UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
January 28, 1999
Abraxas Petroleum Corporation
(Exact name of registrant as specified in its charter)
Nevada
(State of other jurisdiction of incorporation)
0-19118 74-2584033
(Commission File Number) (I.R.S. Employer Identification Number)
500 N. Loop 1604 East, Suite 100
San Antonio, Texas 78232
(Address of principal executive offices)
Registrant's telephone number, including area code:
210-490-4788
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On January 13, 1999, Abraxas Petroleum Corporation, a Nevada
corporation (the "Company"), through its wholly owned subsidiary,
Canadian Abraxas petroleum Limited, (Canaxas) acquired approximately
14,026,467 common shares and associated rights, being approximately
98.8 percent of New Cache Petroleum's, Ltd. (Toronto: NWA ("New
Cache"), on a fully diluted basis. The transaction calls for
approximately $60MM in cash or $6.50 per share and the assumption of
approximately $24MM of debt. The Company intends to integrate the New
Cache operations into the existing operations of Canaxas and Grey Wolf
Exploration, Inc. (Toronto, Alberta: GWX approximately 48% owned by the
Company) with Grey Wolf eventually acquiring as much as 50% of the New
Cache assets.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(B) Pro Forma Financial Statements
It is impracticable to provide the required pro forma
financial statements for the acquisition described above at
the time this report is filed. The pro forma financial
statements will be filed as soon as practicable, but no later
than 60 days after this report must be filed.
(C) The following exhibits are filed as part of this report:
NUMBER DOCUMENT
10.1 Pre-Acquisition Agreement between Canadian Abraxas
Petroleum Limited and New Cache Petroleums LTD.
99.1 Press release dated January 6, 1999.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ABRAXAS PETROLEUM CORPORATION
By:_________________________________
Chris Williford
Executive Vice President, Chief Financial
Officer and Treasurer
Dated: January 28, 1999
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EXHIBIT 10.1
CONFIDENTIAL
PRE-ACQUISITION AGREEMENT
Between
CANADIAN ABRAXAS PETROLEUM LIMITED
and
NEW CACHE PETROLEUMS LTD.
Dated November 14, 1998
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TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
1.1 Definitions..........................................2
1.2 Singular, Plural, etc................................4
1.3 Deemed Currency......................................4
1.4 Headings, etc........................................4
1.5 Date for any Action..................................5
1.6 Governing Law........................................5
1.7 Attornment...........................................5
1.8 Incorporation of Schedules...........................5
ARTICLE 2
THE OFFER
2.1 The Offer............................................6
2.2 New Cache Directors' Circular........................7
2.3 Offer Documents......................................8
2.4 Outstanding Stock Options............................9
ARTICLE 3
PUBLICITY AND SOLICITATION
3.1 Publicity............................................9
3.2 Solicitation of Acceptances of Offer.................9
ARTICLE 4
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 Second Stage Transaction.............................9
4.2 Information Circular, Etc...........................10
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CANAXAS
5.1 Organization and Qualification......................10
5.2 Authority Relative to this Agreement................11
5.3 No Violations.......................................11
5.4 Funds Available.....................................12
5.5 Knowledge...........................................12
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF NEW CACHE
6.1 Organization and Qualification......................12
6.2 Authority Relative to this Agreement................12
6.3 No Violations.......................................13
6.4 Capitalization......................................14
6.5 No Material Adverse Change..........................14
6.6 No Undisclosed Material Liabilities.................14
6.7 Impairment..........................................14
6.8 Officer Obligations.................................14
6.9 Brokerage Fees......................................15
6.10 Conduct of Business.................................15
6.11 Reports.............................................15
6.12 Subsidiaries........................................16
6.13 United States Relationship..........................16
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6.14 Rights Plan.........................................17
ARTICLE 7
CONDUCT OF BUSINESS
7.1 Conduct of Business by New Cache....................17
ARTICLE 8
COVENANTS OF NEW CACHE
8.1 Notice of Material Change...........................19
8.2 Non-Completion Fee..................................19
8.3 No Solicitation.....................................20
8.4 New Cache Board of Directors........................21
ARTICLE 9
COVENANTS OF CANAXAS
9.1 Availability of Funds...............................21
9.2 Employment Agreements...............................22
ARTICLE 10
MUTUAL COVENANTS
10.1 Other Filings.......................................22
10.2 Additional Agreements...............................22
10.3 Access to Information...............................23
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination.........................................23
11.2 Effect of Termination...............................24
11.3 Amendment...........................................24
11.4 Waiver..............................................24
ARTICLE 12
GENERAL PROVISIONS
12.1 Notices.............................................25
12.2 Miscellaneous.......................................26
12.3 Assignment..........................................26
12.4 Expenses............................................26
12.5 Severability........................................27
12.6 Counterpart Execution...............................27
Schedule A Conditions to the Offer
Schedule B Form of Offer to Purchase and Take-over Circular
Schedule C Form of Pre-tender Agreement
Schedule D Form of New Cache Letter to Data Room Participants
Schedule E Conditions in Favour of New Cache
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PRE-ACQUISITION AGREEMENT
THIS AGREEMENT made as of the 14th day of November, 1998,
BETWEEN:
CANADIAN ABRAXAS PETROLEUM LIMITED, a corporation duly
incorporated under and governed by the laws of the Province of
Alberta and having its head and principal office in the City
of Calgary, in the Province of Alberta (hereafter referred to
as "Canaxas")
OF THE FIRST PART,
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NEW CACHE PETROLEUMS LTD., a corporation duly incorporated
under and governed by the laws of the Province of Alberta and
having its head and principal office in the City of Calgary,
in the Province of Alberta (hereafter referred to as "New
Cache")
OF THE SECOND PART.
WHEREAS the Board of Directors of each of Canaxas and New Cache has
determined that it is in the best interests of their respective corporations and
shareholders that Canaxas and New Cache combine their business interests with
the result that there shall be one economic enterprise and that such combination
be effected through an offer by Canaxas to purchase all of the outstanding
shares of New Cache;
AND WHEREAS the Board of Directors of New Cache has determined to
unanimously recommend acceptance of the Canaxas offer to the shareholders of New
Cache;
AND WHEREAS the Board of Directors of New Cache has determined that it
would be in the best interests of New Cache and its shareholders to enter into
this Agreement;
AND WHEREAS Canaxas is willing to make an offer to purchase all of the
outstanding shares of New Cache subject to the terms and conditions of this
Agreement.
NOW THEREFORE IN CONSIDERATION OF the mutual covenants hereinafter
contained and other good and valuable consideration (the receipt and adequacy
whereof is hereby acknowledged), the parties hereto agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith:
"Act" means the Business Corporations Act (Alberta) as the same has been and may
hereafter from time to time be amended;
"Agreement", "this Agreement", "herein", "hereto", and "hereof" and similar
expressions refer to this Agreement, as the same may be amended or supplemented
from time to time and, where applicable, to the appropriate Schedules hereto;
"Business Day" means any day excepting a Saturday, Sunday or statutory holiday
in Calgary, Alberta;
"Canaxas" means Canadian Abraxas Petroleum Limited;
"diluted basis" means, with respect to the number of outstanding New Cache
Shares at any time, such number of outstanding New Cache Shares calculated
assuming that all outstanding New Cache Options and other rights to purchase New
Cache Shares (other than the Rights) are exercised;
"Effective Time" means the time that Canaxas shall have acquired ownership of
and paid for at least that number of New Cache Securities to satisfy the Minimum
Condition pursuant to the terms of the Offer;
"Expiry Time" means the Initial Expiry Time unless the Offer has been extended,
in which case it means the expiry time of the Offer as extended from time to
time;
"in writing" means written information including documents, files, records,
books and other materials made available, delivered or produced to Canaxas by or
on behalf of New Cache in the course of conducting its due diligence review in
respect of New Cache and its subsidiaries between October 9, 1998, being the
date of the Confidentiality Agreement between New Cache and Canaxas, and the
date of this Agreement;
"Initial Expiry Time" means 12:00 p.m. (Vancouver time) on the 20th Business Day
following the day of the mailing of the Offer Documents to the shareholders of
New Cache (where the first day of this period is the day immediately following
the day of mailing);
"Material Adverse Change" means any change (or any condition, event or
development involving a prospective change) in the business, operations, results
of operations, assets, capitalization, financial condition, licenses, permits,
concessions, rights, liabilities, prospects or privileges, whether contractual
or otherwise, of New Cache or any of its subsidiaries which is materially
adverse to the business of New Cache and its subsidiaries considered as a whole
other than a change (i) which
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arises out of a matter that has been publicly disclosed, (ii) resulting from
conditions affecting the oil and gas industry as a whole, or (iii) resulting
from general economic, financial, currency exchange, securities or commodity
market conditions in Canada or elsewhere;
"Minimum Condition" means the condition set forth in paragraph(a)of Schedule A;
"New Cache" means New Cache Petroleums Ltd.;
"New Cache Governing Documents" means the Certificate and Articles of
Incorporation and By- laws of New Cache;
"New Cache Options" means the outstanding options to acquire New Cache Shares
under New Cache's Stock Option Plan;
"New Cache Securities" means all of the outstanding New Cache Shares and
associated Rights;
"New Cache Shares" means the Common Shares in the share capital of New Cache;
"Offer" has the meaning set forth in Section 2.1(a);
"Offer Documents" has the meaning set forth in Section 2.3(a);
"Officer Obligations" means any obligations or liabilities of New Cache or any
subsidiary of New Cache to pay any amount to its officers, directors, or
employees, other than for salary, bonuses under their existing bonus
arrangements and directors' fees in the ordinary course in each case in amounts
consistent with historic practices and, without limiting the generality of the
foregoing, Officer Obligations shall include the obligations of New Cache or any
of its subsidiaries to officers or employees for severance or termination
payments on the change of control of New Cache pursuant to any executive
involuntary severance and termination agreements;
"Rights" means the rights issued to holders of New Cache Shares pursuant to the
Rights Plan;
"Rights Plan" means the Shareholder Rights Plan Agreement dated as of March 25,
1998 between New Cache and Montreal Trust Company of Canada as rights agent;
"Second Stage Transaction" has the meaning set forth in Section 4.1;
"Securities Authorities" means the appropriate securities commissions or similar
regulatory authorities in Canada and each of the provinces and territories
thereof and in the United States and each of the states thereof;
"Securities Laws" has the meaning set forth in Section 2.3(a);
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"Stock Option Plan" means the 1998 Stock Option Plan No.1 of New Cache, the 1997
Stock Option Plan No.1, the 1996 Stock Option Plan No.2, the 1996 Stock Option
Plan No.1, the 1995 Stock Option Plan and the 1990 Stock Option Plan;
"subsidiary" has the meaning set forth in the Act;
"Superior Take-over Proposal" means any bona fide written Take-over Proposal
which, in the opinion of New Cache's Board of Directors after consultation with
its financial advisors, constitutes a commercially feasible transaction for
which adequate financial arrangements have been made and which could be carried
out within 180 days of the date of announcement of such transaction and, if
consummated, would be superior to the Offer from a financial point of view to
New Cache and to New Cache's shareholders;
"Take-over Proposal" means, in respect of New Cache or its subsidiaries or their
assets, any proposals or offers regarding any take-over bid, merger,
consolidation, amalgamation, arrangement, sale of a material amount of assets,
sale of treasury shares in connection with a business combination (other than
pursuant to options under the Stock Option Plan) or other business combination
or similar transaction; and
"Take-up Date" means the date that Canaxas first takes up and acquires New Cache
Securities pursuant to the Offer.
1.2 Singular, Plural, etc.
Words importing the singular number include the plural and vice versa
and words importing gender include the masculine, feminine and neuter genders.
1.3 Deemed Currency
In the absence of a specific designation of any currency any
undescribed dollar amount herein shall be deemed to refer to Canadian dollars.
1.4 Headings, etc.
The division of this Agreement into Articles and Sections, the
provision of a table of contents hereto and the insertion of the recitals and
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement and, unless otherwise stated,
all references in this Agreement or in the Schedules to Articles, Sections and
Schedules refer to Articles, Sections and Schedules of and to this Agreement or
of the Schedules in which such reference is made.
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1.5 Date for any Action
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereunder is not a Business Day, such action
shall be required to be taken on the next succeeding day which is a Business
Day.
1.6 Governing Law
This Agreement shall be governed by and interpreted in accordance with
the laws of the Province of Alberta and the laws of Canada applicable therein.
1.7 Attornment
The parties hereby irrevocably and unconditionally consent to and
submit to the courts of the Province of Alberta for any actions, suits or
proceedings arising out of or relating to this Agreement or the matters
contemplated hereby (and agree not to commence any action, suit or proceeding
relating thereto except in such courts) and further agree that service of any
process, summons, notice or document by single registered mail to the addresses
of the parties set forth in this Agreement shall be effective service of process
for any action, suit or proceeding brought against either party in such court.
The parties hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the matters contemplated hereby in the courts of the Province of Alberta and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding so brought has
been brought in an inconvenient forum.
1.8 Incorporation of Schedules
Schedules A to G attached hereto and described below shall, for all
purposes hereof, form an integral part of this Agreement.
Schedule A Conditions to the Offer
Schedule B Form of Offer to Purchase and Take-over Circular
Schedule C Form of Pre-tender Agreement
Schedule D Form of New Cache Letter to Data Room Participants
Schedule E Conditions in Favour of New Cache
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ARTICLE 2
THE OFFER
2.1 The Offer
(a) Canaxas shall mail before 11:59 p.m. (Calgary time) on
November 27, 1998 an offer to purchase all of the outstanding
New Cache Securities for a price of $6.50 in cash for each New
Cache Share and associated Right, which offer shall be made in
accordance with Securities Laws and be subject only to the
conditions set forth in Schedule A hereto (the "Offer", which
term shall include any amendments to, or extensions of, such
Offer, including, without limitation, increasing the
consideration, removing or waiving any condition or extending
the date by which New Cache Securities may be tendered). The
Offer shall be prepared in both the English and French
language and in accordance with Securities Laws and shall be
in the form or substantially the form of the Offer to Purchase
and Take-over Circular annexed hereto as Schedule B.
(b) The Offer shall expire on the Initial Expiry Time, except that
the Offer may be extended at the sole discretion of Canaxas if
the conditions thereto set forth in Schedule A are not
satisfied on the Initial Expiry Time. Subject to the
satisfaction or waiver of the conditions set forth in Schedule
A hereto, Canaxas shall, within the time periods required by
law but subject to the provisions of the Rights Plan, accept
for payment and pay for all New Cache Securities validly
tendered (and not properly withdrawn) pursuant to the Offer.
Canaxas shall use all commercially reasonable efforts to
consummate the Offer, subject to the terms and conditions
thereof.
(c) Canaxas may, in its sole discretion:
(i) waive any term or condition of the Offer for its
benefit; and
(ii) amend any term or condition of the Offer, provided
that Canaxas shall not without the consent of New
Cache:
(A) reduce the Minimum Condition below 50% of
the New Cache Securities then outstanding;
(B) decrease the cash consideration offered per
New Cache Common Share and associated Right
below $6.50;
(C) add any other conditions to the Offer; or
(D) otherwise amend the Offer in a manner that
is, in the opinion of New Cache, acting
reasonably, materially adverse to the
holders of New Cache Securities.
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(d) Canaxas will instruct the depositary under the Offer to advise
New Cache from time to time, not less frequently than every
two Business Days until the day immediately prior to the
Expiry Time and thereafter on an hourly basis, if requested by
New Cache and in such manner as New Cache may reasonably
request, as to the number of New Cache Securities that have
been tendered (and not withdrawn) under the Offer.
(e) Canaxas's obligation to make the Offer as set forth in Section
2.1(a) is conditional upon the execution and delivery to
Canaxas, concurrently with the execution of this Agreement, of
the pre-tender agreements referred to in Section 2.2(b).
2.2 New Cache Directors' Circular
(a) New Cache hereby consents to the Offer as set forth in Section
2.1 and confirms that the New Cache Board of Directors has
unanimously approved the Offer and this Agreement and has
resolved to unanimously recommend acceptance of the Offer by
the holders of New Cache Securities, subject to Section
2.2(c), provided that the Offer does not differ in any
material respect from the Offer as set forth in the draft
Offer to Purchase and Take-over Circular annexed hereto as
Schedule B. New Cache shall prepare and make available for
mailing with the Offer, in both the English and French
language, sufficient copies of a directors' circular prepared
in accordance with Securities Laws. The directors' circular
will set forth (among other things) the recommendation of the
Board of Directors of New Cache as described above.
(b) The Board of Directors of New Cache has been advised that
certain shareholders of New Cache, including all of the
officers and directors of New Cache, holding at least 19.8% in
aggregate of the New Cache Securities, intend to tender their
New Cache Securities under the Offer. New Cache hereby
delivers concurrently with the execution of this Agreement
pre-tender agreements (each in the form or substantially in
the form of the agreement attached hereto as Schedule C)
signed by such shareholders. The directors' circular referred
to in Section 2.2(a) shall reflect the execution and delivery
of such pre-tender agreements and the intention of such
shareholders, directors and officers to tender their New Cache
Securities pursuant to the Offer.
(c) Notwithstanding Section 2.2(a), in the event that, prior to
the expiry of the Offer, a Superior Take-over Proposal is
offered or made to the holders of New Cache Securities or New
Cache, the Board of Directors of New Cache may withdraw,
modify or change any recommendation regarding the Offer if, in
the opinion of the Board of Directors acting in good faith
after written advice from outside counsel (confirmation of
which shall be immediately delivered to Canaxas), the failure
to so withdraw, modify or change any recommendation regarding
the Offer would be inconsistent with the performance by the
directors of New Cache of their fiduciary duties under
applicable law. New Cache shall as soon as possible but in any
event prior to 10:00 a.m. (Calgary time) on the day following
receipt of any Take-over Proposal, advise orally and in
writing that a Take-over Proposal has been offered or
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made to the Board of Directors of New Cache or to New Cache
(which notice in writing must identify the party proposing
such transaction and the terms and conditions thereof, which
must include a copy of the terms and conditions of any written
form of Take-over Proposal and which must provide an
undertaking to provide to Canaxas any further documents
relating to the terms or conditions thereof delivered to the
Board of Directors of New Cache or to New Cache by the
offeror). If the Board of Directors of New Cache believes that
the Take-over Proposal constitutes a Superior Take-over
Proposal, New Cache shall give Canaxas at least two Business
Days advance notice of any action to be taken by the Board of
Directors of New Cache to withdraw, modify or change any
recommendation regarding the Offer or to enter into an
agreement to implement the Superior Takeover Proposal.
(d) The Board of Directors of New Cache may withdraw, modify or
change any recommendation with respect to the Offer:
(i) as permitted under Section 2.2(c); or
(ii) in the event that the conditions set forth in
Schedule E hereto are not satisfied or waived at the
applicable time by New Cache in its discretion acting
reasonably.
2.3 Offer Documents
(a) Within the time periods required by law, Canaxas shall file or
cause to be filed with the appropriate Securities Authorities
an Offer to Purchase and Take-over Circular and the related
Letter of Transmittal and Notice of Guaranteed Delivery
pursuant to which the Offer will be made (collectively, the
"Offer Documents"). The Offer Documents, when filed with
Securities Authorities and when mailed to holders of New Cache
Securities, shall contain (or shall be amended in a timely
manner to contain) all information which is required to be
included therein in accordance with the Act and any applicable
Canadian provincial securities laws, United States securities
laws, the "blue sky" or securities laws of the states of the
United States and any other applicable law (collectively, the
"Securities Laws").
(b) New Cache agrees to provide such reasonable assistance as
Canaxas or its agents may reasonably request in connection
with communicating the Offer and any amendments and
supplements thereto to the holders of the New Cache Securities
and to such other persons as are entitled to receive the Offer
under Securities Laws, including providing lists of the
shareholders of New Cache and of the holders of New Cache
Options and other securities convertible into or exchangeable
for New Cache Shares (to the extent known by New Cache) and
mailing labels with respect to all such holders of securities
as soon as possible after the date of this Agreement but in
any event no later than the close of business in Calgary on
November 20, 1998 and updates or supplements thereto from time
to time as may be requested by Canaxas.
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2.4 Outstanding Stock Options
New Cache and Canaxas agree that to the extent holders of New Cache
Options do not exercise such options and tender the New Cache Shares they
receive upon such exercise, New Cache may agree with all remaining holders of
New Cache Options that, in lieu of such persons exercising their New Cache
Options, New Cache may pay to such persons the difference between the exercise
price of their New Cache Options and the purchase price for the New Cache
Securities under the Offer immediately after the Expiry Time of the Offer in
exchange for the termination of their New Cache Options.
ARTICLE 3
PUBLICITY AND SOLICITATION
3.1 Publicity
Each of Canaxas and New Cache shall advise, consult and cooperate with
the other party prior to issuing, or permitting any of its subsidiaries,
directors, officers, employees or agents to issue, any press release or other
written statement to the press or any third party with respect to this Agreement
or the transactions contemplated hereby. Canaxas and New Cache shall not issue
any such press release or make any such public statement prior to such consent,
except upon the advice of counsel that such action is required by applicable law
or by obligations pursuant to any listing agreement with a stock exchange and
only after using its best efforts to consult the other party taking into account
the time constraints to which it is subject as a result of such law or
obligation.
3.2 Solicitation of Acceptances of Offer
The financial advisors to Canaxas will act as dealer managers (the
"Dealer Managers") in connection with the Offer and solicit acceptances of the
Offer. The Dealer Managers will form a soliciting dealer group comprised of
members of the Investment Dealers Association of Canada and of the stock
exchanges in Canada and their United States broker dealer affiliates to solicit
acceptances of the Offer.
ARTICLE 4
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 Second Stage Transaction
If Canaxas takes up and pays for New Cache Securities pursuant to the
terms of the Offer with the result that the Minimum Condition is satisfied,
Canaxas agrees to use all commercially reasonable efforts to acquire, and New
Cache agrees to use all commercially reasonable efforts to assist Canaxas in
acquiring, the balance of the New Cache Securities as soon as practicable and in
any event within a period of six months following the Take-up Date by way of a
statutory arrangement, amalgamation, merger, reorganization, consolidation,
recapitalization or other type of
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acquisition transaction or transactions ("Second Stage Transaction") carried out
for a cash consideration per New Cache Share and associated Right not less than
the consideration paid pursuant to the Offer. Nothing herein shall be construed
to prevent Canaxas from acquiring, directly or indirectly, additional New Cache
Securities in the open market or in privately negotiated transactions, in
accordance with Securities Laws (including by way of compulsory acquisition)
following completion of the Offer.
4.2 Information Circular, Etc.
Without limiting Section 4.1, New Cache agrees that if Canaxas is
required to effect a Second Stage Transaction which requires approval of New
Cache's shareholders in a meeting of New Cache's shareholders, New Cache shall
take all action necessary in accordance with the Securities Laws, other
applicable Canadian laws, the New Cache Governing Documents and the requirements
of The Toronto Stock Exchange or any other regulatory authority having
jurisdiction to duly call, give notice of, convene and hold a meeting of its
shareholders as promptly as practicable to consider and vote upon the action
proposed by Canaxas. In the event of such a meeting or meetings, New Cache shall
use all commercially reasonable efforts to mail to its shareholders an
Information Circular with respect to the meeting of New Cache's shareholders.
The term "Information Circular" shall mean such proxy or other required
informational statement or circular, as the case may be, and all related
materials at the time required to be mailed to New Cache's shareholders and all
amendments or supplements thereto, if any. Canaxas and New Cache each shall use
all commercially reasonable efforts to obtain and furnish the information
required to be included in any Information Circular. The information provided
and to be provided by Canaxas and New Cache for use in the Information Circular,
on both the date the Information Circular is first mailed to New Cache's
shareholders and on the date any such meeting is held, shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading and will comply in all
material respects with all applicable requirements of law. Canaxas and New Cache
each agree to correct promptly any such information provided by it for use in
any Information Circular which shall have become false or misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CANAXAS
As of the date hereof, Canaxas hereby represents and warrants to New
Cache as follows and acknowledges that New Cache is relying upon these
representations and warranties in connection with the entering into of this
Agreement:
5.1 Organization and Qualification
Canaxas is a corporation duly incorporated and organized and validly
subsisting under the laws of the Province of Alberta and has the requisite
corporate power and authority to carry on its business as it is now being
conducted.
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5.2 Authority Relative to this Agreement
Canaxas has the requisite corporate authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation by Canaxas of the transactions
contemplated hereby have been duly authorized by its Board of Directors and no
other corporate proceedings on Canaxas's part is or will be necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Canaxas and constitutes the
legal, valid and binding obligation of Canaxas enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general principles of equity.
5.3 No Violations
(a) Neither the execution and delivery of this Agreement by
Canaxas, the consummation by it of the transactions
contemplated hereby nor compliance by Canaxas with any of the
provisions hereof will: (i) violate, conflict with, or result
in breach of any provision of, require any consent, approval
or notice under, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a
default) or result in a right of termination or acceleration
under, or result in a creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of
Canaxas or any of its subsidiaries under, any of the terms,
conditions or provisions of (x) the charter or bylaws of
Canaxas or (y) any material note, bond, mortgage, indenture,
loan agreement, deed of trust, agreement, lien, contract or
other instrument or obligation to which Canaxas or any of its
subsidiaries is a party or to which it, or any of its
respective properties or assets, may be subject or by which
either Canaxas or any of its subsidiaries is bound; or (ii)
subject to compliance with the statutes and regulations
referred to in Section 5.3(b), violate any judgment, ruling,
order, writ, injunction, determination, award, decree,
statute, ordinance, rule or regulation applicable to Canaxas
or any of its subsidiaries (except, in the case of each of
clauses (i) and (ii) above, for such violations, conflicts,
breaches, defaults, terminations which, or any consents,
approvals or notices which if not given or received, would not
have any material adverse effect on the business, operations
or financial condition of Canaxas and its subsidiaries taken
as a whole or on the ability of Canaxas to consummate the
transactions contemplated hereby).
(b) Other than in connection with or in compliance with the
provisions of Securities Laws, the Public Utilities Board Act
(Alberta), the Gas Utilities Act (Alberta), the requirements
of the National Energy Board (Canada), the rules of The
Toronto Stock Exchange, the United States Securities Exchange
Act of 1934, as amended, state securities or "blue-sky" laws
of the states of the United States, as amended, and any other
pre-merger notification statutes, (i) there is no legal
impediment to Canaxas's consummation of the transactions
contemplated by this Agreement and (ii) no filing or
registration with, or authorization, consent or approval of,
any domestic or foreign public body or authority is necessary
by Canaxas in connection with the making or
<PAGE>
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the consummation of the Offer, except for such filings or
registrations which, if not made, or for such authorizations,
consents or approvals, which, if not received, would not have
a material adverse effect on the ability of Canaxas to
consummate the transactions contemplated hereby.
5.4 Funds Available
The aggregate cash consideration payable pursuant to the Offer is
available to Canaxas so that Canaxas is in a position to pay for all New Cache
Securities tendered pursuant to the Offer in accordance with the terms of the
Offer.
5.5 Knowledge
As of the date hereof, Canaxas has no actual knowledge of any
misrepresentation, breach or non-performance by New Cache of any representation,
warranty or covenant contained in this Agreement which would have or would be
reasonably likely to have a material adverse effect on Canaxas should the Offer
be completed.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF NEW CACHE
As of the date hereof, New Cache hereby represents and warrants to
Canaxas as follows and acknowledges that Canaxas is relying upon these
representations and warranties in connection with the entering into of this
Agreement:
6.1 Organization and Qualification
New Cache is a corporation duly incorporated and organized and validly
subsisting under the laws of the Province of Alberta and has the requisite
corporate power and authority to carry on its business as it is now being
conducted. Each of New Cache's subsidiaries is a corporation duly incorporated
and organized and validly subsisting under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority to carry on
its business as now being conducted. New Cache and each of its subsidiaries is
duly registered to do business and is in good standing in each jurisdiction in
which the character of its properties, owned or leased, or the nature of its
activities make such registration necessary, except where the failure to be so
registered or in good standing would not have a material adverse effect on New
Cache and its subsidiaries taken as a whole.
6.2 Authority Relative to this Agreement
New Cache has the requisite corporate authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by New Cache's Board of Directors, and no other
corporate proceedings on the part of New Cache are necessary to authorize this
Agreement (except for obtaining shareholder approval in respect of any Second
Stage Transaction)
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and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by New Cache and constitutes the legal, valid and binding
obligation of New Cache enforceable against New Cache in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and to general principles of equity.
6.3 No Violations
(a) Except as previously disclosed in writing to Canaxas, neither
the execution and delivery of this Agreement by New Cache, the
consummation of the transactions contemplated hereby nor
compliance by New Cache with any of the provisions hereof
will: (i) violate, conflict with, or result in breach of any
provision of, require any consent, approval or notice under,
or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or result
in a right of termination or acceleration under, or result in
a creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of New Cache
or any of its subsidiaries under, any of the terms, conditions
or provisions of (x) the New Cache Governing Documents or (y)
any material note, bond, mortgage, indenture, loan agreement,
deed of trust, agreement, lien, contract or other instrument
or obligation to which New Cache or any of its subsidiaries is
a party or to which any of them, or any of their respective
properties or assets, may be subject or by which New Cache or
any of its subsidiaries is bound; or (ii) subject to
compliance with the statutes and regulations referred to in
Section 6.3(b), violate any judgment, ruling, order, writ,
injunction, determination, award, decree, statute, ordinance,
rule or regulation applicable to New Cache or any of its
subsidiaries (except, in the case of each of clauses (i) and
(ii) above, for such violations, conflicts, breaches,
defaults, terminations which, or any consents, approvals or
notices which if not given or received, would not have any
material adverse effect on the business, operations or
financial condition of New Cache and its subsidiaries taken as
a whole or on the ability of New Cache to consummate the
transactions contemplated hereby).
(b) Except as previously disclosed in writing to Canaxas, other
than in connection with or in compliance with the provisions
of Securities Laws, the Public Utilities Board Act (Alberta),
the Gas Utilities Act (Alberta), the requirements of the
National Energy Board (Canada), the rules of The Toronto Stock
Exchange, the United States Securities Exchange Act of 1934,
as amended, state securities or "blue-sky" laws of the states
of the United States, as amended, and any other pre-merger
notification statutes, (i) there is no legal impediment to New
Cache's consummation of the transactions contemplated by this
Agreement and (ii) no filing or registration with, or
authorization, consent or approval of, any domestic or foreign
public body or authority is necessary by New Cache in
connection with the making or the consummation of the Offer,
except for such filings or registrations which, if not made,
or for such authorizations, consents or approvals, which, if
not received, would not have a material adverse effect on the
ability of New Cache to consummate the transactions
contemplated hereby.
<PAGE>
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6.4 Capitalization
As of the date hereof, the authorized share capital of New Cache
consists of an unlimited number of Common Shares. As of the date hereof,
14,185,128 New Cache Shares are issued and outstanding. As of the date hereof,
1,222,353 New Cache Shares are issuable pursuant to the exercise of outstanding
New Cache Options granted under the Stock Option Plan. Except as set forth above
and for the Rights issued pursuant to the Rights Plan, there are no options,
warrants or other rights, agreements or commitments of any character whatsoever
requiring the issuance, sale or transfer by New Cache of any shares of New Cache
(including the New Cache Shares) or any securities convertible into, or
exchangeable or exercisable for, or otherwise evidencing a right to acquire, any
shares of New Cache (including the New Cache Shares), nor are there any
outstanding stock appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the book value, income or
other attribute of New Cache. All outstanding New Cache Shares have been duly
authorized and validly issued, are fully paid and non-assessable and are not
subject to, nor were they issued in violation of, any preemptive rights, and all
New Cache Shares issuable upon exercise of outstanding stock options in
accordance with their respective terms will be duly authorized and validly
issued, fully paid and non-assessable and will not be subject to any preemptive
rights.
6.5 No Material Adverse Change
Since November 30, 1997, there has not been any Material Adverse
Change, except for those matters which have been disclosed in writing to the
Offeror prior to the date of this Agreement.
6.6 No Undisclosed Material Liabilities
Except (a) as disclosed or reflected in the consolidated interim
unaudited financial statements of New Cache as at August 31, 1998 prepared by
management previously delivered to Canaxas, and (b) for liabilities and
obligations (i) incurred in the ordinary course of business and consistent with
past practice, (ii) pursuant to the terms of this Agreement, or (iii) as
disclosed in writing to Canaxas, neither New Cache nor any of its subsidiaries
has incurred any liabilities of any nature, whether accrued, contingent or
otherwise (or which would be required by generally accepted accounting
principles to be reflected on a consolidated balance sheet of New Cache and its
subsidiaries) that have constituted or would be reasonably likely to constitute
a Material Adverse Change.
6.7 Impairment
The making of the Offer will not result in Material Adverse Change.
6.8 Officer Obligations
The Officer Obligations do not exceed an aggregate of $1 million.
<PAGE>
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6.9 Brokerage Fees
New Cache has not retained nor will it retain any financial advisor,
broker, agent or finder or paid or agreed to pay any financial advisor, broker,
agent or finder on account of this Agreement, any transaction contemplated
hereby or any transaction presently ongoing or contemplated, except that
FirstEnergy Capital Corp. has been retained as New Cache's financial advisors in
connection with certain matters including the transactions contemplated hereby.
New Cache has delivered to Canaxas a true and complete copy of its agreement
with FirstEnergy Capital Corp.
6.10 Conduct of Business
Since August 31, 1998 neither New Cache nor any of its subsidiaries has
taken any action that would be in violation of Section 7.1 if such provision had
been in effect since such date, other than violations which would not have any
material adverse effect on the business, operations or financial condition of
New Cache and its subsidiaries considered as a whole or would materially affect
New Cache's ability to consummate the transactions contemplated hereby.
6.11 Reports
(a) New Cache has heretofore delivered to Canaxas true and
complete copies of (i) New Cache's 1998 Annual Information
Form, Information Circular relating to New Cache's 1998 annual
meeting of shareholders and 1997 Annual Report to
shareholders, Stock Option Plan and Rights Plan and (ii) all
prospectuses or other offering documents used by New Cache in
the offering of its securities or filed with Securities
Authorities since December 31, 1995 and (iii) the consolidated
internal interim unaudited financial statements of New Cache
dated August 31, 1998. As of their respective dates, such
form, statements, prospectuses and other offering documents
(including all exhibits and schedules thereto and documents
incorporated by reference therein) did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading and complied in all material
respects with all applicable requirements of law. The audited
financial statements and unaudited interim financial
statements of New Cache and its consolidated subsidiaries
publicly issued by New Cache, previously delivered to Canaxas,
or included or incorporated by reference in such form,
statements, prospectuses and other offering documents were
prepared in accordance with generally accepted accounting
principles in Canada (except (i) as otherwise indicated in
such financial statements and the notes thereto or, in the
case of audited statements, in the related report of New
Cache's independent accountants or (ii) in the case of
unaudited interim financial statements, to the extent they may
not include footnotes or may be condensed or summary
statements), and fairly present the consolidated financial
position, results of operations and changes in financial
position of New Cache and its consolidated subsidiaries as of
the dates thereof and for the periods indicated therein
(subject, in the case of any unaudited interim financial
statements, to normal year-end audit adjustments).
<PAGE>
- 16 -
(b) New Cache will deliver to Canaxas as soon as they become
available true and complete copies of any report or statement
filed by it with Securities Authorities subsequent to the date
hereof. As of their respective dates, such reports and
statements (excluding any information therein provided by
Canaxas, as to which New Cache makes no representation) will
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading and
will comply in all material respects with all applicable
requirements of law. The consolidated financial statements of
New Cache issued by New Cache or to be included in such
reports and statements (excluding any information therein
provided by Canaxas, as to which New Cache makes no
representation) will be prepared in accordance with generally
accepted accounting principles in Canada (except (i) as
otherwise indicated in such financial statements and the notes
thereto or, in the case of audited statements, in the related
report of New Cache's independent accounts or (ii) in the case
of unaudited interim financial statements, to the extent they
may not include footnotes or may be condensed or summary
statements) and will present fairly the consolidated financial
position, results of operations and changes in financial
position of New Cache as of the dates thereof and for the
periods indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year-end
audit adjustments).
6.12 Subsidiaries
All of New Cache's subsidiaries are wholly-owned by New Cache and all
shares of New Cache's material subsidiaries owned by New Cache are beneficially
owned, directly or indirectly, with valid and marketable title thereto, free and
clear of any and all liens, charges, security interests, adverse claims,
encumbrances and demands of any nature or kind whatsoever.
6.13 United States Relationship
New Cache is not and does not beneficially own, directly or indirectly,
voting securities of, have the right to profits of, or in the event of
dissolution, to the assets of, or have the contractual power to designate one or
more directors (or individuals exercising similar functions) of: (i) an issuer
which beneficially owns, directly or indirectly, assets located in the United
States (other than investment assets, voting or non-voting securities of another
person and certain similar assets) having an aggregate book value of U.S. $15
million or more or (ii) an issuer with aggregate sales (as stated on its last
regularly prepared annual statement of income and expense) in or into the United
States of U.S. $25 million or more in its most recent fiscal year (where such
terms have the meaning set forth in the Hart-Scott-Rodino Antitrust Improvements
Act (United States)). The New Cache Shares are not listed on any United States
national securities exchange or the NASDAQ system in the United States.
<PAGE>
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6.14 Rights Plan
New Cache has adopted the Rights Plan and the Rights Plan remains in
full force and effect, unamended. The Board of Directors of New Cache have
waived, pursuant to the provisions of Section 5.1(a) of the Rights Plan, the
application of Section 3.1 of the Rights Plan to the Offer and is satisfied that
the Rights Plan does not and will not adversely affect the Offeror upon
consummation of the Offer and any Compulsory Acquisition or Subsequent
Acquisition Transaction.
ARTICLE 7
CONDUCT OF BUSINESS
7.1 Conduct of Business by New Cache
New Cache covenants and agrees that, during the period from the date of
this Agreement until either: (i) the time of the next annual meeting of
shareholders of New Cache at which directors areto be elected; or (ii) this
Agreement is terminated by its terms, unless Canaxas shall otherwise agree in
writing, except as required by law or as otherwise expressly permitted or
specifically contemplated by this Agreement:
(a) the business of New Cache and its subsidiaries shall be
conducted only in, and New Cache and its subsidiaries shall
not take any action except in, the usual and ordinary course
of business and consistent with past practice, and New Cache
shall use all commercially reasonable efforts to maintain and
preserve its business organization, assets, employees and
advantageous business relationships;
(b) New Cache shall not directly or indirectly do or permit to
occur any of the following: (i) amend the New Cache Governing
Documents, the Stock Option Plan or the Rights Plan; (ii)
declare, set aside or pay any dividend or other distribution
or payment (whether in cash, shares or property) in respect of
its shares owned by any person; (iii) issue, grant, sell or
pledge or agree to issue, grant, sell or pledge any shares of
New Cache or its subsidiaries, or securities convertible into
or exchangeable or exercisable for, or otherwise evidencing a
right to acquire, shares of New Cache or its subsidiaries,
other than New Cache Shares issuable pursuant to the terms of
the New Cache Options; (iv) redeem, purchase or otherwise
acquire any of its outstanding shares or other securities; (v)
split, combine or reclassify any of its shares; (vi) adopt a
plan of liquidation or resolutions providing for the
liquidation, dissolution, merger, consolidation or
reorganization of New Cache; or (vii) enter into or modify any
contract, agreement, commitment or arrangement with respect to
any of the foregoing, except as permitted above;
(c) neither New Cache nor any of its subsidiaries shall directly
or indirectly do any of the following other than pursuant to
commitments entered into prior to the date of this Agreement:
(i) sell, pledge, dispose of or encumber any assets except in
the ordinary course of business for a consideration not in
excess of $50,000 in aggregate; (ii) acquire (by merger,
amalgamation, consolidation or acquisition of shares or
<PAGE>
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assets)anycorporation, partnership or other business
organization or division thereof, or, except for investments
in securities made in the ordinary course of business, make
any investment either by purchase of shares or securities,
contributions of capital (other than to subsidiaries),
property transfer, or, except in the ordinary course of
business, purchase of any property or assets of any other
individual or entity, in each case having a value in excess of
$50,000; (iii) incur any indebtedness for borrowed money or
any other material liability or obligation or issue any debt
securities or assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any
other individual or entity, or make any loans or advances,
except in the ordinary course of business; (iv) except for
Officer Obligations in an amount less than $1 million in
aggregate, pay, discharge or satisfy any material claims,
liabilities or obligations other than the payment, discharge
or satisfaction in the ordinary course of business consistent
with past practice of liabilities reflected or reserved
against in its financial statements or incurred in the
ordinary course of business consistent with past practice; (v)
authorize, recommend or propose any release or relinquishment
of any material contract right other than in the ordinary
course of business consistent with past practice; (vi) waive,
release, grant or transfer any rights of material value or
modify or change in any material respect any existing material
license, lease, contract, production sharing agreement,
government land concession or other document, other than in
the ordinary course of business consistent with past practice;
(vii) enter into any interest rate swaps, currency swaps or
any other rate fixing agreement for a financial transaction or
enter into any call arrangement of any sort or any forward
sale agreement for commodities, other than in the ordinary
course of business consistent with past practice; or (viii)
authorize or propose any of the foregoing, or enter into or
modify any contract, agreement, commitment or arrangement to
do any of the foregoing.
(d) neither New Cache nor any of its subsidiaries shall create any
new Officer Obligations and, except for payment of the
existing Officer Obligations, neither New Cache nor any of its
subsidiaries shall grant to any officer or director an
increase in compensation in any form, grant any general salary
increase other than in accordance with the requirements of any
existing collective bargaining or union contracts, grant to
any other employee any increase in compensation in any form
other than routine increases in the ordinary course of
business consistent with past practices, make any loan to any
officer or director, or take any action with respect to the
grant of any severance or termination pay (other than as
contemplated pursuant to Section 9.2 of this Agreement)
arising from the Offer or a change of control of New Cache or
the entering into of any employment agreement with, any senior
officer or director, or with respect to any increase of
benefits payable under its current severance or termination
pay policies; and
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(e) neither New Cache nor any of its subsidiaries shall adopt or
amend or make any contribution to any bonus, profit sharing,
option, pension, retirement, deferred compensation, insurance,
incentive compensation, other compensation or other similar
plan, agreement, trust, fund or arrangements for the benefit
of employees, except as is necessary to comply with the law or
with respect to existing provisions of any such plans,
programs, arrangements or agreements.
ARTICLE 8
COVENANTS OF NEW CACHE
8.1 Notice of Material Change
From the date hereof until the termination of this Agreement, New Cache
shall promptly notify Canaxas in writing of:
(a) any material change (actual, anticipated, contemplated or, to
the knowledge of New Cache, threatened, financial or
otherwise) in the business, affairs, operations, assets,
liabilities (contingent or otherwise) or capital of New Cache
and its subsidiaries considered as a whole;
(b) any change in any representation or warranty set forth in
Article 6 which change is or may be of such a nature as to
render any such representation or warranty misleading or
untrue in a material respect; or
(c) any material fact which arises and which would have been
required to be stated herein had the fact arisen on or prior
to the date of this Agreement.
New Cache shall in good faith discuss with Canaxas any change in
circumstances (actual, anticipated, contemplated or, to the knowledge of New
Cache, threatened, financial or otherwise) which is of such a nature that there
may be a reasonable question as to whether notice need to be given to Canaxas
pursuant to this section.
8.2 Non-Completion Fee
(a) Provided that there is no breach or non-performance by Canaxas
of a material provision of this Agreement in any material
respect, New Cache shall pay to Canaxas the sum of two million
five hundred thousand dollars ($2,500,000.00) if:
(i) the Offer shall have expired and not been consummated
by reason of the Minimum Condition not having been
satisfied but only if a Superior Takeover Proposal
has been publicly announced prior to the Expiry Time
and has been completed within 180 days of such
announcement; or
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(ii) this Agreement has been terminated by Canaxas pursuant to
Section 11.1(e).
In the circumstances set forth in clause (ii) above, New Cache
shall also pay to Canaxas an amount equal to all documented
and reasonable out of pocket expenses incurred by Canaxas in
making the Offer, including the fees payable to its financial
advisors and legal counsel and all fees, costs and expenses
incurred in arranging the financing for the Offer. Such
payments shall be made by New Cache to Canaxas within two
Business Days of the event giving rise to the payment in
immediately available funds to an account designated by
Canaxas.
(b) Provided that there is no breach or non-performance by New
Cache of a material provision of this Agreement in any
material respect, Canaxas shall pay to New Cache the sum of
two million five hundred thousand dollars ($2,500,000) if this
Agreement has been terminated by New Cache pursuant to Section
11.1(e). In these circumstances Canaxas shall also pay to New
Cache an amount equal to all documented and reasonable
out-of-pocket expenses incurred by New Cache in respect of the
Offer, including the fees payable to its financial advisors
and legal counsel. Such payments should be made by Canaxas to
New Cache within two Business Days of the event giving rise to
the payment in immediately available funds to an account
designated by New Cache.
8.3 No Solicitation
(a) New Cache shall immediately cease and cause to be terminated
all existing discussions and negotiations, if any, with any
parties conducted before the date of this Agreement with
respect to any Take-over Proposal and, without limitation,
shall immediately send a letter in substantially the form of
the letter attached hereto as Schedule F to all parties who
have had such discussions or negotiations or who have entered
into confidentiality agreements with New Cache pertaining to
the sale of New Cache or a substantial portion of its assets.
New Cache shall immediately advise Canaxas orally and in
writing of any response or action (actual, anticipated,
contemplated or threatened) by any recipient of such letter
which could hinder, prevent or delay or otherwise adversely
affect the completion of the Offer. New Cache agrees not to
release any third party from any confidentiality or standstill
obligation set forth in any agreement to which New Cache and
such third party are parties except for the standstill
obligation in connection with a Superior Take-over Proposal by
such third party.
(b) Neither New Cache nor any of its subsidiaries, or any of their
respective directors, officers, employees, agents, financial
advisors, counsel or other representatives shall, directly or
indirectly, (i) solicit, initiate or knowingly encourage the
initiation or continuation of any inquiries, discussions,
negotiations, proposals or offers from any corporation, person
or other entity or group (other than Canaxas and its
subsidiaries and their respective directors, officers,
employees, agents, financial advisors, counsel or other
representatives) in respect of any matter or thing which is
inconsistent with
<PAGE>
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the successful completion of the Offer and the merger of
Canaxas and New Cache, including any Take-over Proposal or
(ii) provide any confidential information to, participate in
any discussions or negotiations relating to any Take-over
Proposal with, or otherwise cooperate with or assist or
participate in any effort to consider, review or initiate a
Take-over Proposal by, any corporation, person or other entity
or group; provided, however, that New Cache shall not be bound
by the foregoing restrictions in this Section 8.3(b)(ii) in
respect of any proposal or offer in writing received by New
Cache from another party, which offer was not solicited by New
Cache or any of its subsidiaries or, of any of their
respective directors, officers, employees, agents, financial
advisors, counsel or other representatives after the date
hereof, which the Board of Directors of New Cache believes is
reasonably likely to become a Superior Take-over Proposal and
at any such time that New Cache or its Board of Directors
starts to provide any confidential information in accordance
with this proviso, New Cache shall so notify Canaxas of any
such provision of confidential information and provided
further that the provision of any such confidential
information shall be on terms and conditions no more favorable
to such other party than those contained in the
confidentiality agreement dated October 9, 1998 between
Canaxas and New Cache.
8.4 New Cache Board of Directors
New Cache shall take such reasonable steps as may be necessary to
ensure that the Board of Directors of New Cache immediately following the
acquisition by Canaxas of more than 50% of the outstanding New Cache Shares
pursuant to the Offer shall be reconstituted through resignations of all
existing New Cache directors and the appointment of Canaxas nominees in their
stead. New Cache shall, in accordance with the foregoing and subject to the
provisions of the Act, assist Canaxas to secure the resignations of all New
Cache directors to be effective at such time as may be required by Canaxas and
to use its best efforts to cause the election of the Canaxas nominees to fill
the vacancies so created in order to effect the foregoing without the necessity
of a shareholder meeting.
ARTICLE 9
COVENANTS OF CANAXAS
9.1 Availability of Funds
Canaxas covenants and agrees that at all times when the Offer is
outstanding, Canaxas shall not take any action, or fail to take any action,
which would or could result in the representation and warranty set out in
Section 5.4 being untrue in any material respect at any time while the Offer is
outstanding.
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9.2 Employment Agreements
Canaxas covenants and agrees, and after the Effective Time will cause
New Cache and any successor to New Cache to agree, to honour and comply with the
terms of those existing executive termination and severance agreements, plans or
policies of New Cache and its subsidiaries, all of which have been disclosed to
Canaxas in writing prior to the date hereof. In addition, prior to the Expiry
Time, the President or any other authorized officer of Canaxas shall meet with
the President or any other authorized person of New Cache to discuss the
severance of New Cache employees who are not party to a termination or severance
agreement with New Cache. Canaxas agrees that all employees of New Cache whose
employment is terminated will be treated fairly.
ARTICLE 10
MUTUAL COVENANTS
10.1 Other Filings
Canaxas and New Cache shall, as promptly as practicable hereafter,
prepare and file any filings required under the Public Utilities Board Act
(Alberta), the Gas Utilities Act (Alberta), the requirements of the National
Energy Board (Canada), any Securities Law, the rules of The Toronto Stock
Exchange, the United States Securities Exchange Act of 1934, as amended, state
securities or "blue-sky" laws of the states of the United States, as amended, or
any other applicable law relating to the transactions contemplated herein.
10.2 Additional Agreements
Subject to the terms and conditions herein provided and to fiduciary
obligations under applicable law, each of the parties hereto agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and to cooperate with each other in connection with the
foregoing, including using commercially reasonable efforts (i) to obtain all
necessary waivers, consents and approvals from other parties to material
agreements, leases and other contracts or agreements (including, without
limitation, the agreement of any persons as may be required pursuant to any
agreement, arrangement or understanding relating to New Cache's operations),
(ii) to obtain all necessary consents, approvals and authorizations as are
required to be obtained under any federal, provincial or foreign law or
regulations, (iii) to defend all lawsuits or other legal proceedings challenging
this Agreement or the consummation of the transactions contemplated hereby, (iv)
to cause to be lifted or rescinded any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (v) to effect all necessary registrations and
other filings and submissions of information requested by governmental
authorities and (vi) to fulfill all conditions and satisfy all provisions of
this Agreement and the Offer. For purposes of the foregoing, the obligation to
use "commercially reasonable efforts" to obtain waivers, consents and approvals
to loan agreements, leases and other contracts shall not include any
<PAGE>
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obligation to agree to a materially adverse modification of the terms of such
documents or to prepay or incur additional material obligations to such other
parties.
10.3 Access to Information
Subject to the existing Confidentiality Agreement between New Cache and
Canaxas dated October 9, 1998, upon reasonable notice, New Cache shall (and
shall cause each of its subsidiaries to) afford Canaxas's officers, employees,
counsel, accountants and other authorized representatives and advisers
reasonable access, during normal business hours and at such other time or times
as Canaxas may reasonably request from the date hereof and until the expiration
of this Agreement, to its properties, books, contracts and records as well as to
its management personnel, and, during such period, New Cache shall (and shall
cause each of its subsidiaries to) furnish promptly to Canaxas all information
concerning its business, properties and personnel as Canaxas may reasonably
request.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination
This Agreement may be terminated by written notice given to the other
parties hereto, at any time prior to completion of the transactions contemplated
hereby:
(a) by mutual written consent of New Cache and Canaxas;
(b) by either Canaxas or New Cache if Canaxas shall not have taken
up and paid for New Cache Securities under the Offer on or
before the times required by this Agreement, unless the
absence of such occurrence shall be due to the failure of the
party seeking to terminate this Agreement to perform the
obligations under this Agreement required to be performed by
it;
(c) by either Canaxas or New Cache if a court of competent
jurisdiction or a governmental, regulatory or administrative
agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting any of the transactions
contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable,
provided that the party seeking to terminate this Agreement
pursuant to this Section 11.1(c) shall have used all
commercially reasonable efforts to remove such order, decree,
ruling or injunction;
(d) by either Canaxas or New Cache, if the Offer terminates or
expires at the Expiry Time, without Canaxas taking up and
paying for any New Cache Securities on account of the failure
of any condition specified in Schedule A which has not been
waived by Canaxas, unless the absence of such occurrence shall
be due to the failure of the party seeking to terminate this
Agreement to perform the obligations under this Agreement
required to be performed by it;
<PAGE>
- 24 -
(e) by either Canaxas or New Cache, if there has been a
misrepresentation, breach or non-performance by the other
party of any representation, warranty or covenant contained in
this Agreement which would have or would be reasonably likely
to have a material adverse effect on the party seeking to
terminate, provided the breaching party has been given notice
of and three days to cure any such misrepresentation, breach
or non-performance;
(f) by New Cache or Canaxas if New Cache enters into an agreement
providing for a Superior Take-over Proposal or withdraws,
modifies or changes any recommendation regarding the Offer as
a result of a Superior Take-over Proposal;
(g) by New Cache if the Take-up Date has not occurred within 35
days of the Initial Expiry Time; or
(h) by Canaxas if there has been a misrepresentation, breach or
non-performance by a shareholder of any representation,
warranty or covenant contained in the pre-tender agreements
referred to in Section 2.2(b), which would have or would be
reasonably likely to have a material adverse effect on
Canaxas, provided that such shareholders shall have been given
notice of and three days to cure any such misrepresentation,
breach or non-performance.
11.2 Effect of Termination
In the event of the termination of this Agreement as provided in
Section 11.1, this Agreement shall forthwith have no further force or effect and
there shall be no obligation on the part of Canaxas or New Cache hereunder
except as set forth in Sections 8.2 and 12.4 and this Section 11.2, which
provisions shall survive the termination of this Agreement. Nothing herein shall
relieve either party from liability for any breach of this Agreement provided
that if New Cache became obligated to and has paid the fees provided for in
Section 8.2, New Cache shall have no further liability under this Agreement.
11.3 Amendment
This Agreement may be amended by mutual agreement between the parties
hereto. This Agreement may not be amended except by an instrument in writing
signed by the appropriate officers on behalf of each of the parties hereto.
11.4 Waiver
Each of Canaxas and New Cache may (i) extend the time for the
performance of any of the obligations or other acts of the other, (ii) waive
compliance with any of the other's agreements or the fulfillment of any
conditions to its own obligations contained herein or (iii) waive inaccuracies
in any of the other's representations or warranties contained herein or in any
document delivered by the other party hereto; provided, however, that any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
<PAGE>
- 25 -
ARTICLE 12
GENERAL PROVISIONS
12.1 Notices
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered or sent if delivered personally or sent by cable, telegram,
telecopier or telex or sent by prepaid overnight carrier to the parties at the
following addresses (or at such other addresses as shall be specified by the
parties by like notice):
(a) if to Canaxas:
1200, 300 - 5th Avenue S.W.
Calgary, Alberta
T2P 3C4
Attention: Mr. Donald A. Engle
Secretary
Telecopy No.: (403) 262-1969
with a copy to:
Bennett Jones
4500 Bankers Hall East
855 - 2nd Street SW
Calgary, Alberta
T2P 4K7
Attention: Mr. James G. Smeltzer
Telecopy No.: (403) 265-7219
(b) if to New Cache:
400, 140 - 4th Avenue S.W.
Calgary, Alberta
T2P 3N3
Attention: Mr. Raymond G. Smith,
President and Chief Executive Officer
Telecopy No.: (403) 263-3453
<PAGE>
- 26 -
with a copy to:
Howard Mackie
1000, 400 - 3rd Avenue S.W.
Calgary, Alberta
T2P 4H2
Attention: Mr. Brian E. Roberts
Telecopy No.: (403) 266-1395
12.2 Miscellaneous
This Agreement (i) except for the Confidentiality Agreement dated
October 9, 1998 between the parties hereto, constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
between the parties, with respect to the subject matter hereof and (ii) shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The parties hereto shall be entitled to rely upon
delivery of an executed facsimile copy of the Agreement, and such facsimile copy
shall be legally effective to create a valid and binding agreement among the
parties hereto. The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the Province of Alberta having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
12.3 Assignment
Except as expressly permitted by the terms hereof, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either of the parties hereto without the prior written consent of
the other party.
12.4 Expenses
Except as provided in Section 8.2, all fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such cost or expense, whether or not
the Offer is consummated.
<PAGE>
- 27 -
12.5 Severability
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
Any provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
12.6 Counterpart Execution
This Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute one agreement.
IN WITNESS WHEREOF, Canaxas and New Cache have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
CANADIAN ABRAXAS PETROLEUM
LIMITED
Per: ------------------------------
Name:
Title:
Per: ------------------------------
Name:
Title:
NEW CACHE PETROLEUMS LTD.
Per: ------------------------------
Name:
Title:
Per: ------------------------------
Name:
Title:
<PAGE>
- 1 -
SCHEDULE A
CONDITIONS TO THE OFFER
The capitalized terms used in this Schedule A have the meanings set
forth in the attached Pre- Acquisition Agreement dated November 14, 1998 (the
"Agreement") between Canaxas and New Cache, except that the term "Offeror" shall
be deemed to refer to Canaxas.
Notwithstanding any other provision of the Offer, but subject to the
provisions of the Agreement, the Offeror reserves the right to withdraw or
terminate the Offer and not take up and pay for, or to extend the period of time
during which the Offer is open and postpone taking up and paying for, any New
Cache Securities deposited under the Offer unless all of the following
conditions are satisfied or waived by the Offeror:
(a) at the Expiry Time, and at the time the Offeror first takes up and pays
for New Cache Securities under the Offer, there shall have been validly
deposited under the Offer and not withdrawn at least 662/3% of the
outstanding New Cache Securities (calculated on a diluted basis), other
than New Cache Securities held at the date of the Offer by or on behalf
of the Offeror, or its affiliates or associates (as each of such terms
is defined in the Act);
(b) all requisite regulatory approvals and consents (including, without
limitation, those of any stock exchanges or other securities or
regulatory authorities) shall have been obtained on terms and
conditions satisfactory to the Offeror in its sole discretion and all
applicable statutory or regulatory waiting periods shall have expired
or been terminated;
(c) (i) no act, action, suit, proceeding, objection or opposition shall
have been threatened or taken before or by any domestic or foreign
court or tribunal or governmental agency or other regulatory authority
or administrative agency or commission by any elected or appointed
public official or by any private person in Canada or elsewhere,
whether or not having the force of law, and (ii) no law, regulation or
policy (including applicable tax laws and regulations in those
jurisdictions in which New Cache or any of its subsidiaries carries on
business) shall have been proposed, enacted, promulgated, amended or
applied, which in either case, in the sole judgment of the Offeror:
(A) has the effect or may have the effect to cease trade, enjoin,
prohibit or impose material limitations, damages or conditions
on the purchase by, or the sale to, the Offeror of the New
Cache Securities or the right of the Offeror to own or
exercise full rights of ownership of the New Cache Securities;
(B) has had, or if the Offer was consummated would have a material
adverse effect on the Offeror;
(C) has a material adverse effect on the completion of any
compulsory acquisition or any amalgamation, statutory
arrangement or other transaction involving the Offeror and/or
an affiliate of the Offeror and New Cache and/or the holders
of New Cache Securities for the purposes of New Cache
becoming, directly or indirectly, a wholly-owned subsidiary of
the Offeror or affecting an amalgamation or merger of New
<PAGE>
- 2 -
Cache's business and assets with or into the Offeror and/or an
affiliate of the Offeror (a "Subsequent Acquisition
Transaction");
(d) there shall not exist any prohibition at law against the Offeror making
the Offer or taking up and paying for all of the New Cache Securities
under the Offer or completing any compulsory acquisition or Subsequent
Acquisition Transaction in respect of any New Cache Securities not
acquired under the Offer;
(e) the Offeror shall have determined in its reasonable judgment that New
Cache has not taken or proposed to take any action, or publicly
disclosed that it intends to take any action, and the Offeror shall not
have otherwise learned of any previous action taken by New Cache which
had not been publicly disclosed prior to the announcement of the Offer,
that would be materially adverse to the business of New Cache or the
value of the New Cache Securities to the Offeror including, without
limiting the generality of the foregoing, any action with respect to
any agreement, proposal, offer or understanding relating to any
material sale, disposition or other dealing with any of the assets of
New Cache or any of its subsidiaries other than any such sale,
disposition or other dealing between New Cache and any wholly- owned
subsidiary of New Cache, any issue of shares, options or other
securities of New Cache to any person other than a wholly-owned
subsidiary of New Cache, or any material acquisition from a third party
of assets or securities by New Cache or any of its subsidiaries, or any
material capital expenditure by New Cache or any of its subsidiaries
not in the ordinary course of business;
(f) there shall not have occurred (and there shall not have been publicly
disclosed, and the Offeror shall not have otherwise learned of, if
previously not publicly disclosed) any change (or any condition, event
or development involving a prospective change) not publicly disclosed
or disclosed in writing to the Offeror prior to the announcement of
this Offer in the business, operations, assets, capitalization,
financial condition, licenses, permits, rights, liabilities, prospects
or privileges, whether contractual or otherwise, of New Cache or any of
its subsidiaries considered as a whole which, in the sole judgement of
the Offeror, is materially adverse to the business of New Cache or to
the value of the New Cache Securities to the Offeror, and no change (or
any condition, event or development involving a prospective change)
shall have occurred or have been threatened in the general economic,
financial, currency exchange, securities or commodity market conditions
in Canada or elsewhere which, in the sole judgment of the Offeror, is
materially adverse to the business of New Cache or to the value of the
New Cache Securities to the Offeror;
(g) in the sole judgment of the Offeror, acting reasonably, (i) New Cache
shall not have breached, or failed to comply with, in any material
respect, any of its covenants or other obligations under the Agreement,
and (ii) all representations and warranties of New Cache contained in
the Agreement shall have been true and correct in all material respects
as of the date of the Agreement and shall not have ceased to be true
and correct in any material respect thereafter; provided that any
misrepresentation, breach and non-performance would have, or would be
reasonably likely to have, a material adverse effect on the Offeror and
provided further that New Cache has been given notice of and 3 days to
cure any such misrepresentation, breach or non-performance;
<PAGE>
- 3 -
(h) with respect to the Rights Plan:
(i) the Board of Directors shall have waived, pursuant to the
provisions of Section 5.1(a) of the Rights Plan, the
application of Section 3.1 of the Rights Plan to the Offer;
(ii) the Offeror shall have determined in its sole judgment on or
prior to the Expiry Time that the Offeror is satisfied that
the Rights Plan does not and will not adversely affect the
Offeror upon consummation of the Offer and any Compulsory
Acquisition or Subsequent Acquisition Transaction; and
(i) at the Expiry Time, there shall be no outstanding New Cache Options.
<PAGE>
- 1 -
SCHEDULE B
FORM OF OFFER TO PURCHASE AND TAKE-OVER BID
<PAGE>
- 1 -
SCHEDULE C
FORM OF PRE-TENDER AGREEMENT
November 14, 1998
Dear Sir:
Re: Offer by Canadian Abraxas Petroleum Limited ("Canaxas") to Purchase
all of the Shares of New Cache Petroleum Ltd. ("New Cache")
Reference is made to the Pre-Acquisition Agreement dated November 14,
1998 (the "Pre- Acquisition Agreement") between Canaxas and New Cache pursuant
to which Canaxas has agreed to make an offer to purchase all of the issued and
outstanding New Cache Securities. All capitalized terms referred to herein shall
have the meanings attributed thereto in the Pre-Acquisition Agreement.
We understand that you (the "Shareholder") beneficially owns, directly
or indirectly, or exercise control or direction over, the number of New Cache
Securities set forth in your acceptance at the end of this letter agreement. Any
references in this letter agreement to New Cache Securities owned by the
Shareholder shall mean such number of New Cache Securities.
1. Covenants of Shareholder
By the acceptance of this letter agreement, the Shareholder hereby
agrees, subject to the terms of paragraph 5 hereof, from the date hereof until
the completion of the Offer:
(a) not to sell, assign, convey or otherwise dispose of any of the
New Cache Securities owned by such Shareholder and not to
permit any affiliate or subsidiary of such Shareholder to
sell, assign, convey or otherwise dispose of any of the New
Cache Securities owned by it;
(b) to accept and to cause any affiliate or subsidiary of such
Shareholder to accept the Offer made by Canaxas by depositing
the New Cache Securities presently owned or hereafter acquired
by such Shareholder or affiliate or subsidiary immediately
following the mailing of the Offer and in accordance with the
terms and conditions of the Offer;
(c) not to exercise any statutory or other rights of withdrawal
with respect to any New Cache Securities owned by such
Shareholder or any affiliate or subsidiary of such Shareholder
once deposited pursuant to the Offer unless, pursuant to
paragraph 5 hereof, this letter agreement is terminated prior
to Canaxas taking up the New Cache Securities under the Offer;
and
<PAGE>
- 2 -
(d) not to exercise any shareholder rights or remedies available
at common law or pursuant to the Business Corporations Act
(Alberta) or applicable securities legislation to delay,
hinder, upset or challenge the Offer.
The Shareholder, if a director of New Cache, also agrees to tender to
New Cache, at the time he deposits his New Cache Securities pursuant to the
Offer, his resignation as a director of New Cache to be effective when Canaxas
first takes up and pays for the New Cache Securities pursuant to the Offer.
2. Covenants of Canaxas
(a) Canaxas shall make the Offer in accordance with the terms and
conditions of the Pre- Acquisition Agreement and shall comply
with the provisions of Article 2 thereof in respect of the
Offer.
(b) Canaxas shall, subject to the satisfaction or waiver of the
conditions set forth in the Offer, take up and pay for all of
the New Cache Securities owned by the Shareholder or any
affiliate or subsidiary of the Shareholder deposited pursuant
to the Offer, all in accordance with the terms and conditions
of the Offer and the provisions of the Pre-Acquisition
Agreement.
3. Representations
The Shareholder hereby represents and warrants to Canaxas as follows:
(a) the New Cache Securities are beneficially owned by such
Shareholder with valid and marketable title thereto, free and
clear of any and all liens, charges, security interests,
adverse claims, encumbrances and demands of any nature or kind
whatsoever;
(b) no person, firm or corporation has any agreement or option, or
any right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option, for
the purchase, acquisition or transfer of any of the New Cache
Securities or any interest therein or right thereto, except
pursuant to this letter agreement;
(c) the Shareholder has all necessary power and authority to
execute and deliver this letter agreement and to perform its
obligations hereunder; and
(d) this letter agreement has been duly executed and delivered by
the Shareholder and constitutes a valid and binding obligation
of the Shareholder, enforceable in accordance with its terms.
4. Expenses
Canaxas and the Shareholder agree to pay their own respective expenses
incurred in connection with this letter agreement. Each of the parties hereto
agrees to indemnify the other against any claim for a finder's fee or other
compensation validly made by any broker which has an
<PAGE>
- 3 -
agreement with such indemnifying party for the payment of such fee or
compensation. This Section 4 shall survive the termination of this letter
agreement pursuant to Section 5.
5. Termination
It is understood and agreed that the respective rights and obligations
hereunder of Canaxas and the Shareholder shall cease and this letter agreement
shall terminate:
(a) in the event that the Pre-Acquisition Agreement is terminated
pursuant to Article 11 thereof other than pursuant to Section
11.1(f) or 11.1(h) thereof; or
(b) if, prior to the Take-up Date a Superior Take-over Proposal is
announced and the Offer has not been amended to provide for a
consideration to be paid for the New Cache Securities which is
greater than the consideration offered under such Superior
Take-over Proposal before the earlier of:
(i) two Business Days following the announcement of the
Superior Take-over Proposal; and
(ii) 24 hours prior to the first to occur of the expiry of
the Offer and expiry of withdrawal rights under the
Offer.
In the event of such termination of this letter agreement the
Shareholder may withdraw all of the New Cache Securities deposited in accordance
with the terms and conditions of the Offer, this letter agreement shall
forthwith be of no further force and effect and there shall be no liability on
the part of either the Shareholder or Canaxas, except to the extent that either
such party is in default of its obligations herein contained.
6. No Solicitation
(a) The Shareholder shall immediately cease all existing
discussions and negotiations, if any, with any parties
conducted before the date of this letter agreement with
respect to any Take-over Proposal.
(b) The Shareholder shall not directly or indirectly, (a) solicit,
initiate or knowingly encourage the initiation or continuation
of any inquiries, discussions, negotiations, proposals or
offers from any corporation, person or other entity or group
(other than Canaxas and its subsidiaries and their respective
directors, officers, employees, agents, financial advisors,
counsel or other representatives) in respect of any matter or
thing which is inconsistent with the successful completion of
the Offer and the merger of Canaxas and New Cache, including
any Take-over Proposal or (b) provide any confidential
information to, participate in any discussions or negotiations
relating to any Take-over Proposal with, or otherwise
cooperate with or assist or participate in any effort to
consider, review or initiate a Take-over Proposal by, any
corporation, person or other entity or group.
<PAGE>
- 4 -
7. Amendment
Except as expressly set forth herein, this letter agreement constitutes
the whole of the agreement between the parties and may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
8. Assignment
No party to this letter agreement may assign any of its rights or
obligations under this letter agreement without the prior written consent of the
other party.
9. Disclosure
Prior to first public disclosure of the existence and terms and
conditions of this letter, none of the parties hereto shall disclose the
existence of this letter agreement, or any details hereof, to any person other
than New Cache, its directors and officers, without the prior written consent of
the other parties hereto, except to the extent required by law. The existence
and terms and conditions of this letter agreement may be disclosed by Canaxas
and New Cache in the press release issued in connection with the execution of
the Pre-Acquisition Agreement and the Offer Documents and the Directors Circular
prepared by New Cache.
10. Enurement
This letter agreement will be binding upon and enure to the benefit of
Canaxas, the Shareholder and their respective executors, administrators,
successors and permitted assigns.
11. Applicable Law
This letter agreement shall be governed and construed in accordance
with the laws of the Province of Alberta and the federal laws of Canada
applicable therein and each of the parties hereto irrevocably attorns to the
jurisdiction of the courts of the Province of Alberta.
12. Counterparts
This letter agreement may be signed in counterparts which together
shall be deemed to constitute one valid and binding agreement and delivery of
such counterparts may be effected by means of telecopier.
<PAGE>
- 5 -
13. Time of the Essence
Time shall be of the essence of this agreement.
Yours truly,
CANADIAN ABRAXAS PETROLEUM
LIMITED
Per: --------------------------------------------
Per: --------------------------------------------
Acceptance
The foregoing is hereby accepted as of and with effect from the day of
November, 1998 and the undersigned hereby represents that the undersigned
beneficially owns, directly or indirectly, or exercises control or direction
over New Cache Shares and associated Rights.
-----------------------------------------------------
(Signature of Shareholder or Authorized
Signing Officer)
<PAGE>
- 1 -
SCHEDULE D
FORM OF NEW CACHE LETTER TO DATA ROOM PARTICIPANTS
November o, 1998
o
Dear Sirs:
Re: Termination of Discussions
We are writing to you to formally terminate any discussions,
negotiations or arrangements we now or at any time may have had with you
concerning any possible merger, acquisition, business combination, tender offer,
material asset disposition or other possible material transaction with or
relating to New Cache Petroleums Ltd. ("New Cache").
New Cache has by unanimous resolution of its Board of Directors agreed
to a business combination with Canadian Abraxas Petroleum Limited ("Canaxas").
New Cache has executed a definitive business combination agreement with Canaxas
and has agreed to cease providing confidential information to or participating
in any discussions or negotiations with you or to assist or participate in any
effort to consider, review or initiate any other merger or similar proposal.
You are hereby formally requested pursuant to Section o of the
Confidentiality Agreement dated o, 1998 to promptly:
(a) return to New Cache all documents furnished to you or your
representatives, without retaining copies thereof; and
(b) destroy all copies of documents in your possession or in the
possession of your representatives prepared by or on behalf of
you or your Representatives in connection with or relating to
New Cache.
Defined terms used in this letter have the meanings set forth in the
Confidentiality Agreement. The provisions of the Confidentiality Agreement shall
continue to bind you in accordance with their terms.
NEW CACHE PETROLEUMS LTD.
Per:--------------------------------------------
Name:
Title:
Per:--------------------------------------------
Name:
Title:
<PAGE>
- 1 -
SCHEDULE E
CONDITIONS IN FAVOUR OF NEW CACHE
The capitalized terms used in this Schedule G have the meanings set
forth in the attached Pre-Acquisition Agreement dated November 14, 1998 (the
"Agreement") between Canaxas and New Cache, except that the term "Offeror" shall
be deemed to refer to Canaxas.
Notwithstanding any other provision of the Agreement, the Board of
Directors of New Cache reserves the right to withdraw, modify or amend its
recommendation with respect to the Offer unless all of the following conditions
are satisfied or waived by New Cache prior to the Expiry Time:
(a) all requisite regulatory approvals and consents (including,
without limitation, those of any stock exchanges or other
securities or regulatory authorities) shall have been obtained
and all applicable statutory or regulatory waiting periods
shall have expired or been terminated and no objection or
opposition shall have been filed, initiated or made during any
applicable statutory or regulatory period; and
(b) (i) no order shall have been issued by any domestic
or foreign court or tribunal or governmental agency
or other regulatory authority or administrative
agency or commissions, and
(ii) no law shall have been enacted;
which has the effect or may have the effect of cease trading,
enjoining or prohibiting the purchase by, or the sale to, the
Offeror of the New Cache Securities.
<PAGE>
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE www.abraxaspetroleum.com
FOR MORE INFORMATION CONTACT:
JACK M. RONEY
VICE PRESIDENT/CORPORATE DEVELOPMENT
ABRAXAS PETROLEUM CORPORATION ANNOUNCES
ACQUISITION OF NEW CACHE PETROLEUMS LTD.
SAN ANTONIO, TX - (January 6, 1999) - Abraxas Petroleum Corporation (NASDAQ:
AXAS) through its wholly-owned subsidiary, Canadian Abraxas Petroleum Limited,
("Canaxas") announced today that approximately 14,026,467 common shares and
associated rights, being approximately 98.8 per cent of the issued and
outstanding common shares and associated rights of New Cache Petroleums Ltd.
(Toronto: NWA) ("New Cache"), on a fully diluted basis (excluding the 1,222,353
options to acquire common shares of New Cache held by optionholders who have
agreed to cancel their options pursuant to agreements between such optionholders
and New Cache), were deposited prior to the expiration of its outstanding offer
to purchase all such common shares and associated rights as set forth in the
Offer to Purchase and Circular dated November 24, 1998 (the "Offer"), as
extended by Notice of Variation and Extension dated December 18, 1998. All of
the conditions of the Offer have been satisfied.
Canaxas will take up and pay for all of the common shares and associated rights
of New Cache deposited in acceptance of the Offer.
Canaxas will not be extending the Offer in respect of the remaining common
shares and associated rights of New Cache not deposited in acceptance of the
Offer. As Canaxas has acquired in excess of 90% of the issued and outstanding
common shares and associated rights of New Cache pursuant to the Offer, Canaxas
intends to implement the compulsory acquisition provisions of the Business
Corporations Act (Alberta) to acquire the remaining 1.2% of the issued and
outstanding common shares and associated rights of New Cache not deposited in
acceptance of the Offer, whereupon, New Cache will become a wholly-owned
subsidiary of Canaxas.
The previously announced transaction calls for the payment of approximately
$60MM ($92MM CDN) in cash or $6.50/share CDN and the assumption of approximately
$24MM ($37MM CDN) of debt.
Abraxas intends to integrate the New Cache operations into the existing
operations of Canaxas and Grey Wolf Exploration, Inc., (Toronto, Alberta: GWX,
approximately 48% owned by Abraxas) with Grey Wolf eventually acquiring as much
as 50% of the New Cache assets.
<PAGE>
Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas
exploration and production company that also processes natural gas. It operates
primarily along the Texas Gulf Coast, in the Permian Basin of western Texas,
western Canada and southwestern Wyoming.
Safe Harbor for forward-looking statement: Statements in this release looking
forward in time involve known and unknown risks and uncertainties, which may
cause the Company's actual results in future periods to be materially different
from any future performance suggested in this release. Such factors may include,
but may not be necessarily limited to, changes in the prices received by the
Company for crude oil and natural gas. In addition, the Company's future crude
oil and natural gas production is highly dependent upon the Company's level of
success in acquiring or finding additional reserves. Further, the Company
operates in an industry sector where securities values are highly volatile and
may be influenced by economic and other factors beyond the Company's control. In
the context of forward-looking information provided for in this release,
reference is made to the discussion of risk factors detailed in the Company's
filing with the Securities and Exchange Commission during the past 12 months.
