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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 20, 2004
NATURAL GAS SERVICES GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Colorado 1-31398 75-2811855
(State or other jurisdiction (Commission File (IRS Employer
of Incorporation or organization) Number) Identification No.)
2911 South County Road 1260 Midland, Texas 79706
(Address of Principal Executive Offices) (Zip Code)
432-563-3974
(Registrant's telephone number, including area code)
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Item 5. Other Events and Regulation FD Disclosure.
On July 20, 2004, Natural Gas Services Group, Inc. and CBarney
Investments, Ltd. entered into a Securities Purchase Agreement. Under this
agreement, Natural Gas Services Group agreed to issue and sell 649,574 shares of
its common stock to CBarney at $7.69736 per share. The per share price was
determined by multiplying (x) $8.747, the average closing market price of the
common stock on the American Stock Exchange for the twenty consecutive trading
days ended July 15, 2004, times (y) eighty-eight percent. Natural Gas Services
Group will receive aggregate gross proceeds of $5,000,000.00.
We plan to use the net proceeds from the sale of the stock to advance
the growth of our rental fleet of natural gas compressors, working capital and
general corporate purposes, including possible acquisition of strategically
located compressor companies. Subject to certain exceptions contained in the
agreement, we are prohibited from using the proceeds to:
o pay dividends;
o pay for an increase in executive compensation or make any loan
or advance to any officer, employee, shareholder, director or
other affiliate of Natural Gas Services Group; or
o purchase debt or equity securities of any entity (including
our own securities).
Natural Gas Services Group agreed to file a registration statement to
register the resale of the common stock within sixty days from closing. The
Company also agreed to permit a representative selected by CBarney to attend and
observe meetings of the Board of Directors of the Company, subject to certain
conditions.
Under the agreement, for a period of twenty-four months following the
closing, CBarney will have the right, subject to certain limitations, to
participate with respect to the issuance of (a) future equity or equity-linked
securities, and (b) debt which is convertible into equity or in which there is
an equity component (collectively, the "Additional Securities"), on the same
terms and conditions as offered by Natural Gas Services Group to other
purchasers of such Additional Securities. CBarney's participation right is not
applicable to:
o the issuance or sale of securities to employees, officers,
directors, or consultants of Natural Gas Services Group for
the primary purpose of soliciting or retaining their
employment or service pursuant to a stock option plan (or
similar equity incentive plan) approved by the Board of
Directors and the shareholders of Natural Gas Services Group;
o the conversion of any convertible or exercisable securities
outstanding as of the closing;
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o the issuance of shares of common stock of Natural Gas Services
Group in connection with an underwritten public offering; or
o the issuance of securities in connection with mergers,
acquisitions, strategic business partnerships or joint
ventures.
Natural Gas Services Group has not engaged any underwriters, brokers,
agents or finders in connection with the agreement or the issuance and sale of
the shares.
Before the earlier of the termination of the agreement or the closing,
the agreement prohibits Natural Gas Services Group from entering into an
"alternative transaction", defined as any transaction with a person other than
CBarney relative to the sale of equity securities (or instruments convertible
into equity securities) of Natural Gas Services Group for cash (other than
equity securities issued pursuant to options, warrants and other instruments
convertible into equity securities outstanding on the date of the agreement in
accordance with their terms) or that would materially impede the transactions
contemplated by the agreement.
CBarney and its representatives and agents have the right, no more than
twice in any year, to visit and inspect any of the properties of Natural Gas
Services Group, to examine its books of account and records, and to discuss the
affairs, finances and accounts of Natural Gas Services Group with its officers,
employees and independent public accountants.
The agreement is subject to customary closing conditions , including
the approval by the American Stock Exchange of the common stock for listing on
AMEX. Closing under the agreement is scheduled to occur not later than August 4,
2004. The agreement may be terminated by either CBarney or Natural Gas Services
Group if the closing does not occur by August 4, 2004.
The issuance and sale of the common stock is being made in reliance
upon the exemption from registration under Section 4(2) of the Securities Act of
1933, as amended, as a transaction not involving a public offering. All of the
shares, upon issuance, will be "restricted" securities within the meaning of
Rule 144 under the Securities Act and will bear a legend to that effect.
The foregoing is a summary of the material features of the agreement.
This summary does not purport to be complete and is qualified in its entirety by
reference to the terms of the agreement, which is filed as Exhibit 4.1 to this
Current Report on Form 8-K, and incorporated herein by reference.
A press release dated July 21, 2004, announcing the Agreement is filed
herewith as Exhibit 99.1 and is also incorporated herein by reference.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
The Exhibits listed below are filed as part of this Current Report on
Form 8-K.
Exhibit No. Description
4.1 Securities Purchase Agreement, dated July
20, 2004, between Natural Gas Services
Group, Inc. and CBarney Investments, Ltd.
99.1 Press Release dated July 21, 2004, issued by
Natural Gas Services Group, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATURAL GAS SERVICES GROUP, INC.
By: /s/ Wallace C. Sparkman
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Wallace C. Sparkman, President
Dated: July 22, 2004
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