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MCF > SEC Filings for MCF > Form 8-K on 1-May-2013All Recent SEC Filings

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Form 8-K for CONTANGO OIL & GAS CO


1-May-2013

Entry into a Material Definitive Agreement, Changes in Control or Registran


Item 1.01. Entry into a Material Definitive Agreement.

Merger Agreement

On April 29, 2013, Contango Oil & Gas Company, a Delaware corporation (the "Company"), Contango Acquisition, Inc., a Delaware corporation and direct wholly owned subsidiary of the Company ("Merger Sub"), and Crimson Exploration Inc., a Delaware corporation ("Crimson"), entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the Merger Agreement and subject to the conditions set forth therein, Merger Sub will merge with and into Crimson (the "Merger"), with Crimson surviving the Merger as a wholly owned subsidiary of the Company. The Merger Agreement was approved by the Company's Board of Directors (the "Board") and Crimson's board of directors on April 29, 2013.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of Crimson common stock, par value $0.001 per share, issued and outstanding will be converted into the right to receive 0.08288 shares of common stock, par value $0.04 per share, of the Company or, in the case of fractional shares, cash (without interest) in an amount equal to the product of (i) such fractional part of a share of Company common stock multiplied by (ii) the closing price for a share of Company common stock as reported on the New York Stock Exchange on the first trading day following the date on which the Effective Time occurs (the "Merger Consideration"). The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes, so that none of the Company, Crimson, Merger Sub or Crimson's stockholders will recognize any gain or loss in the Merger, except that Crimson's stockholders may recognize gain or loss with respect to cash received in lieu of fractional shares of Company common stock.

Pursuant to the Merger Agreement, each option that was previously granted by Crimson to purchase shares of Crimson common stock will be converted at the Effective Time into a comparable option to purchase Company common stock. The conversion will be accomplished by using the same exchange ratio for the Crimson common stock described above. Immediately prior to the Effective Time, each restricted share of Crimson common stock will become fully vested and unrestricted and become entitled to receive the Merger Consideration.

The Company and Crimson have each made certain representations and warranties and agreed to certain covenants in the Merger Agreement. Each of the Company and Crimson has agreed, among other things: (i) subject to certain exceptions, to conduct its respective business in the ordinary course during the period between the execution of the Merger Agreement and the Effective Time; (ii) not to solicit alternative business combination transactions during such period; and
(iii) subject to certain exceptions, not to engage in discussions or negotiations regarding any alternative business combination transactions during such period.

The closing of the Merger is subject to the satisfaction or waiver of certain customary conditions, including, among others, (i) the adoption of the Merger Agreement by Crimson's stockholders; (ii) the approval by the Company's stockholders of the issuance of Company common stock in the Merger to Crimson's stockholders; (iii) the registration statement on Form S-4 used to register the Company common stock to be issued in the Merger being declared effective by the Securities and Exchange Commission (the "SEC"); (iv) the approval for listing on the New York Stock Exchange of the Company common stock to be issued in the Merger; (v) subject to specified materiality standards, the accuracy of the representations and warranties of, and the performance of all covenants by, the parties; (vi) the absence of a material adverse effect with respect to each of Crimson and the Company; and (vii) the delivery of tax opinions that the Merger will be treated as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code.


The Merger Agreement contains certain termination rights for the Company and Crimson, including the right to terminate the Merger Agreement if the Merger is not completed by October 31, 2013. The Merger Agreement further provides that, upon termination of the Merger Agreement under specified circumstances (including a termination by either party in order to enter into a definitive agreement with respect to an alternative transaction that the board of directors of such party has determined to be a superior proposal, subject to compliance with certain conditions), the Company or Crimson would be required to pay the other party a termination fee. Additionally, upon termination of the Merger Agreement by either party following the other party's change in recommendation as a result of a conclusion in good faith (after consultation with its financial advisors and outside legal counsel) that such action is necessary in order to comply with the fiduciary duties of its directors under applicable law, the terminating party would be required to pay the other party a termination fee. The termination fee is $28 million if payable by the Company and $7 million if payable by Crimson. If the Merger Agreement is terminated by either the Company or Crimson because (i) the other party failed to obtain the required vote of its stockholders at the meeting of its stockholders or (ii) the Closing has not occurred on or before October 31, 2013 and the other party has not obtained stockholder approval prior to such date, then the terminating party is entitled to reimbursement for up to $4.5 million of out-of-pocket expenses incurred in connection with the Merger.

The Company has agreed that, upon the Closing, it will cause the Board to consist of eight directors, three of whom will be appointed by the board of directors of Crimson and five of whom will be appointed by the Board. Additionally, as further discussed in Section 5.01 below, Joseph J. Romano (the current President and Chief Executive Officer of the Company) will serve as Chairman of the Board, Allan D. Keel (the current President and Chief Executive Officer of Crimson) will serve as President and Chief Executive Officer of the Company, and E. Joseph Grady (the current Senior Vice President and Chief Financial Officer of Crimson) will serve as Senior Vice President and Chief Financial Officer of the Company. As discussed further below, Messrs. Keel and Grady entered into employment agreements with the Company that become effective upon the consummation of the Merger. The combined company will have its headquarters and principal corporate office in Houston, Texas.

The Company will amend and restate its bylaws to, among other things, until the first anniversary of the Effective Time, require the affirmative vote of at least two-thirds of the directors then in office, including at least one Crimson director, to (i) increase or decrease the number of directors on the Board; . . .



Item 5.01. Changes in Control of Registrant.

Pursuant to the terms of the Merger Agreement, upon the Closing, the Company will cause (i) the Board to consist of eight directors, three of whom will be appointed by the board of directors of Crimson and five of whom will be appointed by the Board; (ii) Joseph J. Romano to be appointed Chairman of the Board; (iii) Allan D. Keel to be appointed President and Chief Executive Officer of the Company; and (iv) E. Joseph Grady to be appointed Senior Vice President and Chief Financial Officer of the Company.



Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The Board approved annual cash performance goals for the fiscal year beginning July 1, 2013 and ending June 30, 2014 for Joseph J. Romano (the "2014 Bonus Plan"), which include among its performance criteria a reorganization of the Company (which includes a merger or acquisition by the Company of stock or assets of another company) with an aggregate value of at least $150 million. Consequently, in the event the Merger is completed during the twelve month period following June 30, 2013, Mr. Romano is eligible to receive a bonus payment in the amount of $4 million. In no event will Mr. Romano's bonus award under the 2014 Bonus Plan exceed $4 million.


Forward-Looking Statements

This filing contains forward-looking statements, which may be identified by words such as "believes," "expects," "anticipates," "estimates," "projects," "intends," "should," "seeks," "future," "continue," or the negative of such terms, or other comparable terminology. Forward-looking statements are subject to risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors that could cause actual results to differ materially include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (2) the outcome of any legal proceedings that may be instituted against the Company and others following announcement of the Merger Agreement; (3) the inability to complete the Merger due to the failure to satisfy the conditions to the Merger, including obtaining the affirmative vote of at least a majority of the votes cast by the holders of the Company's outstanding shares of common stock entitled to vote on the approval of issuance of shares of Company common stock; (4) risks that the proposed transaction disrupts current plans and operations and potential difficulties in employee and customer retention as a result of the Merger; (5) the ability to recognize the benefits of the Merger; (6) legislative, regulatory and economic developments; and (7) other factors described in the Company's filings with the SEC. Many of the factors that will determine the outcome of the subject matter of this filing are beyond the Company's ability to control or predict. The Company can give no assurance that the conditions to the Merger will be satisfied. Except as required by law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. The Company is not responsible for updating the information contained in this filing beyond the published date, or for changes made to this filing by wire services or Internet service providers.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. The proposed merger transaction between the Company and Crimson will be submitted to the stockholders of both companies for their consideration. The Company expects to file with the Securities and Exchange Commission ("SEC") a registration statement on Form S-4 that will include a prospectus of the Company and will also comprise a proxy statement for each of the Company and Crimson. INVESTORS AND SECURITY HOLDERS OF THE COMPANY, CRIMSON AND OTHER INVESTORS ARE ADVISED TO READ THE PROSPECTUS AND PROXY STATEMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The definitive joint proxy statements and prospectus will be mailed to stockholders of the Company and of Crimson. Investors and security holders may obtain a free copy of the joint proxy statement and prospectus when it becomes available, and other documents filed by the Company with the SEC, at the SEC's web site at http://www.sec.gov. Free copies of the proxy statement, when it becomes available, and the Company's other filings with the SEC may also be obtained from the Company by directing a request to the Company, Attention: Investor Relations department, or by calling
(713) 960-1901.

Participants in Solicitation

The Company and its directors, executive officers and other members of its management and employees may be deemed to be soliciting proxies from the Company's stockholders in favor of the proposed Merger. Information regarding the Company's directors and executive officers is available in its Annual Report on Form 10-K for the fiscal year ended June 30, 2012 filed with the SEC on August 29, 2012, and definitive proxy statement relating to its 2012 Annual Meeting of Stockholders filed with the SEC on October 12, 2012. Stockholders may obtain additional information regarding the interests of the Company and its directors and executive officers in the proposed Merger, which may be different than those of the Company's stockholders generally, by reading the joint proxy statement and prospectus and other relevant documents filed with the SEC when they become available.




Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are filed herewith:

Exhibit
Number       Description
2.1*         Agreement and Plan of Merger, dated as of April 29, 2013, by and among
             Contango Oil & Gas Company, Contango Acquisition, Inc. and Crimson
             Exploration Inc.

10.1         Support and Irrevocable Proxy Agreement, dated as of April 29, 2013,
             among Contango Oil & Gas Company, Contango Acquisition, Inc. and OCM
             Crimson Holdings, LLC.

10.2         Support and Irrevocable Proxy Agreement, dated as of April 29, 2013,
             among Contango Oil & Gas Company, Contango Acquisition, Inc. and OCM
             GW Holdings, LLC.

10.3         Support and Irrevocable Proxy Agreement, dated as of April 29, 2013,
             among Contango Oil & Gas Company, Contango Acquisition, Inc. and Allan
             D. Keel.

10.4         Support and Irrevocable Proxy Agreement, dated as of April 29, 2013,
             among Contango Oil & Gas Company, Contango Acquisition, Inc. and E.
             Joseph Grady.

10.5         Support and Irrevocable Proxy Agreement, dated as of April 29, 2013,
             among Contango Oil & Gas Company, Contango Acquisition, Inc. and A.
             Carl Isaac.

10.6         Support and Irrevocable Proxy Agreement, dated as of April 29, 2013,
             among Contango Oil & Gas Company, Contango Acquisition, Inc. and Jay
             S. Mengle.

10.7         Support and Irrevocable Proxy Agreement, dated as of April 29, 2013,
             among Contango Oil & Gas Company, Contango Acquisition, Inc. and
             Thomas H. Atkins.

10.8         Support and Irrevocable Proxy Agreement, dated as of April 29, 2013,
             among Contango Oil & Gas Company, Contango Acquisition, Inc. and John
             A. Thomas.

10.9         Registration Rights Agreement, dated as of April 29, 2013, among
             Contango Oil & Gas Company, OCM Crimson Holdings, LLC and OCM GW
             Holdings, LLC.

10.10        Employment Agreement, dated as of April 29, 2013, among Contango Oil &
             Gas Company and Allan D. Keel.

10.11        Employment Agreement, dated as of April 29, 2013, among Contango Oil &
             Gas Company and E. Joseph Grady.

99.1         Form of Support and Irrevocable Proxy Agreement, dated as of April 29,
             2013, among Crimson Exploration Inc., and the following directors and
             executive officers of Contango Oil & Gas Company: the estate of
             Kenneth R. Peak, Joseph J. Romano, Brad Juneau, Sergio Castro and
             Yaroslava Makalskaya.

* Schedules to the agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.


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