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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED
PURSUANT TO RULE 13d-2(a)(1)
CONTANGO OIL & GAS COMPANY
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(Name of Issuer)
Common Stock, $.04 par value
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(Title of Class of Securities)
21075N105
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(CUSIP Number)
Kenneth R. Peak
Contango Oil & Gas Company
3700 Buffalo Speedway, Suite 960
Houston, Texas 77098
(713) 960-1901
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 25, 1999
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
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(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, SEE the
NOTES).
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CUSIP NO. 21075N105 13D
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
KENNETH R. PEAK
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
N/A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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7 SOLE VOTING POWER
NUMBER OF 3,817,000 SHARES OF COMMON STOCK
SHARES ------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0 SHARES OF COMMON STOCK
REPORTING ------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
3,817,000 SHARES OF COMMON STOCK
------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0 SHARES OF COMMON STOCK
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,817,000 shares of Common Stock
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* N/A / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
31.15%
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14 TYPE OF REPORTING PERSON*
IN
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STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
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1. SECURITY AND ISSUER
This statement relates to the common stock, $0.04 par value per share,
of Contango Oil & Gas Company, a Nevada corporation. The address of Contango's
principal executive office is 3700 Buffalo Speedway, Suite 960, Houston, Texas
77098. Until September 28, 1999, Contango operated under the name MGPX Ventures,
Inc.
2. IDENTITY AND BACKGROUND
The name and principal business address of the person filing this
statement are:
Kenneth R. Peak
3700 Buffalo Speedway
Suite 960
Houston, Texas 77098
Mr. Peak is the president and chief executive officer of contango.
During the last five years, Mr. Peak has not been convicted in any
criminal proceeding (excluding traffic violations and similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or which found
any violation with respect to such laws.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Mr. Peak entered into Subscription Agreements with Contango dated as of
August 13, 1999 and September 2, 1999, which are attached as Exhibit 1 and
Exhibit 2 and incorporated by reference to this Schedule 13D. Mr. Peak purchased
1,545,000 shares of common stock at a purchase price of $0.10 per share and
warrants to purchase 1,400,000 shares of common stock at a purchase price of
$14,000 on August 25 for an aggregate purchase price of $168,500 in cash.
Mr. Peak financed the purchase from his personal assets.
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On October 6, 1999, Mr. Peak acquired 872,000 additional shares of
common stock at a purchase price of $0.30 a share for an aggregate price of
$261,600. Mr. Peak financed the purchase from his personal assets.
4. PURPOSE OF TRANSACTION
Mr. Peak purchased the shares of common stock for the purpose of
acquiring a substantial investment in Contango. Subject to applicable securities
laws and regulations, Mr. Peak may dispose or acquire securities of Contango,
including the common stock, depending upon the position of the market, the
issuer and other factors.
In connection with Mr. Peak's investments in Contango in august and
october 1999, he became the president and chief executive officer of Contango
and a director of Contango.
Except as set forth above, Mr. Peak does not currently have any plans
or proposals which relate to or would result in any other acquisition by any
person of additional securities of Contango, or the disposition of securities of
Contango. Mr. Peak does not currently have any plans or proposals which relate
to or would result in any other changes in the board of directors or management
of Contango, or which relate to or would result in any of the results specified
in paragraphs (a) through (j) of item 4 of schedule 13d. However, Mr. Peak's
plans and proposals with respect to these matters may change at any time and
from time to time.
5. INTEREST IN SECURITIES OF THE ISSUER
Mr. Peak owns 2,417,000 shares of common stock and may be deemed to be
the beneficial owner of 1,400,000 additional shares which he has the right to
purchase upon exercise of warrants for a total of 3,817,000 shares of common
stock beneficially owned. Subject to applicable marital property laws, Mr. Peak
has sole voting and dispositive power with respect to all of his shares of
common stock.
Except as set forth in item 3 above, Mr. Peak has not effected any
transactions in common stock in the past 60 days.
No other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares of
common stock held by Mr. Peak.
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SECURITIES OF THE ISSUER
Except as described in this Schedule 13D, Mr. Peak is not party to any
contracts, arrangements, understandings or other relationships with respect to
the securities of Contango.
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7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1. Subscription Agreement dated as of August 13, 1999
between Kenneth R. Peak and MGPX Ventures, inc.
Exhibit 2. Subscription Agreement dated as of September 2, 1999
between Kenneth R. Peak and MGPX Ventures, inc.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: October 13, 1999
/s/ Kenneth R. Peak
----------------------------
Kenneth R. Peak
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EXHIBIT 1
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER ANY STATE SECURITIES LAWS ("STATE LAWS") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THE OFFER AND SALE IS
REGISTERED UNDER THE SECURITIES ACT OR THE ISSUER RECEIVES AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT THE OFFER AND SALE IS
EXEMPT FROM SECURITIES ACT REGISTRATION.
SUBSCRIPTION AGREEMENT (UNITS)
This agreement is made and entered into as of the 13th day of
August, 1999, by and between MGPX Ventures, Inc. (the "Issuer") and the
undersigned (the "Purchaser").
1. SUBSCRIPTION FOR AND AGREEMENT TO PURCHASE UNITS. On the terms
and subject to the conditions set forth in this agreement, the Purchaser
hereby subscribes for and irrevocably agrees to purchase from the Issuer that
number of units which is set forth on the signature page of this agreement
(the "Units") at the purchase price of $0.11 per unit (the "Purchase Price"),
payable by wire transfer to the account of the Issuer. Of the $0.11 Purchase
Price per Unit, $0.01 shall be allocable to the purchase of the Warrant. Each
Unit shall consist of one share of the Issuer's common stock (each a "Share"
and collectively the "Shares") and one non-transferable, detachable common
stock purchase warrant (each a "Warrant" and collectively the "Warrants").
Each Warrant shall entitle the holder to purchase one additional share of the
Issuer's common stock (each a "Warrant Share" and collectively the "Warrant
Shares") at an exercise price of $1.00 per share for a term of five years
from the date of issuance. The Warrants will not be exercisable immediately,
but will become exercisable when the Issuer files a certificate of amendment
of its articles of incorporation with the Nevada Secretary of State
certifying that the Issuer's board of directors and stockholders have
approved an increase in the number of authorized shares of the Issuer's
common stock of at least 2,460,000 shares.
2. ACCEPTANCE OF SUBSCRIPTION. The Issuer shall, in its sole
discretion, determine whether to accept the Purchaser's subscription for the
Units. In no event will the Issuer accept the subscription unless the Issuer
is satisfied that its offer and sale of the Units to the Purchaser is exempt
from registration requirements under the Securities Act and is exempt from
registration or qualification requirements of applicable State Laws. The
Issuer shall notify the Purchaser promptly of its decision whether or not to
accept the Purchaser's subscription. If the Issuer accepts the subscription,
it shall provide the Purchaser with wire transfer instructions for delivery
to the Issuer's account of the Purchase Price for the Units.
3. WIRE TRANSFER OF PAYMENT FOR AND DELIVERY OF THE UNITS. Promptly
after the Purchaser has wired the total purchase price for the Units to the
Issuer's account as instructed, the Issuer shall issue and deliver
certificates representing the Shares and the Warrants in the name and to the
address specified by the Purchaser in the registration and delivery
instructions on the signature page of this agreement.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser hereby
represents and warrants to the Issuer that:
4.1 INVESTMENT INTENT. The Purchaser is acquiring the Units
solely for the Purchaser's own account for investment purposes, and not with
a view to, or for offer or sale in connection with, any distribution of the
Units in violation of the Securities Act.
4.2 ACCESS TO INFORMATION. The Purchaser has received a
copy of the Issuer's annual report on Form 10-KSB for the year ended June 30,
1999 (the "Annual Report") and has reviewed it carefully, including the risk
factors set forth under the heading, "Management's Discussion and Analysis or
Plan of Operation--Risk Factors." If desired, the Purchaser has also sought
and obtained from management of the Issuer such additional information
concerning the business, management and financial affairs of the Issuer as
the Purchaser has deemed necessary or appropriate in evaluating an investment
in the Issuer and determining whether or not to purchase the Units.
4.3 ACCREDITED INVESTOR. By completing the Accredited
Investor Certification attached as Exhibit A, the Purchaser represents and
warrants that it is an accredited investor, as defined by Rule 501(a) of
Regulation D under the Securities Act.
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4.4 PREEXISTING RELATIONSHIP; KNOWLEDGE AND EXPERIENCE. The
Purchaser has a preexisting personal and/or business relationship with the
Issuer and certain of its officers, directors and/or controlling persons, is
experienced in evaluating and investing in the securities of businesses in
the development stage, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the Units and of protecting its interests in connection with an
acquisition of the Units.
4.5 SUITABILITY. The Purchaser has carefully considered,
and has, to the extent the Purchaser deems it necessary, discussed with the
Purchaser's own professional legal, tax and financial advisers the
suitability of an investment in the Units for the Purchaser's particular tax
and financial situation, and the Purchaser has determined that the Units are
a suitable investment for the Purchaser.
4.6 ILLIQUIDITY; ABILITY TO BEAR RISK OF LOSS. The
Purchaser has no need for liquidity in its investment in the Units, is
financially able to hold the Units subject to restrictions on transfer for an
indefinite period of time, and is capable of bearing the economic risk of
losing up to the entire amount of its investment in the Units.
4.7 PRIVATE OFFERING. The offer of the Units was directly
communicated to the Purchaser by the Issuer. At no time was the Purchaser
presented with or solicited by any leaflet, newspaper or magazine article,
radio or television advertisement, or any other form of general advertising
or solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such directly communicated offer.
4.8 TRUTH AND ACCURACY. All representations and warranties
made by the Purchaser in this agreement are true and accurate as of the date
hereof and shall be true and accurate as of the date the Issuer issues the
Units. If at any time prior to the issuance of the Units any representation
or warranty shall not be true and accurate in any respect, the Purchaser
shall so notify the Issuer.
4.9 AUTHORITY. If the Purchaser is an entity, the
individual executing and delivering this agreement on behalf of the Purchaser
has been duly authorized to execute and deliver this agreement on behalf of
the Purchaser, the signature of such individual is binding upon the
Purchaser, the Purchaser is duly organized and subsisting under the laws of
the jurisdiction in which is was organized, and the Purchaser was not formed
for the specific purpose of acquiring the Units.
4.10 NO VIOLATION. The execution and delivery of this
agreement and the consummation of the transactions or performance of the
obligations contemplated by this agreement do not and will not violate any
term of the Purchaser's organizational documents (if the Purchaser is an
entity) and will not result in a breach of any term of, or constitute a
default under, any statute, indenture, mortgage, other agreement or
instrument to which the Purchaser is a party or by which it is bound, or any
order, writ, judgment or decree.
4.11 ENFORCEABILITY. The Purchaser has duly executed and
delivered this agreement and (subject to its execution by the Issuer) it
constitutes a valid and binding agreement of the Purchaser enforceable in
accordance with its terms against the Purchaser, except as such
enforceability may be limited by principles of public policy, and subject to
laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief
or other equitable remedies.
4.12 RELIANCE ON OWN ADVISERS. In connection with the
Purchaser's investment in the Units, the Purchaser has not relied upon the
Issuer or its advisers for legal or tax advice, and has, if desired, in all
cases sought the advice of the Purchaser's own legal counsel and tax advisers.
4.13 SCOPE OF BUSINESS. The Purchaser has been advised and
understands that the Issuer will be exposed to numerous investment
opportunities in all areas of the oil and gas industry and may therefore
pursue various types of opportunities, even if they do not fit within the
primary focus of the Issuer's current business plan. For example, such
opportunities could include investments both onshore and offshore the United
States and also international investments. Potential opportunities could also
include such things as downstream investments in oil and gas service
companies, pipelines, and gas processing and gas storage facilities.
5. ISSUER'S REPRESENTATIONS AND WARRANTIES. The Issuer hereby
represents and warrants to the Purchaser that:
2
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5.1 AUTHORITY. The individual executing and delivering this
agreement on behalf of the Issuer has been duly authorized to execute and
deliver this agreement on behalf of the Issuer, the signature of such
individual is binding upon the Issuer, and the Issuer is duly organized and
subsisting under the laws of the jurisdiction in which it was organized.
5.2 ENFORCEABILITY. The Issuer has duly executed and
delivered this agreement and (subject to its execution by the Purchaser) it
constitutes a valid and binding agreement of the Issuer enforceable in
accordance with its terms against the Issuer, except as such enforceability
may be limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
5.3 CAPITALIZATION.
(a) The Issuer has no outstanding capital
stock other than common stock and Series B preferred stock as of the date of
this agreement. The Issuer is authorized to issue 12,375,000 shares of common
stock, of which 1,509,865 shares are issued and outstanding, and 125,000
shares of preferred stock, of which 50,000 shares have been designated as
Series B preferred stock and 16,792 shares are issued and outstanding until
their automatic conversion into a total of 503,760 shares of common stock on
August 16, 1999. All of the outstanding shares of common stock of the Issuer
have been duly and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights. The Shares have been duly
authorized and, when issued and delivered to the Purchaser against payment
therefor as provided by this agreement, will be validly issued, fully paid
and non-assessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights.
(b) To the Issuer's knowledge, the legal
and beneficial ownership of the common and preferred stock of the Issuer is
as set forth in the Annual Report. Except as set forth in the Annual Report,
the Issuer is not a party to or otherwise bound by any agreement, arrangement
or understanding relating to the issuance, sale or transfer of any securities
of the Issuer (including, without limitation, as relates to options,
warrants, or similar rights).
5.4 NO CONFLICTS. The issuance and sale of the Units to the
Purchaser as contemplated hereby will not violate or conflict with the
Issuer's Articles of Incorporation or By-laws or any agreements to which the
Issuer is a party or by which it is otherwise bound or, to the Issuer's
knowledge, any statute, rule or regulation (federal, state, local or foreign)
to which it is subject.
5.5 SEC DOCUMENTS. The Issuer has provided the Annual
Report to the Purchaser. As of the date hereof, the Annual Report does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Issuer included in the Annual
Report have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the financial
position of the Issuer as of the dates thereof and the results of its
operations and cash flows for the periods then ended. The Issuer has included
in the Annual Report all material agreements, contracts and other documents
that it reasonably believes are required to be filed as exhibits to the
Annual Report.
6. RESTRICTIONS ON TRANSFER.
6.1 RESALE RESTRICTIONS. The Purchaser understands that the
offer and sale of the Units to the Purchaser has not been registered under
the Securities Act or under any State Laws. The Purchaser agrees not to
offer, sell or otherwise transfer the Shares, or any interest in the Shares,
unless (i) the offer and sale is registered under the Securities Act, (ii)
the Shares may be sold in accordance with the applicable requirements and
limitations of Rule 144 under the Securities Act and any applicable State
Laws and, if the Issuer so requests, the Purchaser delivers to the Issuer an
opinion of counsel to such effect, or (iii) the Purchaser delivers to the
Issuer an opinion of counsel reasonably satisfactory to the Issuer that the
offer and sale is otherwise exempt from Securities Act registration.
6.2 RESTRICTIVE LEGEND. The Purchaser understands and
agrees that a legend in substantially the following form will be placed on
the certificate representing the Shares:
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"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS (i) THE OFFER AND SALE IS REGISTERED UNDER
THE SECURITIES ACT, OR (ii) THE OFFER AND SALE IS EXEMPT FROM
SECURITIES ACT REGISTRATION AND THE TERMS OF SECTION 6.1 OF THE
SUBSCRIPTION AGREEMENT PURSUANT TO WHICH THE SECURITIES WERE ORIGINALLY
PURCHASED HAVE BEEN COMPLIED WITH. (A COPY OF THE SUBSCRIPTION
AGREEMENT IS ON FILE AT THE CORPORATE OFFICE OF THE ISSUER.)"
6.3 NO REGISTRATION; ILLIQUID INVESTMENT. The Issuer is
under no obligation and has no intention of registering any resale of the
Shares or the Warrant Shares by the Purchaser; however, if in the future the
Issuer should elect to include in a Securities Act registration statement any
of the other securities sold by the Issuer in the same offering in which the
Issuer is selling the Units to the Purchaser, then the Issuer will also
include the Purchaser's Shares and Warrant Shares in that registration
statement. The Purchaser acknowledges that it must bear the economic risk of
its investment in the Units for an indefinite period of time, until such
time, if ever, that an exemption from registration is available. The
Purchaser acknowledges that the soonest that the Rule 144 exemption from
registration could become available for resale of the Shares or Warrant
Shares would be after the Purchaser has paid for and held such shares for one
year.
7. RELIANCE. The Purchaser understands and agrees that the Issuer
and its officers, directors, employees and agents may, and will, rely on the
accuracy of the Purchaser's representations and warranties in this agreement
to establish compliance with applicable securities laws. The Purchaser agrees
to indemnify and hold harmless all such parties against all losses, claims,
costs, expenses and damages or liabilities which they may suffer or incur
caused or arising from their reliance on such representations and warranties.
8. MISCELLANEOUS.
8.1 SURVIVAL. The representations and warranties made in
this agreement shall survive the closing of the transactions contemplated by
this agreement.
8.2 ASSIGNMENT. This agreement is not transferable or
assignable.
8.3 EXECUTION AND DELIVERY OF AGREEMENT. The Issuer shall
be entitled to rely on delivery by facsimile transmission of an executed copy
of this agreement, and acceptance by the Issuer of such facsimile copy shall
create a valid and binding agreement between the Purchaser and the Issuer.
8.4 TITLES. The titles of the sections and subsections of
this agreement are for the convenience of reference only and are not to be
considered in construing this agreement.
8.5 SEVERABILITY. The invalidity or unenforceability of any
particular provision of this agreement shall not affect or limit the validity
or enforceability of the remaining provisions of this agreement.
8.6 ENTIRE AGREEMENT. This agreement constitutes the entire
agreement and understanding between the parties with respect to the subject
matters herein and supersedes and replaces any prior agreements and
understandings, whether oral or written, between them with respect to such
matters.
8.7 WAIVER AND AMENDMENT. Except as otherwise provided
herein, the provisions of this agreement may be waived, altered, amended or
repealed, in whole or in part, only upon the mutual written agreement of the
Purchaser and the Issuer.
8.8 COUNTERPARTS. This agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
8.9 GOVERNING LAW. This agreement is governed by
and shall be construed in accordance with the laws of the State of
California.
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8.10 BUSINESS OPPORTUNITY MATTERS.
(a) Issuer and Purchaser acknowledge and
agree that neither Purchaser nor any of its affiliates shall be expressly or
implicitly restricted or proscribed pursuant to this agreement, the
relationship that exists between Purchaser and Issuer or otherwise, from
engaging in any type of business activity or owning an interest in any type
of business entity, regardless of whether such business activity is (or such
business entity engages in businesses that are) in direct or indirect
competition with the businesses or activities of Issuer or any of its
affiliates. Without limiting the foregoing, Purchaser and Issuer acknowledge
and agree that (i) neither Issuer nor its affiliates nor any other person
shall have any rights, by virtue of this agreement, the relationship that
exists between Purchaser and Issuer or otherwise, in any business venture or
business opportunity of Purchaser or any of its affiliates, and neither
Purchaser nor its affiliates shall have any obligation to offer any interest
in any such business venture or business opportunity to Issuer, any
affiliates of Issuer or any other person, or otherwise account to any of such
persons in respect of any such business ventures, (ii) the activities of
Purchaser or any of its affiliates that are in direct or indirect competition
with the activities of Issuer or any of its affiliates are hereby approved by
Issuer, and (iii) it shall be deemed not to be a breach of any fiduciary or
other duties, if any, whether express or implied, that may be owed by
Purchaser or its affiliates to the Issuer or its affiliates for Purchaser to
permit itself or one of its affiliates to engage in a business opportunity in
preference over or to the exclusion of Issuer, its affiliates or any other
person.
(b) Neither Issuer nor its affiliates
shall enter into any "area of mutual interest" agreement or similar
agreement that could or would have the effect of binding Purchaser or any of
its affiliates or their respective properties.
(c) For purposes of this Section 8.10, the term
"affiliate," when used to refer to affiliates of Purchaser, shall exclude
Issuer and its affiliates.
[REST OF PAGE INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above mentioned.
THE "ISSUER" THE "PURCHASER"
MGPX VENTURES, INC.
Kenneth R. Peak
Name of Purchaser (please type or print)
By:/s/ KENNETH R. PEAK
----------------------------
Kenneth R. Peak /s/ KENNETH R. PEAK
-------------------------------
Signature and, if applicable, title of
person signing
1,000,000
Number of Units subscribed for
$100,000
Total Purchase Price
6
<PAGE>
EXHIBIT 2
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
STATE SECURITIES LAWS ("STATE LAWS") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS THE OFFER AND SALE IS REGISTERED UNDER THE
SECURITIES ACT OR THE ISSUER RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT THE OFFER AND SALE IS EXEMPT FROM SECURITIES
ACT REGISTRATION.
SUBSCRIPTION AGREEMENT
This agreement is made and entered into as of the 2nd day of
September, 1999, by and between MGPX Ventures, Inc. (the "Issuer") and the
undersigned (the "Purchaser").
1. SUBSCRIPTION FOR AND AGREEMENT TO PURCHASE SHARES. On the terms
and subject to the conditions set forth in this agreement, the Purchaser
hereby subscribes for and irrevocably agrees to purchase from the Issuer that
number of shares of the Issuer's common stock which is set forth on the
signature page of this agreement (the "Shares") at the purchase price of
$0.30 per Share (the "Purchase Price"), payable by wire transfer to the
account of the Issuer.
2. ACCEPTANCE OF SUBSCRIPTION. The Issuer shall, in its sole
discretion, determine whether to accept the Purchaser's subscription for the
Shares. In no event will the Issuer accept the subscription unless the Issuer
is satisfied that its offer and sale of the Shares to the Purchaser is exempt
from registration requirements under the Securities Act and is exempt from
registration or qualification requirements of applicable State Laws. The
Issuer shall notify the Purchaser promptly of its decision whether or not to
accept the Purchaser's subscription. If the Issuer accepts the subscription,
it shall provide the Purchaser with wire transfer instructions for delivery
to the Issuer's account of the Purchase Price for the Shares.
3. WIRE TRANSFER OF PAYMENT FOR AND DELIVERY OF THE SHARES. Promptly
after the Purchaser has wired the total purchase price for the Shares to the
Issuer's account as instructed, the Issuer shall issue and deliver a
certificate representing the Shares in the name and to the address specified
by the Purchaser in the registration and delivery instructions on the
signature page of this agreement.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser hereby
represents and warrants to the Issuer that:
4.1 INVESTMENT INTENT. The Purchaser is acquiring the
Shares solely for the Purchaser's own account for investment purposes, and
not with a view to, or for offer or sale in connection with, any distribution
of the Shares in violation of the Securities Act.
4.2 ACCESS TO INFORMATION. The Purchaser has received a
copy of the Issuer's annual report on Form 10-KSB for the year ended June 30,
1999 (the "Annual Report") and has reviewed it carefully, including the risk
factors set forth under the heading, "Management's Discussion and Analysis or
Plan of Operation -- Risk Factors." In addition, the Purchaser has received
and reviewed a copy of the Issuer's preliminary proxy statement for its
annual meeting of stockholders to be held on September 28, 1999 (the "Proxy
Statement"). If desired, the Purchaser has also sought and obtained from
management of the Issuer such additional information concerning the business,
management and financial affairs of the Issuer as the Purchaser has deemed
necessary or appropriate in evaluating an investment in the Issuer and
determining whether or not to purchase the Shares.
4.3 ACCREDITED INVESTOR. By completing the Accredited
Investor Certification attached as Exhibit A, the Purchaser represents and
warrants that it is an accredited investor, as defined by Rule 501(a) of
Regulation D under the Securities Act.
4.4 PREEXISTING RELATIONSHIP; KNOWLEDGE AND EXPERIENCE. The
Purchaser has a preexisting personal and/or business relationship with the
Issuer and certain of its officers, directors and/or controlling persons, is
experienced in evaluating and investing in the securities of businesses in
the development stage, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the Shares and of protecting its interests in connection with
an acquisition of the Shares.
<PAGE>
4.5 SUITABILITY. The Purchaser has carefully considered,
and has, to the extent the Purchaser deems it necessary, discussed with the
Purchaser's own professional legal, tax and financial advisers the
suitability of an investment in the Shares for the Purchaser's particular tax
and financial situation, and the Purchaser has determined that the Shares are
a suitable investment for the Purchaser.
4.6 ILLIQUIDITY; ABILITY TO BEAR RISK OF LOSS. The
Purchaser has no need for liquidity in its investment in the Shares, is
financially able to hold the Shares subject to restrictions on transfer for
an indefinite period of time, and is capable of bearing the economic risk of
losing up to the entire amount of its investment in the Shares.
4.7 PRIVATE OFFERING. The offer of the Shares was directly
communicated to the Purchaser by the Issuer. At no time was the Purchaser
presented with or solicited by any leaflet, newspaper or magazine article,
radio or television advertisement, or any other form of general advertising
or solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such directly communicated offer.
4.8 TRUTH AND ACCURACY. All representations and warranties
made by the Purchaser in this agreement are true and accurate as of the date
hereof and shall be true and accurate as of the date the Issuer issues the
Shares. If at any time prior to the issuance of the Shares any representation
or warranty shall not be true and accurate in any respect, the Purchaser
shall so notify the Issuer.
4.9 AUTHORITY. If the Purchaser is an entity, the
individual executing and delivering this agreement on behalf of the Purchaser
has been duly authorized to execute and deliver this agreement on behalf of
the Purchaser, the signature of such individual is binding upon the
Purchaser, the Purchaser is duly organized and subsisting under the laws of
the jurisdiction in which is was organized, and the Purchaser was not formed
for the specific purpose of acquiring the Shares.
4.10 NO VIOLATION. The execution and delivery of this
agreement and the consummation of the transactions or performance of the
obligations contemplated by this agreement do not and will not violate any
term of the Purchaser's organizational documents (if the Purchaser is an
entity) and will not result in a breach of any term of, or constitute a
default under, any statute, indenture, mortgage, other agreement or
instrument to which the Purchaser is a party or by which it is bound, or any
order, writ, judgment or decree.
4.11 ENFORCEABILITY. The Purchaser has duly executed and
delivered this agreement and (subject to its execution by the Issuer) it
constitutes a valid and binding agreement of the Purchaser enforceable in
accordance with its terms against the Purchaser, except as such
enforceability may be limited by principles of public policy, and subject to
laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief
or other equitable remedies.
4.12 RELIANCE ON OWN ADVISERS. In connection with the
Purchaser's investment in the Shares, the Purchaser has not relied upon the
Issuer or its advisers for legal or tax advice, and has, if desired, in all
cases sought the advice of the Purchaser's own legal counsel and tax advisers.
4.13 SCOPE OF BUSINESS. The Purchaser has been advised and
understands that the Issuer will be exposed to numerous investment
opportunities in all areas of the oil and gas industry and may therefore
pursue various types of opportunities, even if they do not fit within the
primary focus of the Issuer's current business plan. For example, such
opportunities could include investments both onshore and offshore the United
States and also international investments. Potential opportunities could also
include such things as downstream investments in oil and gas service
companies, pipelines, and gas processing and gas storage facilities.
5. ISSUER'S REPRESENTATIONS AND WARRANTIES. The Issuer hereby
represents and warrants to the Purchaser that:
5.1 AUTHORITY. The individual executing and delivering this
agreement on behalf of the Issuer has been duly authorized to execute and
deliver this agreement on behalf of the Issuer, the signature of such
individual is binding upon the Issuer, and the Issuer is duly organized and
subsisting under the laws of the jurisdiction in which it was organized.
<PAGE>
5.2 ENFORCEABILITY. The Issuer has duly executed and
delivered this agreement and (subject to its execution by the Purchaser) it
constitutes a valid and binding agreement of the Issuer enforceable in
accordance with its terms against the Issuer, except as such enforceability
may be limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
5.3 CAPITALIZATION.
(a) The Issuer has no outstanding capital
stock other than common stock as of the date of this agreement. The Issuer is
authorized to issue 12,375,000 shares of common stock, of which 8,473,625
shares are issued and outstanding, and 125,000 shares of preferred stock, of
which 50,000 shares have been designated as Series B preferred stock and no
shares are issued and outstanding. All of the outstanding shares of common
stock of the Issuer have been duly and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights; and the
Shares have been duly authorized and, when issued and delivered to the
Purchaser against payment therefor as provided by this agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(b) To the Issuer's knowledge, the legal
and beneficial ownership of the common stock of the Issuer is as set forth
in the Proxy Statement. Except as set forth in the Proxy Statement, the
Issuer is not a party to or otherwise bound by any agreement, arrangement or
understanding relating to the issuance, sale or transfer of any securities of
the Issuer (including, without limitation, as relates to options, warrants,
or similar rights).
5.4 NO CONFLICTS. The issuance and sale of the Shares to
the Purchaser as contemplated hereby will not violate or conflict with the
Issuer's Articles of Incorporation or By-laws or any agreements to which the
Issuer is a party or by which it is otherwise bound or, to the Issuer's
knowledge, any statute, rule or regulation (federal, state, local or foreign)
to which it is subject.
5.5 SEC DOCUMENTS. The Issuer has provided the Annual
Report and the Proxy Statement to the Purchaser. As of the date hereof, the
Annual Report and the Proxy Statement do not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Issuer included in the Annual Report have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the financial position of the Issuer as
of the dates thereof and the results of its operations and cash flows for the
periods then ended. The Issuer has included in the Annual Report all material
agreements, contracts and other documents that it reasonably believes are
required to be filed as exhibits to the Annual Report.
6. RESTRICTIONS ON TRANSFER.
6.1 RESALE RESTRICTIONS. The Purchaser understands that the
offer and sale of the Shares to the Purchaser has not been registered under
the Securities Act or under any State Laws. The Purchaser agrees not to
offer, sell or otherwise transfer the Shares, or any interest in the Shares,
unless (i) the offer and sale is registered under the Securities Act, (ii)
the Shares may be sold in accordance with the applicable requirements and
limitations of Rule 144 under the Securities Act and any applicable State
Laws and, if the Issuer so requests, the Purchaser delivers to the Issuer an
opinion of counsel to such effect, or (iii) the Purchaser delivers to the
Issuer an opinion of counsel reasonably satisfactory to the Issuer that the
offer and sale is otherwise exempt from Securities Act registration.
6.2 RESTRICTIVE LEGEND. The Purchaser understands and
agrees that a legend in substantially the following form will be placed on
the certificate representing the Shares:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS (i) THE OFFER AND SALE IS REGISTERED UNDER
THE SECURITIES ACT, OR (ii) THE OFFER AND SALE IS EXEMPT FROM SECURITIES
ACT REGISTRATION AND THE TERMS OF
<PAGE>
SECTION 6.1 OF THE SUBSCRIPTION AGREEMENT PURSUANT TO WHICH THE
SECURITIES WERE ORIGINALLY PURCHASED HAVE BEEN COMPLIED WITH. (A COPY
OF THE SUBSCRIPTION AGREEMENT IS ON FILE AT THE CORPORATE OFFICE OF
THE ISSUER.)"
6.3 NO REGISTRATION; ILLIQUID INVESTMENT. The Issuer is
under no obligation and has no intention of registering any resale of the
Shares by the Purchaser; however, if in the future the Issuer should elect to
include in a Securities Act registration statement any of the other
securities sold by the Issuer in the same offering in which the Issuer is
selling the Shares to the Purchaser, then the Issuer will also include the
Purchaser's Shares in that registration statement. The Purchaser acknowledges
that it must bear the economic risk of its investment in the Shares for an
indefinite period of time, until such time, if ever, that an exemption from
registration is available. The Purchaser acknowledges that the soonest that
the Rule 144 exemption from registration could become available would be
after the Purchaser has paid for and held the Shares for one year.
7. RELIANCE. The Purchaser understands and agrees that the Issuer
and its officers, directors, employees and agents may, and will, rely on the
accuracy of the Purchaser's representations and warranties in this agreement
to establish compliance with applicable securities laws. The Purchaser agrees
to indemnify and hold harmless all such parties against all losses, claims,
costs, expenses and damages or liabilities which they may suffer or incur
caused or arising from their reliance on such representations and warranties.
8. MISCELLANEOUS.
8.1 SURVIVAL. The representations and warranties made in
this agreement shall survive the closing of the transactions contemplated by
this agreement.
8.2 ASSIGNMENT. This agreement is not transferable or
assignable.
8.3 EXECUTION AND DELIVERY OF AGREEMENT. The Issuer shall
be entitled to rely on delivery by facsimile transmission of an executed copy
of this agreement, and acceptance by the Issuer of such facsimile copy shall
create a valid and binding agreement between the Purchaser and the Issuer.
8.4 TITLES. The titles of the sections and subsections of
this agreement are for the convenience of reference only and are not to be
considered in construing this agreement.
8.5 SEVERABILITY. The invalidity or unenforceability of any
particular provision of this agreement shall not affect or limit the validity
or enforceability of the remaining provisions of this agreement.
8.6 ENTIRE AGREEMENT. This agreement constitutes the entire
agreement and understanding between the parties with respect to the subject
matters herein and supersedes and replaces any prior agreements and
understandings, whether oral or written, between them with respect to such
matters.
8.7 WAIVER AND AMENDMENT. Except as otherwise provided
herein, the provisions of this agreement may be waived, altered, amended or
repealed, in whole or in part, only upon the mutual written agreement of the
Purchaser and the Issuer.
8.8 COUNTERPARTS. This agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
8.9 GOVERNING LAW. This agreement is governed by and
shall be construed in accordance with the laws of the State of Nevada.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above mentioned.
THE "ISSUER" THE "PURCHASER"
MGPX VENTURES, INC.
Kenneth R. Peak
Name of Purchaser
(please type or print)
By: /s/ Kenneth R. Peak
-------------------
Kenneth R. Peak /s/ Kenneth R. Peak
Signature and, if applicable,
title of person signing
