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.
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:
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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:
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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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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.
Xxxx X. Xxxxxx
Name of Purchaser (please type or print)
By:/s/ Xxxxxxx X. Peak
-------------------
Xxxxxxx X. Peak /s/ Xxxx X. Xxxxxx
------------------
Signature and, if applicable, title of person
signing
400,000 units & 400,000 warrants
Number of Units subscribed for
$44,000
Total Purchase Price
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