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