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EXHIBIT 99.2
CONTANGO OIL & GAS COMPANY
CO-SALE AGREEMENT
THIS CO-SALE AGREEMENT (the "Agreement") is made as of this 8th day of
June, 2000, by and among Contango Oil & Gas Company, a Nevada corporation (the
"Company"), the Southern Ute Indian Tribe, a federally recognized Indian tribe
organized under the Indian Reorganization Act of 1934, doing business as the
Southern Ute Indian Tribe Growth Fund (the "SUIT"), Trust Company of the West, a
California trust company, in its capacities as Investment Manager pursuant to
the Investment Management Agreement dated as of June 6, 1988 between General
Xxxxx, Inc. and the Trust Company of the West and as Custodian pursuant to the
Custody Agreement dated as of February 6, 1989 among General Xxxxx, Inc., the
Trust Company of the West and State Street Bank and Trust Company, as Trustee
("TCW") and Xxxxxxx X. Peak ("Peak").
RECITALS
WHEREAS, SUIT is purchasing shares of the Company's Common Stock, and
options to purchase additional shares of Common Stock (the "Options" and
together with the Common Stock purchased by SUIT, the "SUIT Securities"),
pursuant to that certain Securities Purchase Agreement dated as of the date
hereof (the "Securities Purchase Agreement"), between SUIT and the Company;
WHEREAS, TCW has previously purchased shares of the Company's Common
Stock, and a warrant to purchase additional shares of Common Stock (the
"Warrant" and together with the Common Stock purchased by TCW, the "TCW
Securities"; the SUIT Securities and the TCW Securities collectively the
"Securities") and has previously entered into a Co-Sale Agreement dated December
30, 1999 with the Company and Peak (the "Prior Co-Sale Agreement");
WHEREAS, SUIT was induced by the Company to purchase the Securities in
part by the Company's, Peak's and TCW's agreement to enter into this Agreement;
and
WHEREAS, the parties desire to enter into this Agreement in order to
grant rights of co-sale to SUIT and replace the Prior Co-Sale Agreement.
In consideration of the mutual covenants set forth herein, the parties
agree hereto as follows:
1. DEFINITIONS.
(a) "CO-SALE STOCK" shall mean shares of the Company's Common Stock now
owned or subsequently acquired by Peak.
(b) "COMMON STOCK" shall mean the Company's Common Stock and shares of
Common Stock issued or issuable upon exercise of the Options or the Warrant.
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2. SALES BY PEAK.
(a) If Peak proposes to sell or transfer any shares of Co-Sale Stock, then
Peak shall promptly give written notice (the "Notice") simultaneously to the
Company, to SUIT and to TCW at least thirty (30) days prior to the closing of
such sale or transfer. The Notice shall describe in reasonable detail the
proposed sale or transfer including, without limitation, the number of shares of
Co-Sale Stock to be sold or transferred, the nature of such sale or transfer,
the consideration to be paid, and the name and address of each prospective
purchaser or transferee.
(b) SUIT and TCW shall each have the right, exercisable upon written notice
to Peak within fifteen (15) days after the Notice, to participate in such sale
of Co-Sale Stock on the same terms and conditions. Such notice shall indicate
the number of shares of Common Stock SUIT and/or TCW wishes to sell under its
right to participate. To the extent SUIT or TCW exercises such right of
participation in accordance with the terms and conditions set forth below, the
number of shares of Co-Sale Stock that Peak may sell in the transaction shall be
correspondingly reduced. If the prospective purchaser or transferee then
increases the number of shares it would like to purchase, Peak will provide
notification of such change to SUIT and and TCW and give SUIT and TCW the
opportunity to sell additional shares.
(c) SUIT or TCW, respectively, may sell all or any part of that number of
shares equal to the product obtained by multiplying (i) the aggregate number of
shares of Co-Sale Stock covered by the Notice by (ii) a fraction the numerator
of which is the number of shares of Common Stock owned by SUIT or TCW,
respectively, at the time of the sale or transfer and the denominator of which
is the total number of shares of Common Stock owned by Peak, TCW and SUIT at the
time of the sale or transfer. SUIT or TCW shall effect its respective
participation in the sale by promptly delivering to Peak for transfer to the
prospective purchaser one or more certificates, properly endorsed for transfer,
which represent the number of shares of Common Stock which SUIT or TCW elects to
sell.
(d) After SUIT or TCW shall have received its respective portion of the
sale proceeds by reason of participation in a co-sale transaction, then SUIT or
TCW, as applicable, shall deliver to Peak pursuant to Section 2(c) that number
of shares of Common Stock that shall be transferred to the prospective purchaser
in consummation of the sale of the Common Stock pursuant to the terms and
conditions specified in the Notice. To the extent that any prospective purchaser
or purchasers prohibits such assignment or otherwise refuses to purchase shares
or other securities from SUIT or TCW exercising its rights of co-sale hereunder,
Peak shall not sell to such prospective purchaser or purchasers any Co-Sale
Stock unless and until, simultaneously with such sale, Peak shall purchase such
shares or other securities from SUIT or TCW, as applicable, on the same terms
and conditions specified in the Notice.
(e) The exercise or non-exercise of the rights of SUIT or TCW hereunder to
participate in one or more sales of Co-Sale Stock made by Peak shall not
adversely affect its respective rights to participate in subsequent sales of
Co-Sale Stock subject to Section 2(a). If SUIT or TCW does not elect to
participate in the sale of the Co-Sale Stock subject to the Notice, Peak may,
not later than sixty (60) days following delivery to the Company of the Notice,
enter into an agreement providing for the closing of the transfer of the Co-Sale
Stock covered by the Notice within thirty
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(30) days of such agreement on terms and conditions not more materially
favorable to the transferor than those described in the Notice. Any proposed
transfer on terms and conditions materially more favorable than those described
in the Notice, as well as any subsequent proposed transfer of any of the Co-Sale
Stock by Peak, shall again be subject to the co-sale rights of SUIT and TCW and
shall require compliance by Peak with the procedures described in this Section
2.
3. EXEMPT TRANSFERS.
(a) Notwithstanding the foregoing, the co-sale rights of SUIT and TCW shall
not apply to (i) any pledge of Co-Sale Stock made pursuant to a bona fide loan
transaction with a financial institution that creates a mere security interest,
(ii) any transfer to the ancestors, descendants or spouse of Peak or to trusts
for the benefit of such persons, (iii) any transfer or transfers by Peak to Xxxx
Xxxxxxx so long as such transfer is made in connection with Jurrius' appointment
to the Company's Board of Directors, not to exceed 1,000,000 shares, or (iv) any
bona fide gift of not more than Peak's holdings of the Company's securities on
the date hereof; provided that in the event of any transfer made pursuant to one
of the exemptions provided by clauses (i), (ii) and (iv), (A) Peak shall inform
SUIT and TCW of such pledge, transfer or gift prior to effecting it and (B) the
pledgee, transferee or donee shall furnish SUIT and TCW with a written agreement
to be bound by and comply with all provisions of Section 2. Except with respect
to Co-Sale Stock transferred under clause (iii) above (which Co-Sale Stock shall
no longer be subject to the co-sale rights of SUIT and TCW), such transferred
Co-Sale Stock shall remain "Co-Sale Stock" hereunder, and such pledgee,
transferee or donee shall be treated similarly with Peak for purposes of this
Agreement.
(b) Notwithstanding the foregoing, the provisions of Section 2 shall apply
to the sale of any Co-Sale Stock to (i) the public pursuant to a registration
statement filed with, and declared effective by, the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act")
or (ii) the Company.
4. LEGEND.
(a) Each certificate representing shares of Co-Sale Stock now or hereafter
owned by Peak or issued to any person in connection with a transfer pursuant to
Section 3(a) hereof shall be endorsed with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN CO-SALE
AGREEMENT BY AND BETWEEN SUIT, TCW, THE COMPANY AND CERTAIN HOLDERS OF STOCK OF
THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY."
(b) Peak agrees that the Company may instruct its transfer agent to impose
transfer restrictions on the shares represented by certificates bearing the
legend referred to in Section 4(a) above to enforce the provisions of this
Agreement and the Company agrees to promptly do so. The legend shall be removed
upon termination of this Agreement.
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5. MISCELLANEOUS.
(a) CONDITIONS TO EXERCISE OF RIGHTS. Exercise of TCW's and SUIT's rights
under this Agreement shall be subject to and conditioned upon, and Peak and the
Company shall use their best efforts to assist TCW and SUIT in, compliance with
applicable laws.
(b) GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Nevada.
(c) PRIOR CO-SALE AGREEMENT. This Agreement shall replace the Prior Co-Sale
Agreement in its entirety, and the Prior Co-Sale Agreement is hereby cancelled
and shall have no further force or effect.
(d) AMENDMENT. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only by the written consent of each
of the parties hereto.
(e) NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
party to be notified at the address as set forth on the signature page hereof or
at such other address as such party may designate by ten (10) days advance
written notice to the other parties hereto.
(f) SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
(g) ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
(h) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relative to the specific subject matter hereof. Any previous
agreement among the parties relative to the specific subject matter hereof is
superseded by this Agreement. This Agreement and the rights and obligations of
the parties hereunder shall inure to the benefit of, and be binding upon, their
respective successors, assigns and legal representatives.
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(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this CO-SALE AGREEMENT as
of the date set forth above.
COMPANY: CONTANGO OIL & GAS COMPANY
a Nevada corporation
Address: 3700 Buffalo Speedway By: /s/ Xxxxxxx X. Peak
Suite 960 ------------------------------------------
Xxxxxxx, XX 00000 Xxxxxxx X. Peak
President and Chief Executive Officer
PEAK: /s/ Xxxxxxx X. Peak
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Xxxxxxx X. Peak, an individual
Address: 0000 Xxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
TCW: TRUST COMPANY OF THE WEST, a
California trust company, in its capacities as
Investment Manager pursuant to the
Investment Management Agreement dated as
of June 6, 1988 between General Xxxxx, Inc.
and the Trust Company of the West as
Custodian pursuant to the Custody Agreement
dated as of February 6, 1989 among General
Xxxxx, Inc., the Trust Company of the West and
State Street Bank and Trust Company, as
trustee
Address: 000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000 By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Managing Director
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Managing Director
SUIT: SOUTHERN UTE INDIAN TRIBE, a
federally recognized Indian tribe organized
under the Indian Reorganization Act of 1934,
doing business as the Southern Ute Indian
Tribe Growth Fund
Address: 000 Xxxx 0xx Xxxxxx
Xxxxx X By: /s/ Xxxx X. Xxxxx, Xx.
Xxxxxxx, XX 00000 ------------------------------------------
