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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED
PURSUANT TO RULE 13d-2(a)(1)
CONTANGO OIL & GAS COMPANY
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(Name of Issuer)
Common Stock, $.04 par value
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(Title of Class of Securities)
21075N105
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(CUSIP Number)
Kenneth R. Peak
Contango Oil & Gas Company
3700 Buffalo Speedway, Suite 960
Houston, Texas 77098
(713) 960-1901
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 28, 1999
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
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(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, SEE the
NOTES).
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CUSIP NO. 21075N105 13D
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CHARLES M. REIMER
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
N/A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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7 SOLE VOTING POWER
NUMBER OF 1,000,000 shares of Common Stock
SHARES --------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0 shares of Common Stock
REPORTING --------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
1,000,000 shares of Common Stock
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10 SHARED DISPOSITIVE POWER
0 shares of Common Stock
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000 shares of Common Stock
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* N/A / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.2%
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14 TYPE OF REPORTING PERSON*
IN
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STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
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1. SECURITY AND ISSUER
This statement relates to the common stock, $0.04 par value per share, of
Contango Oil & Gas Company, a Nevada corporation. The address of Contango's
principal executive office is 3700 Buffalo Speedway, Suite 960, Houston, Texas
77098. Until September 28, 1999, Contango operated under the name MGPX
Ventures, Inc.
2. IDENTITY AND BACKGROUND
The name and principal business address of the person filing this statement
are:
Charles M. Reimer
British Borneo Exploration
1201 Louisiana Street, Suite 3500
Houston, Texas 77002
Mr. Reimer is the President and Chief Operating Officer of British Borneo
Exploration.
During the last five years, Mr. Reimer has not been convicted in any
criminal proceeding (excluding traffic violations and similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or which found
any violation with respect to such laws.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Mr. Reimer entered into Subscription Agreements with Contango dated as of
August 13, 1999 and September 2, 1999, which are attached as Exhibit 1 and
Exhibit 2 and incorporated by reference to this Schedule 13D. Mr. Reimer
purchased 400,000 shares of common stock at a purchase price of $0.10 per share
and warrants to purchase 400,000 shares of common stock at a purchase price of
$4,000 on August 25 for an aggregate purchase price of $44,000 in cash. Mr.
Reimer financed the purchase from his personal assets.
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On October 6, 1999, Mr. Reimer acquired 200,000 additional shares of common
stock at a purchase price of $0.30 a share for an aggregate price of $60,000.
Mr. Reimer financed the purchase from his personal assets.
4. PURPOSE OF TRANSACTION
Mr. Reimer purchased the shares of common stock for the purpose of
acquiring a substantial investment in Contango. Subject to applicable
securities laws and regulations, Mr. Reimer may dispose or acquire securities of
Contango, including the common stock, depending upon the position of the market,
the issuer and other factors.
Mr. Reimer does not have any plans or proposals which relate to or would
result in any other acquisition by any person of additional securities of
Contango, or the disposition of securities of Contango. Mr. Reimer does not
have any plans or proposals which relate to or would result in any other changes
in the board of directors or management of Contango, or which relate to or would
result in any of the results specified in paragraphs (a) through (j) of Item 4
of Schedule 13D.
5. INTEREST IN SECURITIES OF THE ISSUER
Mr. Reimer owns 600,000 shares of common stock and may be deemed to be the
beneficial owner of 400,000 additional shares which he has the right to purchase
upon exercise of warrants for a total of 1,000,000 shares of common stock
beneficially owned. Subject to applicable marital property laws, Mr. Reimer has
sole voting and dispositive power with respect to all of his shares of common
stock.
Except as set forth in Item 3 above, Mr. Reimer has not effected any
transactions in common stock in the past 60 days.
No other person has the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, the shares of common stock
held by Mr. Reimer.
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SECURITIES OF THE ISSUER
Except as described in this Schedule 13D, Mr. Reimer is not party to any
contracts, arrangements, understandings or other relationships with respect to
the securities of Contango.
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7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1. Subscription Agreement dated as of August 13, 1999 between
Charles M. Reimer and MGPX Ventures, Inc.
Exhibit 2. Subscription Agreement dated as of September 2, 1999
between Charles M. Reimer and MGPX Ventures, Inc.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: October 13, 1999
/s/ Charles M. Reimer
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Charles M. Reimer
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EXHIBIT 1
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
ANY STATE SECURITIES LAWS ("STATE LAWS") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS THE OFFER AND SALE IS REGISTERED UNDER THE
SECURITIES ACT OR THE ISSUER RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT THE OFFER AND SALE IS EXEMPT FROM SECURITIES ACT
REGISTRATION.
SUBSCRIPTION AGREEMENT (UNITS)
This agreement is made and entered into as of the 13th day of
August, 1999, by and between MGPX Ventures, Inc. (the "Issuer") and the
undersigned (the "Purchaser").
1. SUBSCRIPTION FOR AND AGREEMENT TO PURCHASE UNITS. On the terms
and subject to the conditions set forth in this agreement, the Purchaser
hereby subscribes for and irrevocably agrees to purchase from the Issuer that
number of units which is set forth on the signature page of this agreement
(the "Units") at the purchase price of $0.11 per unit (the "Purchase Price"),
payable by wire transfer to the account of the Issuer. Of the $0.11 Purchase
Price per Unit, $0.01 shall be allocable to the purchase of the Warrant. Each
Unit shall consist of one share of the Issuer's common stock (each a "Share"
and collectively the "Shares") and one non-transferable, detachable common
stock purchase warrant (each a "Warrant" and collectively the "Warrants").
Each Warrant shall entitle the holder to purchase one additional share of the
Issuer's common stock (each a "Warrant Share" and collectively the "Warrant
Shares") at an exercise price of $1.00 per share for a term of five years
from the date of issuance. The Warrants will not be exercisable immediately,
but will become exercisable when the Issuer files a certificate of amendment
of its articles of incorporation with the Nevada Secretary of State
certifying that the Issuer's board of directors and stockholders have
approved an increase in the number of authorized shares of the Issuer's
common stock of at least 2,460,000 shares.
2. ACCEPTANCE OF SUBSCRIPTION. The Issuer shall, in its sole
discretion, determine whether to accept the Purchaser's subscription for the
Units. In no event will the Issuer accept the subscription unless the Issuer
is satisfied that its offer and sale of the Units to the Purchaser is exempt
from registration requirements under the Securities Act and is exempt from
registration or qualification requirements of applicable State Laws. The
Issuer shall notify the Purchaser promptly of its decision whether or not to
accept the Purchaser's subscription. If the Issuer accepts the subscription,
it shall provide the Purchaser with wire transfer instructions for delivery
to the Issuer's account of the Purchase Price for the Units.
3. WIRE TRANSFER OF PAYMENT FOR AND DELIVERY OF THE UNITS. Promptly
after the Purchaser has wired the total purchase price for the Units to the
Issuer's account as instructed, the Issuer shall issue and deliver
certificates representing the Shares and the Warrants in the name and to the
address specified by the Purchaser in the registration and delivery
instructions on the signature page of this agreement.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser hereby
represents and warrants to the Issuer that:
4.1 INVESTMENT INTENT. The Purchaser is acquiring the Units
solely for the Purchaser's own account for investment purposes, and not with
a view to, or for offer or sale in connection with, any distribution of the
Units in violation of the Securities Act.
4.2 ACCESS TO INFORMATION. The Purchaser has received a
copy of the Issuer's annual report on Form 10-KSB for the year ended June 30,
1999 (the "Annual Report") and has reviewed it carefully, including the risk
factors set forth under the heading, "Management's Discussion and Analysis or
Plan of Operation--Risk Factors." If desired, the Purchaser has also sought
and obtained from management of the Issuer such additional information
concerning the business, management and financial affairs of the Issuer as
the Purchaser has deemed necessary or appropriate in evaluating an investment
in the Issuer and determining whether or not to purchase the Units.
4.3 ACCREDITED INVESTOR. By completing the Accredited
Investor Certification attached as Exhibit A, the Purchaser represents and
warrants that it is an accredited investor, as defined by Rule 501(a) of
Regulation D under the Securities Act.
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4.4 PREEXISTING RELATIONSHIP; KNOWLEDGE AND EXPERIENCE. The
Purchaser has a preexisting personal and/or business relationship with the
Issuer and certain of its officers, directors and/or controlling persons, is
experienced in evaluating and investing in the securities of businesses in
the development stage, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the Units and of protecting its interests in connection with an
acquisition of the Units.
4.5 SUITABILITY. The Purchaser has carefully considered,
and has, to the extent the Purchaser deems it necessary, discussed with the
Purchaser's own professional legal, tax and financial advisers the
suitability of an investment in the Units for the Purchaser's particular tax
and financial situation, and the Purchaser has determined that the Units are
a suitable investment for the Purchaser.
4.6 ILLIQUIDITY; ABILITY TO BEAR RISK OF LOSS. The
Purchaser has no need for liquidity in its investment in the Units, is
financially able to hold the Units subject to restrictions on transfer for an
indefinite period of time, and is capable of bearing the economic risk of
losing up to the entire amount of its investment in the Units.
4.7 PRIVATE OFFERING. The offer of the Units was directly
communicated to the Purchaser by the Issuer. At no time was the Purchaser
presented with or solicited by any leaflet, newspaper or magazine article,
radio or television advertisement, or any other form of general advertising
or solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such directly communicated offer.
4.8 TRUTH AND ACCURACY. All representations and warranties
made by the Purchaser in this agreement are true and accurate as of the date
hereof and shall be true and accurate as of the date the Issuer issues the
Units. If at any time prior to the issuance of the Units any representation
or warranty shall not be true and accurate in any respect, the Purchaser
shall so notify the Issuer.
4.9 AUTHORITY. If the Purchaser is an entity, the
individual executing and delivering this agreement on behalf of the Purchaser
has been duly authorized to execute and deliver this agreement on behalf of
the Purchaser, the signature of such individual is binding upon the
Purchaser, the Purchaser is duly organized and subsisting under the laws of
the jurisdiction in which is was organized, and the Purchaser was not formed
for the specific purpose of acquiring the Units.
4.10 NO VIOLATION. The execution and delivery of this
agreement and the consummation of the transactions or performance of the
obligations contemplated by this agreement do not and will not violate any
term of the Purchaser's organizational documents (if the Purchaser is an
entity) and will not result in a breach of any term of, or constitute a
default under, any statute, indenture, mortgage, other agreement or
instrument to which the Purchaser is a party or by which it is bound, or any
order, writ, judgment or decree.
4.11 ENFORCEABILITY. The Purchaser has duly executed and
delivered this agreement and (subject to its execution by the Issuer) it
constitutes a valid and binding agreement of the Purchaser enforceable in
accordance with its terms against the Purchaser, except as such
enforceability may be limited by principles of public policy, and subject to
laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief
or other equitable remedies.
4.12 RELIANCE ON OWN ADVISERS. In connection with the
Purchaser's investment in the Units, the Purchaser has not relied upon the
Issuer or its advisers for legal or tax advice, and has, if desired, in all
cases sought the advice of the Purchaser's own legal counsel and tax advisers.
4.13 SCOPE OF BUSINESS. The Purchaser has been advised and
understands that the Issuer will be exposed to numerous investment
opportunities in all areas of the oil and gas industry and may therefore
pursue various types of opportunities, even if they do not fit within the
primary focus of the Issuer's current business plan. For example, such
opportunities could include investments both onshore and offshore the United
States and also international investments. Potential opportunities could also
include such things as downstream investments in oil and gas service
companies, pipelines, and gas processing and gas storage facilities.
5. ISSUER'S REPRESENTATIONS AND WARRANTIES. The Issuer hereby
represents and warrants to the Purchaser that:
2
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5.1 AUTHORITY. The individual executing and delivering this
agreement on behalf of the Issuer has been duly authorized to execute and
deliver this agreement on behalf of the Issuer, the signature of such
individual is binding upon the Issuer, and the Issuer is duly organized and
subsisting under the laws of the jurisdiction in which it was organized.
5.2 ENFORCEABILITY. The Issuer has duly executed and
delivered this agreement and (subject to its execution by the Purchaser) it
constitutes a valid and binding agreement of the Issuer enforceable in
accordance with its terms against the Issuer, except as such enforceability
may be limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
5.3 CAPITALIZATION.
(a) The Issuer has no outstanding capital
stock other than common stock and Series B preferred stock as of the date of
this agreement. The Issuer is authorized to issue 12,375,000 shares of common
stock, of which 1,509,865 shares are issued and outstanding, and 125,000
shares of preferred stock, of which 50,000 shares have been designated as
Series B preferred stock and 16,792 shares are issued and outstanding until
their automatic conversion into a total of 503,760 shares of common stock on
August 16, 1999. All of the outstanding shares of common stock of the Issuer
have been duly and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights. The Shares have been duly
authorized and, when issued and delivered to the Purchaser against payment
therefor as provided by this agreement, will be validly issued, fully paid
and non-assessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights.
(b) To the Issuer's knowledge, the legal and
beneficial ownership of the common and preferred stock of the Issuer is as
set forth in the Annual Report. Except as set forth in the Annual Report, the
Issuer is not a party to or otherwise bound by any agreement, arrangement or
understanding relating to the issuance, sale or transfer of any securities of
the Issuer (including, without limitation, as relates to options, warrants,
or similar rights).
5.4 NO CONFLICTS. The issuance and sale of the Units to the
Purchaser as contemplated hereby will not violate or conflict with the
Issuer's Articles of Incorporation or By-laws or any agreements to which the
Issuer is a party or by which it is otherwise bound or, to the Issuer's
knowledge, any statute, rule or regulation (federal, state, local or foreign)
to which it is subject.
5.5 SEC DOCUMENTS. The Issuer has provided the Annual
Report to the Purchaser. As of the date hereof, the Annual Report does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Issuer included in the Annual
Report have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the financial
position of the Issuer as of the dates thereof and the results of its
operations and cash flows for the periods then ended. The Issuer has included
in the Annual Report all material agreements, contracts and other documents
that it reasonably believes are required to be filed as exhibits to the
Annual Report.
6. RESTRICTIONS ON TRANSFER.
6.1 RESALE RESTRICTIONS. The Purchaser understands that the
offer and sale of the Units to the Purchaser has not been registered under
the Securities Act or under any State Laws. The Purchaser agrees not to
offer, sell or otherwise transfer the Shares, or any interest in the Shares,
unless (i) the offer and sale is registered under the Securities Act, (ii)
the Shares may be sold in accordance with the applicable requirements and
limitations of Rule 144 under the Securities Act and any applicable State
Laws and, if the Issuer so requests, the Purchaser delivers to the Issuer an
opinion of counsel to such effect, or (iii) the Purchaser delivers to the
Issuer an opinion of counsel reasonably satisfactory to the Issuer that the
offer and sale is otherwise exempt from Securities Act registration.
6.2 RESTRICTIVE LEGEND. The Purchaser understands and
agrees that a legend in substantially the following form will be placed on
the certificate representing the Shares:
3
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"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS (i) THE OFFER AND SALE IS REGISTERED UNDER
THE SECURITIES ACT, OR (ii) THE OFFER AND SALE IS EXEMPT FROM
SECURITIES ACT REGISTRATION AND THE TERMS OF SECTION 6.1 OF THE
SUBSCRIPTION AGREEMENT PURSUANT TO WHICH THE SECURITIES WERE ORIGINALLY
PURCHASED HAVE BEEN COMPLIED WITH. (A COPY OF THE SUBSCRIPTION
AGREEMENT IS ON FILE AT THE CORPORATE OFFICE OF THE ISSUER.)"
6.3 NO REGISTRATION; ILLIQUID INVESTMENT. The Issuer is
under no obligation and has no intention of registering any resale of the
Shares or the Warrant Shares by the Purchaser; however, if in the future the
Issuer should elect to include in a Securities Act registration statement any
of the other securities sold by the Issuer in the same offering in which the
Issuer is selling the Units to the Purchaser, then the Issuer will also
include the Purchaser's Shares and Warrant Shares in that registration
statement. The Purchaser acknowledges that it must bear the economic risk of
its investment in the Units for an indefinite period of time, until such
time, if ever, that an exemption from registration is available. The
Purchaser acknowledges that the soonest that the Rule 144 exemption from
registration could become available for resale of the Shares or Warrant
Shares would be after the Purchaser has paid for and held such shares for one
year.
7. RELIANCE. The Purchaser understands and agrees that the Issuer
and its officers, directors, employees and agents may, and will, rely on the
accuracy of the Purchaser's representations and warranties in this agreement
to establish compliance with applicable securities laws. The Purchaser agrees
to indemnify and hold harmless all such parties against all losses, claims,
costs, expenses and damages or liabilities which they may suffer or incur
caused or arising from their reliance on such representations and warranties.
8. MISCELLANEOUS.
8.1 SURVIVAL. The representations and warranties made in
this agreement shall survive the closing of the transactions contemplated by
this agreement.
8.2 ASSIGNMENT. This agreement is not transferable or
assignable.
8.3 EXECUTION AND DELIVERY OF AGREEMENT. The Issuer shall
be entitled to rely on delivery by facsimile transmission of an executed copy
of this agreement, and acceptance by the Issuer of such facsimile copy shall
create a valid and binding agreement between the Purchaser and the Issuer.
8.4 TITLES. The titles of the sections and subsections of
this agreement are for the convenience of reference only and are not to be
considered in construing this agreement.
8.5 SEVERABILITY. The invalidity or unenforceability of any
particular provision of this agreement shall not affect or limit the validity
or enforceability of the remaining provisions of this agreement.
8.6 ENTIRE AGREEMENT. This agreement constitutes the entire
agreement and understanding between the parties with respect to the subject
matters herein and supersedes and replaces any prior agreements and
understandings, whether oral or written, between them with respect to such
matters.
8.7 WAIVER AND AMENDMENT. Except as otherwise provided
herein, the provisions of this agreement may be waived, altered, amended or
repealed, in whole or in part, only upon the mutual written agreement of the
Purchaser and the Issuer.
8.8 COUNTERPARTS. This agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
8.9 GOVERNING LAW. This agreement is governed by and shall
be construed in accordance with the laws of the State of California.
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8.10 BUSINESS OPPORTUNITY MATTERS.
(a) Issuer and Purchaser acknowledge and
agree that neither Purchaser nor any of its affiliates shall be expressly or
implicitly restricted or proscribed pursuant to this agreement, the
relationship that exists between Purchaser and Issuer or otherwise, from
engaging in any type of business activity or owning an interest in any type
of business entity, regardless of whether such business activity is (or such
business entity engages in businesses that are) in direct or indirect
competition with the businesses or activities of Issuer or any of its
affiliates. Without limiting the foregoing, Purchaser and Issuer acknowledge
and agree that (i) neither Issuer nor its affiliates nor any other person
shall have any rights, by virtue of this agreement, the relationship that
exists between Purchaser and Issuer or otherwise, in any business venture or
business opportunity of Purchaser or any of its affiliates, and neither
Purchaser nor its affiliates shall have any obligation to offer any interest
in any such business venture or business opportunity to Issuer, any
affiliates of Issuer or any other person, or otherwise account to any of such
persons in respect of any such business ventures, (ii) the activities of
Purchaser or any of its affiliates that are in direct or indirect competition
with the activities of Issuer or any of its affiliates are hereby approved by
Issuer, and (iii) it shall be deemed not to be a breach of any fiduciary or
other duties, if any, whether express or implied, that may be owed by
Purchaser or its affiliates to the Issuer or its affiliates for Purchaser to
permit itself or one of its affiliates to engage in a business opportunity in
preference over or to the exclusion of Issuer, its affiliates or any other
person.
(b) Neither Issuer nor its affiliates shall
enter into any "area of mutual interest" agreement or similar agreement that
could or would have the effect of binding Purchaser or any of its affiliates
or their respective properties.
(c) For purposes of this Section 8.10, the
term "affiliate," when used to refer to affiliates of Purchaser, shall
exclude Issuer and its affiliates.
[REST OF PAGE INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above mentioned.
THE "ISSUER" THE "PURCHASER"
MGPX VENTURES, INC.
Charles M. Reimer
Name of Purchaser (please type or print)
By:/s/ Kenneth R. Peak
-------------------
Kenneth R. Peak /s/ Charles M. Reimer
----------------------
Signature and, if applicable, title of person
signing
400,000
Number of Units subscribed for
$44,000
Total Purchase Price
6
<PAGE>
EXHIBIT 2
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY
STATE SECURITIES LAWS ("STATE LAWS") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS THE OFFER AND SALE IS REGISTERED UNDER THE SECURITIES ACT OR
THE ISSUER RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER
THAT THE OFFER AND SALE IS EXEMPT FROM SECURITIES ACT REGISTRATION.
SUBSCRIPTION AGREEMENT
This agreement is made and entered into as of the 2nd day of September,
1999, by and between MGPX Ventures, Inc. (the "Issuer") and the undersigned (the
"Purchaser").
1. SUBSCRIPTION FOR AND AGREEMENT TO PURCHASE SHARES. On the terms and
subject to the conditions set forth in this agreement, the Purchaser hereby
subscribes for and irrevocably agrees to purchase from the Issuer that number of
shares of the Issuer's common stock which is set forth on the signature page of
this agreement (the "Shares") at the purchase price of $0.30 per Share (the
"Purchase Price"), payable by wire transfer to the account of the Issuer.
2. ACCEPTANCE OF SUBSCRIPTION. The Issuer shall, in its sole
discretion, determine whether to accept the Purchaser's subscription for the
Shares. In no event will the Issuer accept the subscription unless the Issuer is
satisfied that its offer and sale of the Shares to the Purchaser is exempt from
registration requirements under the Securities Act and is exempt from
registration or qualification requirements of applicable State Laws. The Issuer
shall notify the Purchaser promptly of its decision whether or not to accept the
Purchaser's subscription. If the Issuer accepts the subscription, it shall
provide the Purchaser with wire transfer instructions for delivery to the
Issuer's account of the Purchase Price for the Shares.
3. WIRE TRANSFER OF PAYMENT FOR AND DELIVERY OF THE SHARES. Promptly
after the Purchaser has wired the total purchase price for the Shares to the
Issuer's account as instructed, the Issuer shall issue and deliver a certificate
representing the Shares in the name and to the address specified by the
Purchaser in the registration and delivery instructions on the signature page of
this agreement.
4. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser hereby
represents and warrants to the Issuer that:
4.1 INVESTMENT INTENT. The Purchaser is acquiring the Shares
solely for the Purchaser's own account for investment purposes, and not with a
view to, or for offer or sale in connection with, any distribution of the Shares
in violation of the Securities Act.
4.2 ACCESS TO INFORMATION. The Purchaser has received a copy
of the Issuer's annual report on Form 10-KSB for the year ended June 30, 1999
(the "Annual Report") and has reviewed it carefully, including the risk factors
set forth under the heading, "Management's Discussion and Analysis or Plan of
Operation -- Risk Factors." In addition, the Purchaser has received and reviewed
a copy of the Issuer's preliminary proxy statement for its annual meeting of
stockholders to be held on September 28, 1999 (the "Proxy Statement"). If
desired, the Purchaser has also sought and obtained from management of the
Issuer such additional information concerning the business, management and
financial affairs of the Issuer as the Purchaser has deemed necessary or
appropriate in evaluating an investment in the Issuer and determining whether or
not to purchase the Shares.
4.3 ACCREDITED INVESTOR. By completing the Accredited Investor
Certification attached as Exhibit A, the Purchaser represents and warrants that
it is an accredited investor, as defined by Rule 501(a) of Regulation D under
the Securities Act.
4.4 PREEXISTING RELATIONSHIP; KNOWLEDGE AND EXPERIENCE. The
Purchaser has a preexisting personal and/or business relationship with the
Issuer and certain of its officers, directors and/or controlling persons, is
experienced in evaluating and investing in the securities of businesses in the
development stage, and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the Shares and of protecting its interests in connection with an
acquisition of the Shares.
<PAGE>
4.5 SUITABILITY. The Purchaser has carefully considered, and
has, to the extent the Purchaser deems it necessary, discussed with the
Purchaser's own professional legal, tax and financial advisers the suitability
of an investment in the Shares for the Purchaser's particular tax and financial
situation, and the Purchaser has determined that the Shares are a suitable
investment for the Purchaser.
4.6 ILLIQUIDITY; ABILITY TO BEAR RISK OF LOSS. The Purchaser
has no need for liquidity in its investment in the Shares, is financially able
to hold the Shares subject to restrictions on transfer for an indefinite period
of time, and is capable of bearing the economic risk of losing up to the entire
amount of its investment in the Shares.
4.7 PRIVATE OFFERING. The offer of the Shares was directly
communicated to the Purchaser by the Issuer. At no time was the Purchaser
presented with or solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such directly communicated offer.
4.8 TRUTH AND ACCURACY. All representations and warranties
made by the Purchaser in this agreement are true and accurate as of the date
hereof and shall be true and accurate as of the date the Issuer issues the
Shares. If at any time prior to the issuance of the Shares any representation or
warranty shall not be true and accurate in any respect, the Purchaser shall so
notify the Issuer.
4.9 AUTHORITY. If the Purchaser is an entity, the individual
executing and delivering this agreement on behalf of the Purchaser has been duly
authorized to execute and deliver this agreement on behalf of the Purchaser, the
signature of such individual is binding upon the Purchaser, the Purchaser is
duly organized and subsisting under the laws of the jurisdiction in which is was
organized, and the Purchaser was not formed for the specific purpose of
acquiring the Shares.
4.10 NO VIOLATION. The execution and delivery of this
agreement and the consummation of the transactions or performance of the
obligations contemplated by this agreement do not and will not violate any term
of the Purchaser's organizational documents (if the Purchaser is an entity) and
will not result in a breach of any term of, or constitute a default under, any
statute, indenture, mortgage, other agreement or instrument to which the
Purchaser is a party or by which it is bound, or any order, writ, judgment or
decree.
4.11 ENFORCEABILITY. The Purchaser has duly executed and
delivered this agreement and (subject to its execution by the Issuer) it
constitutes a valid and binding agreement of the Purchaser enforceable in
accordance with its terms against the Purchaser, except as such enforceability
may be limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.12 RELIANCE ON OWN ADVISERS. In connection with the
Purchaser's investment in the Shares, the Purchaser has not relied upon the
Issuer or its advisers for legal or tax advice, and has, if desired, in all
cases sought the advice of the Purchaser's own legal counsel and tax advisers.
4.13 SCOPE OF BUSINESS. The Purchaser has been advised and
understands that the Issuer will be exposed to numerous investment opportunities
in all areas of the oil and gas industry and may therefore pursue various types
of opportunities, even if they do not fit within the primary focus of the
Issuer's current business plan. For example, such opportunities could include
investments both onshore and offshore the United States and also international
investments. Potential opportunities could also include such things as
downstream investments in oil and gas service companies, pipelines, and gas
processing and gas storage facilities.
5. ISSUER'S REPRESENTATIONS AND WARRANTIES. The Issuer hereby
represents and warrants to the Purchaser that:
5.1 AUTHORITY. The individual executing and delivering this
agreement on behalf of the Issuer has been duly authorized to execute and
deliver this agreement on behalf of the Issuer, the signature of such individual
is binding upon the Issuer, and the Issuer is duly organized and subsisting
under the laws of the jurisdiction in which it was organized.
<PAGE>
5.2 ENFORCEABILITY. The Issuer has duly executed and delivered
this agreement and (subject to its execution by the Purchaser) it constitutes a
valid and binding agreement of the Issuer enforceable in accordance with its
terms against the Issuer, except as such enforceability may be limited by
principles of public policy, and subject to laws of general application relating
to bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
5.3 CAPITALIZATION.
(a) The Issuer has no outstanding capital stock
other than common stock as of the date of this agreement. The Issuer is
authorized to issue 12,375,000 shares of common stock, of which 8,473,625 shares
are issued and outstanding, and 125,000 shares of preferred stock, of which
50,000 shares have been designated as Series B preferred stock and no shares are
issued and outstanding. All of the outstanding shares of common stock of the
Issuer have been duly and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights; and the Shares have been duly
authorized and, when issued and delivered to the Purchaser against payment
therefor as provided by this agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights.
(b) To the Issuer's knowledge, the legal and
beneficial ownership of the common stock of the Issuer is as set forth in the
Proxy Statement. Except as set forth in the Proxy Statement, the Issuer is not a
party to or otherwise bound by any agreement, arrangement or understanding
relating to the issuance, sale or transfer of any securities of the Issuer
(including, without limitation, as relates to options, warrants, or similar
rights).
5.4 NO CONFLICTS. The issuance and sale of the Shares to the
Purchaser as contemplated hereby will not violate or conflict with the Issuer's
Articles of Incorporation or By-laws or any agreements to which the Issuer is a
party or by which it is otherwise bound or, to the Issuer's knowledge, any
statute, rule or regulation (federal, state, local or foreign) to which it is
subject.
5.5 SEC DOCUMENTS. The Issuer has provided the Annual Report
and the Proxy Statement to the Purchaser. As of the date hereof, the Annual
Report and the Proxy Statement do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Issuer
included in the Annual Report have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the financial position of the Issuer as of the dates thereof and the results of
its operations and cash flows for the periods then ended. The Issuer has
included in the Annual Report all material agreements, contracts and other
documents that it reasonably believes are required to be filed as exhibits to
the Annual Report.
6. RESTRICTIONS ON TRANSFER.
6.1 RESALE RESTRICTIONS. The Purchaser understands that the
offer and sale of the Shares to the Purchaser has not been registered under the
Securities Act or under any State Laws. The Purchaser agrees not to offer, sell
or otherwise transfer the Shares, or any interest in the Shares, unless (i) the
offer and sale is registered under the Securities Act, (ii) the Shares may be
sold in accordance with the applicable requirements and limitations of Rule 144
under the Securities Act and any applicable State Laws and, if the Issuer so
requests, the Purchaser delivers to the Issuer an opinion of counsel to such
effect, or (iii) the Purchaser delivers to the Issuer an opinion of counsel
reasonably satisfactory to the Issuer that the offer and sale is otherwise
exempt from Securities Act registration.
6.2 RESTRICTIVE LEGEND. The Purchaser understands and agrees
that a legend in substantially the following form will be placed on the
certificate representing the Shares:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS (i) THE OFFER AND SALE IS REGISTERED UNDER
THE SECURITIES ACT, OR (ii) THE OFFER AND SALE IS EXEMPT FROM SECURITIES
ACT REGISTRATION AND THE TERMS OF
<PAGE>
SECTION 6.1 OF THE SUBSCRIPTION AGREEMENT PURSUANT TO WHICH THE
SECURITIES WERE ORIGINALLY PURCHASED HAVE BEEN COMPLIED WITH.
(A COPY OF THE SUBSCRIPTION AGREEMENT IS ON FILE AT THE CORPORATE
OFFICE OF THE ISSUER.)"
6.3 NO REGISTRATION; ILLIQUID INVESTMENT. The Issuer is under
no obligation and has no intention of registering any resale of the Shares by
the Purchaser; however, if in the future the Issuer should elect to include in a
Securities Act registration statement any of the other securities sold by the
Issuer in the same offering in which the Issuer is selling the Shares to the
Purchaser, then the Issuer will also include the Purchaser's Shares in that
registration statement. The Purchaser acknowledges that it must bear the
economic risk of its investment in the Shares for an indefinite period of time,
until such time, if ever, that an exemption from registration is available. The
Purchaser acknowledges that the soonest that the Rule 144 exemption from
registration could become available would be after the Purchaser has paid for
and held the Shares for one year.
7. RELIANCE. The Purchaser understands and agrees that the Issuer and
its officers, directors, employees and agents may, and will, rely on the
accuracy of the Purchaser's representations and warranties in this agreement to
establish compliance with applicable securities laws. The Purchaser agrees to
indemnify and hold harmless all such parties against all losses, claims, costs,
expenses and damages or liabilities which they may suffer or incur caused or
arising from their reliance on such representations and warranties.
8. MISCELLANEOUS.
8.1 SURVIVAL. The representations and warranties made in this
agreement shall survive the closing of the transactions contemplated by this
agreement.
8.2 ASSIGNMENT. This agreement is not transferable or
assignable.
8.3 EXECUTION AND DELIVERY OF AGREEMENT. The Issuer shall be
entitled to rely on delivery by facsimile transmission of an executed copy of
this agreement, and acceptance by the Issuer of such facsimile copy shall create
a valid and binding agreement between the Purchaser and the Issuer.
8.4 TITLES. The titles of the sections and subsections of this
agreement are for the convenience of reference only and are not to be considered
in construing this agreement.
8.5 SEVERABILITY. The invalidity or unenforceability of any
particular provision of this agreement shall not affect or limit the validity or
enforceability of the remaining provisions of this agreement.
8.6 ENTIRE AGREEMENT. This agreement constitutes the entire
agreement and understanding between the parties with respect to the subject
matters herein and supersedes and replaces any prior agreements and
understandings, whether oral or written, between them with respect to such
matters.
8.7 WAIVER AND AMENDMENT. Except as otherwise provided herein,
the provisions of this agreement may be waived, altered, amended or repealed, in
whole or in part, only upon the mutual written agreement of the Purchaser and
the Issuer.
8.8 COUNTERPARTS. This agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
8.9 GOVERNING LAW. This agreement is governed by and shall
be construed in accordance with the laws of the State of Nevada.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above mentioned.
THE "ISSUER" THE "PURCHASER"
MGPX VENTURES, INC.
Charles M. Reimer
Name of Purchaser (please type or print)
By: /s/ Kenneth R. Peak
--------------------
Kenneth R. Peak /s/ Charles M. Reimer
Signature and, if applicable, title of person
signing
