ABRAXAS PETROLEUM CORPORATION
CANADIAN ABRAXAS PETROLEUM LIMITED
$215,000,000
11 1/2% Senior Notes due 2004
PURCHASE AGREEMENT
November 5, 1996
BT SECURITIES CORPORATION
BANKERS TRUST INTERNATIONAL PLC
XXXXXXXXX & COMPANY INC.
ING BARING (U.S.) SECURITIES CORPORATION
c/o BT Securities Corporation
One Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Abraxas Petroleum Corporation, a Nevada corporation (the "Company"),
and Canadian Abraxas Petroleum Limited, a Canada corporation and a wholly-owned
subsidiary of the Company ("Canadian Abraxas" and together with the Company, the
"Issuers"), hereby confirm their agreement with you (the "Initial Purchasers")
as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Issuers propose to issue and sell to the Initial Purchasers
$215,000,000 aggregate principal amount of their 11 1/2% Senior Notes due 2004
(the "Notes"). The Notes will be guaranteed (collectively, the "Guarantees") on
a senior basis by each of the Company's future Restricted Subsidiaries (as
defined in the Indenture) (collectively, the "Subsidiary Guarantors"). The Notes
and the Guarantees are collectively referred to herein as the "Securities". The
Notes are to be issued under an indenture (the "Indenture") to be dated as of
November 14, 1996 by and among the Issuers and IBJ Xxxxxxxx Bank & Trust
Company, as Trustee (the "Trustee").
The Securities are being offered in connection with and conditioned
upon (i) the Issuers' acquisition of 100% of the capital stock of CGGS Canadian
Gas Gathering Systems Inc. ("CGGS"), (ii) the Company's acquisition of the oil
and gas producing properties located in the Xxxxxxxx and Happy Fields ("Xxxxxxxx
and Happy") (the acquisitions of CGGS and Xxxxxxxx and Happy being collectively
referred to herein as the "Pending Acquisitions" and the agreements executed or
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to be executed by the Issuers in connection with the Pending Acquisitions are
collectively referred to herein as the "Acquisition Agreements"), and (iii) the
Issuers' entering into a new $40.0 million senior revolving credit facility (the
"New Credit Facility").
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Issuers have
prepared a preliminary offering memorandum dated October 21, 1996 (the
"Preliminary Memorandum"), and a final offering memorandum dated November 6,
1996 (the "Final Memorandum"; the Preliminary Memorandum and the Final
Memorandum each herein being referred to as a "Memorandum") setting forth or
including a description of the terms of the Securities, the terms of the
offering of the Securities, a description of the Pending Acquisitions and the
New Credit Agreement, a description of the Issuers and the Subsidiary Guarantors
and any material developments relating to the Issuers and the Subsidiary
Guarantors occurring after the date of the most recent historical financial
statements included therein.
The Initial Purchasers and their direct and indirect transferees of
the Securities will be entitled to the benefits of the Registration Rights
Agreement to be dated as of the Closing Date (as defined) (the "Registration
Rights Agreement"), pursuant to which the Issuers will agree, among other
things, to file with the Securities and Exchange Commission (the "Commission"),
under the circumstances set forth therein, (i) a registration statement under
the Act (the "Exchange Offer Registration Statement"), relating to Senior Notes
due 2004 of the Issuers (the "Exchange Notes") to be offered in exchange (the
"Exchange Offer") for the Notes, and (ii) as and to the extent required by the
Registration Rights Agreement, a shelf registration statement pursuant to Rule
415 under the Act (the "Shelf Registration Statement" and, together with the
Exchange Offer Registration Statement, the "Registration Statements"), relating
to the resale by certain holders of the Notes, and to use their best efforts to
cause such Registration Statements to be declared effective. This Purchase
Agreement (this "Agreement"), the Notes, the Guarantees, the Indenture and the
Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents."
2. Representations and Warranties. The Issuers, jointly and
severally, represent and warrant to and agree with each of the Initial
Purchasers that:
(a) Neither the Preliminary Memorandum as of its date nor the Final
Memorandum nor any amendment or supplement thereto as of the date thereof
and at all times subsequent thereto up to the Closing Date (as defined in
Section 3 below) contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
set forth in this Section 2(a) do not apply to statements or omissions
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made in reliance upon and in conformity with information relating to any
of the Initial Purchasers furnished to the Issuers in writing by the
Initial Purchasers expressly for use in the Preliminary Memorandum, the
Final Memorandum or any amendment or supplement thereto.
(b) As of June 30, 1996, the Company had the authorized, issued and
outstanding capitalization set forth in the Final Memorandum; all of the
subsidiaries of the Company are listed on Schedule I attached hereto
(each, a "Subsidiary" and collectively, the "Subsidiaries"); all of the
outstanding shares of capital stock of the Issuers and of each of the
Subsidiaries of the Company have been, and as of the Closing Date will be,
duly authorized and validly issued, are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights; all of
the outstanding shares of capital stock of Canadian Abraxas and of each of
the Subsidiaries (other than with respect to the shares of capital stock
of Grey Wolf Exploration Ltd., an Alberta corporation ("Grey Wolf"),
Cascade Oil & Gas Ltd., an Alberta corporation ("Cascade"), and Western
Associated Energy Corporation, a Texas corporation ("Western"), such
shares of capital stock owned by others as of the Closing Date and as set
forth in the Final Memorandum) will be owned by the Company free and clear
of all liens, encumbrances, equities and claims or restrictions on
transferability (other than those imposed by the Act and the securities or
"Blue Sky" laws of certain jurisdictions) or voting; except as set forth
in the Final Memorandum, as of June 30, 1996, there were no (i) options,
warrants or other rights to purchase, (ii) agreements or other obligations
of the Issuers to issue or (iii) other rights to convert any obligation
into, or exchange any securities for, shares of capital stock of or
ownership interests in either Issuer or any of the Subsidiaries
outstanding. Except for the Subsidiaries and as disclosed in the Final
Memorandum, none of the Issuers or any of the Subsidiaries owns, directly
or indirectly, any shares of capital stock or any other equity or
long-term debt securities or have any equity interest in any firm,
partnership, joint venture or other entity.
(c) Each of the Issuers and the Subsidiaries is duly incorporated,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation and has all requisite corporate power and
authority to own its properties and conduct its business as now conducted
and as described in the Final Memorandum; each of the Issuers and the
Subsidiaries is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions where the ownership or leasing of
its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified would not, individually or in
the aggregate, have a material adverse effect on the general affairs,
management, business, condition (financial or otherwise), prospects or
results of operations of the Issuers and the Subsidiaries taken as a whole
(any such event, a "Material Adverse Effect").
(d) Each of the Issuers and the Subsidiaries has all requisite
corporate power and authority to execute, deliver and perform its
respective obligations under this Agreement and the other Operative
Documents to which it is a party and to consummate the transactions
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contemplated hereby and thereby, including, without limitation, the power
and authority to issue, sell and deliver the Securities as contemplated by
this Agreement.
(e) This Agreement has been duly and validly authorized, executed
and delivered by each of the Issuers.
(f) The Indenture has been duly and validly authorized by the
Issuers and, when duly executed and delivered in accordance with its terms
(assuming the due execution and delivery thereof by the Trustee), will be
the valid and legally binding agreement of the Issuers, enforceable
against each of them in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereinafter in effect relating to
or affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding
in equity or at law); and the Indenture meets the requirements for
qualification under the Trust Indenture Act of 1939, as amended (the
"TIA").
(g) The Notes have been duly and validly authorized for issuance and
sale to the Initial Purchasers by the Issuers pursuant to this Agreement
and, when issued and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the
terms hereof, will be the legally valid and binding obligations of the
Issuers, enforceable against each of them in accordance with their terms
and entitled to the benefits of the Indenture, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereinafter in effect relating to
or affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding
in equity or at law) or the discretion of the court before which any
proceeding therefor may be brought.
(h) The Exchange Notes have been duly and validly authorized for
issuance by the Issuers and, when issued and authenticated in accordance
with the terms of the Indenture, the Registration Rights Agreement and the
Exchange Offer, will be the legally valid and binding obligations of the
Issuers, enforceable against each of them in accordance with their terms
and entitled to the benefits of the Indenture, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereinafter in effect relating to
or affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding
in equity or at law) or the discretion of the court before which any
proceeding therefor may be brought.
(i) The Registration Rights Agreement has been duly authorized by
the Issuers and, when duly executed and delivered by the Issuers (assuming
the due execution and delivery thereof by you), will be the legally valid
and binding obligation of the Issuers, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
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bankruptcy, insolvency, reorganization, moratorium and other similar laws
now or hereinafter in effect relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or the
discretion of the court before which any proceeding therefor may be
brought and, as to rights of indemnification and contribution, by
principles of public policy or U.S. or Canadian federal, state or
provincial securities laws relating thereto.
(j) No consent, waiver, approval, authorization or order of or
filing, registration, qualification, license or permit of or with any
court or governmental agency or body, or third party is required for (i)
the issuance and sale by the Issuers of the Notes to the Initial
Purchasers or the consummation by the Issuers of each of the other
transactions contemplated hereby or by any of the other Operative
Documents, (ii) the issuance and sale by the Subsidiary Guarantors of the
Guarantees or the consummation by the Subsidiary Guarantors of the other
transactions contemplated hereby or by any of the Operative Documents,
(iii) the consummation by the Issuers of the transactions contemplated by
the Acquisition Agreements, to the extent each is a party thereto, and
(iv) the execution by the Company of the New Credit Facility and the
consummation by the Issuers of each of the transactions contemplated by
the New Credit Facility, except, in each case, such as have been or, prior
to the Closing Date, will be obtained and such as may be required under
state securities or "Blue Sky" laws in connection with the purchase and
resale of the Securities by the Initial Purchasers. None of the Issuers or
any of the Subsidiaries is (A) in violation of its charter or bylaws (or
similar organizational document), (B) in breach or violation of any
statute, judgment, decree, order, rule or regulation applicable to any of
them or any of their respective properties or assets, except for any such
breach or violation which would not, individually or in the aggregate,
have a Material Adverse Effect, or (C) in breach of or default under (nor
has any event occurred which, with notice or passage of time or both,
would constitute a default under) or in violation of any of the terms or
provisions of any indenture, mortgage, deed of trust, loan agreement,
note, lease, license, permit, certificate, contract or other agreement or
instrument to which any of them is a party or to which any of them or
their respective properties or assets is subject (collectively,
"Contracts"), except for any such breach, default, violation or event
which would not, individually or in the aggregate, have a Material Adverse
Effect.
(k) The execution, delivery and performance by the Issuers of this
Agreement and each of the other Operative Documents (to the extent a party
thereto) and the consummation of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale of the
Securities to the Initial Purchasers and the issuance of the Exchange
Notes in the Exchange Offer), the consummation by the Issuers of the
Pending Acquisitions, to the extent each is a party thereto, and the
execution, delivery and performance by the Company of the New Credit
Facility do not and will not violate, conflict with or constitute or
result in a breach of or a default under (or constitute an event which
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with notice or passage of time or both would constitute a default under)
or cause an acceleration of any obligation under, or result in the
imposition or creation of (or the obligation to create or impose) a Lien
(as defined) on any properties or assets of either Issuer or any
Subsidiary with respect to (A) the terms or provisions of any Contract,
except for any such conflict, breach, violation, default or event which
would not, individually or in the aggregate, have a Material Adverse
Effect, (B) the charter or bylaws (or similar organizational document) of
the Issuers or any of the Subsidiaries, or (C) (assuming compliance with
all applicable state securities or "Blue Sky" laws and assuming the
accuracy of the representations and warranties of the Initial Purchasers
in Section 8 hereof) any statute, judgment, decree, order, rule or
regulation applicable to the Issuers or any of the Subsidiaries or any of
their respective properties or assets, except for any such conflict,
breach or violation which would not, individually or in the aggregate,
have a Material Adverse Effect.
(l) Ernst & Young LLP, Deloitte & Touche LLP and KPMG Chartered
Accountants who are reporting on the audited financial statements of the
Issuers, Enserch Exploration, Inc.'s Wamsutter Area package and CGGS,
respectively, included in the Final Memorandum, are independent public
accountants within the meaning of the Act. The audited financial
statements of the Issuers, CGGS and Enserch Exploration, Inc.'s Wamsutter
Area package and related notes thereto included in the Final Memorandum
present fairly in all material respects the financial position of the
Issuers, CGGS and Enserch Exploration, Inc.'s Wamsutter Area package as of
the dates indicated and the results of their respective operations and the
changes in the cash flow for the periods specified, in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout such periods, except as otherwise stated therein. The summary
and selected financial and statistical data included in the Final
Memorandum present fairly in all material respects the information shown
therein and have been prepared and compiled on a basis consistent with the
audited financial statements included therein, except as stated therein.
(m) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Final
Memorandum (i) comply as to form in all material respects with the
applicable requirements of Regulation S-X promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (ii) have been
prepared in all material respects in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements, and
(iii) have been properly computed on the bases described therein; the
assumptions used in the preparation of the pro forma financial data and
other pro forma financial information included in the Final Memorandum are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions or circumstances referred to therein.
(n) There is not pending or, to the knowledge of the Issuers,
threatened any action, suit, proceeding, inquiry or investigation to which
either of the Issuers or any of the Subsidiaries is a party, or to which
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the property or assets of either of the Issuers or any of the Subsidiaries
is subject, before or brought by any court, arbitrator or governmental
agency or body which, if determined adversely to either of the Issuers or
any of the Subsidiaries, would, individually or in the aggregate, have a
Material Adverse Effect or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
(o) Each of the Issuers and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals,
presently required or necessary to own or lease, as the case may be, and
to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as set forth in the Final
Memorandum ("Permits"), except where the failure to obtain such Permits
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; each of the Issuers and the Subsidiaries
has fulfilled and performed all of its obligations with respect to such
Permits and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such Permit,
except where the failure to perform such obligations or the occurrence of
such event would not have a Material Adverse Effect; and none of the
Issuers or any of the Subsidiaries has received any notice of any
proceeding relating to revocation or modification of any such Permit,
except as described in the Final Memorandum and except where such
revocation or modification would not, individually or in the aggregate,
have a Material Adverse Effect.
(p) Since the respective dates as to which information is given in
the Final Memorandum, except as described therein, (i) none of the Issuers
or any of the Subsidiaries has incurred any liabilities or obligations,
direct or contingent, or entered into or agreed to enter into any
transactions or contracts (written or oral) not in the ordinary course of
business, or which liabilities, obligations, transactions or contracts
would, individually or in the aggregate, be material to the business,
condition (financial or otherwise), prospects or results of operations of
the Issuers and the Subsidiaries, taken as a whole, (ii) none of the
Issuers or any of the Subsidiaries has purchased any of its outstanding
capital stock (other than repurchases by the Company of its capital stock
in the open market not exceeding $1 million in the aggregate), nor
declared, paid or otherwise made any dividend or distribution of any kind
on its capital stock (other than with respect to the Company's Series
1995-B Preferred Stock and other than with respect to any of such
Subsidiary, the purchase of, or dividend or distribution on, capital stock
owned by the Company) and (iii) there shall not have been any change in
the capital stock or long-term indebtedness of any of the Issuers or
Subsidiaries.
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(q) Each of the Issuers and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where
the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as
due thereon except as to taxes any of the Issuers or Subsidiaries is
contesting in good faith; and other than tax deficiencies which any of the
Issuers or Subsidiaries is contesting in good faith and for which such
Issuer or such Subsidiaries has provided adequate reserves in accordance
with generally accepted accounting principles, there is no tax deficiency
that has been asserted against any of the Issuers or the Subsidiaries that
would have, individually or in the aggregate, a Material Adverse Effect.
(r) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Issuers believe
to be reliable and accurate.
(s) None of the Issuers or any of the Subsidiaries or any agent
acting on their behalf has taken or will take any action that might cause
this Agreement or the sale of the Securities to violate Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System, in each case
as in effect, or as the same may hereafter be in effect, on the Closing
Date.
(t) Each of the Issuers and the Subsidiaries has good and defensible
title to all real property and good title to all personal property
described in the Final Memorandum as being owned by it and good and
defensible title to a leasehold estate in the real and personal property
described in the Final Memorandum as being leased by it free and clear of
all liens, charges, encumbrances or restrictions, except as described in
the Final Memorandum, liens arising under the New Credit Facility or to
the extent the failure to have such title or the existence of such liens,
charges, encumbrances or restrictions would not, individually or in the
aggregate, have a Material Adverse Effect. All leases, contracts and
agreements to which any of the Issuers or Subsidiaries is a party or by
which any of them is bound are valid and enforceable against such Issuer
or such Subsidiary, as the case may be, and to the knowledge of the
Issuers and the Subsidiaries are valid and enforceable against the other
party or parties thereto and are in full force and effect with only such
exceptions as would not, individually or in the aggregate, have a Material
Adverse Effect, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
now or hereinafter in effect relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or the
discretion of the court before which any proceeding therefor may be
brought. The Issuers and the Subsidiaries own or possess adequate licenses
or other rights to use all patents, trademarks, service marks, trade
names, copyrights and know-how necessary to conduct the businesses now or
proposed to be operated by them as described in the Final Memorandum, and
none of the Issuers or any of the Subsidiaries has received any notice of
infringement of or conflict with (or knows of any such infringement of or
conflict with) asserted rights of others with respect to any patents,
8
trademarks, service marks, trade names, copyrights or know-how which, if
such assertion of infringement or conflict were sustained, would have a
Material Adverse Effect.
(u) There are no legal or governmental proceedings involving or
affecting any of the Issuers or Subsidiaries or any of their respective
properties or assets which would be required to be described in a
prospectus pursuant to the Act that are not so described in the Final
Memorandum, nor are there any material contracts or other documents which
would be required to be described in a prospectus pursuant to the Act that
are not so described in the Final Memorandum.
(v) Except as described in the Final Memorandum or as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect (A) each of the Issuers and the Subsidiaries is in
compliance with and not subject to any known liability under applicable
Environmental Laws (as defined below), (B) each of the Issuers and the
Subsidiaries has made all filings and provided all notices required under
any applicable Environmental Law, and has, and is in compliance with, all
Permits required under any applicable Environmental Laws and each of them
is in full force and effect, (C) there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation
or, to the knowledge of the Issuers and the Subsidiaries, investigation,
proceeding, notice or demand letter or request for information pending or
threatened against any of the Issuers or the Subsidiaries under any
Environmental Law, (D) no lien, charge, encumbrance or restriction has
been recorded under any Environmental Law with respect to any assets,
facility or property owned, operated, leased or controlled by any of the
Issuers or the Subsidiaries, (E) none of the Issuers or any of the
Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
or any comparable state law, (F) no property or facility of any of the
Issuers or the Subsidiaries is (i) listed or, to the knowledge of the
Issuers and the Subsidiaries proposed for listing on the National
Priorities List under CERCLA or is (ii) listed in the Comprehensive
Environmental Response, Compensation, Liability Information System List
promulgated pursuant to CERCLA, or on any comparable list maintained by
any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, laws relating to (i) emissions, discharges,
releases or threatened releases of hazardous materials into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), (ii) the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport or handling of hazardous materials, and (iii) underground and
above ground storage tanks and related piping, and emissions, discharges,
9
releases or threatened releases therefrom.
(w) There is no strike, labor dispute, slowdown or work stoppage
with the employees of any of the Issuers or the Subsidiaries which is
pending or, to the knowledge of the Issuers, threatened.
(x) Each of the Issuers and the Subsidiaries carries insurance
including self-insurance in such amounts and covering such risks as in its
reasonable determination is adequate for the conduct of its business and
the value of its properties.
(y) None of the Issuers or any of the Subsidiaries has incurred any
liability for any prohibited transaction or funding deficiency or any
complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which any of the
Issuers or the Subsidiaries makes or ever has made a contribution and in
which any employee of any of the Issuers or the Subsidiaries is or has
ever been a participant, which in the aggregate could have a Material
Adverse Effect. With respect to such plans, each of the Issuers and the
Subsidiaries is in compliance in all respects with all applicable
provisions of ERISA, except where the failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect.
(z) Each of the Issuers and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(aa) None of the Issuers or any of the Subsidiaries will be an
"investment company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder.
(bb) The Notes, the Guarantees, the Indenture, the Registration
Rights Agreement and the New Credit Facility conform in all material
respects to the descriptions thereof contained in the Final Memorandum.
(cc) No holder of securities of any of the Issuers or any Subsidiary
will be entitled to have such securities registered under the registration
statements required to be filed by the Issuers pursuant to the
Registration Rights Agreement, other than as expressly permitted thereby.
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(dd) Immediately after the consummation of the transactions
contemplated by the Acquisition Agreements, this Agreement and the
Indenture, the fair value and present fair saleable value of the assets of
each of the Issuers and the Subsidiaries will exceed the sum of its stated
liabilities and identified contingent liabilities; none of the Issuers or
any of the Subsidiaries (each on a consolidated basis) is, nor will any of
the Issuers or the Subsidiaries (each on a consolidated basis) be, after
giving effect to the execution, delivery and performance of the
Acquisition Agreements, this Agreement and the Indenture, and the
consummation of the transactions contemplated hereby and thereby, (a) left
with unreasonably small capital with which to carry on its business as it
is proposed to be conducted, (b) unable to pay its debts (contingent or
otherwise) as they mature or (c) otherwise insolvent.
(ee) None of the Issuers or any of the Subsidiaries or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under the
Act) has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
"security" (as defined in the Act) which is or could be integrated with
the sale of the Securities in a manner that would require the registration
under the Act of the Securities or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Act) in connection with the offering of the Securities or in
any manner involving a public offering within the meaning of Section 4(2)
of the Act.
(ff) When the Securities are delivered pursuant to this Agreement,
none of the Securities will be of the same class (within the meaning of
Rule 144A under the Act) as securities of either Issuer or any Subsidiary
that are listed on a national securities exchange registered under Section
6 of the Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(gg) All legal or governmental proceedings, contracts or documents
of a character required to be described in a registration statement on
Form S-1 or to be filed as an exhibit to a registration statement on Form
S-1 have been so described; and any such descriptions are complete and
accurate in all material respects.
(hh) None of the Issuers, the Subsidiaries, any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Act) or
any person acting on any of their behalf (other than the Initial
Purchasers) has engaged in any directed selling efforts (as that term is
defined in Regulation S under the Act ("Regulation S")) with respect to
the Securities; the Issuers and their respective Affiliates and any person
acting on any of their behalf (other than the Initial Purchasers) have
complied with the offering restrictions requirement of Regulation S.
(ii) Subsequent to the respective dates as of which information is
given in the Final Memorandum and up to the Closing Date, except as set
forth in the Final Memorandum, neither of the Issuers has incurred any
liabilities or obligations, direct or contingent, which are material to
the Issuers taken as a whole, nor entered into any transaction not in the
ordinary course of business and there has not been, individually or in the
11
aggregate, any material adverse change, or any development which may
reasonably be expected to involve a material adverse change, in the
properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Issuers taken as a whole other
than any such effect caused solely by decreases in crude oil, natural gas
liquids and natural gas prices (any such event, a "Material Adverse
Change").
(jj) Assuming that the representations and warranties of the Initial
Purchasers contained in Section 8 are true and correct, it is not
necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers or the reoffer and resale by the
Initial Purchasers in the manner contemplated by this Agreement to
register the Securities under the Act or to qualify the Indenture in
respect of the Notes under the TIA.
(kk) Western is a subsidiary of the Company with no operations,
assets or liabilities other than $2,000,000 par value preferred stock
issued to a bank. Xxxxxxxx Happy Corporation, a Texas corporation, will be
dissolved prior to the Closing Date and will not be a Subsidiary of the
Company on the Closing Date.
Any certificate signed by any officer of either Issuer and delivered
to any Initial Purchaser or to counsel for the Initial Purchasers or either of
the Issuers shall be deemed a joint and several representation and warranty by
the Issuers to each Initial Purchaser as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Issuers agree to issue
and sell to the Initial Purchasers, and the Initial Purchasers, acting severally
and not jointly, agree to purchase the Notes (and the related Guarantees) in the
respective amounts set forth opposite their respective names on Schedule II
attached hereto at [ ]% of their principal amount. One or more certificates in
definitive form for the Notes and Guarantees that the Initial Purchasers have
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Initial Purchasers request upon notice
to the Issuers at least 36 hours prior to the Closing Date, shall be delivered
by or on behalf of the Issuers to the Initial Purchasers, against payment by or
on behalf of the Initial Purchasers of the purchase price therefor by wire
transfer (same day funds) to such account or accounts as the Issuers shall
specify prior to the Closing Date, or by such means as the parties hereto shall
agree prior to the Closing Date. Such delivery of and payment for the Securities
shall be made at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx at 10:00 A.M., New York time, on November 14, 1996, or at such
other place, time or date as the Initial Purchasers, on the one hand, and the
Issuers, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Issuers will
make such certificate or certificates for the Securities available for checking
and packaging by the Initial Purchasers at the offices of BT Securities
Corporation in New York, New York, or at such other place as BT Securities
Corporation may designate, at least 24 hours prior to the Closing Date.
12
4. Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum, as soon as practicable after this Agreement
is entered into and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Issuers. The Issuers, jointly and severally,
covenant and agree with each of the Initial Purchasers that:
(a) The Issuers will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchasers shall
not previously have been advised and furnished a copy for a reasonable
period of time prior to the proposed amendment or supplement and as to
which the Initial Purchasers shall not have given their consent, which
consent shall not unreasonably be withheld. The Issuers will promptly,
upon the reasonable request of the Initial Purchasers or counsel for the
Initial Purchasers, make any amendments or supplements to the Preliminary
Memorandum or the Final Memorandum that may be necessary or advisable in
connection with the resale of the Securities by the Initial Purchasers.
(b) The Issuers will cooperate with the Initial Purchasers in
arranging for the qualification of the Securities for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such qualifications in
effect for as long as may be necessary to complete the resale of the
Securities; provided, however, that in connection therewith, neither of
the Issuers shall be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or
subject itself to taxation in excess of a nominal dollar amount in any
such jurisdiction where it is not then so subject.
(c) If, at any time prior to the initial resale by the Initial
Purchasers of the Securities or the Exchange Notes, any event occurs or
information becomes known as a result of which the Final Memorandum as
then amended or supplemented would include any untrue statement of a
material fact, or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Final Memorandum to comply with
applicable law, the Issuers will promptly notify the Initial Purchasers
thereof and will prepare, at the expense of the Issuers, an amendment or
supplement to the Final Memorandum that corrects such statement or
omission or effects such compliance.
(d) The Issuers will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchasers may reasonably request.
(e) The Issuers will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Final Memorandum.
13
(f) For so long as any of the Securities remain outstanding, the
Issuers will furnish to the Initial Purchasers copies of all reports and
other communications (financial or otherwise) furnished by the Issuers to
the Trustee or to the holders of the Notes and, as soon as available,
copies of any reports or financial statements furnished to or filed by the
Issuers with the Commission or any national securities exchange on which
any class of securities of the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchasers, as soon as they have been prepared, if at all, a copy
of any available unaudited consolidated interim financial statements of
the Company and any available unaudited interim consolidated financial
statements of CGGS for any period subsequent to the period covered by the
most recent financial statements of the Company and CGGS respectively,
appearing in the Final Memorandum.
(h) None of the Issuers or any of their Affiliates will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale
of the Securities in a manner which would require the registration under
the Act of the Securities.
(i) The Issuers will not, and will not permit any of the
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Securities or in any manner involving
a public offering within the meaning of Section 4(2) of the Act.
(j) For so long as any of the Securities remain outstanding, the
Company will make available at its expense, upon request, to any holder of
such Securities and any prospective purchasers thereof, the information
specified in Rule 144A(d)(4) under the Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(k) The Issuers will use their best efforts to (i) permit the
Securities to be designated for trading in the Private Offerings, Resales
and Trading through Automated Linkages market (the "PORTAL Market") of the
NASD and (ii) permit the Securities to be eligible for clearance and
settlement through The Depository Trust Company.
(l) In connection with Securities offered and sold in an off-shore
transaction (as defined in Regulation S) the Issuers will not register any
transfer of such Notes not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Notes in the form of
definitive securities.
6. Expenses. The Issuers agree, jointly and severally, to pay all
costs and expenses incident to the performance of their respective
14
obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including all costs and expenses incident
to (i) the printing, word processing or other production of documents with
respect to the transactions contemplated hereby, including any costs of
printing the Preliminary Memorandum and the Final Memorandum and any
amendment or supplement thereto, and any "Blue Sky" memoranda, (ii) all
arrangements relating to the delivery to the Initial Purchasers of copies
of the foregoing documents, (iii) the fees and disbursements of the
counsel, the accountants and any other experts or advisors retained by the
Issuers, (iv) preparation (including printing), issuance and delivery to
the Initial Purchasers of the Securities, (v) the qualification of the
Securities under state securities and "Blue Sky" laws, including filing
fees and reasonable fees and disbursements of counsel for the Initial
Purchasers relating thereto, (vi) expenses in connection with any meetings
with prospective investors in the Securities, (vii) fees and expenses of
the Trustee including reasonable fees and expenses of its counsel, (viii)
all expenses and listing fees incurred in connection with the application
for quotation of the Securities on the PORTAL Market, (ix) any fees
charged by investment rating agencies for the rating of the Securities and
(x) all reasonable out-of-pocket expenses of the Initial Purchasers
(including fees and expenses of Xxxxxx Xxxxxx & Xxxxxxx, as counsel to the
Initial Purchasers). If the sale of the Securities provided for herein is
not consummated because any condition to the obligations of the Initial
Purchasers set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated or because of any failure, refusal or inability on
the part of the Issuers to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder (other
than solely by reason of a default by the Initial Purchasers of their
obligations hereunder after all conditions hereunder have been satisfied
in accordance herewith), the Issuers agree, jointly and severally, to
promptly reimburse the Initial Purchasers upon demand for all
out-of-pocket expenses (including reasonable fees, disbursements and
charges of Xxxxxx Xxxxxx & Xxxxxxx, counsel for the Initial Purchasers)
that shall have been incurred by the Initial Purchasers in connection with
the proposed purchase and sale of the Securities.
7. Conditions of the Initial Purchasers' Obligations. The obligation
of the Initial Purchasers to purchase and pay for the Securities shall, in
their sole discretion, be subject to the satisfaction or waiver of the
following conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of Xxx & Xxxxx Incorporated, United States counsel for the
Issuers, in form and substance satisfactory to counsel for the Initial
Purchasers, to the effect that:
(i) The Company is duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation
and has all requisite corporate power and authority to own its
properties and to conduct its business as described in the Final
Memorandum. The Company is duly qualified to do business as a
15
foreign corporation in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to be
so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.
(ii) As of June 30, 1996, the Company had the authorized,
issued and outstanding capitalization set forth in the Final
Memorandum; all of the outstanding shares of capital stock of the
Issuers and each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and, with respect
to the Company and Western, were not issued in violation of any
preemptive or similar rights; all of the outstanding shares of
capital stock of Canadian Abraxas and Western will be owned,
directly or indirectly, by the Company, free and clear of all
perfected security interests and, to the knowledge of such counsel,
free and clear of all other liens, encumbrances, equities and claims
or restrictions on transferability (other than those imposed by the
Act and the securities or "Blue Sky" laws of certain jurisdictions)
or voting.
(iii) To the knowledge of such counsel, except as set forth in
the Final Memorandum (A) no options, warrants or other rights to
purchase from either Issuer or any of the Subsidiaries shares of
capital stock or ownership interests in either Issuer or any of the
Subsidiaries were outstanding as of June 30, 1996 other than stock
options granted to employees, officers and directors, (B) no
agreements or other obligations to issue, or other rights to
convert, any obligation into, or exchange any securities for, shares
of capital stock or ownership interests in either Issuer or any of
the Subsidiaries were outstanding as of June 30, 1996 other than
stock options granted to employees, officers and directors and (C)
no holder of securities of either Issuer or any of the Subsidiaries
is entitled to have such securities registered under a registration
statement filed pursuant to the Registration Rights Agreement.
(iv) The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and each of the other Operative Documents and to
consummate the transactions contemplated hereby and thereby,
including, without limitation, the corporate power and authority to
issue, sell and deliver the Securities as contemplated by this
Agreement. The Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under each
Operative Document and to consummate the transactions contemplated
hereby and thereby.
(v) This Agreement has been duly and validly authorized,
executed and delivered by the Company and the Company has the
requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
16
(vi) The Indenture has been duly and validly authorized by the
Company and, when duly executed and delivered in accordance with its
terms (assuming the due execution and delivery thereof by each of
the parties thereto other than the Company), will be the valid and
legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law) or the discretion of the court
before which any proceeding therefor may be brought; and the
Indenture meets the requirements for qualification under the TIA.
(vii) The Notes have been duly and validly authorized for
issuance and sale to the Initial Purchasers by the Company pursuant
to this Agreement and, when issued and authenticated in accordance
with the terms of the Indenture and delivered against payment
therefor in accordance with the terms hereof, will be the legally
valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms and entitled to the
benefits of the Indenture, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law) or the discretion of the court
before which any proceeding therefor may be brought.
(viii) The Exchange Notes have been duly and validly authorized
for issuance by the Company and, when issued and authenticated in
accordance with the terms of the Indenture, the Registration Rights
Agreement and the Exchange Offer, will be the legally valid and
binding obligations of the Company, enforceable against the Company
in accordance with their terms and entitled to the benefits of the
Indenture, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar
laws now or hereinafter in effect relating to or affecting
creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) or the discretion of the court
before which any proceeding therefor may be brought.
(ix) The Registration Rights Agreement has been duly
authorized by the Company and, when duly executed and delivered by
the Company (assuming the due execution and delivery thereof by each
of the parties thereto other than the Company), will be the legally
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally, by general equitable
17
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law) or the discretion of the court
before which any proceeding therefor may be brought and, as to
rights of indemnification and contribution, by principles of public
policy or federal or state securities laws relating thereto.
(x) The statements set forth in the Final Memorandum under
the captions "Business-Regulatory Matters," "Certain United States
and Canadian Income Tax Considerations" and "Certain Anti-takeover
Defenses," insofar as they address matters of United States, Texas
or Nevada law or legal conclusions based on United States, Texas or
Nevada law and subject to the limitations set forth therein, insofar
as such statements constitute a summary of the matters referred to
therein, fairly and accurately present the information disclosed
therein in all material respects.
(xi) The Indenture, the Notes, the Guarantees, the
Registration Rights Agreement and the New Credit Facility conform in
all material respects to the descriptions thereof contained in the
Final Memorandum.
(xii) To such counsel's knowledge, no legal or governmental
proceedings are pending or threatened to which either of the Issuers
or any Subsidiary is a party or to which the property or assets of
either of the Issuers or any Subsidiary is subject, before or
brought by any court, arbitrator or government agency or body which,
if determined adversely to either of the Issuers or any Subsidiary,
would result, individually or in the aggregate, in a Material
Adverse Effect, or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
(xiii) To such counsel's knowledge, none of the Issuers or any
of the Subsidiaries is (A) in violation of its charter or bylaws (or
similar organizational document), (B) in breach or violation of any
statute, judgment, decree, order, rule or regulation applicable to
any of them or any of their respective properties or assets, except
for any such breach or violation which would not, individually or in
the aggregate, have a Material Adverse Effect, or (C) in breach of
or default under (nor has any event occurred which, with notice or
passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any Contract, except
for any such breach, default, violation or event which would not,
individually or in the aggregate, have a Material Adverse Effect.
(xiv) The execution, delivery and performance by the Issuers
of the Purchase Agreement and each of the other Operative Documents
(to the extent a party thereto) and the consummation of the
transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Securities to the Initial
18
Purchasers and the issuance of the Exchange Notes in the Exchange
Offer), the consummation by the Issuers of the Pending Acquisitions
and the execution, delivery and performance by the Company of the
New Credit Facility do not conflict with or constitute or result in
a breach or a default under (or an event which with notice or
passage of time or both would constitute a default under) or
violation of or cause an acceleration of any obligation under, or
result in the imposition or creation of (or the obligation to create
or impose) a Lien on any properties or assets of the Company or any
Subsidiary with respect to (i) the terms or provisions of any
Contract known to such counsel to which the Company is a party,
except for any such conflict, breach, violation, default or event
which would not, individually or in the aggregate, have a Material
Adverse Effect, (ii) the certificate of incorporation or bylaws (or
similar organizational document) of the Company, or (iii) (assuming
compliance with all applicable state securities or "Blue Sky" laws
and assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof) any statute, judgment,
decree, order, rule or regulation known to such counsel to be
applicable to the Company or any of its properties or assets, except
for any such conflict, breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect.
(xv) To the knowledge of such counsel, no consent, waiver,
approval, authorization or order of or filing, registration,
qualification, license or permit of or with any court or
governmental agency or body, or third party is required for (i) the
issuance and sale by the Issuers of the Notes to the Initial
Purchasers or the consummation by the Issuers of the other
transactions contemplated hereby and (ii) the consummation by the
Issuers of the transactions contemplated by the Acquisition
Agreements, to the extent each is a party thereto and (iii) the
execution by the Company of the New Credit Facility and the
consummation by the Issuers of each of the transactions contemplated
by the New Credit Facility, except such as may be required under
Blue Sky laws, as to which such counsel need express no opinion, and
those which have previously been obtained.
(xvi) To the knowledge of such counsel, there are no legal or
governmental proceedings involving or affecting either Issuer or the
Subsidiaries or any of their respective properties or assets which
would be required to be described in a prospectus pursuant to the
Act that are not so described in the Final Memorandum, nor are there
any material contracts or other documents which would be required to
be described in a prospectus pursuant to the Act that are not so
described in the Final Memorandum.
(xvii) None of the Issuers or any of the Subsidiaries is, or
immediately after the sale of the Securities to be sold hereunder
and the application of the proceeds from such sale (as described in
the Final Memorandum under the caption "Use of Proceeds") will be,
an "investment company" as such term is defined in the Investment
19
Company Act of 1940, as amended.
(xviii) No registration under the Act of the Securities is
required in connection with the sale of the Securities to the
Initial Purchasers as contemplated by this Agreement and the Final
Memorandum or in connection with the initial resale of the
Securities by the Initial Purchasers in accordance with Section 8 of
this Agreement, and prior to the commencement of the Exchange Offer
or the effectiveness of the Shelf Registration Statement, the
Indenture is not required to be qualified under the TIA, in each
case assuming (i) that the purchasers who buy such Securities in the
initial resale thereof are qualified institutional buyers as defined
in Rule 144A promulgated under the Act ("QIBs") or accredited
investors as defined in Rule 501(a) (1), (2), (3) or (7) promulgated
under the Act ("Accredited Investors"), (ii) the accuracy of the
Initial Purchasers' representations in Section 8 and those of the
Issuers contained in this Agreement regarding the absence of a
general solicitation in connection with the sale of such Securities
to the Initial Purchasers and the initial resale thereof and (iii)
the due performance by the Initial Purchasers of the agreements set
forth in Section 8 hereof.
(xix) Neither the consummation of the transactions contemplated
by this Agreement nor the sale, issuance, execution or delivery of
the Securities will violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
At the time the foregoing opinion is delivered, Xxx & Xxxxx,
Incorporated shall additionally state that it has participated in conferences
with officers and other representatives of the Issuers, representatives of the
independent public accountants for the Issuers, representatives of Canadian
counsel for the Issuers, representatives of the Initial Purchasers and counsel
for the Initial Purchasers, at which conferences the contents of the Final
Memorandum and related matters were discussed, and, although it has not
independently verified and is not passing upon and assumes no responsibility for
the accuracy, completeness or fairness of the statements contained in the Final
Memorandum (except to the extent specified in subsections (x) and (xi) of this
Section 7(a)), no facts have come to its attention which lead it to believe that
the Final Memorandum, on the date thereof or at the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading (it being
understood that such firm need express no opinion with respect to the financial
statements and related notes thereto and the other financial, engineering,
statistical and accounting data included in the Final Memorandum).
In rendering the foregoing opinions, Xxx & Xxxxx Incorporated may
(i) rely, to the extent such counsel deems proper, upon the representations and
certifications of officers of the Issuers or of public officials and (ii) rely
as to matters involving the application of laws of any jurisdiction other than
the federal laws of the United States of America and the laws of the State of
20
Texas and the corporation law of the State of Nevada, to the extent such counsel
deems proper and specifies in such opinion, upon the opinion of other counsel
who are reasonably satisfactory to counsel for the Initial Purchasers; provided,
however, that Xxx & Xxxxx Incorporated shall state that it believes that it, the
Initial Purchasers and counsel for the Initial Purchasers are justified in
relying on such opinion.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with
the provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of Burnet, Xxxxxxxxx & Xxxxxx, Barristers and Solicitors,
Canadian Counsel for the Issuers, in form and substance satisfactory to
counsel for the Initial Purchasers, to the effect that:
(i) Each of Canadian Abraxas, Cascade and Grey Wolf is duly
incorporated, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation and has all
requisite corporate power and authority to own its properties and to
conduct its business as described in the Final Memorandum. Each of
Canadian Abraxas, Cascade and Grey Wolf is duly qualified to carry
on business in the Province of Alberta, Canada, being the only
jurisdiction in which such entities do business.
(ii) All of the outstanding shares of capital stock of Canadian
Abraxas, Grey Wolf and Cascade have been duly and validly issued,
are fully paid and non-assessable and in respect of Canadian
Abraxas, to the knowledge of counsel, were not issued in violation
of any preemptive or similar rights. The Company is the registered
owner of all of the outstanding shares of capital stock of Canadian
Abraxas and the Company is the registered owner of that percentage
of outstanding shares of the capital stock of Grey Wolf as is set
forth in the Final Memorandum and Grey Wolf is the registered owner
of the capital stock of Cascade as is reflected in the Final
Memorandum in the indirect ownership of the Company in Cascade; in
each such case, free and clear of all perfected security interests
registered in the Province of Alberta against the Company, Grey Wolf
and Cascade. To the knowledge of such counsel, except as set forth
in the Final Memorandum (A) no options, warrants or other rights to
purchase from Canadian Abraxas, Grey Wolf or Cascade shares of
capital stock or ownership interests in Canadian Abraxas, Grey Wolf
or Cascade are outstanding, other than as are disclosed in the Final
Memorandum and other than stock options issued to employees,
officers and directors, (B) no agreements or other obligations to
issue, or other rights to convert, any obligation into, or exchange
any securities for, shares of capital stock or ownership interests
in Canadian Abraxas Grey Wolf or Cascade are outstanding other than
stock options issued to employees, officers and directors and (C) no
holder of securities of Canadian Abraxas, Grey Wolf or Cascade is
21
entitled to have such securities registered under a registration
statement filed pursuant to the Registration Rights Agreement.
(iii) Each of Canadian Abraxas, Grey Wolf and Cascade has all
requisite corporate power and authority to execute, deliver and
perform its respective obligations under this Agreement and the
other Operative Documents to which it is a party and to consummate
the transactions contemplated hereby and thereby, including, without
limitation, in respect of Canadian Abraxas the corporate power and
authority to issue, sell and deliver the Securities as contemplated
by this Agreement.
(iv) This Agreement has been duly and validly authorized,
executed and delivered by Canadian Abraxas.
(v) The Indenture has been duly and validly authorized by
Canadian Abraxas and, when duly executed and delivered in accordance
with its terms (assuming the due execution and delivery thereof by
the other parties thereto), will be the valid and legally binding
agreement of Canadian Abraxas, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar
laws now or hereinafter in effect relating to or affecting
creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(vi) The Notes have been duly and validly authorized for
issuance and sale to the Initial Purchasers by Canadian Abraxas
pursuant to this Agreement and, when issued and authenticated in
accordance with the terms of the Indenture and delivered against
payment therefor in accordance with the terms hereof, will be the
legally valid and binding obligations of Canadian Abraxas,
enforceable against Canadian Abraxas in accordance with their terms
and entitled to the benefits of the Indenture, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereinafter
in effect relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(vii) The Exchange Notes have been duly and validly authorized
for issuance by Canadian Abraxas and, when issued and authenticated
in accordance with the terms of the Indenture, the Registration
Rights Agreement and the Exchange Offer, will be the legally valid
and binding obligations of Canadian Abraxas, enforceable against
Canadian Abraxas in accordance with their terms and entitled to the
benefits of the Indenture, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and
22
other similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(viii) The Registration Rights Agreement has been duly
authorized by Canadian Xxxxxxx and, when duly executed and delivered
by Canadian Abraxas (assuming the due execution and delivery thereof
by the other parties thereto), will be the legally valid and binding
obligation of Canadian Abraxas, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar
laws now or hereinafter in effect relating to or affecting
creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) and, as to rights of
indemnification, contribution and waiver, by principles of public
policy or federal or provincial securities laws relating thereto.
(ix) To such counsel's knowledge, no legal or governmental
proceedings are pending or threatened to which Canadian Abraxas or
Grey Wolf or Cascade is a party or to which the property or assets
of Canadian Abraxas or Grey Wolf or Cascade is subject, before or
brought by any court, arbitrator or government agency or body which,
if determined adversely to Canadian Abraxas, Grey Wolf or Cascade,
would result, individually or in the aggregate, in a Material
Adverse Effect, or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
(x) To such counsel's knowledge, none of Canadian Abraxas or
Grey Wolf or Cascade is (A) in violation of its charter or bylaws
(or similar organizational document), (B) in breach or violation of
any statute, judgment, decree, order, rule or regulation applicable
to any of them or any of their respective properties or assets,
except for any such breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect, or
(C) in breach of or default under (nor has any event occurred which,
with notice or passage of time or both, would constitute a default
under) or in violation of any of the terms or provisions of any
Contract known to such counsel, except for any such breach, default,
violation or event which would not, individually or in the
aggregate, have a Material Adverse Effect.
(xi) The execution, delivery and performance by Canadian
Abraxas of the Purchase Agreement and each of the other Operative
Documents (to the extent a party thereto) and the consummation of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Securities to the Initial
Purchasers and the issuance of the Exchange Notes in the Exchange
23
Offer), the consummation by Canadian Abraxas of the Pending
Acquisitions to which it is a party do not and will not conflict
with or constitute or result in a breach or a default under (or an
event which with notice or passage of time or both would constitute
a default under) or violation of or cause an acceleration of any
obligation under, or result in the imposition or creation of (or the
obligation to create or impose) a Lien on any properties or assets
of Canadian Abraxas, Grey Wolf or Cascade with respect to (i) the
terms or provisions of any Contract known to such counsel, except
for any such conflict, breach, violation, default or event which
would not, individually or in the aggregate, have a Material Adverse
Effect, (ii) the certificate of incorporation or bylaws (or similar
organizational document) of Canadian Abraxas, Grey Wolf or Cascade,
or (iii) (assuming the accuracy of the representations and
warranties of the Initial Purchasers in Section 8 hereof) any
statute, judgment, decree, order, rule or regulation known to such
counsel to be applicable to Canadian Abraxas or Grey Wolf or Cascade
or any of their respective properties or assets, except for any such
conflict, breach or violation which would not, individually or in
the aggregate, have a Material Adverse Effect.
(xii) To the knowledge of such counsel no consent, waiver,
approval, authorization or order of or filing, registration,
qualification, license or permit of or with any court or
governmental agency or body, or third party is required for (i) the
issuance and sale by Canadian Abraxas of the Notes to the Initial
Purchasers or the consummation by Canadian Abraxas of the other
transactions contemplated hereby and (ii) the consummation by
Canadian Abraxas of the transactions contemplated by the Acquisition
Agreements under the laws of Alberta except those which have
previously been obtained or made.
(xiii) The statements set forth in the final Memorandum under
the captions "Business-Regulatory Matters" and "Certain United
States and Canadian Income Tax Considerations," insofar as they
address matters of Alberta law or the laws of Canada applicable
therein and subject to the limitations set forth therein, insofar as
such statements constitute a summary of the matters referred to
therein, fairly and accurately present the information disclosed
therein in all material respects.
(xiv) The laws of the Province of Alberta, Canada, permit an
action to be brought in a court of competent jurisdiction on any
final and conclusive judgment in persona for a sum certain in money
of a court of the State of New York in favor of persons of a foreign
jurisdiction, which is not impeachable as void or voidable under the
internal laws of such foreign jurisdiction, for a sum certain,
without reexamination or relitigation of the matters adjudicated
upon if:
a) the Court rendering such judgment had jurisdiction,
in accordance with Alberta conflict of law rules, over the
24
judgment debtor (and submission by Canadian Abraxas to the
jurisdiction of the New York Court pursuant to the Operative
Documents will suffice for this purpose).
b) such judgment was not obtained by fraud or in a
manner contrary to natural justice and the enforcement thereof
would not be contrary to public policy, as such term is
understood under the laws of Alberta and the federal laws of
Canada applicable therein;
c) the enforcement of such judgment does not constitute,
directly or indirectly, the enforcement of foreign revenues,
expropriation, penal or public laws;
d) no new admissible evidence relevant to the action is
discovered prior to the rendering of judgment by the Alberta
Court; and
e) the action to enforce such judgment is commenced
within 10 years after the date of such judgment.
(xv) In the event that any of the Operative Documents are
sought to be enforced in any action or proceeding in the Province of
Alberta, Canada, in accordance with the laws of the State of New
York, the courts of the Province of Alberta, Canada, would recognize
the choice of laws and would apply the laws of the State of New York
in any such action or proceeding, upon appropriate evidence as to
such laws being adduced, provided that none of the provisions of
such agreements or instruments, as the case may be, or of the laws
of the State of New York are contrary to public policy, as such term
is understood under the law of the Province of Alberta, Canada and,
an Alberta court will not apply those laws of New York which it
characterizes as being of a revenue, expropriatory, penal or public
law nature and in matters of procedure, the laws of Alberta will be
applied.
At the time the foregoing opinion is delivered, Burnet, Xxxxxxxxx &
Xxxxxx, Barristers and Solicitors shall additionally state that although
it has not independently verified and is not passing upon and assumes no
responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum (except to the extent
specified in subsection (xiv), no facts have come to its attention which
lead it to believe that the Final Memorandum, on the date thereof or at
the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such firm need express no opinion with respect to the
financial statements and related notes thereto and the other financial,
statistical and accounting data included in the Final Memorandum).
25
In rendering the foregoing opinions, Burnet, Xxxxxxxxx & Xxxxxx,
Barristers and Solicitors may rely, to the extent such counsel deems
proper, upon the representations and certifications of officers of the
Issuers or of public officials and shall not be required to opine on the
effect of any statutes or laws of the United States and may restrict its
opinion to the laws of the Province of Alberta and the laws of Canada
applicable therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with
the provisions of this Agreement at the Closing Date.
(c) On the Closing Date, the Initial Purchasers shall have received
the opinion, in form and substance satisfactory to the Initial Purchasers,
dated as of the Closing Date and addressed to the Initial Purchasers, of
Xxxxxx Xxxxxx & Xxxxxxx, counsel for the Initial Purchasers, with respect
to certain legal matters relating to this Agreement and such other related
matters as the Initial Purchasers may reasonably require. In rendering
such opinion, Xxxxxx Xxxxxx & Xxxxxxx shall have received and may rely
upon such certificates and other documents and information as it may
reasonably request to pass upon such matters.
(d) The Initial Purchasers shall have received from each of Ernst &
Young LLP, Deloitte & Touche LLP and KPMG Chartered Accountants a comfort
letter or letters dated the date hereof and the Closing Date, in form and
substance satisfactory to counsel for the Initial Purchasers.
(e) The representations and warranties of the Issuers contained in
this Agreement shall be true and correct in all material respects on and
as of the date hereof and on and as of the Closing Date as if made on and
as of the Closing Date; the statements of the Issuers' officers made
pursuant to any certificate delivered in accordance with the provisions
hereof shall be true and correct in all material respects on and as of the
date made and on and as of the Closing Date; the Issuers shall have
performed all covenants and agreements and satisfied all conditions on
their part to be performed or satisfied hereunder at or prior to the
Closing Date; and, except as described in the Final Memorandum (exclusive
of any amendment or supplement thereto after the date hereof), subsequent
to the date of the most recent financial statements in such Final
Memorandum, there shall have been no event or development, and no
information shall have become known, that, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
(f) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(g) Subsequent to the date of the most recent financial statements
in the Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), none of the Issuers or any of the Subsidiaries
shall have sustained any loss or interference with respect to its business
or properties from fire, flood, hurricane, accident or other calamity,
26
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or from any legal or governmental proceeding,
order or decree, which loss or interference, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
(h) The Initial Purchasers shall have received a certificate of the
Company, dated the Closing Date, signed on behalf of the Company by its
Chairman of the Board, President or any Senior Vice President and the
Chief Financial Officer, to the effect that:
(i) The representations and warranties of the Issuers
contained in this Agreement are true and correct on and as of the
date hereof and on and as of the Closing Date, and the Issuers have
performed all covenants and agreements and satisfied all conditions
on their part to be performed or satisfied hereunder at or prior to
the Closing Date;
(ii) At the Closing Date, since the date hereof or since the
date of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or development has occurred, and no information
has become known, that, individually or in the aggregate, has or
would be reasonably likely to have a Material Adverse Effect; and
(iii) The sale of the Securities hereunder has not been
enjoined (temporarily or permanently).
(i) On the Closing Date, the Initial Purchasers shall have received
the Registration Rights Agreement executed by each of the Issuers and such
agreement shall be in full force and effect at all times from and after
the Closing Date.
(j) The Company shall have delivered to the Initial Purchasers a
true, correct and complete copy of the New Credit Facility; the Company
and the other parties thereto shall have executed and delivered the New
Credit Facility and satisfied all conditions precedent to any borrowing
thereunder; and the New Credit Facility shall be in full force and effect.
(k) The Issuers shall have delivered to the Initial Purchasers a
true, correct and complete copy of each of the Acquisition Agreements; the
Issuers (to the extent each is a party thereto) and the other parties
thereto shall have executed and delivered the Acquisition Agreements; all
conditions precedent to the Pending Acquisitions shall have been satisfied
or waived; and each of the Acquisition Agreements shall be in full force
and effect.
(l) On or prior to the Closing Date, the sale by CGGS of the Nevis
Plant (as defined in the Memorandum) shall have been consummated.
27
(m) The closing in respect of the New Credit Facility and the
Pending Acquisitions, including the merger of CGGS with and into Canadian
Abraxas, shall occur simultaneously with the closing in respect of the
purchase and sale of the Securities hereunder.
(n) On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such further
documents, opinions, certificates, letters and schedules or instruments
relating to the business, corporate, legal and financial affairs of the
Issuers as they shall have heretofore reasonably requested.
(o) On the Closing Date, the Initial Purchasers shall have received
letters, dated as of the Closing Date and addressed to the Initial
Purchasers of, XxXxxxxx & XxxXxxxxxxx and Xxxxxxx Associates Limited,
independent petroleum engineers for the Company and CGGS, respectively, in
form and substance satisfactory to counsel for the Initial Purchasers.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Issuers shall
furnish to the Initial Purchasers such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchasers shall reasonably request.
8. Offering of Securities; Restrictions on Transfer. (a)Each of the
Initial Purchasers represents and warrants (as to itself only) that it is a QIB.
Each of the Initial Purchasers agrees with the Issuers (as to itself only) that
(i) it has not and will not solicit offers for, or offer or sell, the Securities
by any form of general solicitation or general advertising (as those terms are
used in Regulation D under the Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Act; and (ii) it has and will solicit
offers for the Securities only from, and will offer the Securities only to (A)
in the case of offers inside the United States, (x) persons whom the Initial
Purchasers reasonably believe to be QIBs or, if any such person is buying for
one or more institutional accounts for which such person is acting as fiduciary
or agent, only when such person has represented to the Initial Purchasers that
each such account is a QIB, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A or (y) a limited number of other institutional
investors reasonably believed by the Initial Purchasers to be Accredited
Investors that, prior to their purchase of the Securities, deliver to the
Initial Purchasers a letter containing the representations and agreements set
forth in Annex A to the Final Memorandum and (B) in the case of offers outside
the United States, to persons other than U.S. persons ("foreign purchasers,"
which term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)); provided, however, that, in the case of this clause (B),
in purchasing such Securities such persons are deemed to have represented and
agreed as provided under the caption "Transfer Restrictions" contained in the
Final Memorandum (or, if the Final Memorandum is not in existence, in the most
28
recent Memorandum).
(b) Each of the Initial Purchasers represents and warrants (as to
itself only) with respect to offers and sales outside the United States that (i)
it has and will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Securities or has
in its possession or distributes any Memorandum or any such other material, in
all cases at its own expense including, without limitation, that the Securities
have not been and will not be offered or sold to residents of the Province of
Alberta, Canada; (ii) the Securities have not been and will not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Regulation S under the Act or pursuant to an
exemption from the registration requirements of the Act; (iii) it has offered
the Securities and will offer and sell the Securities (A) as part of its
distribution at any time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in accordance with Rule
903 of Regulation S and, accordingly, neither it nor any persons acting on its
behalf have engaged or will engage in any directed selling efforts (within the
meaning of Regulation S) with respect to the Securities, and any such persons
have complied and will comply with the offering restrictions requirement of
Regulation S; and (iv) it agrees that, at or prior to confirmation of sales of
the Securities, it will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under the United
States Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of the distribution of the Securities
at any time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date of the offering, except
in either case in accordance with Regulation S (or Rule 144A if available)
under the Securities Act. Terms used above have the meaning given to them
in Regulation S."
Terms used in this Section 8(b) and not defined in this Agreement have the
meanings given to them in Regulation S.
(c) Each of the Initial Purchasers represents and warrants (as to
itself only) that the source of funds being used by it to acquire the Securities
does not include the assets of any "employee benefit plan" (within the meaning
of Section 3 of ERISA) or any "plan" (within the meaning of Section 4975 of the
Code).
9. Indemnification and Contribution. (a)The Issuers and any
Subsidiary Guarantors agree, jointly and severally, to indemnify and hold
harmless the Initial Purchasers, their affiliates and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which any Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
29
(i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement
thereto or any application or other document, or any amendment or
supplement thereto, executed by an Issuer or based upon written
information furnished by or on behalf of an Issuer filed in any
jurisdiction in order to qualify the Securities under the securities or
"Blue Sky" laws thereof or filed with any securities association or
securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto or any Application, 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,
and will reimburse, as incurred, the Initial Purchasers, each such affiliate and
each such controlling person for any reasonable legal or other reasonable
expenses incurred by the Initial Purchasers, such affiliate or such controlling
person in connection with investigating, defending against or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action; provided, however, that the Issuers and the Subsidiary Guarantors
will not be liable (i) in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any Memorandum
or any amendment or supplement thereto or any Application in reliance upon and
in conformity with written information concerning the Initial Purchasers
furnished to an Issuer by the Initial Purchasers specifically for use therein or
(ii) with respect to the Preliminary Memorandum, to the extent that any such
loss, claim, damage or liability arises solely from the fact that the Initial
Purchasers sold Securities to a person to whom there was not sent or given, on
or prior to the written confirmation of such sale, a copy of the Final
Memorandum, as amended and supplemented, if the Issuers shall have previously
furnished copies thereof to the Initial Purchasers in accordance with this
Agreement and the Final Memorandum, as amended and supplemented, would have
corrected any such untrue statement or omission. This indemnity agreement will
be in addition to any liability that the Issuers and the Subsidiary Guarantors
may otherwise have to the indemnified parties. The Issuers and the Subsidiary
Guarantors shall not be liable under this Section 9 for any settlement of any
claim or action effected without their prior written consent, which shall not be
unreasonably withheld.
The Initial Purchasers shall not, without the prior written consent
of the Issuers, effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Issuer is or could have been a party, or
indemnity could have been sought hereunder by any Issuer, unless such settlement
(A) included an unconditional written release of the Issuers, in form and
substance reasonably satisfactory to the Issuers, from all liability on claims
that are the subject matter of such proceeding and (B) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of any Issuer.
30
(b) The Initial Purchasers agree, severally and not jointly, to
indemnify and hold harmless the Issuers and the Subsidiary Guarantors, their
respective directors and their respective officers and each person, if any, who
controls an Issuer within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act against any losses, claims, damages or liabilities to which an
Issuer or any of the Subsidiary Guarantors or any such director, officer or
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any Memorandum or any
amendment or supplement thereto or any Application, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated in any
Memorandum or any amendment or supplement thereto or any Application, or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information concerning such Initial Purchaser, furnished to an Issuer by
such Initial Purchaser specifically for use therein; and subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any reasonable legal or other expenses incurred by an Issuer or any of
the Subsidiary Guarantors or any such director, officer or controlling person in
connection with investigating or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
that the Initial Purchasers may otherwise have to the indemnified parties. The
Initial Purchasers shall not be liable under this Section 9 for any settlement
of any claim or action effected without their consent, which shall not be
unreasonably withheld.
The Issuers shall not, without the prior written consent of the
Initial Purchasers, effect any settlement or compromise of any pending or
threatened proceeding in respect of which any Initial Purchaser is or could have
been a party, or indemnity could have been sought hereunder by any Initial
Purchaser, unless such settlement (A) includes an unconditional written release
of the Initial Purchasers, in form and substance reasonably satisfactory to the
Initial Purchasers, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve the indemnifying party from any liability under paragraph (a)
or (b) above unless and to the extent such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraphs (a) and (b) above. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
31
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, that if (i) the use of counsel chosen
by the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, or
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Initial Purchasers
in the case of paragraph (a) of this Section 9 or the Issuers in the case of
paragraph (b) of this Section 9, representing the indemnified parties under such
paragraph (a) or paragraph (b), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the prior written consent of the indemnifying party (which consent shall
not be unreasonably withheld), unless such indemnified party waived in writing
its rights under this Section 9, in which case the indemnified party may effect
such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 9 is unavailable to, or insufficient
to hold harmless, an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof), each indemnifying party, in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Securities or (ii) if the allocation provided
32
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof). The relative benefits received by the Issuers on the one hand and any
Initial Purchaser on the other shall be deemed to be in the same proportion as
the total proceeds from the offering (before deducting expenses) received by the
Issuers bear to the total discounts and commissions received by such Initial
Purchaser. The relative fault of the parties 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 Issuers on the one hand, or such Initial
Purchaser on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Issuers and the Initial Purchasers agree
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), no Initial Purchaser shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under this
Agreement, less the aggregate amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
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 fraudulent misrepresentation. For purposes of this paragraph (d),
each affiliate of an Initial Purchaser, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Initial
Purchasers, and each director of an Issuer, each officer of an Issuer and each
person, if any, who controls an Issuer within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Issuers.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Issuers, their
respective officers and the Initial Purchasers set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Issuers, any of their respective officers or directors, the Initial
Purchasers or any controlling person referred to in Section 9 hereof and (ii)
delivery of and payment for the Securities. The respective agreements,
covenants, indemnities and other statements set forth in Sections 6, 9 and 15
hereof shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
11. Termination. (a)This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Issuers given prior to the
Closing Date in the event that either of the Issuers shall have failed, refused
or been unable to perform all obligations and satisfy all conditions on its part
33
to be performed or satisfied hereunder at or prior thereto or, if at or prior to
the Closing Date:
(i) either of the Issuers shall have sustained any loss or
interference with respect to its businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work stoppage
or any legal or governmental proceeding, which loss or interference, in
the sole judgment of the Initial Purchasers, has had or has a Material
Adverse Effect, or there shall have been, in the sole judgment of the
Initial Purchasers, any event or development that, individually or in the
aggregate, has or could be reasonably likely to have a Material Adverse
Effect (including without limitation a change in control of any of the
Issuers or the Subsidiaries), except in each case as described in the
Final Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or the NASDAQ National Market shall have been
suspended or minimum or maximum prices shall have been established on any
such exchange or market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial markets
of the United States which, in the case of (A), (B) or (C) above and in
the sole judgment of the Initial Purchasers, makes it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities
as contemplated by the Final Memorandum; or
(v) any securities of the Issuers shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchasers. The statements
set forth in the last paragraph on the front cover page and in the third
paragraph and the first, third and seventh sentences of the fifth paragraph
under the heading "Private Placement" in the Final Memorandum (to the extent
such statements relate to the Initial Purchasers) constitute the only
information furnished by the Initial Purchasers to the Issuers for the purposes
of Sections 2(a) and 9 hereof and the Initial Purchasers confirm that such
statements are correct as of the date hereof and as of the Closing Date.
34
13. Notices. All communications hereunder shall be in writing and,
if sent to the Initial Purchasers, shall be mailed or delivered to BT Securities
Corporation, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate
Finance Department, with a copy to Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxx; if sent to the Issuers or
the Subsidiary Guarantors, if any, shall be mailed or delivered to the Issuers
at 000 Xxxxx Xxxx 0000 Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxx 00000, Attention:
Xxxxxx X.X. Xxxxxx, with a copy to Xxx & Xxxxx Incorporated, 000 Xxxx Xxxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxx 00000, Attention: Xxxxxx Xxxxxx.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; and one business
day after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers, the Issuers and the Subsidiary Guarantors,
if any, and their respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained; this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person except that (i) the indemnities of the Issuers and the Subsidiary
Guarantors, if any, contained in Section 9 of this Agreement shall also be for
the benefit of any person or persons who control an Initial Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Initial Purchasers contained in Section 9 of this Agreement
shall also be for the benefit of the directors of the Issuers and the Subsidiary
Guarantors, if any, their respective officers and any person or persons who
control an Issuer within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act. No purchaser of Securities from the Initial Purchasers will be
deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Miscellaneous. If, on the Closing Date, any of the Initial
Purchasers shall fail or refuse to purchase Securities that it has agreed to
purchase hereunder on such date, and the aggregate amount of Securities which
such defaulting Initial Purchaser agreed but failed and refused to purchase is
not more than ten percent of the aggregate amount of Securities to be purchased
35
on such date, the other Initial Purchasers shall be obligated to purchase the
Securities which such defaulting Initial Purchaser agreed but failed or refused
to purchase on such date. If, on the Closing Date, any Initial Purchaser shall
fail or refuse to purchase Securities which it agreed to purchase hereunder on
such date and the aggregate amount of Securities with respect to which such
default occurs is more than ten percent of the aggregate amount of Securities to
be purchased on such date and arrangements satisfactory to the nondefaulting
Initial Purchasers and the Company for the purchase of such Securities are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any nondefaulting Initial Purchasers or of the Company,
except as provided in Section 10. In any such case either the nondefaulting
Initial Purchaser or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Final Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect to any
default of such Initial Purchaser under this Agreement.
18. Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, Canadian Abraxas
(i) acknowledges that it has, by separate written instrument, designated and
appointed CT Corporation System, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (and
any successor entity), as its authorized agent upon which process may be served
in any suit or proceeding arising out of or relating to this Agreement, the
Registration Rights Agreement, the Securities, the Exchange Notes, the Private
Exchange Notes, if any, or the Indenture that may be instituted in any Federal
or state court in the State of New York, The City of New York, the Borough of
Manhattan, or brought under Federal or state securities laws, and acknowledges
that CT Corporation System has accepted such designation, (ii) submits to the
non-exclusive jurisdiction of any such court in any such suit or proceeding and
(iii) agrees that service of process upon CT Corporation System and written
notice of said service to Canadian Abraxas in accordance with Section 13 shall
be deemed in every respect effective service of process upon Canadian Abraxas in
any such suit or proceeding. Canadian Abraxas further agrees to take any and all
action, including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment of
CT Corporation System in full force and effect so long as any of the Securities,
the Exchange Notes, the Private Exchange Notes, if any, shall be outstanding;
provided that Canadian Abraxas may, by written notice to the Initial Purchasers,
designate such additional or alternative agent for service of process under this
Section 18 that (i) maintains an office located in the Borough of Manhattan, The
City of New York in the State of New York; (ii) is either (x) counsel for
Canadian Abraxas or (y) a corporate service company which acts as agent for
service of process for other persons in the ordinary course of its business and
(iii) agrees to act as agent for service of process in accordance with this
Section 18. Such written notice shall identify the name of such agent for
service of process and the address of the office of such agent for service of
process in the Borough of Manhattan, The City of New York, State of New York.
19. Subsidiary Guarantor a Party. Immediately upon the designation
36
of any Subsidiary of either Issuer as a Restricted Subsidiary (as defined in the
Indenture), the Issuers shall cause such Subsidiary to become a party hereto as
a Subsidiary Guarantor by executing and delivering to the Initial Purchasers a
counterpart hereof.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Issuers
and the Initial Purchasers.
Very truly yours,
ABRAXAS PETROLEUM CORPORATION
By:
Name:
Title:
CANADIAN ABRAXAS PETROLEUM LIMITED
By:
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
BT SECURITIES CORPORATION
By: __________________________
Name:
Title:
XXXXXXXXX & COMPANY INC.
By: __________________________
Name:
Title:
37
ING BARINGS (U.S.) SECURITIES CORPORATION
By: __________________________
Name:
Title:
BANKERS TRUST INTERNATIONAL PLC
By: __________________________
Name:
Title:
Each of the undersigned by its execution hereof agrees to become a
party to this Agreement as a Subsidiary Guarantor as of the date first above
written:
By:
Name:
Title:
38
SCHEDULE I
Subsidiaries of Abraxas Petroleum Corporation
Grey Wolf Exploration Ltd.
Cascade Oil & Gas Ltd.
Western Associated Energy Corporation
SCHEDULE II
Principal
Amount of
Initial Purchaser Notes
BT Securities Corporation................................... $ 85,250,000
Bankers Trust International PLC............................. $ 11,500,000
Xxxxxxxxx & Company Inc..................................... $ 96,750,000
ING Barings (U.S.) Securities
Corporation .............................................. $ 21,500,000
------------
Total.................................................. $215,000,000
