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MCF > SEC Filings for MCF > Form 8-K on 14-Jun-2013All Recent SEC Filings

Show all filings for CONTANGO OIL & GAS CO | Request a Trial to NEW EDGAR Online Pro

Form 8-K for CONTANGO OIL & GAS CO


14-Jun-2013

Change in Directors or Principal Officers, Other Events, Financial Statemen


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

As previously reported on its Form 8-K filed with the Securities and Exchange Commission (the "SEC") on May 1, 2013, 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.

New Employment Agreements with Contango

The Company has entered into employment agreements with each of A. Carl Isaac, Jay S. Mengle, Thomas H. Atkins, Jeffrey A. Sikora and John A. Thomas, which will become effective only upon the consummation of the Merger (each, an "Employment Agreement" or collectively, the "Employment Agreements"). The Employment Agreements for Messrs. Isaac, Mengle and Atkins provide for a term of three years with automatic two-year extensions of the initial term, unless Contango or the executive provides prior notice of intention not to extend the agreement. The Employment Agreements for Messrs. Sikora and Thomas provide for a term of two years with automatic one-year extensions of the initial term, unless Contango or the executive provides prior notice of intention not to extend the agreement. The Employment Agreements for Messrs. Isaac, Mengle, Atkins and Sikora replace and are in substantially the same form as the June 29, 2011 Employment Agreements between Crimson and Messrs. Mengle and Atkins, the April 18, 2012 Employment Agreement between Crimson and Mr. Isaac and the April 30, 2012 Employment Agreement between Crimson and Mr. Sikora, except as described below. Mr. Thomas did not previously have an employment agreement with Crimson.

Under the new Employment Agreements, Mr. Isaac is entitled to a base salary of $320,000, Mr. Mengle is entitled to a base salary of $300,000, Mr. Atkins is entitled to a base salary of $310,000, Mr. Sikora is entitled to a base salary of $250,000 and Mr. Thomas is entitled to a base salary of $270,000. Each executive shall participate in Contango's Annual Cash Incentive Bonus Plan (which is referred to as the "cash plan") and Annual Long-Term Incentive Equity Plan (which is referred to as the "incentive equity plan"). With respect to the cash plan, the executives are eligible to receive a cash bonus based upon minimum, target and maximum award levels of not less than 50%, 80% and 120% for Messrs. Isaac, Mengle and Atkins and 30%, 50% and 75% for Messrs. Sikora and Thomas, respectively, of such executive's base salary. With respect to the incentive equity plan, the executives are eligible to receive stock option awards, restricted stock awards or a combination of both upon minimum, target and maximum award levels of not less than 75%, 250% and 350% for Messrs. Isaac, Mengle and Atkins and 40%, 100% and 200% for Messrs. Sikora and Thomas, respectively, of such executive's base salary.

Each Employment Agreement provides for payments in the event Contango terminates the executive's employment "without cause" or if the executive resigns for "good reason," each as defined in each Employment Agreement.

Except as otherwise described in the following paragraph, if the executive's employment is terminated by Contango without cause or the executive resigns for good reason, the executive will receive (A) a cash amount equal to two times the sum of the then current calendar year's base salary and the prior year's bonus under the cash plan, (B) reimbursement of COBRA health insurance premiums for up to 24 months, (C) accelerated vesting of all stock, stock option and other equity awards to the extent such awards (other than stock options and stock appreciation rights) are not subject to performance-based vesting for purposes of qualifying as "performance-based


compensation" for purposes of Section 162(m) of the Code and (D) a pro-rated bonus under the cash plan for the year of termination, based on the attainment of the applicable corporate performance goals. For purposes of calculating the severance amount due in (A), if no bonus was paid under the prior year's cash plan, severance would instead be calculated using the greater of the target bonus under the cash plan for the year of termination or the amount of any discretionary bonuses that were paid to the executive in the twelve month period prior to his termination.

With respect to Messrs. Isaac, Mengle and Atkins, if such executive's employment is terminated by Contango without cause or the executive resigns for good reason, in either case, within 12 months after a change in the ownership or control of Contango, the executive will receive (A) a cash amount equal to 2.5 times the sum of the then current calendar year's base salary and the prior year's bonus under the cash plan, (B) reimbursement of COBRA health insurance premiums for up to 30 months from the termination date, (C) accelerated vesting of all stock, stock option and other equity awards to the extent such awards (other than stock options and stock appreciation rights) are not subject to performance-based vesting for purposes of qualifying as "performance-based compensation" for purposes of Section 162(m) of the Code and (D) a pro-rated bonus under the cash plan for the year of termination, based on the attainment of the applicable corporate performance goals. If no bonus was paid under the prior year's cash plan, the bonus component of the cash severance amount due in (A) will be calculated as described in the last sentence of the preceding paragraph.

If the executive's employment is terminated by Contango without cause or the executive resigns for good reason within 12 months after a change in the ownership or control of Contango, payment of the entire cash severance amount will be made in a lump sum at termination. Otherwise, upon termination by Contango without cause or by the executive for good reason, the executive will receive half of the cash severance amount in a lump sum at termination and half the number of months of health insurance reimbursement. The remainder of the cash severance payment and the second half of health insurance reimbursement will be paid if and when the executive notifies Contango, prior to the conclusion of 50% of the term of the executive's non-competition and non-solicitation obligations, that the executive agrees to comply with the non-competition and non-solicitation obligations for the remainder of the term.

If the executive's employment is terminated due to non-renewal of the Employment Agreement by the executive or Contango, then no severance is due to the executive under the Employment Agreement. However, if the Employment Agreement is not renewed by Contango and a new employment agreement is not entered into with the executive within ten days following the expiration of the Employment Agreement, the executive will become 100% vested in all stock, stock option and other equity awards then held by the executive to the extent that such awards (other than stock options and stock appreciation rights) are not subject to performance-based vesting for purposes of qualifying as "performance-based compensation" for purposes of Section 162(m) of the Code.

In the event of the executive's death or disability, the executive officer will be entitled to: (A) pro rata base salary and pro rata target annual cash incentive bonus through the date of termination for the year in which termination occurs, plus a lump sum amount equal to the greater of: (1) the remainder of the base salary that would have been earned by the executive officer under the executive's Employment Agreement between the date of his death or permanent disability and the expiration of the then current term of the Employment Agreement, or (2) 12 months of base salary plus the executive's target annual cash incentive bonus for the year of termination; and (B) full acceleration of vesting for all stock, stock option and other equity awards.

The Employment Agreements contain confidentiality, non-competition and non-solicitation covenants. In order to receive any severance payments, the executive is required to execute a general release of claims against Contango.

The Employment Agreements for Messrs. Isaac, Mengle, Atkins and Sikora provide that the gross-up payment for any excise taxes under Section 4999 of the Code described in the Crimson employment agreements shall apply with respect to the merger, but not with respect to any subsequent transaction. The Employment Agreement for Mr. Thomas provides that a gross-up payment for any excise taxes under Section 4999 of the Code shall apply with respect to the Merger, but not with respect to any subsequent transaction. In the event of a change of control transaction, other than the Merger, none of the executives are entitled to gross-up payments for any excise taxes under Section 4999 of the Code. In that event, if payments to any of the executives would otherwise constitute a parachute payment under Section 280G of the Code, then the payments will be . . .



Item 8.01. Other Events

The information set forth in Item 5.02 of this current Report on Form 8-K is hereby incorporated by reference into this Item 8.01.



Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are filed herewith:

Exhibit
Number       Description

10.1         Employment Agreement, dated as of June 10, 2013, among Contango Oil &
             Gas Company and Jeffrey A. Sikora (incorporated by reference to
             Exhibit 10.17 to Contango's Registration Statement on Form S-4, filed
             with the SEC on June 13, 2013)

10.2         Employment Agreement, dated as of June 7, 2013, among Contango Oil &
             Gas Company and A. Carl Isaac (incorporated by reference to Exhibit
             10.18 to Contango's Registration Statement on Form S-4, filed with the
             SEC on June 13, 2013)

10.3         Employment Agreement, dated as of June 7, 2013, among Contango Oil &
             Gas Company and John A. Thomas (incorporated by reference to Exhibit
             10.19 to Contango's Registration Statement on Form S-4, filed with the
             SEC on June 13, 2013)

10.4         Employment Agreement, dated as of June 7, 2013, among Contango Oil &
             Gas Company and Jay S. Mengle (incorporated by reference to Exhibit
             10.20 to Contango's Registration Statement on Form S-4, filed with the
             SEC on June 13, 2013)

10.5         Employment Agreement, dated as of June 7, 2013, among Contango Oil &
             Gas Company and Thomas H. Atkins (incorporated by reference to Exhibit
             10.21 to Contango's Registration Statement on Form S-4, filed with the
             SEC on June 13, 2013)

10.6         Transition Agreement, dated as of June 10, 2013, between Contango Oil
             & Gas Company and Marc Duncan


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