such
omission materially and adversely affects the indemnifying person's ability to
defend such action or such failure results in the forfeiture by the indemnifying
party of substantial rights or defenses) or from any liability otherwise than
under this Section 8.4. Subject to the provisions hereinafter stated, in case
any such action shall be brought against an indemnified person, the indemnifying
person shall be entitled to participate therein, and, to the extent that it
shall elect by written notice delivered to the indemnified person promptly after
receiving the aforesaid notice from such indemnified person, shall be entitled
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
13
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) only in the event that (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would, in the opinion of counsel for the indemnified party, present such counsel
with a potential or actual conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (iv)
the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. In no event shall any
indemnifying person be liable in respect of any amounts paid in settlement of
any action unless the indemnifying person shall have approved the terms of such
settlement; provided that such consent shall not be unreasonably withheld. No
indemnifying person shall, without the prior written consent of the indemnified
person, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified person is or could have been a party and
indemnification could have been sought hereunder by such indemnified person,
unless such settlement includes an unconditional release of such indemnified
person from all liability on claims that are the subject matter of such
proceeding.
(e) If the indemnification provided for in this Section 8.4 is
unavailable to or insufficient to hold harmless an indemnified person under
subsection (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying person, in lieu of indemnifying such indemnified person,
shall contribute to the amount paid or payable by such indemnified person as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the Issuer, on the one hand, and the Purchaser(s), on the other, in connection
with the statements or omissions or other matters which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Issuer, on the one
hand, or the Purchaser(s), on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement. The Issuer and the Purchasers agree that it would not be just
and equitable if contribution pursuant to this subsection (e) were determined by
pro rata allocation (even if the Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified person as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified person in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), a Purchaser shall not be required to contribute any amount in
excess of the amount by which the net amount received by such Purchaser from the
sale of the Common Stock to which such loss relates exceeds the amount of any
damages which such Purchaser has otherwise been required to pay by reason of
such untrue statement. No person guilty of fraudulent misrepresentation (within
14
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Each Purchaser's obligations in this subsection to contribute
shall be in proportion to its sale of Common Stock to which such loss relates
and shall not be joint with any other Selling Stockholders.
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 8.4, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 8.4
fairly allocate the risks in light of the ability of the parties to investigate
the Issuer and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Securities Act. The parties are
advised that federal or state public policy as interpreted by the courts in
certain jurisdictions may be contrary to certain of the provisions of this
Section 8.4, and the parties hereto hereby expressly waive and relinquish any
right or ability to assert such public policy as a defense to a claim under this
Section 8.4 and further agree not to attempt to assert any such defense.
8.5 Acknowledgment Regarding Registration. Each Purchaser hereby
acknowledges and agrees that those stockholders of the Issuer listed on Schedule
4.3(e) attached hereto have registration rights with respect to the number of
shares of Common Stock of the Issuer listed on such Schedule and such shares of
Common Stock will be included in the Registration Statement to be filed pursuant
to Section 8.1 above.
8.6 Registration Expenses. The Issuer will bear all expenses incident
to or incurred in connection with the preparation and filing of the Registration
Statement whether or not declared effective, including, without limitation, all
registration and filing fees and expenses, fees and expenses of compliance with
federal and state securities laws or with blue sky laws as provided in Section
8.1(f), any NASD filing fees required to be made in connection with an
underwritten offering of the Common Stock, application and filing fees and
expenses, duplicating and printing expenses, and fees and disbursements of
counsel to the Issuer (including expenses of legal opinions) and all independent
accountants, but excluding fees and expenses of counsel to any of the
Purchasers, fees and expenses of any accountants, engineers, consultants or any
other advisers to the Purchasers, any underwriting discount or commission and
any broker-dealer sales commission that the Purchasers may incur in disposing of
their Common Stock.
8.7 Termination of Conditions and Obligations. The conditions precedent
imposed by this Agreement upon the transferability of the Common Stock, shall
cease and terminate as to any particular shares of Common Stock when the sale of
such shares of Common Stock shall have been effectively registered under the
Securities Act and sold or otherwise disposed of in accordance with the intended
method of disposition set forth in the Registration Statement covering the sale
of the Common Stock or at such time as an opinion of counsel reasonably
satisfactory to the Issuer shall have been rendered to the effect that such
conditions are not necessary in order to comply with the Securities Act.
9. Notices. All notices, requests, consents and other communications hereunder
shall be in writing, shall be mailed (A) if within the United States by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, or by facsimile, or (B) if delivered from
15
outside the United States, by International Federal Express or facsimile, and
shall be deemed given (i) if delivered by first-class registered or certified
mail, three business days after so mailed, (ii) if delivered by nationally
recognized overnight carrier, one business day after so mailed, (iii) if
delivered by International Federal Express, two business days after so mailed,
(iv) if delivered by facsimile, upon electronic confirmation of receipt and
shall be delivered as addressed as follows:
(a) if to the Issuer, to:
Abraxas Petroleum Corporation
000 Xxxxx Xxxx 0000 Xxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X.X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) with a copy to:
Xxx Xxxxx Xxxxxxxx Incorporated
000 X. Xxxxx Xx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
(c) if to a Purchaser, at its
address on Schedule 1 attached
hereto, or at such other address
or addresses as may have been
furnished to the Issuer in
writing
(d) with a copy to:
Energy Capital Solutions, LP
0000 Xxxxx Xxxxxxx
000 Xxxxx Xxxx.
Xxxxxx, XX 00000
and
Xxxxxx Xxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
10. Reliance. Each Purchaser and the Issuer understand and agree that the other
party and its respective officers, directors, employees and agents may, and
will, rely on the accuracy of the other party's respective representations and
16
warranties in this Agreement to establish compliance with applicable securities
laws. Each Purchaser and the Issuer agree to indemnify and hold harmless all
such parties against all losses, claims, costs, expenses and damages or
liabilities which they may suffer or incur caused or arising from their reliance
on such representations and warranties.
11. Miscellaneous.
11.1 Survival. The representations and warranties made in this
Agreement shall survive the closing of the transactions contemplated by this
Agreement.
11.2 Assignment. This Agreement is not transferable or assignable,
except that the rights of the Purchasers set forth in Section 8 hereof shall be
transferable by a Purchaser to its affiliate.
11.3 Execution and Delivery of Agreement. The Issuer shall be entitled
to rely on delivery by facsimile transmission of an executed copy of this
Agreement, and acceptance by the Issuer of such facsimile copy shall create a
valid and binding agreement between the Purchaser and the Issuer.
11.4 Titles. The titles of the sections and subsections of this
Agreement are for the convenience of reference only and are not to be considered
in construing this Agreement.
11.5 Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect or limit the validity or
enforceability of the remaining provisions of this Agreement.
11.6 Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject matters herein
and supersedes and replaces any prior agreements and understandings, whether
oral or written, between them with respect to such matters.
11.7 Waiver and Amendment. Except as otherwise provided herein, the
provisions of this Agreement may be waived, altered, amended or repealed, in
whole or in part, only upon the mutual written agreement of the Issuer and
Purchasers acquiring in the aggregate a majority of the Common Stock purchased
pursuant to this Agreement.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
11.9 Governing Law. This Agreement is governed by and shall be
construed in accordance with the laws of the State of Texas.
11.10 Attorney's Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorney's fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
17
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above mentioned.
ISSUER:
ABRAXAS PETROLEUM CORPORATION
By: /s/ Xxxxxx X. X. Xxxxxx
----------------------------
Name: Xxxxxx X. X. Xxxxxx
Title: Chairman of the Board, President and Chief
Executive Officer
[Issuer Signature Page to Common Stock Purchase Agreement]
[Purchaser Signature Pages to Follow]
18
PURCHASER:
XXXXXX PARTNERS, L.P.
By: /s/ Xxx X. Xxxxxxxxxxx
----------------------------------
Name: Xxx X. Xxxxxxxxxxx
Title: Managing Partner
[Purchaser Signature Page to Common Stock Purchase Agreement]
19
PURCHASER:
BONANZA MASTER FUND, LTD.
By: Bonanza Capital, Ltd.,
its Investment Manager
By: Bonanza Fund Management, Inc.,
its General Partner
By: /s/ Bernay Box
-------------------------
Name: Bernay Box
Title: President
[Purchaser Signature Page to Common Stock Purchase Agreement]
20
PURCHASER:
IRONMAN ENERGY CAPITAL LP
By: /s/ G. Xxxxx Xxxx
---------------------------------------
Name: G. Xxxxx Xxxx
Title: President
[Purchaser Signature Page to Common Stock Purchase Agreement]
21
PURCHASER:
XXXXX & XXXXXXX XXXXX
/s/ Xxxxx Xxxxx
Xxxxx Xxxxx
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
[Purchaser Signature Page to Common Stock Purchase Agreement]
22
PURCHASER:
TONGA PARTNERS, L.P.
By: /s/ J. Xxxxx Xxxxxxx
------------------------------
Name: J. Xxxxx Xxxxxxx
Title: Managing Member
[Purchaser Signature Page to Common Stock Purchase Agreement]
23
PURCHASER:
ANEGADA MASTER FUND, LTD.
By: /s/ J. Xxxxx Xxxxxxx
------------------------------
Name: J. Xxxxx Xxxxxxx
Title: Managing Member
[Purchaser Signature Page to Common Stock Purchase Agreement]
24
