<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MGPX VENTURES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
MGPX VENTURES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 28, 1999
To the stockholders of MGPX Ventures, Inc.:
The 1999 annual meeting of stockholders of MGPX Ventures, Inc., a Nevada
corporation ("MGPX"), will be held at 3700 Buffalo Speedway, Second Floor,
Houston, Texas, on Tuesday, September 28, 1999, at 1:00 p.m., local time, and
any adjournments thereof, for the following purposes:
(1) To elect four directors;
(2) To change the name of the company to Contango Oil & Gas Company;
(3) To increase the number of our authorized shares of common stock
from 12,375,000 to 50,000,000, of which 2,460,000 shares will be
reserved for issuance upon the exercise of certain outstanding
warrants, 5,000,000 shares will be reserved for issuance under our
1999 Stock Incentive Plan if proposal 4 is approved, and the
remaining shares will be available generally for issuance by the
board of directors without further stockholder approval;
(4) To approve the company's 1999 Stock Incentive Plan, which will
provide for the issuance of up to 5,000,000 shares of common stock;
(5) To ratify the selection of Arthur Andersen LLP as the independent
certified public accountants to audit the company's financial
statements for the fiscal year ending June 30, 2000; and
(6) To transact such other business as may properly come before the
meeting and any adjournments thereof.
Stockholders who owned shares of MGPX common stock at the close of business
on August 31, 1999 are entitled to receive notice of and to attend and vote at
the meeting. The stock transfer books of the company will not be closed.
As a stockholder of MGPX, you have the right to vote on the proposals
listed above. This proxy statement discusses those proposals and the reasons why
our board of directors is recommending that you approve them. Please read the
proxy statement carefully because it contains important information for you to
consider when deciding how to vote. Your vote is important.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. A postage-paid return
envelope is enclosed for your convenience. If you decide to attend the meeting,
you can, if you wish, revoke your proxy and vote in person. If you have any
questions, you may contact us by calling (713) 960-1901 (telephone) or (713)
960-1065 (fax).
By order of the board of directors
Kenneth R. Peak
PRESIDENT AND SECRETARY
Houston, Texas
September [10], 1999
<PAGE>
MGPX VENTURES, INC.
3700 BUFFALO SPEEDWAY, SUITE 960
HOUSTON, TEXAS 77098
-------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 28, 1999
-------------
To our stockholders:
The board of directors of MGPX Ventures, Inc. ("MGPX") is furnishing you
with this proxy statement in connection with their solicitation of your proxy,
in the form enclosed, for use at our annual meeting of stockholders to be held
on September 28, 1999 at the time and place and for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders.
The record of stockholders entitled to vote at the meeting was taken at the
close of business on August 31, 1999 (the "record date"). As of the record date,
there were 8,473,625 shares of common stock outstanding, with each share being
entitled to one vote on each matter to be voted upon at the meeting. There is no
right to cumulate votes as to any matter.
We are mailing this proxy statement to you on or about September [10],
1999, together with the accompanying proxy card and annual report on Form 10-KSB
for the year ended June 30, 1999.
We cordially invite you to attend the meeting. Whether or not you plan to
attend, please complete, date and sign the proxy card and return it promptly in
the return envelope provided.
PROCEDURES FOR VOTING AND REVOKING PROXIES
The proxy card has been designed to allow you to specify how you want your
shares voted as to each proposal listed. The proxy card provides space for you
to
- vote for, or withhold authority to vote for, each nominee for the
board of directors, and
- vote for or against, or abstain from voting on, each of the other
proposals.
The election of directors will be decided by a plurality of the votes cast
at the meeting. The affirmative vote of a majority of all outstanding shares of
common stock is required to approve proposals 2 and 3, since those proposals
both call for our articles of incorporation to be amended. The affirmative vote
of a majority of the shares present and voting at the meeting is required to
approve proposals 4 and 5.
Presence at the meeting, in person or by proxy, of holders of a majority of
the votes entitled to be cast by all holders of MGPX common stock will
constitute a quorum for the transaction of business at the meeting. If a quorum
is not present, the meeting may be adjourned from time to time until a quorum is
obtained.
<PAGE>
Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
With respect to all matters other than the election of directors, an abstention
will have the same effect as a vote against any specified proposal.
If you return a signed proxy card with choices specified as to voting
matters, the person designated as proxy on the proxy card will vote the
shares represented in accordance with your instructions. The person named as
proxy on the proxy card is Kenneth R. Peak, president and chief executive
officer. Any stockholder who wishes to name a different person as his or her
proxy may do so by crossing out the name of the designated proxy and
inserting the name of the other person to act as his or her proxy. In such a
case, the stockholder would have to sign the proxy card and deliver it to the
person named as his or her proxy, and that person would have to be present
and vote at the meeting. Any proxy card so marked should not be mailed to
MGPX.
If you return a signed proxy card without having specified any choices,
the person named as proxy will vote the shares represented at the meeting and
any adjournment of the meeting as follows:
- FOR the election of each nominee for director,
- FOR proposals 2 through 5, and
- at the discretion of the person named as proxy on any other matter
that may properly come before the meeting or any adjournment of the
meeting.
You may revoke your proxy at any time before it is exercised at the meeting
by filing with or transmitting to our corporate secretary either a notice of
revocation or a properly created proxy bearing a later date. You may also attend
the meeting and revoke your proxy by voting your shares in person.
We have been advised by our executive officers, directors and nominees for
director who own shares of common stock that they intend to vote their shares in
favor of the proposals presented in this proxy statement. As of the record date,
executive officers, directors and nominees for director collectively owned
2,205,000 shares of common stock, representing 26.02% of the total shares
outstanding. See "Security Ownership of Certain Beneficial Owners and
Management."
MGPX will bear the entire cost of soliciting proxies, including expenses of
preparing and mailing proxy solicitation materials. In addition to use of the
mails, our officers, directors and regular employees may, without extra
compensation, solicit proxies by telephone, telegraph or personal solicitation.
If requested, we will reimburse brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses incurred in mailing proxy material
to their principals.
PROPOSAL 1:
ELECTION OF DIRECTORS
At the annual meeting, we will present the nominees named below and
recommend that they be elected to serve as directors for a term of one year or
until their successors are duly elected and qualified. Each nominee has
consented to being named in this proxy statement and to serve if elected.
Your proxy will be voted for the election of the four nominees named below
unless you give instructions to the contrary. Your proxy cannot be voted for a
greater number of persons than the number of nominees named. If any nominee
becomes unable to serve as a director, the person named in the enclosed form of
proxy will, unless you
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<PAGE>
direct otherwise, vote for the election of any other person recommended by
the present board of directors to fill that position.
DIRECTORS AND EXECUTIVE OFFICERS
Presented below is a description of certain biographical information,
occupations and business experience for the past five years of each of our
directors and executive officers, a key consultant and those persons nominated
to become directors.
Of our current directors, only Mr. Peak is standing for reelection as a
director. If the nominees for director are elected at the annual meeting, we
anticipate that Mr. Schlesinger, who is our current chairman and chief financial
officer, will resign from all of his offices and Mr. Peak will become our new
chairman and chief financial officer. After the meeting, we also expect that our
former president and chief executive officer, Mr. Young, will end his current
service as a consultant to the company.
<TABLE>
<CAPTION>
Year first
became a
Name Age Position director
- ----------------- --- ------------------------------- ----------
<S> <C> <C> <C>
Peter Schlesinger 65 Chairman, chief financial 1993
officer and director (not
standing for reelection)
Emanuel Batler 73 Director (not standing for 1998
(reelection)
Buddy Young 64 Consultant (former president, --
chief executive officer,
secretary and director)
Kenneth R. Peak 54 President, chief executive 1999
officer, secretary and director;
nominee for reelection as director;
expected to be appointed to
additional offices as chairman
and chief financial officer
Brad Juneau 40 Nominee for director --
Joseph J. Romano 46 Nominee for director --
Darrell W. Williams 57 Nominee for director --
</TABLE>
PETER SCHLESINGER has been a director of MGPX since December 1993 and
became chairman and chief financial officer following our sale of assets on
March 31, 1998. A Canadian citizen, Mr. Schlesinger attended McGill University
and Columbia University, receiving a Bachelor of Commerce degree in 1962. He was
a partner of a Canadian stockbrokerage firm, Annett Partners, for 10 years and
manager of a Bermuda investment company, Tatra Ltd., since 1974. He was
president of Halton Insurance, a Bermuda insurance company, listed on The
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<PAGE>
Toronto Stock Exchange, from 1988 to 1994. For ten years he has also served as
president of the Canadian Parkinson Disease Foundation.
EMANUEL BATLER has been a director of MGPX since December 1998. From 1960
to 1969, Mr. Batler was vice-president of Philips Electronics Industries Ltd.,
the Canadian division of the Dutch-based Philips Company, with responsibility
for marketing as well as for corporate mergers and acquisitions. Subsequently,
he founded and was president of Glentech Investments, a venture capital company
active in both the United States and Canada. After negotiating the sale of this
business, Mr. Batler was active from 1974 to 1995 in the commodity futures
business, managing firms in Toronto, Hong Kong and Chicago. Since 1970, Mr.
Batler has also been chairman of the board of Eclectic Management Sciences,
Ltd., a private holding company that controls several operating businesses.
BUDDY YOUNG served as president, chief executive officer and a director
of MGPX from March 31, 1998 until July 26, 1999, when he resigned from all of
his positions and agreed to continue to act as a consultant to MGPX until the
annual meeting of stockholders or October 31, 1999, whichever is sooner.
Since August 1997, Mr. Young has also conducted a privately owned merger and
acquisition business. In addition, since August 1998 Mr. Young has been the
president and chief executive officer of Advanced Knowledge, Inc., a
reporting company that produces and distributes workforce training videos.
Mr. Young previously also held various executive positions in the
entertainment industry.
KENNETH R. PEAK was appointed president, chief executive officer, secretary
and a director of MGPX on July 26, 1999. Before joining MGPX, Mr. Peak was the
president of Peak Enernomics, Incorporated, an oil and gas consulting firm that
he formed in 1990. In 1991 Mr. Peak helped form Carbon Energy International, a
company that explored and developed coal bed methane reserves in Washington and
Oregon and the San Juan Basin of Colorado. Mr. Peak began his energy career in
1973 as a commercial banker in First Chicago's energy group. He became treasurer
of Tosco Corporation in 1980 and chief financial officer of Texas International
Company ("TIC") in 1982. His tenure with TIC included serving as president of
TIPCO, the domestic operating subsidiary of TIC's oil and gas operations. Mr.
Peak has also served as chief financial officer of Forest Oil and as an
investment banker with Howard Weil. Mr. Peak was an officer in the U.S. Navy
from 1968 to 1971, serving as a cryptologist and reporting operationally to the
National Security Agency, with collateral duties to the Central Intelligence
Agency. Mr. Peak received a B.S. degree in physics from Ohio University and an
MBA from Columbia University. He currently serves as a director of NL
Industries, Inc., a worldwide manufacturer and marketer of titanium dioxide
pigments whose stock is listed on the New York Stock Exchange; Cheniere Energy,
Inc., an oil and gas exploration company whose stock is traded on the Nasdaq
SmallCap Market; and Cellxion, Inc., a privately owned manufacturing and
construction company serving the cellular telephone industry.
BRAD JUNEAU is currently a private investor. Mr. Juneau served as senior
vice president of exploration for Zilkha Energy Company from 1987 to 1998. His
previous experience included three years as staff petroleum engineer with Texas
International Company, where his principle responsibilities included reservoir
engineering, as well as acquisitions and evaluations. Prior to that he was a
production engineer with ENSERCH in Oklahoma City. Mr. Juneau holds a bachelor
of science degree in petroleum engineering from Louisiana State University and
is a registered professional engineer in the State of Texas.
JOSEPH J. ROMANO has been employed by MSZ Investments, Inc. since 1998. In
February 1989, Mr. Romano joined Zilkha Energy Company, where he served as
senior vice president and chief financial officer until 1998. He served as the
chief financial officer, treasurer and controller of Texas International Company
from 1986 to 1988, and as its treasurer and controller for 1982 to 1985. Prior
to 1982, Mr. Romano spent five years working in the Worldwide Energy Group of
the First National Bank of Chicago. He holds a bachelor of arts degree in
economics
4
<PAGE>
and political science from the University of Wisconsin-Eau Claire and an MBA
in finance from the University of Northern Illinois.
DARRELL W. WILLIAMS became president of Deutag Marketing and Technical
Services in 1993, with responsibility to develop new business with other
companies having international drilling departments in North America. In
September 1996, Mr. Williams was transferred to Germany and promoted to
managing director of Deutag International, which has responsibility for all
drilling operations outside of Europe. Before joining Deutag, Mr. Williams
held senior executive positions with Nabors Drilling from 1988 to 1993, Pool
Company from 1985 to 1988, Baker Oil Tools from 1980 to 1983 and SEDCO from
1970 to 1980. Mr. Williams graduated from West Virginia University in 1964
with a degree in petroleum engineering. Mr. Williams is past chairman of the
Houston Chapter of International Association of Drilling Contractors, a
current member of the IADC executive committee, and a member of the Society
of Petroleum Engineers. He serves on various industry committees and
charitable boards.
Directors of MGPX hold office until the next annual stockholders meeting,
until successors are elected and qualified or until their earlier resignation or
removal.
Officers of MGPX are elected by the board of directors and hold office
until their successors are chosen and qualified, until their death or until they
resign or have been removed from office. All corporate officers serve at the
discretion of the board of directors.
There are no family relationships between any of our directors, executive
officers or persons nominated to become directors or executive officers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who beneficially own more than ten percent
of a registered class of our equity securities (referred to as "reporting
persons"), to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of common stock and other MGPX
equity securities. Reporting persons are required by Commission regulations to
furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of reports and
amendments thereto on Forms 3, 4 and 5 furnished to us by reporting persons
during, and with respect to, our fiscal year ended June 30, 1999, and on a
review of written representations from reporting persons that no other reports
were required to be filed for that fiscal year, all Section 16(a) filing
requirements applicable to our directors, executive officers and greater than
ten percent beneficial owners during such period were satisfied in a timely
manner, except that (i) Peter Schlesinger, Emanuel Batler, Isaac Moss (former
director) and Buddy Young (former executive officer and director) each failed to
timely file one report, and (ii) Gunther Schiff (former director) failed to file
one report.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of MGPX is managed under the direction of the board of
directors. The board meets during each fiscal year to review significant
developments and to act on matters requiring board approval. The board held four
meetings during the fiscal year ended June 30, 1999, and all of the board
members participated in all of the meetings.
Currently, the board does not have standing audit, compensation or
nominating committees or committees performing similar functions.
5
<PAGE>
EXECUTIVE COMPENSATION
The tables and discussion below set forth information about the
compensation awarded to, earned by or paid to our chief executive officer
(sometimes referred to in this report as the "named executive officer") during
the fiscal years ended June 30, 1999, 1998 and 1997. No executive officer
received total annual salary and bonus in excess of $100,000 during the fiscal
year ended June 30, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SHARES
FISCAL ------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- --------------------------- ---- ------ ----- -------
<S> <C> <C> <C> <C>
Buddy Young(1)......................... 1999 $ 34,850 -- 100,000
President, chief executive 1998 $ 12,510 -- --
officer & director 1997 -- -- --
</TABLE>
- ------------------------
(1) Mr. Young resigned from all of his positions with MGPX after the end of the
1999 fiscal year on July 26, 1999, and Kenneth R. Peak was appointed on
that date as the new president and chief executive officer and a director.
EMPLOYMENT AND CONSULTING AGREEMENTS
We currently have no employment agreement with any executive officer. On
March 24, 1998, we entered into a consulting agreement with Mr. Young,
pursuant to which he served until July 26, 1999 as president, chief executive
officer and a director and was paid a total of $34,850 during the year ended
June 30, 1999. On July 26, 1999, Mr. Young resigned from all of his positions
with MGPX, and he entered into a new consulting agreement with us on July 27,
1999. Under the terms of the new agreement, Mr. Young will serve as a
consultant to MGPX until the earlier of October 31, 1999 or our annual
meeting, and will perform various administrative functions to help facilitate
a smooth transition to new management. His agreed compensation is $20,000
payable at the rate of $2,000 per month, with a balloon payment of $14,000 at
the conclusion of his services. Under the agreement, Mr. Young was given the
opportunity to purchase 100,000 shares of common stock on the same terms as
other investors in our August 1999 private placement. See "Proposal 1:
Election of Directors -- Certain Relationships and Related Transactions" and
"Proposal 3: Authorization of Additional Shares of Common Stock."
The board of directors appointed Kenneth R. Peak as president, chief
executive officer and a director on July 26, 1999 and approved an initial salary
for Mr. Peak in the amount of $12,500 per month.
OPTION/SAR GRANTS IN FISCAL YEAR ENDED JUNE 30, 1999
The following table sets forth certain information with respect to stock
options granted to the our chief executive officer during the fiscal year ended
June 30, 1999. To date, MGPX has never granted stock appreciation rights
("SARs").
6
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE
---- ----------- ----------- ------ ----
<S> <C> <C> <C> <C>
Buddy Young 100,000(1) 100 $1.00 6/8/2002
</TABLE>
- ------------------
(1) The board of directors granted these options on June 8, 1999 in
consideration of Mr. Young's services as our former president and chief
executive officer. The options were immediately exercisable.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-
END OPTION/SAR VALUES
As shown in the following table, our former chief executive officer did
not exercise any stock options during the fiscal year ended June 30, 1999,
and none of the 100,000 stock options which he held at the end of the fiscal
year was in the money.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARs
SHARES OPTIONS/SARs AT 6/30/99 AT 6/30/99 ($)
ACQUIRED ON VALUE ----------------------- --------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Buddy Young -- -- 100,000 -- -- --
</TABLE>
COMPENSATION OF DIRECTORS
Outside directors of MGPX have been paid $150 for their attendance at each
meeting of the board of directors. In the future, directors will be paid
principally in stock options for serving as directors and for attendance at
board and committee meetings. In addition, directors will receive normal and
customary industry fees, paid in either shares or options, for their assistance
in sourcing, evaluating and closing various transactions. Directors who are also
officers of MGPX receive no additional compensation for their service as a
director. The board of directors awarded cash compensation of $6,000
to Isaac Moss in appreciation for his services as a director upon his
resignation on July 26, 1999.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information about the beneficial ownership
of our class of common stock as of August 25, 1999, by each person known to own
beneficially more than 5% of the class, by each of our directors, nominees for
director and named executive officers (as defined in "Proposal 1: Election of
Directors -- Executive Compensation"), and by all of our directors and executive
officers as a group. The table includes three extra columns showing the
following:
- the number of shares of common stock underlying outstanding warrants
that will become exercisable if stockholders approve proposal 3
(increasing the number of authorized shares of common stock) at the
annual meeting;
- the total number of shares of common stock that such persons would
beneficially own if proposal 3 were approved and the warrants became
exercisable; and
7
<PAGE>
- the percentage of the class of common stock that such persons would
beneficially own if proposal 3 were approved and the warrants became
exercisable.
Unless otherwise indicated below, to our knowledge, all persons listed in
the table have sole voting and investment power with respect to their shares of
common stock except to the extent that authority is shared by spouses under
applicable law. MGPX currently has no other class of voting securities
outstanding.
<TABLE>
<CAPTION>
Number of Shares Total
underlying warrants Total shares percentage
that will become that would be that would be
Number exercisable if stock- beneficially beneficially
of Shares Percentage holders approve owned if the owned if the
Name and address beneficially beneficially proposal 3 at the warrants became warrants became
of beneficial owner(1) owned(2) owned(2)(3) annual meeting(4) exercisable(5) exercisable(5)(6)
- ---------------------- -------- ----------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Bounty Management, Ltd. 615,000 7.26% -- 615,000 7.26%
28-30 The Parade
St. Helier, Jersey JE4 8XY
Three-D Holdings, Ltd. 570,000 6.73% -- 570,000 6.73%
3 Trilogy Court
Paget Close, PG05 Bermuda
APEX Investment Fund Ltd. 529,980 6.25% -- 529,980 6.25%
3 Trilogy Court
Paget Close, PG05 Bermuda
Guildford Manor, Ltd. 495,000 5.84% -- 495,000 5.84%
28-30 The Parade
St. Helier, Jersey JE4 8XY
Charles Reimer(7) 400,000 4.72% 400,000 800,000 9.02%
1201 Louisiana
Houston, TX 77002
Buddy Young(8) 220,000 2.57% -- 220,000 2.57%
Peter Schlesinger(9) -- -- -- -- --
Emanuel Batler(10) -- -- -- -- --
Kenneth R. Peak(9)(11) 1,545,000 18.23% 1,400,000 2,945,000 29.83%
Brad Juneau(11) 400,000 4.72% 400,000 800,000 9.02%
Darrell W. Williams(11) 160,000 1.89% 160,000 320,000 3.71%
Joseph J. Romano(11) 100,000 1.18% 100,000 200,000 2.33%
Current directors and 1,545,000 18.23% 1,400,000 2,945,000 29.83%
executive officers as a
group (3 persons)
</TABLE>
- ----------------------
(1) Unless otherwise indicated, the address of each stockholder is 3700 Buffalo
Speedway, Suite 960, Houston, Texas 77098.
8
<PAGE>
(2) Does not include shares of common stock underlying certain warrants which
are currently unexercisable but will become exercisable if stockholders
approve proposal 3 at the annual meeting. See footnotes (4), (5) and (6).
(3) Based on a total of 8,473,625 shares of common stock outstanding, plus, for
each individual stockholder named, the number of other shares of common
stock (if any) which that person has a right to acquire within 60 days
pursuant to options, warrants, conversion privileges or other rights.
(4) The shares listed in this column underlie outstanding, non-transferable
warrants which were sold by MGPX in a private placement during August 1999.
Currently, the warrants are not exercisable. The warrants will become
exercisable if stockholders approve proposal 3 at the annual meeting,
authorizing an increase in the number of shares of common stock that MGPX
may issue. Upon becoming exercisable, each warrant would entitle the holder
to purchase one share of common stock at an exercise price of $1.00.
(5) Includes shares beneficially owned and shares that would be beneficially
owned (i.e., that the holders would have the right to acquire) if the
warrants referenced in footnote (4) became exercisable.
(6) Based on a total of 8,473,625 shares of common stock outstanding, plus, for
each individual stockholder named, the number of other shares of common
stock (if any) which that person would have a right to acquire if the
warrants referenced in footnote (4) became exercisable.
(7) Although currently the beneficial owner of less than 5% of the class of
common stock, Mr. Reimer is included in the table because he would become
the beneficial owner of over 5% of the class if his warrants, referenced in
footnote (4), became exercisable.
(8) Includes 100,000 shares of common stock issuable upon exercise of options
granted to Mr. Young for his services as former president, chief executive
officer and director. Mr. Young resigned from all such positions on July
26, 1999.
(9) Director and executive officer of MGPX.
(10) Director of MGPX.
(11) Nominee for election as a director of MGPX.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 16, 1998, when we were operating our former business under the
name of Warner Technologies, Inc., we entered into an asset sale agreement,
effective as of December 31, 1997, with Thomas S. Hathaway and Joseph A.
Ferrari, who were then serving as our president and executive vice president,
respectively. The cash purchase price of $650,000 was established through
negotiations between our outside directors and Messrs. Hathaway and Ferrari and
was supported by an independent valuation of the net assets by Singer Lewak
Greenbaum & Goldstein LLP and a fairness opinion from The Mentor Group, Inc. On
March 10, 1998, our stockholders voted to approve the sale and to change the
name of the company from Warner Technologies, Inc. to MGPX Ventures, Inc. The
sale of assets was completed on March 31, 1998. We received net proceeds of
$585,000 from the sale after closing costs. Pursuant to the asset sale
agreement, we also purchased from Messrs. Hathaway and Ferrari for $1,000 all of
the shares of MGPX common stock owned by them (183,481 shares from Mr. Hathaway
and 159,396 shares from Mr. Ferrari). In addition, under the agreement, all of
their options and option rights were canceled.
On July 26, 1999, Kenneth R. Peak was appointed as a director of MGPX. On
the same date, MGPX and Mr. Peak entered into an agreement under which he was
also appointed as president, chief executive officer and
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<PAGE>
secretary, subject to the satisfaction of certain conditions by August 26,
1999. All such conditions were satisfied by that date.
On August 25, 1999, MGPX completed a private placement of a total of
6,460,000 shares of common stock and warrants to purchase 2,460,000 shares of
common stock, raising gross proceeds of $670,600. MGPX paid no commissions or
finder's fees in connection with the placement. In the placement, MGPX sold
common stock and warrants for consideration in excess of $60,000 to each of the
following directors, executive officers and beneficial owners of over 5% of the
class of MGPX common stock:
<TABLE>
<CAPTION>
Number of
shares of Number of
common stock warrants
purchased at purchased at
Name of purchaser Relationship to MGPX $0.10 per share $0.01 per warrant Total paid
- ----------------- -------------------- --------------- ----------------- ----------
<S> <C> <C> <C> <C>
Kenneth R. Peak Director, president, chief 1,545,000 1,400,000 $168,500
executive officer and
secretary, and 5%+
beneficial owner
Bounty Management, Ltd. 5%+ beneficial owner 615,000 -- $61,500
</TABLE>
The warrants will expire in five years, have an exercise price of $1.00 per
share, and will become exercisable if MGPX stockholders approve proposal 3 at
the annual meeting. See "Proposal 1: Election of Directors--Security
Ownership of Certain Beneficial Owners and Management" and "Proposal 3:
Authorization of Additional Shares of Common Stock." In the placement, MGPX
also sold a total of 2,100,000 shares of common stock to four private
investment funds for which Peter Schlesinger, our chairman and chief
financial officer, acts as a financial adviser and by which he may be
compensated on a performance basis.
THE BOARD OF DIRECTORS RECOMMENDS THAT AUTHORITY BE GRANTED
TO VOTE FOR ALL NOMINEES FOR DIRECTOR
PROPOSAL 2:
NAME CHANGE
On August 26, 1999, the board of directors unanimously approved an
amendment to our articles of incorporation to change the company's name to
"Contango Oil & Gas Company." The board recommends that stockholders approve the
amendment at the annual meeting. If the amendment is approved, Article First
will be amended to read in its entirety as follows:
"FIRST: The name of the corporation shall be Contango Oil &
Gas Company."
The board believes that the proposed name will better describe the company,
in view of its recent entry into the oil and gas resources business. The board
believes that the name change will increase the company's ability to develop
positive name recognition within its industry and among securities analysts,
market makers and investors.
The amendment will not be adopted unless at least 4,236,813 shares of
common stock, representing a majority of such shares outstanding on the record
date, are voted for its approval. If the amendment is approved by the
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<PAGE>
stockholders at the meeting, it will become effective when we file with the
Nevada Secretary of State a certificate of amendment in accordance with
Nevada law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
CHANGING THE NAME OF THE CORPORATION
PROPOSAL 3:
AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK
On August 26, 1999, the board of directors unanimously approved an
amendment to our articles of incorporation to increase the number of our
authorized shares of common stock from 12,375,000 to 50,000,000, and to reserve
2,460,000 of such shares for issuance upon the exercise of certain outstanding
warrants. The remaining shares would be available generally for issuance by the
board without further stockholder approval.
The board recommends that stockholders approve the amendment at the annual
meeting. If the amendment is approved, Article Fourth will be amended to read in
its entirety as follows:
"FOURTH: The maximum number of shares of all classes which the
corporation is authorized to have outstanding is fifty million one hundred
twenty-five thousand (50,125,000) shares, consisting of fifty million
(50,000,000) shares of Common Stock, all par value $0.04, and one hundred
twenty-five thousand (125,000) shares of Preferred Stock, all par value
$0.04 per share. The holders of Preferred Stock shall have such rights,
preferences, and privileges as may be determined, prior to the issuance of
such shares, by the Board of Directors.
As of the date of this proxy statement, we have 12,375,000 authorized
shares of common stock, of which 8,473,625 shares are issued and outstanding
and 100,000 shares have been reserved for issuance upon exercise of
outstanding options. The outstanding shares include a total of 6,460,000
shares which MGPX sold in a private placement on August 25, 1999. Thus, MGPX
currently has a total of 3,801,375 unissued and unreserved shares which are
available for issuance, most of which MGPX expects to issue in a second
private placement sometime before the annual meeting.
As part of the August private placement, MGPX also sold warrants for the
purchase of a total of 2,460,000 shares of common stock at an exercise price of
$1.00 per share. However, because insufficient shares were available to be
reserved for issuance upon exercise of the warrants, the warrants will not
become exercisable until after our stockholders have authorized additional
shares. See "Proposal 1: Election of Directors -- Certain Relationships and
Related Transactions" and "-- Security Ownership of Certain Beneficial Owners
and Management." Therefore, if stockholders approve the proposal to increase the
number of authorized shares of common stock, they will also in effect make the
warrants exercisable. The following persons who purchased such warrants in the
private placement thus stand to benefit personally if proposal 3 is approved:
<TABLE>
<CAPTION>
Name of purchaser Relationship to MGPX Number of warrants
----------------- -------------------- ------------------
<S> <C> <C>
Kenneth R. Peak Director, president, chief executive 1,400,000
officer and secretary, and 5%+
beneficial owner
Brad Juneau Nominee for director 400,000
Darrell W. Williams Nominee for director 160,000
</TABLE>
11
<PAGE>
<TABLE>
<S> <C> <C>
Joseph J. Romano Nominee for director 100,000
</TABLE>
Stockholders will also be asked to approve the 1999 Stock Incentive Plan at
the annual meeting, as described in proposal 4. The plan provides for the
issuance of up to 5,000,000 shares of common stock. Therefore, in order for the
plan to be fully implemented, stockholders must approve proposal 3 and authorize
the additional shares of common stock necessary to be reserved for issuance
under the plan. See "Proposal 4: Adoption of the 1999 Stock Incentive Plan."
The board of directors believes that if this proposal is approved and the
warrants become exercisable, the warrants will provide the holders thereof with
a strong incentive to help create value for our stockholders. The board believes
that similar incentives will be provided to our directors, officers, employees
and others if stockholders approve the authorization of additional shares under
proposal 3 and approve the 1999 Stock Incentive Plan under proposal 4.
In addition, the board believes it is prudent to authorize additional
shares of common stock to provide the board with flexibility in corporate
planning and in responding to future business developments, including possible
financings to sustain operations, financing of oil and gas property acquisitions
and exploration projects, providing incentives for our officers, employees,
directors and consultants, approving stock splits and dividends, and for other
general corporate purposes. In order to implement the company's new business
plan, the board anticipates that the company will have an immediate and ongoing
need to issue shares of common stock in private placements in order to finance
the company's operations, acquisitions and exploration projects.
Authorized shares of common stock may be issued by the board from time to
time without further stockholder approval, except in situations where
stockholder approval is required by state law or by the rules of a national
securities exchange or market on which a company's securities are listed or
traded. No such rules are imposed by the OTC Bulletin Board, on which the
company's common stock is traded.
Under some circumstances, the issuance by the company of additional shares
of common stock could dilute the voting rights, equity and earnings per share of
existing stockholders. Our stockholders have no preemptive rights to acquire
additional shares of common stock whenever the company sells its common stock.
The authorization of additional shares of common stock may also have
anti-takeover effects. For example, the board of directors could, in the
exercise of its fiduciary obligations, seek to resist an unsolicited takeover
proposal by issuing the additional authorized shares without further
stockholder approval in private placements or other transactions, which could
prevent or make more difficult or costly the completion of the takeover
transaction by diluting the voting rights or other rights of the insurgent,
by creating a substantial voting block in friendly hands, by effecting an
acquisition that would complicate or preclude the takeover, or otherwise. The
issuance of additional common stock under such circumstances could be
disadvantageous to existing stockholders because to do so might prevent a
favorable takeover proposal and, in any event, would dilute their percentage
interests in the company and thus weaken their percentage control of the
company.
The amendment will not be adopted unless at least 4,236,813 shares of
common stock, representing a majority of such shares outstanding on the record
date, are voted for its approval. If the amendment is approved by the
stockholders at the meeting, it will become effective when we file with the
Nevada Secretary of State a certificate of amendment in accordance with Nevada
law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE AUTHORIZATION OF ADDITIONAL SHARES OF COMMON STOCK
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<PAGE>
PROPOSAL 4:
ADOPTION OF THE 1999 STOCK INCENTIVE PLAN
THE PLAN
The success of MGPX is largely dependent upon the efforts of our key
employees and our directors and consultants. In order to continue to attract,
motivate and retain outstanding individuals to serve MGPX in these roles, the
board of directors believes it is essential to provide compensation incentives
that are competitive with those provided by other companies in our industry. In
addition, the board believes it is important to create an identity of interests
of its key employees, directors and consultants with those of its stockholders
by encouraging ownership of MGPX common stock.
Accordingly, the board has adopted the 1999 Stock Incentive Plan and
proposes that stockholders approve the plan at the annual meeting in
substantially the form attached as Appendix A. The plan will be designated
as the "Contago Oil & Gas Company 1999 Stock Incentive Plan," provided that
stockholders approve the company's name change at the meeting. See "Proposal
2: Name Change."
Currently, MGPX has no other stock option or stock incentive plan and no
stock options outstanding other than 100,000 options which the company granted
to its former president and chief executive officer on June 8, 1999, which are
exercisable for three years at $1.00 per share.
Material provisions of the 1999 Stock Incentive Plan are summarized below.
GENERAL
The shares to be offered under the plan will initially consist of up to
5,000,000 shares of common stock (subject to adjustment to prevent dilution),
which may be issued:
- pursuant to options granted under the plan which either are intended
to qualify as incentive stock options ("Incentive Options") under
Section 422 of the Internal Revenue Code (the "Code") or constitute
non-qualified options ("Non-Qualified Options"), or
- pursuant to restricted stock awards ("RSAs").
EFFECTIVE DATE AND TERM
The plan will become effective upon approval by the stockholders. If the
plan is approved, options and RSAs may be granted under the plan at any time
until August 26, 2009.
ADMINISTRATION
The plan will be administered either by the board of directors or, in the
discretion of the board, by a committee appointed by the board consisting solely
of non-employee directors (the "Committee"). Accordingly, in this discussion all
references to the Committee will also refer to the board acting in that
capacity.
The Committee will have the authority to construe and interpret the plan,
to define its terms, to determine the times an option or RSA may be issued or
exercised and the number of shares which may be exercised at any one time, to
prescribe, amend and rescind rules and regulations relating to the plan, to
approve and determine the duration of leaves of absence which may be granted to
participants without constituting a termination of their
13
<PAGE>
employment for purposes of the plan, and to make all other determinations
necessary or advisable for the administration of the plan.
ELIGIBILITY
Those eligible to receive Non-Qualified Options and RSAs under the plan
include directors, officers, employees and independent contractors of the
company or of any subsidiary or parent of the company, prospective employees and
independent contractors of the company, and any other individual or entity to
whom the Committee deems it to be in the company's best interest to grant a
Non-Qualified Option, so long as the grant of the Non-Qualified Option would
further a specific company purpose. Those eligible to receive Incentive Options
include only actual employees of the company or of any subsidiary or parent of
the company. All such eligible parties are sometimes referred to in this
discussion as "Employees."
PARTICIPATION
The Committee will determine those Employees to whom options or RSAs
shall be granted, the time or times at which the options or RSAs shall be
granted and the number of shares to be subject to each option or RSA.
Employees may receive more than one option or RSA and may be granted either
Incentive Options or Non-Qualified Options, or both. However, in no event
shall an Employee be granted in any calendar year, under the plan and all
other plans of the company and any subsidiary or parent of the company,
Incentive Options that are first exercisable during any one calendar year for
stock with an aggregate fair market value at the time of grant of over
$100,000.
Because of the discretion possessed by the Committee, it is not possible to
state in advance the number of persons who may be selected to participate in the
plan, the number of options or RSAs that may be granted to them or the number of
shares of common stock subject to each option.
EXERCISE OF OPTIONS
The exercise price of any Incentive Option granted under the plan shall not
be less than:
- 100% of the fair market value (as defined) of the company's
common stock on the date of grant, and
- 110% of the fair market value of the company's common stock on the
date of grant if the recipient of the Incentive Option owns more than
10% of the total combined voting power of all classes of stock of the
company or any subsidiary or parent of the company.
The exercise price of a Non-Qualified Option granted under the plan shall
not be less than 85% of the fair market value per share of the company's common
stock on the date of grant.
However, in no event shall the exercise price of an Incentive Option or a
Non-Qualified Option be less than $0.30 per share.
Options granted under the plan shall not be exercisable after the
expiration of ten years from the date of grant (or five years in the case of
Incentive Options granted to a recipient owning more than 10% of the total
combined voting power of all classes of stock of the company or any subsidiary
or parent of the company) unless the Committee selects an earlier date.
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<PAGE>
An option shall be exercisable at a rate of 33-1/3% per year over 3 years
from the date of grant of the option, unless the Committee determines otherwise.
An option holder may purchase less than the total number of shares for
which an option is exercisable, provided that a partial exercise of an option
may not be for less than 100 shares unless the exercise is during the final year
of the option, and shall not include any fractional shares.
The plan permits options to be exercised from time to time by a written
notice to the company stating the number of shares as to which the option is
being exercised, accompanied by full payment, by cash or by certified or
cashier's check or other equivalent means acceptable to the company, of the
purchase price for the number of shares being purchased and, if applicable,
any federal, state or local taxes required to be paid. In the Committee's
discretion, payment of the purchase price at the time of exercise may be made
in whole or in part with shares of the company's common stock, valued at
their fair market value on the date of exercise.
In addition, the company may make loans to finance the exercise of options
on terms approved by the Committee; however, the principal amount of any such
loan shall not exceed the purchase price of the shares being purchased, and the
term of the loan, including extensions, shall not exceed 10 years. Unless the
Committee determines otherwise, when a loan shall have been made, shares having
a fair market value at least equal to the principal unpaid balance of the loan
shall be pledged by the holder to the company as security for payment of the
unpaid balance of the loan.
NON-TRANSFERABILITY OF OPTIONS AND RSAS
No options or RSAs granted under the plan shall be assignable or
transferable by the recipient under the plan, either voluntarily or by operation
of law, otherwise than by will or the laws of descent and distribution. An
option shall be exercisable only by the recipient during his lifetime. Shares
subject to an RSA shall be delivered or made only to the holder of the RSA or
the holder's duly appointed legal representative.
TERMINATION OF EMPLOYMENT
Except as the Committee may determine otherwise with respect to any
Non-Qualified Options granted under the plan, the options granted to a recipient
who ceases to be an Employee because of death, permanent disability or
otherwise, will terminate as follows:
- DEATH OR PERMANENT DISABILITY. An option granted to a recipient
who dies at a time when he is employed by the company or who
ceases to be an Employee by reason of permanent disability shall
terminate one year after the date of death or termination of
employment due to permanent disability unless, by its terms, the
option shall expire before that date or otherwise terminate as
provided in the plan. In the case of death, an option may be
exercised by the persons to whom the recipient's rights under
the option pass by will or by the laws of descent and
distribution. The decision whether a termination by reason of
permanent disability has occurred shall be made by the
Committee.
- OTHERWISE THAN DEATH OR PERMANENT DISABILITY. The options granted to a
recipient who ceases to be an Employee for any reason other than his
death or permanent disability shall terminate three months from the
date on which the employment was terminated, unless the recipient has
been rehired by the company and is an Employee on that date.
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<PAGE>
DILUTION OR OTHER ADJUSTMENTS
The Committee may specify any rules, procedures, adjustments and matters
with respect to the plan and any options or RSAs issued under the plan in
connection with any reorganization, merger, reverse merger, recapitalization,
reclassification, stock split, reverse split, combination of shares, sale of all
or substantially all of the company's assets, sale of the company, or other
corporate event or transaction, including such things as modifying any
applicable vesting provisions, adjusting the amount of outstanding options and
RSAs and terminating the plan.
AMENDMENT AND TERMINATION
With respect to any shares under the plan which, at the time, are not
already subject to options or RSAs, the board of directors may suspend or
terminate the plan or amend or revise the terms of the plan; however, any
amendment to the plan must be approved by a majority of the company's
stockholders if the amendment would (i) materially increase the benefits to
participants under the plan, (ii) increase the number of shares which may be
issued under the plan, except pursuant to the adjustment provisions of the plan,
or (iii) materially modify the requirements for eligibility to participate in
the plan.
No amendment, suspension or termination of the plan will change or impair
the rights or obligations of any previously granted option or RSA without the
recipient's consent.
The terms and conditions of any option or RSA granted under the plan may be
amended only by written agreement. However, if any amendment of an Incentive
Option would constitute a "modification, extension or renewal" of the original
option or RSA within the meaning of Section 424(h) of the Code, the amendment
will be null and void unless it contains an acknowledgment of that fact by the
parties.
RIGHT TO REPURCHASE AND RIGHT OF FIRST REFUSAL
Except as the Committee determines otherwise, if a recipient of options or
RSAs under the plan ceases to be an Employee other than due to retirement with
the consent of the company, the company shall have the right to:
- repurchase all or any portion of the shares purchased by the Employee
upon exercise of options, or delivered to the Employee pursuant to an
RSA, at the fair market value of the shares as of the date employment
was terminated or, if necessary in order to satisfy applicable legal
requirements, the original purchase price, if higher;
- repurchase any shares issuable under any unexercised options at the
fair market value of the shares less the purchase price payable upon
exercise of the options; and
- purchase the unvested portion of the options as of the date of
termination of employment at the cost, if any, paid by the Employee
for purchase of the options.
Any shares or options repurchased by the company shall again be available for
issuance under the plan.
The company shall also have a right of first refusal which it may exercise
whenever there is a proposed sale of shares purchased upon exercise of options
or delivered pursuant to an RSA. If the holder of such shares desires to accept
a bona fide third-party offer for any or all of such shares, the shares shall
first be offered to the company upon the same terms and conditions as are set
forth in the bona fide offer.
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<PAGE>
The Committee may elect to provide that the company's repurchase rights
and rights of first refusal will lapse upon (1) the first date on which the
company's common stock is held of record by more than 500 persons, (2) a
determination by the board of directors that a public market exists for the
company's outstanding shares of common stock, or (3) the consummation of an
initial public offering of the company's securities.
MARKET STAND-OFF
Any recipient of an option or RSA under the plan will be required to agree
not to sell or make any other disposition for value of shares received under the
plan for a period of up to 180 days after the effective date of a registration
statement for an initial public offering or any subsequent underwritten public
offering by the company of its equity securities.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary generally describes the principal federal (and not
state, local or foreign) income tax consequences of awards granted under the
plan as of this time. The summary is general in nature and is not intended to
cover all tax consequences that may apply to a particular Employee or to the
Company. The provisions of the Code and regulations thereunder relating to these
matters are complicated and their impact in any one case may depend upon the
particular circumstances.
INCENTIVE STOCK OPTIONS
Incentive stock options granted under the plan are intended to qualify
as incentive stock options under Section 422 of the Code. Pursuant to Section
422, the grant and exercise of an incentive stock option will generally not
result in taxable income to the optionee (with the possible exception of
alternative minimum tax liability) if the optionee does not dispose of shares
received upon exercise of such option less than one year after the date of
exercise and two years after the date of grant, and if the optionee has
continuously been a company employee from the date of grant to three months
before the date of exercise (or twelve months in the event of death or
disability). The company generally will not be entitled to a deduction for
income tax purposes in connection with the exercise of an incentive stock
option. Upon the disposition of shares acquired upon exercise of an incentive
stock option, the optionee will be taxed on the amount by which the amount
realized upon such disposition exceeds the option price, and such amount will
be treated as long-term capital gain or loss. If the holding period
requirements for incentive stock option treatment described above are not
met, the option will be treated as a nonqualified stock option.
Pursuant to the Code and the terms of the plan, in no event can there first
become exercisable by an optionee in any one calendar year incentive stock
options granted by the company with respect to shares having an aggregate fair
market value (determined at the time an option is granted) greater than
$100,000. To the extent an incentive stock option granted under the plan exceeds
this limitation, it will be treated as a nonqualified stock option. In addition,
if an incentive stock option is granted to an individual who owns, immediately
before the time that the option is granted, stock possessing more than 10% of
the total combined voting power of all classes of stock of the company, then (i)
the purchase price of each share covered by the option must be not less than
110% of the fair market value per share on the date of grant, and (ii) instead
of expiring after ten years, the option must expire 5 years after the date of
grant unless the Committee selects an earlier date.
NONQUALIFIED STOCK OPTIONS
If an optionee receives a nonqualified stock option, the difference between
the market value of the stock on the date of exercise and the option price will
constitute taxable ordinary income to the optionee on the date of exercise. The
company will be entitled to a deduction in the same year in an amount equal to
the income taxable to the
17
<PAGE>
optionee. The optionee's basis in shares of common stock acquired upon
exercise of an option will equal the option price plus the amount of income
taxable at the time of exercise. Any subsequent disposition of the stock by
the optionee will be taxed as a capital gain or loss to the optionee, and
will be long-term capital gain or loss if the optionee has held the stock for
more than one year at the time of sale.
RESTRICTED STOCK SUBJECT TO RESTRICTED STOCK AWARDS
Awards of restricted stock will not result in taxable income to the
employee or a tax deduction to the company for federal income tax purposes.
Upon expiration of the restricted period applicable to the restricted stock
awarded, the fair market value of such shares at such date and any cash
amount awarded, less cash or other consideration paid, if any, will be
included in the recipient's ordinary income as compensation, except that, in
the case of restricted stock issued at the beginning of the restriction
period, the recipient may elect to include in his ordinary income as
compensation at the time the restricted stock is awarded, the fair market
value of such shares at such time, less any amount paid therefor. The company
will be entitled to a corresponding income tax deduction to the extent that
the amount represents reasonable compensation and an ordinary and necessary
business expense, subject to any required income tax withholding.
STOCKHOLDER APPROVAL
The affirmative vote of holders of a majority of the shares of common
stock, represented in person or by proxy and entitled to vote, at the annual
meeting is required to approve the plan.
Since the plan provides for the issuance of up to 5,000,000 shares of
common stock, the plan cannot be fully implemented unless there are that many
shares available to be reserved for issuance under the plan. Currently, MGPX has
fewer than 5,000,000 shares of common stock available. Therefore, in order for
the plan to be fully implemented, stockholders will also need to authorize the
issuance of additional shares of common stock by approving proposal 3. See
"Proposal 3: Authorization of Additional Shares of Common Stock."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
APPROVAL OF THE 1999 STOCK INCENTIVE PLAN
PROPOSAL 5:
SELECTION OF INDEPENDENT AUDITORS
In the past, MGPX has retained the accounting firm of Singer Lewak
Greenbaum & Goldstein LLP ("Singer Lewak") to audit our financial statements.
With the company's recent change of business, the board of directors believes
that it will be in the company's best interests to have its financial
statements audited by an internationally known accounting firm, which the
board believes will improve the company's credibility in the business and
investment communities. Accordingly, the board has selected Arthur Andersen
LLP ("Arthur Andersen") to audit our financial statements for the fiscal year
ending June 30, 2000 and asks that stockholders ratify that selection.
Arthur Andersen has advised us that neither it nor any of its partners or
associates has any direct or indirect financial interest in or any connection
with MGPX.
Although ratification of the choice of auditors is not legally required,
the board believes such ratification to be in the best interests of the
corporation. If stockholders do not approve the board's choice of auditors, the
board will select another firm to audit our financial statements.
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<PAGE>
We do not anticipate that a representative of either Singer Lewak or
Arthur Andersen will attend the annual meeting. However, if a representative
does attend the meeting, we will give them the opportunity to make a
statement if they wish and to answer appropriate questions.
The following resolution will be offered for a vote at the meeting:
RESOLVED, that the appointment of Arthur Andersen LLP as the
independent certified public accountants of the corporation for the
fiscal year ending June 30, 2000 is hereby approved and ratified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN AS OUR AUDITORS
OTHER MATTERS
We are not aware of any other matters that may come before the annual
meeting. However, if any other matter does properly come before the meeting,
the person named as proxy on the accompanying proxy card will have
discretionary authority to vote all proxies in accordance with his best
judgment.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at next year's annual
meeting of stockholders and wishes to have the proposal included in the proxy
materials for that meeting must deliver the proposal to us no later than May
13, 2000 and must comply in all other respects with Rule 14a-8 under the
Securities Exchange Act of 1934. Any stockholder proposal submitted other
than for inclusion in the proxy materials for that meeting must be delivered
to us a reasonable time before we mail the proxy materials for that meeting,
or the proposal will be considered untimely and the person named as proxy
will have authority to vote on the proposal in his discretion as to all
shares represented by proxy.
ADDITIONAL INFORMATION
This proxy statement is accompanied by our annual report on Form 10-K for
the fiscal year ended June 30, 1999. The Securities and Exchange Commission
maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. We will also
provide our stockholders with a copy of the exhibits to our annual report on
Form 10-K at no charge upon written request to Kenneth R. Peak, 3700 Buffalo
Speedway, Suite 960, Houston, Texas 77098.
Houston, Texas By Order of the Board of Directors
September [10], 1999
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<PAGE>
APPENDIX A
CONTANGO OIL & GAS COMPANY
1999 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of the Contango Oil & Gas Company 1999 Stock Incentive
Plan (the "Plan") is to further the interests of Contango Oil & Gas Company (the
"Company") by strengthening the desire of Employees to continue their employment
with the Company and by securing other benefits for the Company through stock
options and restricted stock awards to be granted hereunder. Options granted
under the Plan are either options intending to qualify as "incentive stock
options" within the meaning of Section 422 of the Code or non-qualified stock
options.
2. DEFINITIONS
Whenever used herein the following terms shall have the following
meanings, respectively:
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the committee which shall be selected and
designated by the Board as the "Compensation Committee" and which shall consist
solely of non-employee directors, or if no committee has been appointed,
reference to "Committee" shall be deemed to refer to the Board.
(e) "Common Stock" shall mean the Company's Common Stock as described
in the Company's Articles of Incorporation.
(f) "Company" shall mean Contango Oil & Gas, Inc., a Nevada
corporation.
(g) "Employee" shall mean in connection with Non-Qualified Options,
the Company's Non-Qualified Stock Option Agreement and Restricted Stock
Awards (i) any director, officer, actual employee or independent contractor
of the Company or any Subsidiary or Parent of the Company, (ii) any
individual in an effort to induce said individual to become and remain an
employee or independent contractor of the Company, or (iii) any other
individual or entity the Committee may deem appropriate to receive a
Non-Qualified Option (so long as the grant of the Non-Qualified Option
furthers a specific Company purpose and the Committee deems it in the best
interests of the Company to grant the Non-Qualified Option to said individual
or entity). In connection with Incentive Options and the Company's Incentive
Stock Option Agreement, the term "Employee" shall include only actual
employees of the Company or of any Subsidiary or Parent of the Company.
(h) "Fair Market Value Per Share" of the Common Stock shall mean, if
the Common Stock is publicly traded, the mean between the highest and lowest
quoted selling prices of the Common Stock on the date of the grant of the Option
or, if not available, the mean between the bona fide bid and asked prices of the
Common Stock on the date of the grant of the Option or RSA. In any situation not
covered above or if there were no sales on the date of
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<PAGE>
the grant of an Option or RSA, the Fair Market Value Per Share shall be
determined by the Committee in accordance with Section 20.2031-2 of the
Federal Estate Tax Regulations. Notwithstanding the foregoing, if the Option
or RSA is granted in connection with an initial public offering of the
Company's Common Stock, the Fair Market Value Per Share shall be at the price
at which the Common Stock is sold in such public offering.
(i) "Incentive Option" shall mean an Option granted under the Plan
which is designated as and is intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code.
(j) "Non-Qualified Option" shall mean an Option granted under the Plan
which is designated as a non-qualified stock option and which does not qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(k) "Option" shall mean an Incentive Option, as defined in Section
2(i) hereof, or a Non-Qualified Option, as defined in Section 2(k) hereof.
(l) "Optionee" shall mean any Employee who has been granted an
Incentive Option to purchase shares of Common Stock under the Plan and shall
mean any person (including an Employee) who has been granted a Non-Qualified
Option under the Plan.
(m) "Parent" shall have the meaning set forth in Section 424(e) of the
Code.
(n) "Participant" means any individual to whom an RSA has been granted
by the Committee under this Plan.
(o) "Permanent Disability" shall mean termination of employment with
the Company or with the consent of the Company by reason of permanent and total
disability within the meaning of Section 22(e)(3) of the Code.
(p) "Plan" shall mean this 1999 Stock Incentive Plan.
(q) "Public Offering" shall mean a firm commitment underwritten
public offering pursuant to an effective registration statement under the Act
covering the offer and sale of the Common Stock.
(r) "Restricted Stock Award" means any form of grant of Restricted
Stock under the Plan.
(s) "Restricted Stock" means shares of Common Stock issued pursuant to
an RSA which are subject to forfeiture provisions or such other conditions as
may be determined by the Committee and specified in the Restricted Stock Award
Agreement.
(t) "Restricted Stock Award Agreement" means a written agreement
setting forth the terms of an RSA.
(u) "RSA" means a Restricted Stock Award.
(v) "Subsidiary" shall have the meaning set forth in Section 424(f) of
the Code.
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<PAGE>
3. ADMINISTRATION
(a) The Plan shall be administered either (i) by the Board, or (ii) in
the discretion of the Board, by the Committee appointed by the Board. The Board
may from time to time appoint members of the Committee in substitution for or in
addition to members previously appointed and may fill vacancies.
(b) Any action of the Committee with respect to the administration of
the Plan shall be taken by majority vote or by written consent of a majority of
its members.
(c) Subject to the provisions of the Plan, the Committee or the Board
shall have the authority to construe and interpret the Plan, to define the terms
used therein, to determine the time or times an Option or RSA may be issued or
exercised and the number of shares which may be exercised at any one time, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
approve and determine the duration of leaves of absence which may be granted to
participants without constituting a termination of their employment for purposes
of the Plan, and to make all other determinations necessary or advisable for the
administration of the Plan. All determinations and interpretations made by the
Committee shall be conclusive and binding on all Employees and on their
guardians, legal representatives and beneficiaries.
(d) The Company will indemnify and hold harmless the members of the
Board and the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act, or omission to act, in
connection with the performance of such persons' duties, responsibilities and
obligations under the Plan, other than such liabilities, costs and expenses as
may result from the negligence, gross negligence, bad faith, willful misconduct
and/or criminal acts of such person.
(e) The Company will provide financial information to the Optionees
and Participants on the same basis as the Company provides such information to
holders of Common Stock, which in any event shall include dissemination of the
Company's financial statements at least annually.
4. NUMBER OF SHARES SUBJECT TO PLAN
The shares to be offered under the Plan shall initially consist of up
to five million (5,000,000) shares of Common Stock, subject to adjustment from
time to time by the Committee under Section 17 of the Plan. If any Option
granted hereunder shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for purposes of this Plan. If any shares which are attributable to
RSAs expire or are otherwise terminated, canceled, surrendered or forfeited,
during a calendar year, such shares shall again be available for purposes of
this Plan.
5. ELIGIBILITY AND PARTICIPATION
(a) The Committee shall determine the Employees to whom Options or
RSAs shall be granted, the time or times at which such Options or RSAs shall be
granted and the number of shares to be subject to each Option or RSA. An
Employee who has been granted an Option or RSA may, if he is otherwise eligible,
be granted an additional Option or Options or RSA or RSAs if the Committee shall
so determine. An Employee may be granted Incentive Options or Non-Qualified
Options or both under the Plan; provided, however, that the grant of Incentive
Options and Non-Qualified Options to an Employee shall be the grant of separate
Options and each Incentive Option and each Non-Qualified Option shall be
specifically designated as such.
(b) In no event shall an Employee be granted in any calendar year,
under the Plan and all other plans of the Company and any Subsidiary or Parent
of the Company, Incentive Options that are first exercisable during
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any one calendar year for stock with an aggregate fair market value
(determined as of the time the option was granted) in excess of One Hundred
Thousand Dollars ($100,000).
6. RESTRICTED STOCK AWARDS
The Committee may grant RSAs to such directors, officers, actual
employees or independent contractors of the Company of any Subsidiary of Parent
of the Company, in such amounts and subject to such terms and conditions as the
Committee may determine in its sole discretion, including such restrictions on
transferability and other restrictions as the Committee may impose, which
restrictions may lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Committee shall
determine.
Restricted Stock granted under the Plan shall be evidenced by
certificates registered in the name of the Participant and bearing an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock. The Company may retain physical possession
of any such certificates, and the Company may require a Participant awarded
Restricted Stock to deliver a stock power to the Company, endorsed in blank,
relating to the Restricted Stock for so long as the Restricted Stock is subject
to a risk of forfeiture.
Unless otherwise determined by the Committee at the time of an Award,
the holder of an RSA shall have the right to vote the restricted shares and to
receive dividends thereon, unless and until such shares are forfeited.
In the event all or any of the shares subject to an RSA are forfeited
due to failure to meet or comply with restrictions imposed by the Committee at
the time of grant prior to the lapse of any or all such restrictions, the
Company shall repay to the Participant (or the Participant's estate) any cash
amount paid by the Participant for such forfeited shares.
7. PURCHASE PRICE OF OPTIONS
The purchase price of each share covered by the Plan shall be
determined by the Committee subject to the following; provided, however, that in
no event shall the purchase price of any share covered by an Incentive Option or
a Non-Qualified Option be less than $0.30:
(a) The purchase price of each share covered by each Incentive Option
shall not be less than one hundred percent (100%) of the Fair Market Value Per
Share of the Common Stock of the Company on the date the Incentive Option is
granted; provided, however, that if at the time an Incentive Option is granted
the Optionee owns or would be considered to own by reason of Section 424(d) of
the Code more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Subsidiary or Parent of the Company, the
purchase price of the shares covered by such Incentive Option shall not be less
than one hundred ten percent (110%) of the Fair Market Value Per Share of the
Common Stock on the date the Incentive Option is granted.
(b) The purchase price of each share covered by each Non-Qualified
Option shall not be less than eighty-five percent (85%) of the Fair Market Value
Per Share of the Common Stock of the Company on the date the Non-Qualified
Option is granted.
8. DURATION OF OPTIONS
The expiration date of each Option and all rights thereunder shall be
determined by the Committee at the time of the grant of the Option and as shall
be permissible under the terms of the Plan; provided, however, in no event shall
an Option be exercisable after the expiration of ten (10) years from the date on
which the Option is granted, and the Option shall be subject to earlier
termination as provided herein; provided, however, that if at the
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<PAGE>
time an Incentive Option is granted the Optionee owns or would be considered
to own by reason of Section 424(d) of the Code more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Subsidiary or Parent of the Company, such Incentive Option shall expire five
(5) years from the date the Incentive Option is granted unless the Committee
selects an earlier date.
9. EXERCISE OF OPTIONS
Except as otherwise determined by the Committee, an Option shall be
exercisable at a rate of twenty percent (20%) per year over five (5) years from
the date of grant of such Options, unless the Committee determines otherwise.
An Optionee may purchase less than the total number of shares for
which the Option is exercisable, provided that a partial exercise of an
Option may not be for less than one hundred (100) shares, unless the exercise
is during the final year of the Option, and shall not include any fractional
shares. As a condition to the exercise, in whole or in part, of any Option,
the Committee may in its sole discretion require the Optionee to pay, in
addition to the purchase price of the shares covered by the Option, an amount
equal to any federal, state and local taxes that the Committee has determined
are required to be paid in connection with the exercise of such Option in
order to enable the Company to claim a deduction or otherwise. Furthermore,
if any Optionee disposes of any shares of stock acquired by exercise of an
Incentive Option prior to the expiration of either of the holding periods
specified in Section 422(a)(1) of the Code, the Optionee shall pay to the
Company, or the Company shall have the right to withhold from any payments to
be made to the Optionee, an amount equal to any federal, state and local
taxes the Committee has determined are required to be paid in connection with
the exercise of such Option, in order to enable the Company to claim a
deduction or otherwise.
10. METHOD OF EXERCISE OF OPTIONS
(a) To the extent that the right to purchase shares has accrued,
Options may be exercised from time to time by giving written notice to the
Company stating the number of shares with respect to which the Option is being
exercised, accompanied by payment in full, by cash or by certified or cashier's
check payable to the order of the Company or the equivalent thereof acceptable
to the Company, of the purchase price for the number of shares being purchased
and, if applicable, any federal, state or local taxes required to be paid in
accordance with the provisions of Section 9 hereof. The Company shall issue a
separate certificate or certificates with respect to each Option exercised by an
Optionee.
(b) In the Committee's discretion, payment of the purchase price for
the shares with respect to which the Option is being exercised may be made in
whole or in part with shares of Common Stock of the Company. If payment is made
with shares of Common Stock, the Optionee, or other person entitled to exercise
the Option, shall deliver to the Company certificates representing the number of
shares of Common Stock in payment for the shares being purchased, duly endorsed
for transfer to the Company. If requested by the Committee, prior to the
acceptance of such certificates in payment for such shares, the Optionee, or any
other person entitled to exercise the Option, shall supply the Committee with a
representation and warranty in writing that he has good and marketable title to
the shares represented by the certificate(s), free and clear of all liens and
encumbrances. The value of the shares of Common Stock tendered in payment for
the shares being purchased shall be their Fair Market Value Per Share on the
date of the Optionee's exercise.
(c) Notwithstanding the foregoing, the Company shall have the right
to postpone the time of delivery of the shares for such period as may be
required for it to comply, with reasonable diligence, with any applicable
listing requirements of any national securities exchange or any federal,
state or local law. If an Optionee, or other person entitled to exercise an
Option, fails to accept delivery of or fails to pay for all or any portion of
the shares
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<PAGE>
requested in the notice of exercise, upon tender of delivery thereof, the
Committee shall have the right to terminate his Option with respect to such
shares.
(d) The Company may make loans to Optionees as the Committee, in its
discretion, may determine in connection with the exercise of outstanding Options
granted under the Plan. Such loans shall (i) be evidenced by promissory notes
entered into by the holders in favor of the Company; (ii) be subject to the
terms and conditions set forth in this subsection (d) and such other terms and
conditions, not inconsistent with the Plan, as the Committee shall determine;
and (iii) bear interest at such rate as the Committee shall determine. In no
event may the principal amount of any such loan exceed the purchase price of the
shares covered by the Option, or portion thereof, purchased by the Optionee. The
initial term of the loan, the schedule of payments of principal and interest
under the loan, the extent to which the loan is to be with or without recourse
against the holder with respect to principal and applicable interest and the
conditions upon which the loan will become payable in the event of the holder's
termination of employment shall be determined by the Committee; PROVIDED,
however, that the term of the loan, including extensions, shall not exceed ten
(10) years. Unless the Committee determines otherwise, when a loan shall have
been made, shares having a Fair Market Value at least equal to the principal
amount of the loan shall be pledged by the holder to the Company as security for
payment of the unpaid balance of the loan and such pledge shall be evidenced by
a security agreement, the terms of which shall be determined by the Committee,
in it discretion; PROVIDED, HOWEVER, that each loan shall comply with all
applicable laws, regulations and rules of the Board of Governors of the Federal
Reserve System and any other governmental agency having jurisdiction.
11. NON-TRANSFERABILITY OF OPTIONS
No Option or RSA granted under the Plan shall be assignable or
transferable by the Optionee, either voluntarily or by operation of law,
otherwise than by will or the laws of descent and distribution, and shall be
exercisable during his lifetime only by the Optionee. Shares subject to RSAs
shall be delivered or made only to the holder of the RSA or such holder's duly
appointed legal representative.
12. CONTINUANCE OF EMPLOYMENT
Nothing contained in the Plan or in any Option or RSA granted under
the Plan shall confer upon any Optionee or Participant any rights with respect
to the continuation of his employment by the Company or interfere in any way
with the right of the Company at any time to terminate such employment or to
increase or decrease the compensation of the Optionee or Participant from the
rate in existence at the time of the grant of an Option or RSA.
13. TERMINATION OF EMPLOYMENT OTHER THAN BY
DEATH OR PERMANENT DISABILITY
Except as the Committee may determine otherwise with respect to any
Non-Qualified Options granted hereunder: If an Optionee ceases to be an Employee
for any reason other than his death or Permanent Disability, any Options granted
to him under the Plan shall terminate three (3) months from the date on which
such Optionee terminates his employment (whether voluntarily or involuntarily)
unless such Optionee has been rehired by the Company and is an Employee on such
date. During such three (3) month period, an Optionee may exercise any Option
granted to him but only to the extent such Option was exercisable on the date of
termination of his employment and provided that such Option has not expired or
otherwise terminated as provided herein. The decision as to whether a
termination for a reason other than death or Permanent Disability has occurred
shall be made by the Committee, whose decision shall be final and conclusive. A
leave of absence approved in writing by the Committee shall not be deemed a
termination of employment for purposes of this Section, but no Option may be
exercised during any such leave of absence, except during the first three (3)
months thereof.
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<PAGE>
14. DEATH OR PERMANENT DISABILITY OF OPTIONEE OR PARTICIPANT
Except as the Committee may determine otherwise with respect to any
Non-Qualified Options granted hereunder: If an Optionee shall die at a time when
he is employed by the Company or if the Optionee shall cease to be an Employee
by reason of Permanent Disability, any Options granted to him under this Plan
shall terminate one year after the date of his death or termination of
employment due to Permanent Disability unless by its terms it shall expire
before such date or otherwise terminate as provided herein, and shall only be
exercisable to the extent that it would have been exercisable on the date of his
death or his retirement due to Permanent Disability. In the case of death, the
Option may be exercised by the person or persons to whom the Optionee's rights
under the Option shall pass by will or by the laws of descent and distribution.
The decision as to whether a termination by reason of Permanent Disability has
occurred shall be made by the Committee, whose decision shall be final and
conclusive.
Each Participant shall file and maintain with the Company a written
designation of one or more persons as the beneficiary or beneficiaries who shall
be entitled to receive the award, if any, of Restricted Stock payable under the
Plan upon the Participant's death. If no such designation is in effect at the
time of a Participant's death, or if no designated beneficiary survives the
Participant or if such designation conflicts with the law, the Participant's
estate shall be entitled to receive the RSA, if any, payable under the Plan upon
the Participant's death.
15. STOCK PURCHASE NOT FOR DISTRIBUTION
Each Optionee or Participant shall, by accepting the grant of an
Option or RSA under the Plan, represent and agree, for himself and his
transferees by will or the laws of descent and distribution, that all shares
of stock purchased upon exercise of the Option or grant of the RSA will be
received and held without a view to distribution except as may be permitted
by the Act, and the rules and regulations promulgated thereunder. After each
notice of exercise of any portion of an Option or grant of an RSA, if
requested by the Committee, the person entitled to exercise the Option or
granted the RSA must agree in writing that the shares of stock are being
acquired in good faith without a view to distribution except as may be
permitted by the Act and the rules and regulations promulgated thereunder.
16. PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any Option granted under the Plan shall
have any of the rights or privileges of a shareholder of the Company with
respect to any shares of Common Stock issuable upon exercise of such Option
until such person has become the holder of record of such shares. No adjustment
shall be made for dividends or distributions of rights in respect of such shares
if the record date is prior to the date on which such person becomes the holder
of record, except as provided in Section 17 hereof.
17. ADJUSTMENTS
The Committee shall have the full authority, in its sole discretion,
to specify any rules, procedures, adjustments or matters with respect to the
Plan or any Options or RSAs issued under the Plan in connection with any
reorganization, merger, reverse merger, recapitalization, reclassification,
stock split, reverse split, combination of shares, sale of all or substantially
all of the assets of the Company, sale of the Company or other corporate event
or transaction, including, without limitation, modifying any applicable vesting
provisions, adjusting the amount of outstanding Options and/or RSAs, and/or
terminating the Plan. The Committee shall not be obligated to take any action,
but any determination by the Committee, and the extent thereof, shall be final,
binding and conclusive. No fractional shares of stock shall be issued under the
Plan or in connection with any such adjustment.
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<PAGE>
18. AMENDMENT AND TERMINATION OF PLAN
(a) The Board may from time to time, with respect to any shares at the
time not subject to Options or RSAs, suspend or terminate the Plan or amend or
revise the terms of the Plan; provided that any amendment to the Plan shall be
approved by a majority of the shareholders of the Company if the amendment would
(i) materially increase the benefits accruing to participants under the Plan;
(ii) increase the number of shares of Common Stock which may be issued under the
Plan, except as permitted under the provisions of Section 17 hereof; or (iii)
materially modify the requirements as to eligibility for participation in the
Plan.
(b) No amendment, suspension or termination of the Plan shall, without
the consent of the Optionee or Participant, alter or impair any rights or
obligations under any Option or RSA theretofore granted to such Optionee or
Participant under the Plan.
(c) The terms and conditions of any Option granted to an Optionee, or
RSA granted to a Participant, under the Plan may be modified or amended only by
a written agreement executed by the Optionee or Participant and the Company;
provided, however, that if any amendment or modification of an Incentive Option
would constitute a "modification, extension or renewal" within the meaning of
Section 424(h) of the Code, such amendment shall be null and void unless the
amendment contains an acknowledgment by the parties substantially in the
following form: "The parties hereto recognize and agree that this amendment
constitutes a modification, renewal or extension, within the meaning of Section
424(h) of the Code, of the option originally granted ________."
19. EFFECTIVE DATE OF PLAN
This Plan shall become effective upon adoption by the Board and
approval by the Company's shareholders; provided, however, that prior to
approval of the Plan by the Company's shareholders, but after adoption by the
Board, RSAs and Options may be granted under the Plan subject to obtaining such
shareholders' approval. Notwithstanding the foregoing, such shareholders'
approval must occur no later than twelve (12) months after the date of adoption
of the Plan by the Board.
20. TERM OF PLAN
No Option or RSA shall be granted pursuant to the Plan after ten (10)
years from the earlier of the date of adoption of the Plan by the Board or the
date of approval of the Plan by the Company's shareholders.
21. RIGHT TO REPURCHASE AND RIGHT OF FIRST REFUSAL
Except as the Committee may determine otherwise, if an Optionee or
Participant shall cease to be an Employee other than due to retirement with
the consent of the Company, the Company shall have the right to (i)
repurchase all or any portion of the shares purchased by an Optionee upon the
exercise of the Optionee's Option, or delivered to a Participant pursuant to
a RSA, at the Fair Market Value of the shares as of the date of termination
of employment or, to the extent required to satisfy applicable legal
requirements, the original purchase price, if higher, as well as any shares
issuable upon exercise of any unexercised Options which the Optionee has the
right to exercise at the time the Optionee ceases to be an employee at the
Fair Market Value of the shares less the purchase price payable upon exercise
of such Options, and (ii) to purchase the unvested portion of the Options as
of the date of termination of employment at the cost, if any, paid by the
Employee for purchase of the Options. Any shares or Options repurchased by
the Company hereunder shall again be available for issuance under the Plan.
The Committee shall determine in each case whether the Optionee or
Participant shall have ceased to be an Employee
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<PAGE>
due to retirement with the consent of the Company. Any such determination of
the Committee shall be final and conclusive.
The Company shall have the right of first refusal, exercisable in
connection with any proposed sale, hypothecation or other disposition of the
shares purchased by an Optionee pursuant to an Option or delivered to a
Participant pursuant to an RSA. In the event the holder of such shares desires
to accept a bona fide third-party offer for any or all of such shares, the
shares shall first be offered to the Company upon the same terms and conditions
as are set forth in the bona fide offer.
Each Option or RSA may provide, at the Committee's discretion, that
the rights granted by this section shall lapse and cease to have effect upon any
of the following: (1) the first date on which the Common Stock is held of record
by more than five hundred (500) persons, (2) determination by the Board that a
public market exists for the outstanding shares of Common Stock or (3) the
consummation of an Initial Public Offering.
22. MARKET STAND-OFF
In connection with an Initial Public Offering or any subsequent
underwritten public offering by the Company of its equity securities pursuant to
an effective registration statement filed under the Act, an Optionee or
Participant shall agree not to sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the repurchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to any shares under the Plan without the prior written consent of the
Company or its underwriters, for such period of time from and after the
effective date of such registration statement as may be requested by the Company
or such underwriters, provided, however, that in no event shall such period
exceed one hundred eighty (180) days.
23. OPTION OR RSA AGREEMENTS
Options and RSAs under the Plan shall be evidenced by an agreement
as shall be approved by the Committee that sets forth the terms, conditions
and limitations of an Option or RSA. The Committee may amend agreements
theretofore entered into, either prospectively or retroactively, including,
but not limited to, the acceleration of vesting of an Option or RSA and the
extension of time to exercise an Option or RSA, except that, no such
amendment shall affect the Option or RSA in a materially adverse manner
without the consent of the Optionee or Participant.
24. LEGENDS
All certificates for shares delivered under the Plan shall be subject
to such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Common Stock is then
listed and any applicable federal or state securities laws, or as may otherwise
be appropriate to administer the Plan, and the Committee may cause a legend or
legends to be placed on such certificates to evidence such restrictions.
25. GOVERNING LAW
The Plan shall be governed and construed in accordance with the laws
of the State of Nevada and the Code.
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<PAGE>
MGPX VENTURES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of MGPX Ventures, Inc. (the "Company") hereby
acknowledges receipt of the proxy statement and the notice of the annual meeting
of stockholders to be held on September 28, 1999 at 1:00 p.m., local time, at
3700 Buffalo Speedway, Second Floor, Houston, Texas, and hereby further revokes
all previous proxies and appoints Kenneth R. Peak as proxy of the undersigned at
the meeting and any adjournments thereof with the same effect as if the
undersigned were present and voting the shares.
<TABLE>
<S> <C> <C> <C>
1. The election of directors
/ / AUTHORITY GRANTED to vote for / / AUTHORITY WITHHELD Nominees: Kenneth R. Peak
nominees listed at right, except as to vote for all nominees Brad Juneau
indicated to the contrary below. listed at right. Joseph J. Romano
Darrell W. Williams
</TABLE>
(INSTRUCTION: TO VOTE AGAINST ANY NOMINEE, WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. Approval of a change in the Company's name to Contango Oil & Gas Company
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of an increase in the number of authorized shares of common stock
from 12,375,000 to 50,000,000
/ / FOR / / AGAINST / / ABSTAIN
4. Approval of the Company's 1999 Stock Incentive Plan
/ / FOR / / AGAINST / / ABSTAIN
5. Ratification of the selection of Arthur Andersen LLP as auditors for the
fiscal year ending June 30, 2000
/ / FOR / / AGAINST / / ABSTAIN
6. On such other matters as may properly come before the meeting and any
adjournments thereof
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE INDICATED
ABOVE. IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED TO GRANT AUTHORITY TO VOTE FOR ALL OF THE NOMINEES FOR DIRECTOR IN
PROPOSAL 1 AND "FOR" PROPOSALS 2, 3, 4 AND 5. THE PERSON NAMED AS PROXY WILL USE
HIS DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN PROPOSAL 6. THIS PROXY
IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Dated: ______________________, 1999
___________________________________
___________________________________
Sign exactly as your name appears
on your share certificate. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title. If more
than one trustee, all should sign.
All joint owners should sign. If a
corporation, sign in full
corporation name by president or
other authorized officer. If a
partnership, sign in partnership
name by authorized person. Persons
signing in a fiduciary capacity
should indicate their full title in
such capacity.
