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EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
dated as of September 27, 2000
between
CONTANGO OIL & GAS COMPANY
and
AQUILA ENERGY CAPITAL CORPORATION
5,000 shares of Series B Senior Convertible Cumulative Preferred Stock
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TABLE OF CONTENTS
1. AGREEMENT TO PURCHASE SECURITIES...............................................................1
2. WIRE TRANSFER OF PAYMENT FOR AND DELIVERY OF THE SECURITIES....................................1
3. PURCHASER'S REPRESENTATIONS AND WARRANTIES.....................................................1
3.1 Investment Intent.....................................................................1
3.2 Access to Information.................................................................1
3.3 Accredited Investor...................................................................2
3.4 Knowledge and Experience..............................................................2
3.5 Suitability...........................................................................2
3.6 Ability to Bear Risk of Loss..........................................................2
3.7 Private Offering......................................................................2
3.8 Truth and Accuracy....................................................................2
3.9 Authority.............................................................................2
3.10 No Violation..........................................................................3
3.11 Enforceability........................................................................3
3.12 Reliance on Own Advisers..............................................................3
3.13 Scope of Business.....................................................................3
4. ISSUER'S REPRESENTATIONS AND WARRANTIES........................................................3
4.1 Corporate Existence; Authority........................................................3
4.2 Enforceability........................................................................3
4.3 Capitalization........................................................................4
4.4 No Conflicts..........................................................................5
4.5 SEC Documents.........................................................................5
4.6 Litigation............................................................................5
4.7 No Material Adverse Change............................................................6
4.8 Environmental Matters.................................................................6
4.9 Equity Sales Since November 5, 1999...................................................6
4.10 Material Agreements...................................................................6
4.11 Truth and Accuracy....................................................................7
4.12 Compliance with Laws, Other Instruments...............................................7
4.13 Observance of Agreements, Statutes and Orders.........................................7
5. RESTRICTIONS ON TRANSFER.......................................................................7
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5.1 Resale Restrictions...................................................................7
5.2 Restrictive Legend....................................................................8
5.3 Illiquid Investment...................................................................8
6. REGISTRATION PROCEDURES........................................................................8
6.1 Demand Registration Rights............................................................8
6.2 Piggy-Back Registration Rights.......................................................10
6.3 Delivery of Prospectus...............................................................11
6.4 Third Party Registration Rights......................................................11
6.5 Registration in Other Jurisdictions..................................................11
6.6 Notice of Material Events............................................................11
6.7 Notice of Suspension of Effectiveness................................................12
6.8 Listing of Common Stock on Securities Exchanges......................................12
6.9 Further Assurances...................................................................12
6.10 Cooperation..........................................................................12
6.11 Discontinuation of Disposition of Shares.............................................12
6.12 Expenses.............................................................................13
6.13 Indemnification of Purchaser.........................................................13
6.14 Indemnification of Issuer............................................................14
6.15 Participation in Indemnified Claims..................................................14
7. TRANSFER AGENT INSTRUCTIONS...................................................................15
8. RELIANCE......................................................................................15
9. COVENANT REGARDING PRIORITY OF PREFERRED SHARES...............................................15
10. BOARD OF DIRECTORS............................................................................16
11. MISCELLANEOUS.................................................................................16
11.1 Survival.............................................................................16
11.2 Assignment...........................................................................16
11.3 Execution and Delivery of Agreement..................................................17
11.4 Titles...............................................................................17
11.5 Severability.........................................................................17
11.6 Entire Agreement.....................................................................17
11.7 Waiver and Amendment.................................................................17
11.8 Counterparts.........................................................................17
11.9 Governing Law........................................................................17
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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.
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement ("Agreement") is made and entered
into as of the 27th day of September, 2000, by and between Contango Oil & Gas
Company (the "Issuer") and Aquila Energy Capital Corporation (the "Purchaser").
1. AGREEMENT TO PURCHASE SECURITIES. On the terms and subject to the
conditions set forth in this Agreement, the Purchaser hereby agrees to purchase
from the Issuer 5,000 shares of the Issuer's Series B Senior Convertible
Cumulative Preferred Stock, $.04 per share par value (the "Preferred Shares")
for a purchase price of $5,000,000 (the "Purchase Price"), payable by wire
transfer to the account of the Issuer. The shares of Issuer's common stock that
may be issued upon conversion of the Preferred Shares as contemplated by the
Designation Certificate (as defined below) are referred to herein as the
"Converted Shares", and the Preferred Shares and the Converted Shares are
collectively referred to herein as the "Securities").
2. WIRE TRANSFER OF PAYMENT FOR AND DELIVERY OF THE SECURITIES.
Immediately after the Purchaser has wired the Purchase Price for the Preferred
Shares as instructed by Issuer, the Issuer shall issue and deliver a certificate
representing the Preferred 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.
3. PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Purchaser hereby
represents and warrants to the Issuer that:
3.1 Investment Intent. The Purchaser is acquiring the Securities
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
Securities in violation of the Securities Act.
3.2 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 quarterly report on Form 10-QSB for the quarter ended March
31, 2000 (the "Quarterly Report") and has reviewed them carefully, including the
risk factors set forth
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under the heading, "Management's Discussion and Analysis of Plan of Operation --
Risk Factors." In addition, the Purchaser has received and reviewed a copy of
the Issuer's proxy statement for its annual meeting of stockholders 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 Securities.
3.3 Accredited Investor. By completing the Accredited Investor
Certification attached as Exhibit B, the Purchaser represents and warrants that
it is an accredited investor, as defined by Rule 501(a) of Regulation D under
the Securities Act.
3.4 Knowledge and Experience. The Purchaser 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
Securities and of protecting its interests in connection with an acquisition of
the Securities.
3.5 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 Securities for the Purchaser's particular tax and financial
situation, and the Purchaser has determined that the Securities are a suitable
investment for the Purchaser.
3.6 Ability to Bear Risk of Loss. The Purchaser is financially able
to hold the Securities 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 Securities.
3.7 Private Offering. The offer of the Securities 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.
3.8 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 Securities. If
at any time prior to the issuance of the Securities any representation or
warranty shall not be true and accurate in any respect, the Purchaser shall so
notify the Issuer.
3.9 Authority. The individuals executing and delivering this
Agreement on behalf of the Purchaser have been duly authorized to execute and
deliver this Agreement on behalf of the Purchaser, the signature of both such
individuals is binding upon the Purchaser, the Purchaser is duly organized and
subsisting under the
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laws of the jurisdiction in which it was organized, and the Purchaser was not
formed for the specific purpose of acquiring the Securities.
3.10 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.
3.11 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.
3.12 Reliance on Own Advisers. In connection with the Purchaser's
investment in the Securities, 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.
3.13 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
both onshore and offshore United States investments 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.
4. ISSUER'S REPRESENTATIONS AND WARRANTIES. The Issuer hereby
represents and warrants to the Purchaser that:
4.1 Corporate Existence; Authority. The Issuer is a corporation
duly organized, validly existing and in good standing under the laws of Nevada,
and it has all requisite power and authority to carry on its business as it is
being conducted. 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, and the signature of such individual is
binding upon the Issuer.
4.2 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.
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4.3 Capitalization.
(a) The Issuer is authorized to issue 50,000,000 shares of
common stock, of which 22,920,412 shares are issued and outstanding, and, prior
to giving effect to the transactions set forth herein, 125,000 shares of
preferred stock, of which 5,000 shares have been designated as Series A Senior
Convertible Cumulative Preferred Stock (the "Series A Preferred") and 2,500
shares of such Series A Preferred are issued and outstanding. All of the
outstanding shares of common stock and Series A Preferred 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 Preferred 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, shall have the rights and preferences set forth in the Preferred
Stock Series Designation Certificate attached hereto as Exhibit B (the
"Designation Certificate") and the issuance of such Preferred Shares will not be
subject to any preemptive or similar rights. If and when issued, the Converted
Shares will have been duly authorized and when issued and delivered to the
Purchaser against payment therefor as provided by in herein, will be validly
issued, fully paid and non-assessable, and the issuance of such Converted Shares
will not be subject to any preemptive or similar rights.
(b) Prior to giving effect to the transactions set forth
herein, there are no outstanding subscriptions, options, warrants, convertible
securities, calls, commitments, agreements or rights to purchase or otherwise
acquire from the Issuer any shares of, or any securities convertible into, the
capital stock of the Issuer except as set forth on Schedule 4.3(b), including
(i) outstanding options to purchase 1,034,167 shares of the Issuer's common
stock under the Issuer's 1999 Stock Incentive Plan, under which 5,000,000 shares
of common stock are reserved for issuance, (ii) warrants exercisable for
3,830,370 shares of the Issuer's common stock at the exercise price of $1.00 per
share, (iii) outstanding options to purchase an aggregate of 280,000 shares of
the Issuer's common stock pursuant to certain agreements between the Issuer and
various third parties, and (iv) the Series A Preferred stock which is currently
convertible into 2,000,000 shares the Issuer's common stock (excluding accrued
and unpaid dividends).
(c) Except as set forth on Schedule 4.3(c), no shareholders of
the Issuer have any right to require the registration of any securities of the
Issuer or to participate in any such registration.
(d) No issuance of the Preferred Shares, the Converted Shares
and any other securities issued or issuable pursuant to this Agreement or the
Designation Certificate will result in the right of any person to obtain any
"anti-dilution adjustment", including any adjustment to the number of securities
of the Issuer outstanding or hereafter issuable, or to the conversion price or
exchange price of any convertible or exchangeable securities of the Issuer, or
to the exercise price of any option, warrant or right currently outstanding or
issuable.
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4.4 No Conflicts.
(a) The issuance and sale of the Securities to the Purchaser
as contemplated hereby and the performance of this Agreement 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.
(b) The Issuer has obtained, and has provided to the Purchaser
true and correct copies of, written waivers of rights of first refusal to
purchase additional securities issued by the Issuer insofar as such rights
pertain to the Series A Preferred, the Preferred Shares, the Converted Shares
and any other securities issued or issuable pursuant to this Agreement or the
Designation Certificate. Without limited the generality of the preceding
sentence, the Issuer has obtained such written waivers from all parties entitled
to assert the rights set forth in (i) Section 6 (Right to Additional Securities)
under that certain Securities Purchase Agreement dated December 29, 1999, by and
between the Issuer and Trust Company of the West, and (ii) Section 6 (Right to
Additional Securities) under that certain Securities Purchase Agreement dated
June 8, 2000, by and between the Issuer and the Southern Ute Indian Tribe.
(c) The Issuer has obtained, and has provided to the
Purchaser, a true and correct copy of, a written consent to the issuance of the
Preferred Shares, the Converted Shares and any other securities issued or
issuable pursuant to this Agreement or the Designation Certificate from the
holders of the Series A Preferred.
4.5 SEC Documents. The Issuer has provided the Annual Report, the
Quarterly Report and the Proxy Statement to the Purchaser. As of the date
hereof, the Annual Report, the Quarterly 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
and the financial statements dated as of March 31, 2000 heretofore delivered to
the Purchaser, 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 and in its Quarterly Reports on Form 10-QSB filed since the
Annual Report, all material agreements, contracts and other documents that it
reasonably believes are required to be filed as exhibits thereto.
4.6 Litigation. There is no litigation or other legal,
administrative or governmental proceeding pending or, to the knowledge of the
Issuer, threatened against or relating to the Issuer or its properties or
business, that if determined adversely to the Issuer may reasonably be expected
to have a material adverse effect on the present or future operations or
financial condition of the Issuer.
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4.7 No Material Adverse Change. Since the date of the Quarterly
Report, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of the Issuer, and no
event has occurred or circumstance exits that may result in such a material
adverse change.
4.8 Environmental Matters.
(a) Except as would not be reasonably likely to have a
material adverse effect change in the business, operations, properties,
prospects, assets, or condition of the Issuer: (i) to Issuer's knowledge, Issuer
has complied with all applicable Environmental Laws (as defined in Section
4.8(b)); (ii) to Issuer's knowledge, Issuer is not subject to liability for any
Hazardous Substance disposal or contamination on any third party property; (iii)
to Issuer's knowledge, Issuer has not been associated with any release or threat
of release of any Hazardous Substance; (v) Issuer has not received any notice,
demand, letter, claim or request for information alleging that Issuer may be in
violation of or liable under any Environmental Law; (vi) Issuer is not subject
to any orders, decrees, injunctions or other arrangements with any Governmental
Entity or is subject to any indemnity or other agreement with any third party
relating to liability under any Environmental Law or relating to Hazardous
Substances; and (vii) there are no circumstances or conditions involving Issuer
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use or transfer of any
property of Issuer pursuant to any Environmental Law.
(b) For purposes of this Agreement, the term "Environmental
Law" means any federal, state, local or foreign law, regulation, order, decree,
permit, authorization, opinion, common law or agency requirement relating to:
(A) the protection, investigation or restoration of the environment, health and
safety, or natural resources, (B) the handling, use, presence, disposal, release
or threatened release of any Hazardous Substance or (C) noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
(c) For purposes of this Agreement, the term "Hazardous
Substance" means any substance that is: (A) listed, classified or regulated
pursuant to any Environmental Law; (B) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive materials or radon; or (C) any other substance which is
the subject of regulatory action by any governmental entity pursuant to any
Environmental Law.
4.9 Equity Sales Since November 5, 1999. All shares of common stock
sold by Issuer since November 5, 1999, the purchasers thereof, the number of
shares purchased and the dollar amount paid by each purchaser are set forth on
Schedule 4.9.
4.10 Material Agreements. The Issuer has delivered to the Purchaser
true and correct copies of (i) the Agreement dated September 1, 1999, as
amended, between the Issuer and Juneau Exploration Company, LLC (the "Juneau
Agreement"), (ii) the Participation Agreement dated June 8, 2000 between the
Issuer and the Southern Ute Indian Tribe (doing business as Red Willow
Production Company) (the "SUIT
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Participation Agreement"), and (iii) the Limited Liability Company Agreement
dated August 24, 2000 of Republic Exploration LLC (the "▇▇▇ Agreement"), and
since the date received by Purchaser, the Juneau Agreement, the SUIT
Participation Agreement and the ▇▇▇ Agreement have not been amended or modified
in any respect, orally or in writing, are in full force and effect and have not
been terminated.
4.11 Truth and Accuracy. All representations and warranties made by
the Issuer 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 Securities. If
at any time prior to the issuance of any of the Securities any representation or
warranty shall not be true and accurate in any respect, the Issuer shall so
notify the Purchaser.
4.12 Compliance with Laws, Other Instruments. The execution,
delivery and performance by the Issuer of this agreement will not (a)
contravene, result in any breach of, or constitute a default under or result in
the creation of any lien in respect of any property of the Issuer under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or bylaws, or any other material agreement or instrument to
which the Issuer is bound or by which the Issuer or any of its respective
properties may be bound or affected, (b) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or governmental authority applicable to the
Issuer or (c) violate any provision of any statute or other rule or regulation
of any governmental authority applicable to the Issuer.
4.13 Observance of Agreements, Statutes and Orders. The Issuer is
not in default under any term of any agreement or instrument to which it is a
party or by which it is bound, or any order, judgment, decree or ruling of any
court, arbitrator or governmental authority or is in violation of any applicable
law, ordinance, rule or regulation (including without limitation environmental
laws) of any governmental authority which default or violation could have a
material adverse effect upon the business or operations of the Issuer.
5. RESTRICTIONS ON TRANSFER
5.1 Resale Restrictions. The Purchaser understands that the offer
and sale of the Securities 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 Securities, or any interest in the Securities, unless
(i) the offer and sale is registered under the Securities Act, (ii) the
Securities 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 reasonably 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. Notwithstanding the
foregoing subsections (ii) and (iii), no opinion shall be required for transfers
by Purchaser to Purchaser's affiliates.
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5.2 Restrictive Legend. The Purchaser understands and agrees that a
legend in substantially the following form will be placed on the certificates or
other documents representing the Securities:
"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 5.1 OF
THE SECURITIES PURCHASE AGREEMENT PURSUANT TO WHICH THE SECURITIES WERE
ORIGINALLY PURCHASED HAVE BEEN COMPLIED WITH. (A COPY OF THE SECURITIES PURCHASE
AGREEMENT IS ON FILE AT THE CORPORATE OFFICE OF THE ISSUER.)"
5.3 Illiquid Investment. The Purchaser acknowledges that it must
bear the economic risk of its investment in the Securities for an indefinite
period of time, until such time as the Securities are registered or as 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 Securities for one year.
6. REGISTRATION PROCEDURES.
6.1 Demand Registration Rights.
(a) Purchaser shall be entitled to make a request for
registration under the Securities Act of the Converted Shares (the "Registerable
Securities") in an aggregate amount of at least equal to the lesser of (i)
1,705,000 shares and (ii) number of non-registered Converted Shares then issued
to Purchaser (a "Demand Registration"). Within 90 days of the receipt of a
written request for a Demand Registration, the Issuer shall file with the SEC
and use its best efforts to cause to become effective under the Securities Act a
registration statement with respect to such Registerable Securities (a "Demand
Registration Statement"). Any such request will specify the number of
Registerable Securities proposed to be sold and will also specify the intended
method of disposition thereof. The Issuer shall be required to register
Registerable Securities pursuant to this Section 6.1 on a maximum of three
separate occasions; provided, the Issuer shall not be required to register
Registerable Securities pursuant to this Section 6.1 more than once in any
twelve month period. The Issuer shall thereafter use diligence in attempting to
cause each Demand Registration Statement to be declared effective by the SEC and
shall thereafter use diligence to maintain the effectiveness of such Demand
Registration Statement until the earlier to occur of (i) the date which is one
year from the effective date of such Demand Registration Statement, (ii) the
date on which all of the Converted Shares have been sold by the Purchaser or
(iii) the date on which the Converted Shares can be resold in full over a
three-month period pursuant to SEC Rule 144.
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Subject to Section 6.1(b) hereof, no other securities of the Issuer
except securities held by Purchaser, any persons with "demand" registration
rights pursuant to a contractual commitment of the Issuer ("Demand Right
Holder"), and any Person entitled to exercise "piggy back" registration rights
pursuant to contractual commitments of the Issuer shall be included in a Demand
Registration.
(b) In a registration pursuant to Section 6.1(a) hereof
involving an underwritten offering, if the managing underwriter or underwriters
of such underwritten offering have informed, in writing, the Issuer and the
Purchaser that in such underwriter's or underwriters' opinion the total number
of securities which the Purchaser and any other person desiring to participate
in such registration intend to include in such offering is such as to adversely
affect the success of such offering, including the price at which such
securities can be sold, then the Issuer will be required to include in such
registration only the amount of securities which it is so advised should be
included in such registration. In such event, securities shall be registered in
such registration in the following order of priority: (i) first, the
Registerable Securities which have been requested to be included in such
registration by the Purchaser and person(s) exercising demand registration
rights (whether pursuant to this Agreement or otherwise) (pro rata based on the
amount of securities sought to be registered by such Persons), (ii) second,
provided that no securities sought to be included by the Purchasers and the
Demand Right Holders have been excluded from such registration, the securities
of other persons entitled to exercise "piggy-back" registration rights pursuant
to contractual commitments of the Issuer (pro rata based on the amount of
securities sought to be registered by such Persons) and (iii) third, securities
the Issuer proposes to register.
(c) A Demand Registration Statement will not be deemed to have
been effected as a Demand Registration unless it has been declared effective by
the SEC and the Issuer has complied in a timely manner and in all material
respects with all of its obligations under this Agreement with respect thereto;
provided, however, that if, after such Demand Registration Statement has become
effective, the offering of Registerable Securities pursuant to such Registration
Statement is or becomes the subject of any stop order, injunction or other order
or requirement of the SEC or any other governmental or administrative agency or
court that prevents, restrains or otherwise limits the sale of Registerable
Securities pursuant to such Demand Registration Statement for any reason not
attributable to Purchaser and such Demand Registration Statement has not become
effective within a reasonable time period thereafter (not to exceed 60 days),
such Demand Registration Statement will be deemed not to have been effected. If
(i) a registration requested pursuant to this Section 6.1 is deemed not to have
been effected or (ii) a Demand Registration does not remain effective under the
Securities Act until at least the earlier of (A) an aggregate of 90 days after
the effective date thereof or (B) the consummation of the distribution by the
Purchaser of 80% of Purchaser's Registerable Securities covered thereby, then
the Issuer shall continue to be obligated to effect a Demand Registration
pursuant to this Section 6.1. For purposes of calculating the 90-day period
referred to in the preceding sentence, any period of time during which such
Demand Registration Statement was not in effect shall be excluded.
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6.2 Piggy-Back Registration Rights
(a) If at any time a Demand Registration Statement is not in
effect with respect to all Registerable Securities and the Issuer proposes to
file a registration statement under the Securities Act with respect to an
offering by the Issuer for its own account or for the account of any of its
security holders of any class of its Common Stock in a firmly underwritten
public equity offering (other than (i) a registration statement on Form S-4 or
S-8 (or any substitute form that may be adopted by the SEC) or (ii) a
registration statement filed in connection with an exchange offer or offering of
securities solely to the Issuer's existing security holders), then the Issuer
shall give written notice of such proposed filing to the Purchaser as soon as
practicable (but in no event fewer than 30 days before the anticipated filing
date), and such notice shall offer Purchaser the opportunity to register such
number of Registerable Securities as Purchaser may request in writing within 15
days after receipt of such written notice from the Issuer (which request shall
specify the shares intended to be disposed of by Purchaser) (a "Piggy-Back
Registration"). The Issuer shall use its best efforts to keep such Piggy-Back
Registration continuously effective under the Securities Act until at least the
earlier of (A) the 90th day after the effective date thereof or (B) the
consummation of the distribution by the holders of all of the securities covered
thereby. The Issuer shall use its best efforts to cause the managing underwriter
or underwriters, if any, of such proposed offering to permit the Registerable
Securities requested by Purchaser to be included in a Piggy-Back Registration to
be included on the same terms and conditions as any similar securities of the
Issuer or any other security holder included therein and to permit the sale or
other disposition of such Registerable Securities in accordance with the
intended method of distribution thereof. Purchaser shall have the right to
withdraw its request for inclusion of its Registerable Securities in any
Registration Statement pursuant to this Section 6.2 by giving written notice to
the Issuer of its request to withdraw. The Issuer may withdraw the proposed
offering and/or a Piggy-Back Registration (subject to the Issuer's obligation to
use its best efforts to permit such Piggy-Back Registration set forth in the
second immediately preceding sentence) at any time prior to the time it becomes
effective or the Issuer may elect to delay the registration; provided, however,
that the Issuer shall give prompt written notice thereof to Purchaser.
No registration effected under this Section 6.2, and no failure to
effect a registration under this Section 6.2, shall relieve the Issuer of its
obligation to effect a registration upon the request of Purchaser pursuant to
Section 6.1 hereof, and no failure to effect a registration under this Section
6.2 and to complete the sale of securities registered thereunder in connection
therewith shall relieve the Issuer of any other obligation under this Agreement.
(b) In a registration pursuant to Section 6.2 hereof involving
an underwritten offering, if the managing underwriter or underwriters of such
underwritten offering have informed, in writing, the Issuer and the security
holders requesting inclusion in such offering that in such underwriter's or
underwriters' opinion the total number of securities which the Issuer, the
Purchaser and any other persons desiring to participate in such registration
intend to include in such offering is such as to adversely affect the success of
such offering, including the price at which such securities can be sold, then
the Issuer will be required to include in such registration only the amount of
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securities which it is so advised should be included in such registration. In
such event: (x) in cases initially involving the registration for sale of
securities for the Issuer's own account, securities shall be registered in such
offering in the following order of priority: (i) first, the securities which the
Issuer proposes to register and (ii) second, the securities which have been
requested to be included in such registration by persons entitled to exercise
"piggy-back" registration rights pursuant to contractual commitments of the
Issuer (pro rata based on the amount of securities sought to be registered by
such persons); and (y) in cases not initially involving the registration for
sale of securities for the Issuer's own account, securities shall be registered
in such offering in the following order of priority: (i) first, the securities
of any Demand Right Holder whose exercise of a demand registration right is the
basis for the registration, (ii) second, securities of other persons entitled to
exercise "piggy-back" registration rights pursuant to contractual commitments
(pro rata based on the amount of securities sought to be registered by such
Persons) and (iii) third, the securities which the Issuer proposes to register.
6.3 Delivery of Prospectus. Following effectiveness of any
registration statement filed by Issuer pursuant to Sections 6.1 or 6.2 of this
Agreement ("a Registration Statement"), the Issuer shall furnish to the
Purchaser a quantity of the prospectus as well as such other documents as the
Purchaser may reasonably request.
6.4 Third Party Registration Rights. Without the written consent of
the Purchaser, the Issuer shall not grant to any person the right to request the
Issuer to register any securities of the Issuer under the Securities Act unless
the rights so granted are subject to the prior rights of the Purchaser set forth
herein, and are not otherwise in conflict or inconsistent with the provisions of
this Agreement; provided, that Issuer has granted the registration rights set
forth on Schedule 4.3(c).
6.5 Registration in Other Jurisdictions. The Issuer shall use
diligent efforts to (i) register or otherwise qualify the common stock covered
by the Registration Statement for sale under the securities laws of such
jurisdictions as the Purchaser may reasonably request, (ii) prepare and file in
those jurisdictions such amendments (including post-effective amendments) and
supplements as may be required, (iii) take such other actions as may be
necessary to maintain such registrations and/or qualifications in effect at all
times while the Registration Statement is likewise maintained effective and (iv)
take all other actions reasonably necessary or advisable to qualify the
Converted Shares for sale in such jurisdictions; provided, however, that the
Issuer shall not be required in connection therewith or as a condition thereto
to (I) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 6.5, (II) subject itself to general
taxation in any such jurisdiction, (III) file a general consent to service of
process in any such jurisdiction, (IV) provide any undertakings that cause more
than nominal expense or burden to the Issuer or (V) make any change in its
certificate of incorporation or bylaws, which in each case the Board determines
to be contrary to the best interests of the Issuer and its stockholders.
6.6 Notice of Material Events. The Issuer shall, following
effectiveness of the Registration Statement, as promptly as practicable after
becoming aware of any such event, notify the Purchaser of the happening of any
event of which the Issuer has knowledge, as a result of which the prospectus
included in the Registration
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Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to the
Purchaser or as the Purchaser may reasonably request. The Issuer may voluntarily
suspend once the effectiveness of a Registration Statement for a limited time,
which in no event shall be longer than 90 days, if the Issuer has been advised
by legal counsel that the offering of common stock pursuant to the Registration
Statement would adversely affect, or would be improper in view of (or improper
without disclosure in a prospectus), a proposed financing, a reorganization,
recapitalization, merger, consolidation, or similar transaction involving the
Issuer or its subsidiaries, in which event the one year period referred to in
clause (i) of Section 6.1(a) shall be extended for an additional period of time
beyond such one year period equal to the number of days the effectiveness
thereof has been suspended pursuant to this sentence.
6.7 Notice of Suspension of Effectiveness. Following effectiveness
of a Registration Statement, the Issuer, as promptly as practicable after
becoming aware of any such event, will notify the Purchaser of the issuance by
the SEC of any stop order or other suspension of effectiveness of the
Registration Statement at the earliest possible time.
6.8 Listing of Common Stock on Securities Exchanges. Following
effectiveness of a Registration Statement, the Issuer will use diligence either
to (i) cause all the common stock covered by the Registration Statement to be
listed on each national securities exchange on which similar securities issued
by the Issuer are then listed, if any, if the listing of such common stock is
then permitted under the rules of such exchange, or (ii) secure the quotation of
all the common stock covered by the Registration Statement on The Nasdaq
SmallCap Market, if the listing of such common stock is then permitted under the
rules of such The Nasdaq SmallCap Market, or (iii) if, despite the Issuer's best
efforts to satisfy the preceding clause (i) or (ii), the Issuer is unsuccessful
in satisfying the preceding clause (i) or (ii) and without limiting the
generality of the foregoing, to use its best efforts to arrange for at least two
market makers to register with the National Association of Securities Dealers,
Inc. as such with respect to such common stock.
6.9 Further Assurances. It shall be a condition precedent to the
obligations of the Issuer to take any action pursuant to this Article 6 that the
Purchaser shall furnish to the Issuer such information regarding itself as the
Issuer may reasonably request to effect the registration of the common stock and
shall execute such documents in connection with such registration as the Issuer
may reasonably request.
6.10 Cooperation. The Purchaser agrees to cooperate with the Issuer
in any manner reasonably requested by the Issuer in connection with the
preparation and filing of a Registration Statement hereunder.
6.11 Discontinuation of Disposition of Shares. The Purchaser agrees
that, upon receipt of any notice from the Issuer of the happening of any event
of the kind
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described in Section 6.6 or 6.7, the Purchaser will immediately discontinue
disposition of the Converted Shares pursuant to an effective Registration
Statement until the Purchaser's receipt of notice from the Issuer that sales may
resume and copies of the supplemented or amended prospectus and, if so directed
by the Issuer, shall deliver to the Issuer (at the expense of the Issuer) or
destroy (and deliver to the Issuer a certificate of destruction) all copies in
the Purchaser's possession of the prospectus covering such Common Stock current
at the time of receipt of such notice.
6.12 Expenses. All expenses, other than (i) underwriting discounts
and commissions, (ii) other fees and expenses of investment bankers and (iii)
brokerage commissions, in each case incurred in connection with registrations,
filings or qualifications pursuant to this Article 6, including, without
limitation, all registration, listing and qualification fees, printing and
accounting fees and the fees and disbursements of counsel to the Issuer, shall
be borne by the Issuer.
6.13 Indemnification of Purchaser. To the extent permitted by law,
the Issuer will indemnify and hold harmless the Purchaser, its directors and
officers, each person, if any, who is under common control with the Purchaser
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), any underwriter (as defined in the Securities
Act) for the Purchaser, the officers and directors of such underwriter and each
person, if any, who controls any such underwriter within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person"), against any
losses, claims, damages, expenses or liabilities (joint or several)
(collectively, "Claims") to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations in a Registration Statement, or any post effective amendment thereof,
or any prospectus included therein: (i) any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement or any post
effective amendment thereof or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of a Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Issuer files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading or (iii) any violation or alleged violation by the Issuer
of the Securities Act, any state securities law or any rule or regulation under
the Securities Act, the Exchange Act or any state securities law (the matters in
the foregoing clauses (i) through (iii) are hereinafter collectively referred to
as the "Violations"). Subject to the restrictions set forth in Section 6.15 with
respect to the number of legal counsel, the Issuer shall reimburse the Purchaser
and each such underwriter or controlling person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnity contained in this Section 6.13 (I) shall not apply to a
Claim arising out of or based upon a Violation which occurs in reliance upon
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and in conformity with information furnished in writing to the Issuer by any
Indemnified Person or underwriter for such Indemnified Person expressly for use
in connection with the preparation of a Registration Statement or any such
amendment thereof or supplement thereto; (II) with respect to any preliminary
prospectus shall not inure to the benefit of any person from whom the person
asserting any Claim purchased the Converted Shares that are the subject thereof
(or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if such final
prospectus was timely made available by the Issuer; and (III) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Issuer, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Converted Shares by the Purchaser.
6.14 Indemnification of Issuer. The Purchaser agrees to indemnify
and hold harmless, to the same extent and in the same manner set forth in
Section 6.13, the Issuer, each of its directors, each of its officers who signs
a Registration Statement, each person, if any, who controls the Issuer within
the meaning of the Securities Act or the Exchange Act, any underwriter and any
other stockholder selling securities pursuant to a Registration Statement or any
of its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act (each
such person and each Indemnified Person, an "Indemnified Party"), against any
Claim to which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim arises out of or is based upon
any Violation by the Purchaser, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished to the Issuer by the Purchaser expressly for use
in connection with such Registration Statement or such prospectus; and the
Purchaser will reimburse any reasonable legal or other expenses reasonably
incurred by any Indemnified Party in connection with investigating or defending
any such Claim; provided, however, that the indemnity contained in this Section
6.14 shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Purchaser, which
consent shall not be unreasonably withheld; provided, further, that the
Purchaser shall be liable under this Section 6.14 for only that amount of a
Claim as does not exceed the net proceeds to the Purchaser as a result of the
sale of the Converted Shares pursuant to any such Registration Statement or such
prospectus. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Converted Shares (or underlying securities) by the
Purchaser. Notwithstanding anything to the contrary contained herein the
indemnity contained in this Section 6.14 with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.
6.15 Participation in Indemnified Claims. Promptly after receipt by
an Indemnified Person or Indemnified Party under Section 6.13 or 6.14 of notice
of the commencement of any action (including any governmental action), such
Indemnified
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Person or Indemnified Party shall, if a Claim in respect thereof is made against
any indemnifying party under this Article 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying parties; provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. Except as provided in the
preceding sentence, the Issuer shall pay for only one separate legal counsel for
the Indemnified Persons. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Article 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action. The indemnity required by this Article 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
7. TRANSFER AGENT INSTRUCTIONS. The Issuer, concurrently with the
delivery by the Purchaser of the Purchase Price, will issue one or more
certificates representing the Preferred Shares purchased, bearing the
restrictive legend specified in Section 5.2 of this Agreement, registered in the
name of the Purchaser or its nominee and in such denominations as shall be
specified by the Purchaser. The Issuer warrants that the Preferred Shares shall
be freely transferable on the books and records of the Issuer as and to the
extent provided in this Agreement. Nothing in this Section shall affect in any
way the Purchaser's obligations and agreement to comply with all applicable
federal and state securities laws upon resale of the Preferred Shares. If the
Purchaser provides the Issuer with an opinion of counsel reasonably satisfactory
in form, scope and substance to the Issuer that registration of a resale by the
Purchaser of any of the Preferred Shares in accordance with Section 5.1 is not
required under the Securities Act or applicable state securities laws, the
Issuer shall permit the transfer agent to issue one or more share certificates
in such name and in such denominations as specified by the Purchaser.
8. RELIANCE. Each of the Purchaser and the Issuer understand and agree
that the other party and its respective officers, directors, employees and
agents may, and will, rely on the accuracy of the other party's respective
representations and warranties in this Agreement to establish compliance with
applicable securities laws. Each of the Purchaser and the Issuer agree 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.
9. COVENANT REGARDING PRIORITY OF PREFERRED SHARES. The Issuer shall
not issue preferred stock that ranks senior to the Preferred Shares as to
dividend distributions
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or distributions upon the liquidation, winding-up or dissolution of the Issuer
except as approved by the holder(s) of the Preferred Shares pursuant to the
Designation Certificate.
10. BOARD OF DIRECTORS. For so long as the Purchaser holds at least
five percent (5%) of the Issuer's common stock or a sufficient number of
Preferred Shares which, if converted to common stock in accordance with the
Designation Certificate, would constitute at least five percent (5%) of the
Issuer's common stock, or a combination of the foregoing, the Issuer shall use
its best efforts to cause one of the members of the Issuer's Board of Directors
to be an individual selected by the Purchaser in its discretion. Such board
member, if any, shall have all the rights and privileges of each other outside
board member of the Issuer, including rights to compensation as established by
the Issuer. If at any time the Purchaser has not appointed or nominated for
election at least one of the members of the Issuer's Board of Directors and the
Purchaser then holds at least five percent (5%) of the Issuer's common stock or
Preferred Shares which, if converted to common stock in accordance with the
Designation Certificate, would constitute at least five percent (5%) of the
Issuer's common stock, or a combination of the foregoing, then the Purchaser
shall be entitled to appoint one observer to the Issuer's Board of Directors
(the "Observer"). Such Observer shall have the right to attend, and receive all
materials distributed for or at, all meetings (telephone and otherwise) of the
Board of Directors (including committees thereof) and shall be entitled to the
same rights and privileges as directors of the Issuer, except that such Observer
shall not be entitled to vote on matters presented to or discussed by the Board
of Directors. The Observer will receive compensation from the Issuer for his
services as observer on an equal basis with the directors of the Issuer and
shall be entitled to be reimbursed by the Issuer for all reasonable costs and
expenses incurred in connection with his participation in meetings or other
activities of the Board of Directors. The Purchaser will use commercially
reasonable efforts to cause the Observer to keep all information provided to the
Observer in connection with all meetings of the Board of Directors confidential
prior to its becoming public, except that the Observer shall be permitted to
disclose such information (i) to officers, directors, employees,
representatives, agents, auditors, accountants, consultants, advisors, lawyers
and affiliates of the Purchaser in the ordinary course of business who have been
made aware of the confidential nature of the information; (ii) to prospective
assignees and their respective directors, employees, agents and representatives
who have agreed in writing to become subject to this confidentiality provision,
(iii) as required by applicable law, or pursuant to subpoenas or other legal
process, or as requested by governmental agencies and examiners; (iv) to the
extent such information (A) becomes available to the Observer other than as a
result of a breach of this provision or (B) becomes available to the Observer on
a non-confidential basis, or (v) to the extent the Issuer shall have consented
to such disclosure in writing.
11. MISCELLANEOUS.
11.1 Survival. The representations and warranties made in this
Agreement shall survive the closing of the transactions contemplated by this
Agreement.
11.2 Assignment. This Agreement is not transferable or assignable,
except that the rights of Purchaser set forth in Sections 5 and 6 hereof shall
be
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transferable to an affiliate of Purchaser and any transferee of Purchaser's
Securities who receives at least 30% of the Securities to be issued hereby.
11.3 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.
11.4 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.
11.5 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.
11.6 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.
11.7 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.
11.8 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.
11.9 Governing Law. This Agreement is governed by and shall be
construed in accordance with the laws of the State of Nevada.
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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"
CONTANGO OIL & GAS COMPANY AQUILA ENERGY CAPITAL
CORPORATION
By: By:
----------------------------- --------------------------
▇▇▇▇▇▇▇ ▇. Peak
President and Chief Executive
Officer
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EXHIBIT A
ACCREDITED INVESTOR CERTIFICATE
In connection with the issuance of shares of Series B Senior Preferred
Convertible Cumulative Preferred Stock (the "Series B Preferred") of Contango
Oil & Gas Company, a Nevada corporation (the "Company"), the undersigned (an
"Investor") hereby furnishes the following information and makes the following
acknowledgments and representations and warranties:
I. Legal Status of Investor.
Each Investor must check the applicable statement below.
The Investor is (check the appropriate category(ies)):
___ A natural person whose net worth (or joint net worth with his
or her spouse) is in excess of $1,000,000 as of the date
hereof;
___ A natural person whose income in 1997 and 1998 was, and whose
income in 1999 is expected to be, in excess of $200,000, or
whose income with his or her spouse in 1997 and 1998 was, and
whose income with his or her spouse in 1999 is expected to be,
in excess of $300,000;
___ A broker dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended;
___ An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust or partnership, not formed for the specific purpose of
acquiring the Securities, with total assets in excess of
$5,000,000;
___ A trust with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the Securities, whose
purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) under the Securities Act;
___ An entity in which all of the equity owners are "accredited
investors" as defined in Rule 501 under the Securities Act; or
___ A director or executive officer of the Company.
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II. Identity of Investor.
Name: __________________________________________________
Address: __________________________________________________
Telephone: __________________________________________________
Tax ID No.: __________________________________________________
III. Acknowledgment.
Investor understands, acknowledges and agrees that:
(a) The shares of Series B Preferred have not been registered
under the Securities Act or any other applicable federal or state
securities laws;
(b) Investor is acquiring the Series B Preferred for his, her
or its own account for investment purposes and not with a view to, or
for offer or sale in connection with, any distribution of the Series B
Preferred in violation of the Securities Act; and
(c) Investor has a preexisting personal and business
relationship with the Company and certain of its officers, directors
and controlling persons, and, by reason of Investor's business and
financial experience, has the capacity to protect his, her or its
interests in connection with the acquisition of the Series B Preferred.
This completed questionnaire must be returned as soon as possible after
receipt hereof and prior to acquiring the Series B Preferred.
-----------------------------------
Print or type name of Investor
By:
-------------------------------
Name:
Title:
Date: ____________________, 2000
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EXHIBIT B
CERTIFICATE OF DESIGNATION, PREFERENCES,
AND RELATIVE RIGHTS AND LIMITATIONS
OF THE
SERIES B SENIOR CONVERTIBLE CUMULATIVE PREFERRED STOCK
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Schedules
4.3(b) Outstanding Subscriptions, Options, Warrants, Convertible
Securities, etc.
4.3(c) Third Party Registration Rights
4.9 Purchasers of Common Stock since November 5, 1999
Exhibits
A Accredited Investor Certificate
B Certificate of Designation of Series B Senior Convertible
Cumulative Preferred Stock
1