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.
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.
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
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.
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.
Xxxxxxx X. Peak
Name of Purchaser
(please type or print)
By: /s/ Xxxxxxx X. Peak
-------------------
Xxxxxxx X. Peak /s/ Xxxxxxx X. Peak
Signature and, if applicable,
title of person signing
