Exhibit 10.2

Execution Version

PURCHASE AGREEMENT

among

CONTANGO OIL & GAS COMPANY

and

THE PURCHASERS PARTY HERETO

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TABLE OF CONTENTS

 

            Page  

ARTICLE I DEFINITIONS

     1  

Section 1.01

     Definitions      1  

ARTICLE II AGREEMENT TO SELL AND PURCHASE

     4  

Section 2.01

     Authorization of Sale of the Purchased Securities      4  

Section 2.02

     Sale and Purchase      4  

Section 2.03

     Closing      5  

Section 2.04

     Conditions to Closing      5  

Section 2.05

     Contango Deliveries      6  

Section 2.06

     Purchasers’ Deliveries      7  

Section 2.07

     Independent Nature of the Purchasers’ Obligations and Rights      7  

Section 2.08

     Further Assurances      7  

ARTICLE III REPRESENTATIONS AND WARRANTIES AND COVENANTS RELATED TO CONTANGO

     8  

Section 3.01

     Corporate Existence      8  

Section 3.02

     Subsidiaries      8  

Section 3.03

     Capitalization      9  

Section 3.04

     Listing      9  

Section 3.05

     Valid Issuance of Purchased Securities      9  

Section 3.06

     Authorization      10  

Section 3.07

     No Conflicts, Breach or Default      10  

Section 3.08

     Approvals      10  

Section 3.09

     Permits and Licenses      11  

Section 3.10

     Litigation      11  

Section 3.11

     Financial Statements      11  

Section 3.12

     Internal Controls      12  

Section 3.13

     Disclosure Controls      12  

Section 3.14

     Reserves      12  

 

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Section 3.15

     Stock Plans      13  

Section 3.16

     No Material Adverse Change      13  

Section 3.17

     Investment Company Status      13  

Section 3.18

     Title to Properties      13  

Section 3.19

     Rights-of-Way      14  

Section 3.20

     Oil and Gas Properties      14  

Section 3.21

     Intellectual Property      14  

Section 3.22

     Employee Matters      15  

Section 3.23

     Environmental Matters      15  

Section 3.24

     Tax Matters      16  

Section 3.25

     Insurance      16  

Section 3.26

     Sarbanes-Oxley Act      16  

Section 3.27

     FCPA      16  

Section 3.28

     Anti-Money Laundering      17  

Section 3.29

     Sanctions      17  

Section 3.30

     Dividends, Distributions      18  

Section 3.31

     No Preemptive Rights      18  

Section 3.32

     Certain Fees      18  

Section 3.33

     Stabilization      18  

Section 3.34

     Information Technology      18  

Section 3.35

     No Registration      18  

Section 3.36

     No Integration      19  

Section 3.37

     No Disqualification Events      19  

Section 3.38

     No General Solicitation      19  

Section 3.39

     Shell Company Status      19  

Section 3.40

     Related Party Transactions      19  

Section 3.41

     Disclosure      20  

Section 3.42

     Information on Shareholdings      20  

Section 3.43

     Removal of Legend      20  

 

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ARTICLE IV REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PURCHASERS

     21  

Section 4.01

     Existence      21  

Section 4.02

     Authorization, Enforceability      21  

Section 4.03

     No Breach      21  

Section 4.04

     Certain Fees      22  

Section 4.05

     Unregistered Securities      22  

Section 4.06

     No Legal, Tax or Investment Advice      23  

Section 4.07

     Short Selling      23  

Section 4.08

     Lock-Up Agreement      23  

ARTICLE V INDEMNIFICATION

     24  

Section 5.01

     Indemnification by Contango      24  

Section 5.02

     Indemnification by the Purchasers      24  

Section 5.03

     Indemnification Procedure      25  

Section 5.04

     Tax Treatment of Indemnification Payments      26  

ARTICLE VI TERMINATION

     26  

Section 6.01

     Termination      26  

Section 6.02

     Certain Effects of Termination      26  

ARTICLE VII MISCELLANEOUS

     26  

Section 7.01

     Expenses      26  

Section 7.02

     Interpretation      27  

Section 7.03

     Survival of Provisions      27  

Section 7.04

     No Waiver; Modifications in Writing      28  

Section 7.05

     Binding Effect; Assignment      28  

Section 7.06

     Communications      29  

Section 7.07

     Entire Agreement      29  

Section 7.08

     Governing Law; Submission to Jurisdiction      30  

Section 7.09

     Waiver of Jury Trial      30  

Section 7.10

     Execution in Counterparts      30  

Section 7.11

     Recapitalizations, Exchanges, Etc. Affecting the Purchased Securities     
31  

Section 7.12

     Certain Tax Matters      31  

 

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SCHEDULE A – Schedule of Purchasers

SCHEDULE B – Schedule of Subsidiaries

EXHIBIT A – Form of Registration Rights Agreement

EXHIBIT B – Form of Statement of Resolution

 

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PURCHASE AGREEMENT

This PURCHASE AGREEMENT, dated as of December 19, 2019 (this “Agreement”), is
entered into by and among Contango Oil & Gas Company, a Texas corporation
(“Contango”), and each of the purchasers set forth in Schedule A hereto (the
“Purchasers”).

RECITALS:

WHEREAS, Contango desires to sell the Purchased Securities (as defined below)
and the Purchasers desire to purchase from Contango the Purchased Securities, in
accordance with the provisions of this Agreement; and

WHEREAS, Contango has agreed to provide the Purchasers with certain registration
rights with respect to the shares of Common Stock underlying the Purchased
Securities acquired pursuant hereto.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Contango and each of the Purchasers, severally and
not jointly, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. As used in this Agreement, the following terms have
the meanings indicated:

“Affiliate” means, with respect to a specified Person, any other Person,
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
“control” (including, with correlative meanings, “controlling,” “controlled by”
and “under common control with”) means the power to direct or cause the
direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
provided however, that Contango and the Purchasers shall not be considered
Affiliates for purposes of this Agreement.

“Agreement” has the meaning set forth in the introductory paragraph of this
Agreement.

“Allocated Purchase Price” means with respect to each Purchaser, the dollar
amount set forth opposite such Purchaser’s name under the heading “Allocated
Purchase Price” on Schedule A hereto.

“Basic Documents” means, collectively, this Agreement, the Statement of
Resolution and the Registration Rights Agreement.

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“Business Day” means any day other than a Saturday, Sunday, any federal legal
holiday or day on which banking institutions in the State of Texas are
authorized or required by Law or other governmental action to close.

“Closing” shall have the meaning specified in Section 2.03.

“Closing Date” shall have the meaning specified in Section 2.03.

“Common Stock” means the Common Stock, par value $0.04 per share, of Contango.

“Contango” has the meaning set forth in the introductory paragraph of this
Agreement.

“Contango Bylaws” shall have the meaning specified in Section 3.05.

“Contango Charter” shall have the meaning specified in Section 2.04(b)(iii).

“Contango Related Parties” shall have the meaning specified in Section 5.02.

“Conversion Shares” means the Common Stock issuable upon conversion of the
Preferred Stock.

“Credit Agreement” shall have the meaning specified in Section 3.02.

“Disqualification Event” shall have the meaning specified in Section 3.37.

“Environmental Law” shall have the meaning specified in Section 3.21.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the SEC promulgated thereunder.

“FCPA” shall have the meaning specified in Section 3.25.

“GAAP” shall have the meaning specified in Section 3.11.

“Indemnified Party” shall have the meaning specified in Section 5.03.

“Indemnifying Party” shall have the meaning specified in Section 5.03.

“Intellectual Property” shall have the meaning specified in Section 3.19.

“Issuer Covered Person” shall have the meaning specified in Section 3.37.

“IT Systems” means, collectively, Contango and its Subsidiaries’ information
technology assets and equipment, computers, systems, networks, hardware,
software, websites, applications, and databases.

 

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“Law” means any federal, state, local or foreign order, writ, injunction,
judgment, settlement, award, decree, statute, law (including common law), rule
or regulation.

“Lien” means any mortgage, claim, encumbrance, pledge, lien (statutory or
otherwise), security agreement, conditional sale or trust receipt or a lease,
consignment or bailment, preference or priority, assessment, deed of trust,
charge, easement, servitude or other encumbrance upon or with respect to any
property of any kind.

“Material Adverse Effect” shall have the meaning specified in Section 3.01.

“Money Laundering Laws” shall have the meaning specified in Section 3.26.

“NYSE American” means the NYSE American LLC.

“Outside Date” shall have the meaning specified in Section 6.01(a).

“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization, government or any agency, instrumentality or political subdivision
thereof or any other form of entity.

“Placement Agents” shall have the meaning specified in Section 4.06.

“Preferred Stock” means the Series C Contingent Convertible Preferred Stock
having the terms set forth in the Statement of Resolution.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

“Purchased Securities” means, with respect to each Purchaser, the number of
shares of Preferred Stock as set forth opposite such Purchaser’s name on
Schedule A hereto.

“Purchaser Related Parties” shall have the meaning specified in Section 5.01.

“Purchasers” has the meaning set forth in the introductory paragraph of this
Agreement.

“Registration Rights Agreement” means the Registration Rights Agreement, to be
entered into on or before the Closing, between Contango and the Purchasers in
substantially the form attached hereto as Exhibit A.

“Regulatory Authority” shall have the meaning specified in Section 3.07(a).

“Representatives” means, with respect to a specified Person, the officers,
directors, partners, members, managers, employees, investment advisers, agents,
counsel, accountants, investment bankers and other representatives of such
Person.

 

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“Sanctioned Country” shall have the meaning specified in Section 3.27.

“Sanctioned Person” shall have the meaning specified in Section 3.27.

“Sanctions” shall have the meaning specified in Section 3.27.

“Sarbanes-Oxley Act” shall have the meaning specified in Section 3.24.

“SEC” means the United States Securities and Exchange Commission.

“SEC Reports” means reports and statements filed (but not furnished) by Contango
with the SEC under the Exchange Act, including all amendments, exhibits and
schedules thereto, and documents incorporated by reference therein.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the SEC promulgated thereunder.

“Short Sales” means, without limitation, all “short sales” as defined in Rule
200 promulgated under Regulation SHO under the Exchange Act, whether or not
against the box, and forward sale contracts, options, puts, calls, short sales,
“put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act)
and similar arrangements, and sales and other transactions through non-U.S.
broker dealers or foreign regulated brokers.

“Statement of Resolution” shall have the meaning specified in
Section 2.04(b)(iii).

“Stock Plan” shall have the meaning specified in Section 3.13.

“Subsidiaries” shall have the meaning specified in Section 3.02.

“TBOC” means the Texas Business Organizations Code.

“Transfer” shall have the meaning specified in Section 4.08.

“White Star Properties” shall have the meaning specified in Section 3.11.

ARTICLE II

AGREEMENT TO SELL AND PURCHASE

Section 2.01 Authorization of Sale of the Purchased Securities. Contango has
authorized the issuance and sale to the Purchasers of the Purchased Securities
on the terms and subject to the conditions set forth in this Agreement.

Section 2.02 Sale and Purchase. Subject to the terms and conditions hereof,
Contango hereby agrees to issue and sell to each Purchaser, free and clear of
any and all Liens (other than the transfer restrictions under applicable federal
and state securities laws and other than those arising under the Statement of
Resolution or the TBOC), and each Purchaser, severally and not jointly, hereby
agrees to purchase from Contango, such number of Purchased Securities on the
Closing Date as set forth on Schedule A, and each Purchaser agrees to pay
Contango its Allocated Purchase Price with respect to such Purchased Securities.

 

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Section 2.03 Closing. Subject to the terms and conditions hereof, the
consummation of the purchase and sale of the Purchased Securities hereunder (the
“Closing”) shall take place at 9:00 a.m. Central Time on December 23, 2019 at
the offices of Gibson, Dunn & Crutcher LLP, 811 Main Street, Suite 3000,
Houston, Texas, or such other date, time or location as agreed by the parties.
The date of the Closing shall be the “Closing Date.” The parties agree that the
Closing may occur via delivery of facsimiles or portable document format (PDF)
documents.

Section 2.04 Conditions to Closing.

(a) Mutual Conditions. The respective obligations of each party to consummate
the purchase and issuance and sale of the Purchased Securities to be purchased
and issued at the Closing shall be subject to the satisfaction on or prior to
the Closing Date of each of the following conditions (any or all of which may be
waived by a particular party on behalf of itself in writing, in whole or in
part, to the extent permitted by applicable Law):

(i) no statute, rule, order, decree or regulation shall have been enacted or
promulgated, and no action shall have been taken, by any Regulatory Authority
which temporarily, preliminarily or permanently restrains, precludes, enjoins or
otherwise prohibits the consummation of the transactions contemplated hereby or
makes the transactions contemplated hereby illegal; and

(ii) there shall not be pending any suit, action or proceeding by any Regulatory
Authority seeking to restrain, preclude, enjoin or prohibit the transactions
contemplated by this Agreement.

(b) Conditions of the Purchasers’ Obligations at the Closing. The respective
obligations of each Purchaser to consummate the purchase of the Purchased
Securities to be purchased by such Purchaser at the Closing shall be subject to
the satisfaction (or waiver by such Purchaser) on or prior to the Closing Date
of each of the following conditions:

(i) the representations and warranties of Contango contained in this Agreement
that are qualified by materiality shall be true and correct as of the Closing
Date as if made on and as of the Closing Date and all other representations and
warranties shall be true and correct in all material respects as of the Closing
Date as if made on and as of the Closing Date (except that representations and
warranties made as of a specific date shall be required to be true and correct
in all material respects as of such date only);

 

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(ii) Contango and the Subsidiaries shall have performed and complied, in all
material respects, with all of the covenants and agreements required to be
performed and complied with by it hereunder on or prior to the Closing Date;

(iii) Contango shall have adopted and filed with the Secretary of State of the
State of Texas the Statement of Resolution in the form attached hereto as
Exhibit B (the “Statement of Resolution”), and the Statement of Resolution shall
have become effective as an amendment to Contango’s Amended and Restated
Certificate of Formation, dated June 14, 2019, as amended (the “Contango
Charter”); and

(iv) Contango shall have delivered, or caused to be delivered, to such
Purchaser, Contango’s closing deliveries described in Section 2.05.

(c) Conditions of Contango’s Obligations at the Closing. The obligation of
Contango to consummate the sale of the Purchased Securities to be sold to each
Purchaser at the Closing shall be subject to the satisfaction (or waiver by
Contango) on or prior to the Closing Date of each of the following conditions:

(i) the representations and warranties of such Purchaser contained in this
Agreement that are qualified by materiality shall be true and correct as of the
Closing Date as if made on and as of the Closing Date and all other
representations and warranties shall be true and correct in all material
respects as of the Closing Date as if made on and as of the Closing Date (except
that representations and warranties made as of a specific date shall be required
to be true and correct in all material respects as of such date only);

(ii) such Purchaser shall have performed and complied, in all material respects,
with all of the covenants and agreements required to be performed and complied
with by such Purchaser on or prior to the Closing Date; and

(iii) such Purchaser shall have delivered, or caused to be delivered, to
Contango such Purchaser’s closing deliveries as described in Section 2.06 of
this Agreement.

Section 2.05 Contango Deliveries. At the Closing, Contango shall deliver or
cause to be delivered to each Purchaser:

(a) evidence of the Purchased Securities purchased by such Purchaser credited to
book-entry accounts maintained by the transfer agent of Contango and issued by
Contango free and clear of any Liens, other than the transfer restrictions under
applicable federal and state securities laws and other than those arising under
the Statement of Resolution or the TBOC, registered in such names as such
Purchaser shall have designated; and

(b) the Registration Rights Agreement in substantially the form attached hereto
as Exhibit A, which shall have been duly executed by Contango.

 

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Section 2.06 Purchasers’ Deliveries. At the Closing, each Purchaser shall
deliver or cause to be delivered to Contango:

(a) subject to receipt of evidence of issuance referred to in Section 2.05(a),
its Allocated Purchase Price as of the Closing Date, such payments to be made by
wire transfers of immediately available funds on the Closing Date to an account
designated by Contango at least two (2) Business Days (or such shorter period of
time as shall be agreeable by such Purchaser and Contango) prior to the Closing
Date; and

(b) the Registration Rights Agreement in substantially the form attached hereto
as Exhibit A, which shall have been duly executed by such Purchaser.

Section 2.07 Independent Nature of the Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Basic Document are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Basic Document. The failure or waiver of performance under
any Basic Document of any Purchaser by Contango does not excuse performance by
any other Purchaser and the waiver of performance of Contango by any Purchaser
does not excuse performance by Contango with respect to each other Purchaser.
Nothing contained herein or in any other Basic Document, and no action taken by
any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Basic Documents. Each Purchaser shall be entitled to independently protect and
enforce its rights, including without limitation, the rights arising out of this
Agreement or out of the other Basic Documents, and it shall not be necessary for
any other Purchaser to be joined as an additional party in any proceeding for
such purpose.

Section 2.08 Further Assurances. From time to time after the date hereof,
without further consideration, Contango and the Purchasers shall use their
commercially reasonable efforts to take, or cause to be taken, all actions
necessary or appropriate to consummate the transactions contemplated by this
Agreement. Contango shall use its commercially reasonable efforts to obtain the
appropriate approval for the conversion of the Preferred Stock from the holders
of Contango’s voting stock entitled to vote thereon, whether at the next annual
meeting of stockholders, by holding a special meeting of stockholders or
obtaining approval by written consent, within six months after the Closing Date.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES AND

COVENANTS RELATED TO CONTANGO

Contango represents and warrants to and covenants with each Purchaser as
follows:

Section 3.01 Corporate Existence. Contango has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Texas, with full corporate power and authority to own, lease and operate its
properties and assets and conduct its business as described in the SEC Reports,
to execute and deliver this Agreement and to issue, sell and deliver the
Purchased Securities as contemplated herein. Contango is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the ownership or leasing of its properties and assets or the conduct of
its business requires such qualification, except where the failure to be so
qualified and in good standing would not, individually or in the aggregate,
reasonably be expected to either (i) have a material adverse effect on the
business, properties, condition (financial or otherwise), liquidity, results of
operations or prospects of Contango and the Subsidiaries taken as a whole or
(ii) prevent or materially interfere with consummation of the transactions
contemplated hereby (the occurrence of any such effect or any such prevention or
interference described in the foregoing clauses (i) and (ii) being herein
referred to as a “Material Adverse Effect”).

Section 3.02 Subsidiaries. Contango owns, directly or indirectly, the issued and
outstanding capital stock, membership interests, partnership interests or other
ownership interests (as applicable) of each of the entities listed on Schedule
B hereto in the percentages set forth on Schedule B hereto, which constitute all
direct or indirect subsidiaries of Contango. References herein to “Subsidiaries”
refer to the entities listed on Schedule B hereto. Each Subsidiary has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its organization, with full power and authority to own, lease
and operate its properties and assets and to conduct its business as described
in the SEC Reports, except where the failure to be in good standing would not
have a Material Adverse Effect. Each Subsidiary is duly qualified to do business
and is in good standing in each jurisdiction where the ownership or leasing of
its properties and assets or the conduct of its business requires such
qualification, except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, have a Material Adverse Effect.
Except as disclosed in the SEC Reports, all of the outstanding shares of capital
stock of, or other equity interests in, each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable, have been
issued in compliance with all applicable securities laws, were not issued in
violation of any preemptive right, resale right, right of first refusal or
similar right and are owned by Contango or applicable Subsidiary subject to no
security interest, other encumbrance or adverse claims, except for such liens,
encumbrances, equities or claims granted in connection with that certain Credit
Agreement, dated as of September 17, 2019, among Contango, as borrower, JPMorgan
Chase Bank, N.A., as administrative agent, and each of JPMorgan Chase Bank,
N.A., Royal Bank of Canada and Cadence Bank, N.A., as joint bookrunners and the
lenders from time to time party thereto, and as amended, restated or modified
from time to time (collectively, the “Credit Agreement”), or as could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect. No
options, warrants or other rights to purchase, agreements or other obligations
to issue or other rights to convert any obligation into shares of capital stock
of, or equity interests in, the Subsidiaries are outstanding. Contango owns,
directly or indirectly, 37% of the outstanding limited liability company
interests in Exaro Energy III LLC, a Delaware limited liability company, and
such limited liability company interests are owned by Contango subject to no
security interest, other encumbrance or adverse claims, except for such liens,
encumbrances, equities or claims granted in connection with the Credit Agreement
or as could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

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Section 3.03 Capitalization. As of the date of this Agreement, Contango has
200,000,000 shares of Common Stock and 5,000,000 shares of preferred stock
authorized and, prior to the issuance and sale of the Purchased Securities as
contemplated hereby and assuming conversion of all outstanding shares of the
Company’s Series A Contingent Convertible Preferred Stock and Series B
Contingent Convertible Preferred Stock, has 108,334,045 shares of Common Stock
issued and outstanding. All of the issued and outstanding shares of capital
stock of Contango have been duly authorized and validly issued and are fully
paid and non-assessable, have been issued in compliance with all applicable
securities laws and were not issued in violation of any preemptive right, resale
right, right of first refusal or similar right.

Section 3.04 Listing. The Common Stock is duly listed, and admitted and
authorized for trading, on the NYSE American. Contango has not received any
notice from the NYSE American regarding the delisting or potential delisting of
the Common Stock from the NYSE American. Prior to the conversion of the
Purchased Securities in accordance with the Statement of Resolution, Contango
shall apply to list or quote all of the Conversion Shares on the national stock
exchange on which the Common Stock is then listed and promptly secure the
listing of all of the Conversion Shares. Contango hereby agrees to use
commercially reasonable efforts to maintain the listing or quotation of the
Common Stock, including the Conversion Shares when listed, on the NYSE American
and will comply in all respects with Contango’s reporting, filing and other
obligations under the rules and regulations of the NYSE American. Contango
further agrees, if Contango applies to have the Common Stock traded on any other
trading market, it will then include in such application all of the Conversion
Shares, and will take such other action as is necessary to cause all of the
Conversion Shares to be listed or quoted on such other trading market as
promptly as possible. For so long as Contango maintains a listing or quotation
of the Common Stock on the NYSE American or any other trading market, Contango
agrees to maintain the eligibility of the Common Stock for electronic transfer
through the Depository Trust Company or another established clearing
corporation, including, without limitation, by timely payment of fees to the
Depository Trust Company or such other established clearing corporation in
connection with such electronic transfer.

Section 3.05 Valid Issuance of Purchased Securities. The Purchased Securities
have been duly and validly authorized and, when issued and delivered against
payment therefor as provided herein, will be duly and validly issued, fully paid
and non-assessable and free of statutory and contractual preemptive rights,
resale rights, rights of first refusal and similar rights and any restriction
upon the voting or transfer thereof pursuant to the TBOC or the Contango
Charter, the Statement of Resolution or the Bylaws of Contango, dated June 14,
2019, as amended (“Contango Bylaws”), or any agreement or other instrument to
which Contango is a party. No holder of Purchased Securities will be subject to
personal liability by reason of being such a holder.

 

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Section 3.06 Authorization. This Agreement has been duly authorized, executed
and delivered by Contango and the other Basic Documents have been duly
authorized, and will be executed and delivered by Contango on or prior to the
Closing.

Section 3.07 No Conflicts, Breach or Default. (a) Neither Contango nor any of
the Subsidiaries is in breach or violation of or in default under (nor has any
event occurred which, with notice, lapse of time or both, would result in any
breach or violation of, constitute a default under or give the holder of any
indebtedness (or a Person acting on such holder’s behalf) the right to require
the repurchase, redemption or repayment of all or a part of such indebtedness
under) (A) its charter or bylaws or similar organizational documents, or (B) any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other agreement or
instrument to which it is a party or by which it or any of its properties or
assets may be bound or affected, or (C) any U.S. federal, state, local or
foreign law, or (D) any rule or regulation of any U.S. federal, state, local or
foreign governmental or regulatory commission, board, body, authority or agency
or any self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, the NYSE American) (collectively, a
“Regulatory Authority”), or (E) any decree, judgment or order applicable to it
or any of its properties, except, in the case of clauses (B), (C), (D) and (E),
to the extent that any such conflict, breach, violation or default would not
reasonably be expected to have a Material Adverse Effect.

(b) The execution, delivery and performance of the Basic Documents, the issuance
and sale of the Purchased Securities and the consummation of the transactions
contemplated hereby do not and will not conflict with, result in any breach or
violation of or constitute a default under (nor constitute any event which, with
notice, lapse of time or both, would result in any breach or violation of,
constitute a default under or give the holder of any indebtedness (or a Person
acting on such holder’s behalf) the right to require the repurchase, redemption
or repayment of all or a part of such indebtedness under) (or result in the
creation or imposition of a lien, charge or encumbrance on any property or asset
of Contango or any Subsidiary pursuant to) (A) the charter or bylaws or similar
organizational document of Contango or any of the Subsidiaries, or (B) any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other agreement or
instrument to which Contango or any of the Subsidiaries is a party or by which
any of them or any of their respective properties or assets may be bound or
affected, or (C) any U.S. federal, state, local or foreign law, or (D) any rule
or regulation of any Regulatory Authority (including, without limitation, the
rules and regulations of the NYSE American), or (E) any decree, judgment or
order applicable to Contango or any of the Subsidiaries or any of their
respective properties or assets.

Section 3.08 Approvals. No approval, authorization, license, registration,
qualification, decree, consent or order of or filing with any Regulatory
Authority or approval of the stockholders of Contango is necessary or required
in connection with the issuance and sale of the Purchased Securities or the
consummation by Contango of the transactions contemplated hereby, other than
(i) as required under the Statement of Resolution in connection with the
issuance of the Conversion

 

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Shares, (ii) any necessary qualification under the state or non-U.S. securities
or blue sky laws of the various jurisdictions in which the Purchased Securities
are being offered, (iii) the filing under the Securities Act of the registration
statement contemplated by the Registration Rights Agreement, and (iv) such
filings as may be required to be made by Contango under the Exchange Act, NYSE
American rules or the Rules of the Financial Industry Regulatory Authority, Inc.

Section 3.09 Permits and Licenses. Each of Contango and the Subsidiaries has all
necessary permits, licenses, authorizations, consents and approvals issued by
the appropriate Regulatory Authorities and has made all necessary filings
required under any applicable law, regulation or rule, and has obtained all
necessary permits, licenses, authorizations, consents and approvals from other
Persons, in order to conduct their respective businesses as described in the SEC
Reports. Neither Contango nor any of the Subsidiaries is in violation of, or in
default under, or has received notice of any proceedings relating to revocation
or modification of, any such permit, license, authorization, consent or approval
or any U.S. federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to Contango or any of the Subsidiaries,
except where such violation, default, revocation or modification would not,
individually or in the aggregate, have a Material Adverse Effect.

Section 3.10 Litigation. Except as disclosed in the SEC Reports, there are no
actions, suits, proceedings, claims, investigations or inquiries pending or, to
Contango’s knowledge, threatened to which Contango or any of the Subsidiaries or
any of their respective directors or officers is or would be a party or of which
any of their respective properties or assets is or would be subject at law or in
equity, before or by any Regulatory Authority, except any such action, suit,
proceeding, claim, investigation or inquiry which, if resolved adversely to
Contango or any Subsidiary, would not, individually or in the aggregate, have a
Material Adverse Effect.

Section 3.11 Financial Statements. The financial statements included or
incorporated by reference in SEC Reports, together with the related notes and
schedules, present fairly the consolidated financial position of Contango and
the Subsidiaries as of the dates indicated and the consolidated results of
operations, cash flows and changes in stockholders’ equity of Contango and the
Subsidiaries for the periods specified and have been prepared in compliance with
the requirements of the Securities Act and the Exchange Act and in conformity
with U.S. generally accepted accounting principles (“GAAP”) applied on a
consistent basis during the periods involved. The other financial and
statistical data included or incorporated by reference in the SEC Reports are
accurately and fairly presented in all material respects and are prepared on a
basis consistent with the financial statements and books and records of
Contango. Other than in connection with the acquisition of certain assets and
liabilities from White Star Petroleum, LLC and certain of its affiliates (the
“White Star Properties”), Contango and the Subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet obligations), not described or incorporated by reference in the SEC
Reports. All disclosures included or incorporated by reference in the SEC
Reports regarding “non-GAAP financial measures” (as such term is defined by the
rules and regulations of the SEC) comply with Regulation G under the Exchange
Act and Item 10 of Regulation S-K under the Securities Act, to the extent
applicable. The interactive data in eXtensible Business Reporting Language
included or incorporated by reference in the SEC Reports fairly presents the
information called for in all material respects and has been prepared in
accordance with the SEC’s rules and guidelines applicable thereto.

 

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Section 3.12 Internal Controls. Contango and each of its Subsidiaries maintain
effective internal control over financial reporting (as defined in Rules 13a-15
and 15d-15 under the Exchange Act) and a system of internal accounting controls
sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. Contango’s independent registered public
accountants and the Audit Committee of the Board of Directors of Contango have
been advised of (1) all significant deficiencies and material weaknesses, if
any, in the design or operation of Contango’s internal control over financial
reporting (whether or not remediated) and (2) all fraud, if any, whether or not
material, that involves management or other employees who have a role in
Contango’s internal control over financial reporting. All significant
deficiencies and material weaknesses, if any, in Contango’s internal control
over financial reporting are disclosed SEC Reports. Since the end of Contango’s
most recent audited fiscal year, except as disclosed in the SEC Reports, there
have not been any changes in Contango’s internal control over financial
reporting that have materially affected, or are reasonably likely to materially
affect, the Contango’s internal control over financial reporting.

Section 3.13 Disclosure Controls. Contango and each of its Subsidiaries maintain
effective disclosure controls and procedures (as defined in Rules 13a-15 and
15d-15 under the Exchange Act) designed to ensure that information required to
be disclosed by Contango in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time period
specified in the SEC’s rules and forms, and is accumulated and communicated to
management of Contango, including its principal executive officer and its
principal financial officer, as appropriate, to allow timely decisions regarding
disclosure.

Section 3.14 Reserves. The factual information underlying the estimates of
reserves of Contango and the Subsidiaries included or incorporated by reference
in the SEC Reports, including, without limitation, production, costs of
operation and development, current prices for production, agreements relating to
current and future operations and sales of production, was true and correct in
all material respects on the dates such estimates were made and such information
was supplied and was prepared in accordance with customary industry practices.
Other than normal production of reserves, intervening market commodity price
fluctuations, fluctuations in demand for such products, adverse weather
conditions, unavailability or increased costs of rigs, equipment, supplies or
personnel, the timing of third party operations and other factors, changes in
applicable regulations or regulatory guidance regarding the rules for estimating
reserves, in each case in the ordinary course of business, and the acquisition
of the White Star Properties, and except as described in the SEC Reports,
neither of Contango nor any of the Subsidiaries is aware of any facts or
circumstances that would result in a material adverse change in the aggregate
net reserves, or the aggregate present value of future net cash flows therefrom,
as described in the SEC Reports.

 

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Section 3.15 Stock Plans. Except as disclosed in the SEC Reports, each stock
option granted under any stock option plan of Contango or any Subsidiary (each,
a “Stock Plan”) was granted with a per share exercise price no less than the
fair market value per share of Common Stock on the grant date of such option,
and no such grant involved any “back-dating,” “forward-dating” or similar
practice with respect to the effective date of such grant. Each such stock
option (i) was granted in compliance with applicable law and with the applicable
Stock Plan(s), (ii) was duly approved by the board of directors (or a duly
authorized committee thereof) of Contango or such Subsidiary, as applicable, and
(iii) has been properly accounted for in Contango’s consolidated financial
statements in accordance with GAAP and disclosed in the SEC Reports.

Section 3.16 No Material Adverse Change. Except as disclosed in the SEC Reports,
subsequent to the respective dates as of which information is given in the SEC
Reports, there has not been, whether or not arising in the ordinary course of
business, (i) any material adverse change, or any development involving a
prospective material adverse change, in the business, properties, management,
condition (financial or otherwise), liquidity, or results of operations of
Contango and the Subsidiaries taken as a whole, (ii) any transaction which is
material to Contango and the Subsidiaries taken as a whole, (iii) any obligation
or liability, direct or contingent (including any off-balance sheet obligations)
incurred by Contango or any Subsidiary that is material to Contango and the
Subsidiaries taken as a whole, (iv) any change in the capital stock of, or other
equity interests in, or outstanding indebtedness of, Contango or any
Subsidiaries or (v) any dividend or distribution of any kind declared, paid or
made on the capital stock of, or other equity interests in, Contango or any
Subsidiary.

Section 3.17 Investment Company Status. Neither Contango nor any Subsidiary is,
and, after giving effect to the offer and sale of the Purchased Securities and
the application of the proceeds thereof, neither of them will be, an “investment
company,” as defined in the Investment Company Act of 1940, as amended.

Section 3.18 Title to Properties. Contango and the Subsidiaries have good and
marketable title to all of their interests in oil and gas properties and all
other real property owned by Contango and the Subsidiaries and good title to all
other properties owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as (i) are disclosed in the SEC Reports, (ii) arise under the
Credit Agreement, (iii) liens and encumbrances under operating agreements,
unitization and pooling agreements, production sales
contracts, farm-out agreements and other oil and gas exploration participation
and production agreements, in each case that secure payment of amounts not yet
due and payable for the performance of other unmatured obligations and are of a
scope and nature customary in the oil and gas industry or arise in connection
with drilling and production

 

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operations, or (iv) would not, in the aggregate, have a Material Adverse Effect.
Except as would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect or as described in the SEC Reports, all of the oil and gas leases
of Contango or any of the Subsidiaries and under which Contango or any of the
Subsidiaries holds properties described in the SEC Reports, are in full force
and effect, and neither Contango nor any of the Subsidiaries has received
written notice of any claim of any sort that has been asserted by anyone adverse
to the rights of Contango or any of the Subsidiaries under any of such leases,
or affecting or questioning the rights of Contango or such Subsidiary to the
continued possession of the leased or subleased premises under any such lease,
except for such claims that would not have a Material Adverse Effect.

Section 3.19 Rights-of-Way. Contango and the Subsidiaries have such consents,
easements, rights-of-way or licenses from any Person (collectively,
“rights-of-way”) as are necessary to enable Contango to conduct its business in
the manner described in the SEC Reports, subject to qualifications as may be set
forth in the SEC Reports, except where failure to have such rights-of-way would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

Section 3.20 Oil and Gas Properties. As of the date hereof, (i) all royalties,
rentals, deposits and other amounts owed under the oil and gas leases
constituting the oil and gas properties of Contango and the Subsidiaries have
been properly and timely paid (other than amounts held in suspense accounts
pending routine payments or related to disputes about the proper identification
of royalty owners and except where the failure to timely pay or pay such amounts
would not reasonably be expected to have a Material Adverse Effect); and no
material amount of proceeds from the sale or production attributable to the oil
and gas properties of Contango and the Subsidiaries are currently being held in
suspense by any purchaser thereof, except where such amounts due would not
reasonably be expected to have a Material Adverse Effect, and (ii) there are no
claims under take-or-pay contracts pursuant to which natural gas purchasers have
any makeup rights affecting the interests of Contango or the Subsidiaries in
their respective oil and gas properties, except where such claims would not
reasonably be expected to have a Material Adverse Effect.

Section 3.21 Intellectual Property. Each of Contango and the Subsidiaries owns,
licenses or otherwise has the right to use all inventions, patent applications,
patents, trademarks (both registered and unregistered), trade names, service
names, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
copyrights, service marks and other intellectual property as described in the
SEC Reports and which is necessary for the conduct of, or material to, its
business (collectively, the “Intellectual Property”), and Contango is unaware of
any claim to the contrary or any challenge by any other Person to the rights of
Contango or any of the Subsidiaries with respect to the Intellectual Property.
Neither Contango nor any of the Subsidiaries has infringed or is infringing the
intellectual property of a third party, and neither Contango nor any Subsidiary
is subject to any pending claim, or aware of any threatened claim, by a third
party to the contrary.

 

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Section 3.22 Employee Matters. Except for matters which would not, individually
or in the aggregate, have a Material Adverse Effect, (i) there is (A) no unfair
labor practice complaint pending or, to Contango’s knowledge, threatened against
Contango or any of the Subsidiaries before the National Labor Relations Board,
and no grievance or arbitration proceeding arising out of or under collective
bargaining agreements is pending or, to Contango’s knowledge, threatened, (B) no
strike, labor dispute, slowdown or stoppage pending or, to Contango’s knowledge,
threatened against Contango or any of the Subsidiaries and (C) no union
representation dispute currently existing concerning the employees of Contango
or any of the Subsidiaries, (ii) to Contango’s knowledge, no union organizing
activities are currently taking place concerning the employees of Contango or
any of the Subsidiaries and (iii) to Contango’s knowledge, there has been no
violation of any federal, state, local or foreign law relating to discrimination
in the hiring, promotion or pay of employees, any applicable wage or hour laws
or any provision of the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations promulgated thereunder concerning the
employees of Contango or any of the Subsidiaries.

Section 3.23 Environmental Matters. Contango and the Subsidiaries and their
respective properties, assets and operations are in compliance with, and
Contango and each of the Subsidiaries hold all permits, authorizations and
approvals required under, Environmental Laws (as defined below), except to the
extent that failure to so comply or to hold such permits, authorizations or
approvals would not, individually or in the aggregate, have a Material Adverse
Effect. There are no past or present conditions, circumstances, activities,
practices, actions, omissions or plans that could reasonably be expected to give
rise to any material costs or liabilities to Contango or any Subsidiary under,
or to interfere with or prevent compliance by Contango or any Subsidiary with,
Environmental Laws. Except as would not, individually or in the aggregate, have
a Material Adverse Effect, neither Contango nor any of the Subsidiaries (i) is
the subject of any investigation, (ii) has received any notice or claim,
(iii) is a party to or affected by any pending or, to Contango’s knowledge,
threatened action, suit or proceeding, (iv) is bound by any decree, judgment or
order or (v) has entered into any agreement, in each case relating to any actual
or alleged violation of any Environmental Law or any actual or alleged release
or threatened release or cleanup at any location of any Hazardous Materials (as
defined below) (as used herein, “Environmental Law” means any U.S. federal,
state, local or foreign law, statute, ordinance, rule, regulation, order,
decree, judgment, injunction, permit, license, authorization or other binding
requirement, or common law, relating to the protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, those relating to the distribution, processing, generation,
treatment, storage, disposal, transportation, other handling or release or
threatened release of Hazardous Materials, and “Hazardous Materials” means any
material (including, without limitation, any flammable explosives, radioactive
materials, toxic chemicals, pollutants, contaminants, hazardous or toxic
substances or wastes, petroleum or petroleum products, asbestos-containing
materials or mold) or any other hazardous materials as defined or regulated by
or which may give rise to liability under any Environmental Law). In the
ordinary course of their business, Contango and each of the Subsidiaries conduct
periodic reviews of the effect of the Environmental

 

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Laws on their respective properties, assets and operations, in the course of
which they identify and evaluate associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for cleanup,
closure of properties or compliance with the Environmental Laws or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties).

Section 3.24 Tax Matters. All tax returns required to be filed by Contango or
any of the Subsidiaries have been timely filed, and all taxes and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax or penalties applicable
thereto due or claimed to be due from such entities, have been timely paid,
other than those being contested in good faith and for which adequate reserves
have been provided or those that would not, individually or in the aggregate,
have a Material Adverse Effect.

Section 3.25 Insurance. Contango and each of the Subsidiaries maintain insurance
covering their respective properties, assets, operations, personnel and
businesses as Contango reasonably deems adequate. Such insurance insures against
such losses and risks to an extent which is adequate in accordance with
customary industry practice for similar companies to protect Contango and the
Subsidiaries and their respective properties, assets, operations, personnel and
businesses in all material respects. All such insurance is fully in force.
Neither Contango nor any Subsidiary has reason to believe that it will not be
able to renew any such insurance as and when such insurance expires.

Section 3.26 Sarbanes-Oxley Act. The principal executive officers (or their
equivalents) and principal financial officers (or their equivalents) of Contango
have made all certifications required by the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”) and any related rules and regulations promulgated by the
SEC, and the statements contained in each such certification are complete and
correct in all material respects. Contango, the Subsidiaries and Contango’s
directors and executive officers are each in compliance in all material respects
with all applicable effective provisions of the Sarbanes-Oxley Act and the rules
and regulations of the SEC and the NYSE American promulgated thereunder.

Section 3.27 FCPA. Neither Contango nor any of its Subsidiaries nor, to the
knowledge of Contango, any director, officer, agent, employee or Affiliate of
Contango or any of its Subsidiaries is aware of or has taken any action,
directly or indirectly, that would result in a violation by such persons of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any “foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA; and Contango, its
Subsidiaries and, to the knowledge of Contango, its Affiliates have conducted
their businesses in compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance therewith.

 

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Section 3.28 Anti-Money Laundering. The operations of Contango and its
Subsidiaries are and have been conducted at all times in compliance with all
applicable financial recordkeeping and reporting requirements and the money
laundering statutes and the rules and regulations thereunder, including but not
limited to the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the United States Bank Secrecy Act, as amended by the USA PATRIOT Act
of 2001, the United States Money Laundering Control Act of 1986, as amended, and
the applicable anti-money laundering statutes of jurisdictions where Contango
and its Subsidiaries conduct business, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving Contango or any of its
Subsidiaries with respect to the Money Laundering Laws is pending or, to the
best knowledge of Contango, threatened.

Section 3.29 Sanctions. None of Contango, any of its Subsidiaries or, to the
knowledge of Contango, any director, officer, agent, employee or Affiliate of
Contango or any of its Subsidiaries is currently the subject or the target of
any applicable sanctions administered or enforced by the U.S. Government
(including, without limitation, the Office of Foreign Assets Control of the U.S.
Department of the Treasury), the United Nations Security Council, the European
Union, Her Majesty’s Treasury, or other relevant sanctions authority
(collectively, “Sanctions”), nor is Contango or any of its Subsidiaries located,
organized, or resident in a country or territory that is the subject or target
of Sanctions; and Contango will not directly or indirectly use the proceeds of
the offering hereunder, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity
(i) to fund any activities of or business with any person, or in any country or
territory, that, at the time of such funding, is the subject of Sanctions or
(ii) in any other manner that will result in a violation by any person
(including any person participating in the transaction, whether as underwriter,
advisor, investor or otherwise) of Sanctions. Neither Contango nor any of its
Subsidiaries nor, to the knowledge of Contango, any director, officer, agent,
employee or Affiliate of Contango or any of its Subsidiaries, is a person that
is, or is 50% or more owned or otherwise controlled by a person that is: (i) the
subject of any Sanctions (a “Sanctioned Person”); or (ii) located, organized or
resident in a country or territory that is, or whose government is, the subject
of Sanctions that broadly prohibit dealings with that country or territory
(currently, Cuba, Iran, North Korea, Sudan, Venezuela, Syria and the Crimea
region of Ukraine claimed by Russia) (collectively, “Sanctioned Countries” and
each, a “Sanctioned Country”). Except as has been disclosed to each Purchaser or
is not material to the analysis under any Sanctions, neither Contango nor any of
its Subsidiaries has engaged in any dealings or transactions with or for the
benefit of a Sanctioned Person, or with or in a Sanctioned Country, in the
preceding five (5) years, nor does Contango or any of its Subsidiaries have any
plans to increase its dealings or transactions with Sanctioned Persons, or with
or in Sanctioned Countries.

 

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Section 3.30 Dividends, Distributions. No Subsidiary is currently prohibited,
directly or indirectly, from paying any dividends or making other distributions
to Contango, from repaying to Contango any loans or advances to such Subsidiary
from Contango or from transferring any of such Subsidiary’s properties or assets
to Contango or any other Subsidiary of Contango, except, in each case, as
described in the SEC Reports.

Section 3.31 No Preemptive Rights. The issuance and sale of the Purchased
Securities will not cause any holder of any shares of capital stock, securities
convertible into or exchangeable or exercisable for capital stock or options,
warrants or other rights to purchase capital stock or any other securities of
Contango to have any right to acquire any shares of capital stock of Contango.

Section 3.32 Certain Fees. Other than fees or commissions paid or to be paid to
the Placement Agents or Richard Perry in connection with the transactions
contemplated by this Agreement, no fees or commissions are or will be payable by
Contango to brokers, finders or investment bankers with respect to the sale of
any of the Purchased Securities or the consummation of the transactions
contemplated by this Agreement. Contango agrees that it will indemnify and hold
harmless each Purchaser from and against any and all claims, demands, or
liabilities by the Placement Agents, Richard Perry or any other Person for
broker’s, finder’s, placement, or other similar fees or commissions incurred by
Contango or alleged to have been incurred by Contango in connection with the
sale of the Purchased Securities or the consummation of the transactions
contemplated by this Agreement.

Section 3.33 Stabilization. Neither Contango nor any of the Subsidiaries nor any
of their respective directors, officers, Affiliates or controlling Persons has
taken, directly or indirectly, any action that is designed, or might reasonably
be expected, to cause or result in, or any action that constitutes, the
stabilization or manipulation of the price of any security of Contango to
facilitate the sale or resale of the Purchased Securities or a violation of
Regulation M under the Exchange Act.

Section 3.34 Information Technology. Contango and its Subsidiaries are presently
in material compliance with all applicable laws or statutes and all judgments,
orders, rules and regulations of any court or arbitrator or governmental or
Regulatory Authority, internal policies and contractual obligations relating to
the privacy and security of IT Systems and personal data and to the protection
of such IT Systems and personal data from unauthorized use, access,
misappropriation or modification, except to the extent that failure to so comply
would not, individually or in the aggregate, have a Material Adverse Effect. To
the knowledge of Contango, there has been no security breach or attack or other
compromise of or relating to any of Contango’s and its Subsidiaries’ IT Systems,
except as could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

Section 3.35 No Registration. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.05, the issuance and sale of
the Purchased Securities pursuant to this Agreement is exempt from registration
requirements of the Securities Act, and Contango has not taken nor will take any
action hereafter that would cause the loss of such exemption.

 

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Section 3.36 No Integration. Contango has not, directly or through any agent,
issued, sold, offered for sale, solicited offers to buy or otherwise negotiated
in respect of, any security (as defined in the Securities Act), that is or will
be integrated with the issuance and sale of the Purchased Securities
contemplated by this Agreement pursuant to the Securities Act, the rules and
regulations thereunder or the interpretations thereof by the SEC.

Section 3.37 No Disqualification Events. With respect to the Purchased
Securities to be offered and sold hereunder, none of Contango, any of its
predecessors, any affiliated issuer, any director, executive officer, other
officer of Contango participating in the offering hereunder, any beneficial
owner of 20% or more of Contango’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is
defined in Rule 405 under the Securities Act) connected with Contango in any
capacity at the time of sale (each, an “Issuer Covered Person” and, together,
“Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification Event”), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). Contango has exercised reasonable care to determine whether
any Issuer Covered Person is subject to a Disqualification Event. Other than the
Placement Agents and Richard Perry, Contango is not aware of any person (other
than any Issuer Covered Person) that has been or will be paid (directly or
indirectly) remuneration for solicitation of purchasers in connection with the
sale of any Purchased Securities. Contango will notify the Purchasers and the
Placement Agents in writing, prior to the Closing Date of (i) any
Disqualification Event relating to any Issuer Covered Person and (ii) any event
that would, with the passage of time, become a Disqualification Event relating
to any Issuer Covered Person.

Section 3.38 No General Solicitation. Neither Contango, any of its Affiliates
nor any Person acting on behalf of Contango has offered or sold any of the
Purchased Securities by any form of general solicitation or general advertising.
Contango has offered the Purchased Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under
the Securities Act.

Section 3.39 Shell Company Status. Contango is not, and has not been at any time
since December 31, 2000, an issuer identified in Rule 144(i)(1) and satisfies
the requirements in Rule 144(i)(2).

Section 3.40 Related Party Transactions. All transactions that have occurred
between or among Contango, on the one hand, and any of its officers or
directors, or any Affiliates of any such officer or director, on the other hand,
prior to the date hereof that are required to be disclosed by applicable SEC
rules and regulations have been disclosed in the SEC Reports.

 

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Section 3.41 Disclosure. On or before 9:30 a.m., New York local time, on the
Business Day following execution of this Agreement, Contango shall issue a press
release and/or a Current Report on Form 8-K (the “Press Release”) announcing the
entry into this Agreement and describing any other material, nonpublic
information that Contango may have provided any Purchaser at any time prior to
the issuance of the Press Release. On or before the fourth Business Day
following the date hereof, Contango shall file a Current Report on Form 8-K with
SEC describing the terms of the transactions contemplated by the Basic Documents
in the form required by the Exchange Act. Contango and each Purchaser shall
consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither Contango nor any Purchaser shall
issue any such press release nor otherwise make any such public statement
without the prior consent of Contango, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with respect to any
press release of Contango, which consent shall not unreasonably be withheld or
delayed, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, Contango
shall not publicly disclose the name of any Purchaser, or include the name of
any Purchaser in any filing with the SEC or any regulatory agency or NYSE
American, without the prior written consent of such Purchaser, except (a) as
required by federal securities law in connection with the filing of the Basic
Documents with the SEC and (b) to the extent such disclosure is required by law
or NYSE American regulations, in which case Contango shall provide the
Purchasers with prior notice of such disclosure permitted under this clause (b).

Section 3.42 Information on Shareholdings. After the Closing, Contango shall
promptly and accurately respond, and shall use its commercially reasonable
efforts to cause its transfer agent to respond, to reasonable requests for
information (which is otherwise not publicly available) made by a Purchaser or
its auditors relating to the actual holdings of such Purchaser or its accounts;
provided that Contango shall not be obligated to provide any information that
could reasonably result in a violation of applicable law or conflict with
Contango’s insider trading policy or a confidentiality obligation of the
Contango.

Section 3.43 Removal of Legend. In connection with a sale of the Conversion
Shares by a Purchaser in reliance on Rule 144, the applicable Purchaser or its
broker shall deliver to the transfer agent and Contango a seller or broker
representation letter, as applicable, providing to the transfer agent and
Contango any information deemed reasonably necessary to determine that the sale
of the Conversion Shares is made in compliance with Rule 144, including, as may
be appropriate, a certification that the Purchaser is not an Affiliate of
Contango and regarding the length of time the Conversion Shares have been held.
Upon receipt of such representation letter, Contango shall promptly direct its
transfer agent to remove the notation of a restrictive legend in such
Purchaser’s book-entry account maintained by the transfer agent, including the
legend referred to in Section 4.05(d), and Contango shall bear all costs
associated therewith. After a registration statement under the Securities Act
permitting the public resale of the Conversion Shares has become effective or
any Purchaser or its permitted assigns have held the Conversion Shares for one
year, if the book-entry account of such Conversion Shares still bears the
notation

 

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of the restrictive legend referred to in Section 4.05(d), Contango agrees, upon
request of the Purchaser or permitted assignee, to take all steps necessary to
promptly effect the removal of the legend described in Section 4.05(d) from the
Conversion Shares, and Contango shall bear all costs associated therewith,
regardless of whether the request is made in connection with a sale or
otherwise, so long as such Purchaser or its permitted assigns provide to
Contango any information deemed reasonably necessary to determine that the
legend is no longer required under the Securities Act or applicable state laws,
including (if there is no such registration statement) a certification that the
holder is not an Affiliate of Contango and regarding the length of time the
Conversion Shares have been held.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES AND

COVENANTS OF THE PURCHASERS

Each Purchaser, severally and not jointly, hereby represents and warrants and
covenants to Contango as follows:

Section 4.01 Existence. Such Purchaser is duly organized and validly existing
and in good standing under the laws of its state of formation, with all
necessary power and authority to own properties and to conduct its business as
currently conducted.

Section 4.02 Authorization, Enforceability. Such Purchaser has all necessary
legal power and authority to execute, deliver and perform its obligations under
the Basic Documents to which such Purchaser is or will be a party. The
execution, delivery and performance by such Purchaser of the Basic Documents to
which such Purchaser is or will be a party and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary legal action, and no further consent or
authorization of such Purchaser is required. This Agreement to which such
Purchaser is a party has been duly and validly authorized, executed and
delivered by such Purchaser and constitutes the legal, valid and binding
obligation of such Purchaser and, when executed by such Purchaser, the other
Basic Documents to which such Purchaser is a party will be duly and validly
authorized, executed and delivered by such Purchaser and will constitute the
legal, valid and binding obligations of such Purchaser, in each case enforceable
in accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer and similar laws affecting
creditors’ rights generally or by general principles of equity and except as the
rights to indemnification may be limited by applicable law.

Section 4.03 No Breach. The execution, delivery and performance by such
Purchaser of the Basic Documents and the consummation by such Purchaser of the
transactions contemplated hereby or thereby does not and will not (a) assuming
the accuracy of the representations and warranties of Contango contained herein
and its compliance with the covenants contained herein, violate any provision of
any Law or permit having applicability to such Purchaser or the property or
assets of such Purchaser, (b) conflict with or result in a violation or breach
of any provision of

 

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the organizational documents of such Purchaser, or (c) conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, any material agreement to which such Purchaser is a party or by
which such Purchaser is bound or to which any of the property or assets of such
Purchaser is subject, except in the case of clauses (a) and (c), for such
conflicts, breaches, violations or defaults as would not have a material adverse
effect on the ability of such Purchaser to consummate the transactions
contemplated by the Basic Documents.

Section 4.04 Certain Fees. No fees or commissions are or will be payable by such
Purchaser to brokers, finders or investment bankers with respect to the purchase
of any of the Purchased Securities or the consummation of the transactions
contemplated by this Agreement.

Section 4.05 Unregistered Securities.

(a) Accredited Investor Status; Sophisticated Purchasers. Such Purchaser is an
“accredited investor” within the meaning of Rule 501 under the Securities Act
and is able to bear the risk of its investment in Purchased Securities and the
Conversion Shares. Such Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the purchase of the Purchased Securities and the Conversion Shares.

(b) Information. Such Purchaser and its Representatives have been furnished with
all materials relating to the business, finances and operations of Contango that
have been requested and materials relating to the offer and sale of the
Purchased Securities that have been requested by such Purchaser and its
Representatives. Such Purchaser and its Representatives have been afforded the
opportunity to ask questions of Contango. Neither such inquiries nor any other
due diligence investigations conducted at any time by such Purchaser and its
Representatives shall modify, amend or affect such Purchaser’s right (i) to rely
on Contango’s representations and warranties contained in Article III above or
(ii) to indemnification or any other remedy based on, or with respect to the
accuracy or inaccuracy of, or compliance with, the representations, warranties,
covenants and agreements in this Agreement, or any other Basic Document. Such
Purchaser understands that the purchase of the Purchased Securities involves a
high degree of risk. Such Purchaser has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Purchased Securities.

(c) Cooperation. Such Purchaser shall cooperate reasonably with Contango to
provide any information necessary for any applicable securities filings required
to be made by Contango in connection with the transactions contemplated hereby.

(d) Legends. Such Purchaser understands that the Purchased Securities will bear
a restrictive legend substantially in the form as set forth in the Statement of
Resolution.

(e) Purpose of Purchase. Such Purchaser is purchasing the Purchased Securities
for its own account and not with a view to distribution in violation of any
securities laws. Such Purchaser has been advised and understands that none of
the Purchased Securities or the Conversion Shares have been registered under the
Securities Act or under the “blue sky” laws of any jurisdiction and may be
resold only if registered pursuant to the provisions of the Securities Act (or
if eligible, pursuant to the provisions of Rule 144 promulgated under the
Securities Act or pursuant to another available exemption from the registration
requirements of the Securities Act).

 

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(f) Rule 144. Such Purchaser understands that there is no public trading market
for the Purchased Securities, that none is expected to develop and that the
Purchased Securities must be held indefinitely unless and until the Purchased
Securities or the Conversion Shares, as applicable, are registered for resale
under the Securities Act or an exemption from such registration is available.
Such Purchaser has been advised by its advisors of and is aware of the
provisions of Rule 144 promulgated under the Securities Act.

(g) Reliance by Contango. Such Purchaser understands that the Purchased
Securities are being offered and sold in reliance on transactional exemptions
from the registration requirements of federal and state securities laws and that
Contango is relying upon the truth and accuracy of the representations,
warranties, covenants, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the applicability of such exemptions and the
suitability of such Purchaser to acquire the Purchased Securities and the
Conversion Shares.

Section 4.06 No Legal, Tax or Investment Advice. Such Purchaser understands that
nothing in this Agreement or any other materials presented by or on behalf of
Contango to the Purchaser in connection with the offer and sale of the Purchased
Securities constitutes legal, tax or investment advice. Such Purchaser has
consulted such legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase of the
Purchased Securities. Such Purchaser understands that Cowen and Company LLC and
Intrepid Partners, LLC (the “Placement Agents”) have acted solely as the agents
of Contango in this placement of the Purchased Securities, and that the
Placement Agents make no representation or warranty with regard to the merits of
this transaction or as to the accuracy of any information such Purchaser may
have received in connection therewith. Such Purchaser acknowledges that it has
not relied on any information or advice furnished by or on behalf of the
Placement Agents.

Section 4.07 Short Selling. Such Purchaser has not engaged in any Short Sales
involving Common Stock owned by it between the time it first began discussions
with Contango about the transaction contemplated by this Agreement and the date
of execution of this Agreement.

Section 4.08 Lock-Up Agreement. Without the prior written consent of Contango,
except as otherwise specifically provided in this Agreement, each Purchaser will
not, during the period commencing on the Closing Date and ending the date that
is six months after the Closing Date, (i) offer, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any of its Purchased Securities or
(ii) enter into any swap or other transaction or arrangement that transfers or
that is designed to, or that might reasonably be expected to, result in the
transfer to another, in whole or in part, any of the economic consequences of
ownership of its Purchased Securities, whether any such transaction described in
clause (i) or (ii) above (any such transaction described in clauses (i) and
(ii), a “Transfer”) is to be settled by delivery of Purchased Securities, Common
Stock or such other securities, in cash or otherwise.

 

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ARTICLE V

INDEMNIFICATION

Section 5.01 Indemnification by Contango. Contango agrees to indemnify each
Purchaser and its Representatives (collectively, “Purchaser Related Parties”)
from, and hold each of them harmless against, any and all losses, actions,
suits, proceedings (including any investigations, litigation or inquiries),
demands and causes of action, and, in connection therewith, and promptly upon
demand, pay or reimburse each of them for all reasonable costs, losses,
liabilities, damages or expenses of any kind or nature whatsoever (including the
reasonable fees and disbursements of counsel and all other reasonable expenses
incurred in connection with investigating, defending or preparing to defend any
such matter that may be incurred by them or asserted against or involve any of
them), involving a third party claim, as a result of, arising out of, or in any
way related to (i) the failure of any of the representations or warranties made
by Contango contained herein to be true and correct in all material respects as
of the date hereof (except with respect to any provisions including the word
“material” or words of similar import, with respect to which such
representations and warranties must have been true and correct) or (ii) the
material breach of any covenants of Contango contained herein, provided that, in
the case of the immediately preceding clause (i), such claim for indemnification
is made prior to the expiration of such representation or warranty; provided,
however, that for purposes of determining when an indemnification claim has been
made, the date upon which a Purchaser Related Party shall have given notice
(stating in reasonable detail the basis of the claim for indemnification) to
Contango shall constitute the date upon which such claim has been made.

Section 5.02 Indemnification by the Purchasers. Each Purchaser agrees, severally
and not jointly, to indemnify Contango and its respective Representatives
(collectively, “Contango Related Parties”) from, and hold each of them harmless
against, any and all losses, actions, suits, proceedings (including any
investigations, litigation or inquiries), demands and causes of action, and, in
connection therewith, and promptly upon demand, pay or reimburse each of them
for all reasonable costs, losses, liabilities, damages or expenses of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
and all other reasonable expenses incurred in connection with investigating,
defending or preparing to defend any such matter that may be incurred by them or
asserted against or involve any of them), involving a third party claim, as a
result of, arising out of, or in any way related to (i) the failure of any of
the representations or warranties made by such Purchaser contained herein to be
true and correct in all material respects as of the date hereof or (ii) the
material breach of any of the covenants of such Purchaser contained herein,
provided that, in the case of the immediately preceding clause (i), such claim
for indemnification relating to a breach of any representation or warranty is
made prior to the expiration of such representation or warranty; provided,
however, that for purposes of determining when an indemnification claim has been
made, the date upon which a Contango Related Party shall have given notice
(stating in reasonable detail the basis of the claim for indemnification) to
such Purchaser shall constitute the date upon which such claim has been made;
provided, further, that the liability of such Purchaser shall not be greater in
amount than such Purchaser’s Allocated Purchase Price.

 

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Section 5.03 Indemnification Procedure. A claim for indemnification for any
matter not involving a third party claim may be asserted by notice to the party
from whom indemnification is sought; provided, however, that failure to so
notify the Indemnifying Party shall not preclude the Indemnified Party from any
indemnification which it may claim in accordance with this Article V, except as
otherwise provided in Sections 5.01 and 5.02. Promptly after any Contango
Related Party or Purchaser Related Party (hereinafter, the “Indemnified Party”)
has received notice of any indemnifiable claim hereunder, or the commencement of
any action, suit or proceeding by a third Person, which the Indemnified Party
believes in good faith is an indemnifiable claim under this Agreement, the
Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”)
written notice of such claim or the commencement of such action, suit or
proceeding, but failure to so notify the Indemnifying Party will not relieve the
Indemnifying Party from any liability it may have to such Indemnified Party
hereunder except to the extent that the Indemnifying Party is materially
prejudiced by such failure. Such notice shall state the nature and the basis of
such claim to the extent then known. The Indemnifying Party shall have the right
to defend and settle, at its own expense and by its own counsel, any such matter
as long as the Indemnifying Party pursues the same diligently and in good faith.
If the Indemnifying Party undertakes to defend or settle such claim, it shall
promptly after such determination, and in no event later than five (5) days,
notify the Indemnified Party of its intention to do so, and the Indemnified
Party shall cooperate with the Indemnifying Party and its counsel in all
commercially reasonable respects in the defense thereof and/or the settlement
thereof. Such cooperation shall include, but shall not be limited to, furnishing
the Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party’s possession or
control relevant to the claim. Such cooperation of the Indemnified Party shall
be at the cost of the Indemnifying Party. After the Indemnifying Party has
notified the Indemnified Party of its intention to undertake to defend or settle
any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability; provided, however,
that the Indemnified Party shall be entitled (i) at its expense, to participate
in the defense of such asserted liability and the negotiations of the settlement
thereof and (ii) if (A) the Indemnifying Party has, within ten (10) Business
Days of when the Indemnified Party provides written notice of a claim, failed
(y) to assume the defense or settlement of such claim and employ counsel or
(z) to notify the Indemnified Party of such assumption, or (B) if the defendants
in any such action include both the Indemnified Party and the Indemnifying Party
and counsel to the Indemnified Party shall have concluded that there may be
reasonable defenses available to the Indemnified Party that are different from
or in addition to those available to the Indemnifying Party or if the interests
of the Indemnified Party reasonably may be deemed to conflict with the interests
of the Indemnifying Party, then the Indemnified Party shall have the right to
select a separate

 

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counsel and to assume such legal defense and otherwise to participate in the
defense of such action, with the expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
Indemnifying Party as incurred. Notwithstanding any other provision of this
Agreement, the Indemnifying Party shall not settle any indemnified claim without
the consent of the Indemnified Party, unless the settlement thereof imposes no
liability or obligation on, and includes a complete release from liability of,
and does not contain any admission of wrong doing by, the Indemnified Party.

Section 5.04 Tax Treatment of Indemnification Payments. Any indemnification
payments made under this Article V shall be treated for all tax purposes as an
adjustment to the relevant Purchaser’s Allocated Purchase Price except as
otherwise required by applicable Law.

ARTICLE VI

TERMINATION

Section 6.01 Termination. Notwithstanding anything in this Agreement to the
contrary, this Agreement may be terminated at any time:

(a) by any Purchaser (with respect to the obligations of such Purchaser) or
Contango, upon written notice to the other party, if the Closing shall not have
occurred on or before December 27, 2019 (the “Outside Date”); provided, however,
that the right to terminate this Agreement under this Section 6.01(a) shall not
be available to any party whose (i) breach of any provision of this Agreement,
(ii) failure to comply with its obligations under this Agreement or
(iii) actions not taken in good faith shall have been the cause of, or shall
have resulted in, the failure of the Closing to occur on or prior to the Outside
Date or the failure of a condition in Section 2.04(b) or Section 2.04(c) to be
satisfied at such time; or

(b) by either Contango or any Purchaser (with respect to the obligations of such
Purchaser) if any court of competent jurisdiction in the United States or other
United States Regulatory Authority shall have issued a final order, decree or
ruling or taken any other final action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree, ruling
or other action is or shall have become final and nonappealable.

Section 6.02 Certain Effects of Termination. If this Agreement is terminated as
provided in Section 6.01, except as set forth in Section 7.03, this Agreement
shall become null and void and have no further force or effect, but the parties
shall not be released from any liability arising from or in connection with any
breach hereof occurring prior to such termination.

ARTICLE VII

MISCELLANEOUS

Section 7.01 Expenses. All other costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.

 

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Section 7.02 Interpretation. Article, Section, Schedule and Exhibit references
in this Agreement are references to the corresponding Article, Section, Schedule
or Exhibit to this Agreement, unless otherwise specified. All Exhibits and
Schedules to this Agreement are hereby incorporated and made a part hereof as if
set forth in full herein and are an integral part of this Agreement. All
references to instruments, documents, contracts and agreements are references to
such instruments, documents, contracts and agreements as the same may be
amended, supplemented and otherwise modified from time to time, unless otherwise
specified. The word “including” shall mean “including but not limited to” and
shall not be construed to limit any general statement that it follows to the
specific or similar items or matters immediately following it. Whenever Contango
has an obligation under the Basic Documents, the expense of complying with that
obligation shall be an expense of Contango unless otherwise specified. Any
reference in this Agreement to $ shall mean U.S. dollars. Whenever any
determination, consent or approval is to be made or given by any Purchaser, such
action shall be in such Purchaser’s sole discretion, unless otherwise specified
in this Agreement. If any provision in the Basic Documents is held to be
illegal, invalid, not binding or unenforceable, (i) such provision shall be
fully severable and the Basic Documents shall be construed and enforced as if
such illegal, invalid, not binding or unenforceable provision had never
comprised a part of the Basic Documents, and the remaining provisions shall
remain in full force and effect and (ii) the parties hereto shall negotiate in
good faith to modify the Basic Documents so as to effect the original intent of
the parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
the Basic Documents, the date that is the reference date in calculating such
period shall be excluded. If the last day of such period is a non-Business Day,
the period in question shall end on the next succeeding Business Day. Any words
imparting the singular number only shall include the plural and vice versa. The
words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to this
Agreement as a whole and not merely to a subdivision in which such words appear
unless the context otherwise requires. The provision of a Table of Contents, the
division of this Agreement into Articles, Sections and other subdivisions and
the insertion of headings are for convenience of reference only and shall not
affect or be utilized in construing or interpreting this Agreement.

Section 7.03 Survival of Provisions. The representations and warranties set
forth in Sections 3.01, 3.02, 3.03, 3.05, 3.06, 3.30, 4.02, 4.04 and 4.05
hereunder shall survive the execution and delivery of this Agreement for a
period of one (1) year, and the other representations and warranties set forth
herein shall survive for a period of six (6) months following the final Closing
Date regardless of any investigation made by or on behalf of Contango or a
Purchaser. The covenants made in this Agreement shall survive the final Closing
and remain operative and in full force and effect regardless of acceptance of
any of the Purchased Securities and payment therefor and repayment, conversion
or repurchase thereof. Regardless of any purported general

 

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termination of this Agreement, the provisions of Article V and all
indemnification rights and obligations of Contango and the Purchasers
thereunder, Section 6.02 and this Article VII shall remain operative and in full
force and effect as between Contango and each Purchaser, unless Contango and
each Purchaser execute a writing that expressly (with specific references to the
applicable Section or subsection of this Agreement) terminates such rights and
obligations as between Contango and such Purchaser.

Section 7.04 No Waiver; Modifications in Writing.

(a) Delay. No failure or delay on the part of any party in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to a party at law or in equity or otherwise.

(b) Specific Waiver. Except as otherwise provided herein, no amendment, waiver,
consent, modification or termination of any provision of this Agreement or any
other Basic Document shall be effective unless signed by each of the parties
hereto or thereto affected by such amendment, waiver, consent, modification or
termination. Any amendment, supplement or modification of or to any provision of
this Agreement or any other Basic Document, any waiver of any provision of this
Agreement or any other Basic Document and any consent to any departure by
Contango from the terms of any provision of this Agreement or any other Basic
Document shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement, no notice to or demand on Contango in any case shall entitle
Contango to any other or further notice or demand in similar or other
circumstances. Any investigation by or on behalf of any party shall not be
deemed to constitute a waiver by the party taking such action of compliance with
any representation, warranty, covenant or agreement contained herein.
Notwithstanding any of the foregoing, any amendment, waiver, consent or
modification of, or supplement to, this Agreement or any other Basic Document
shall require approval of a majority of the members of the board of directors of
Contango not affiliated with John C. Goff.

Section 7.05 Binding Effect; Assignment.

(a) Binding Effect. This Agreement shall be binding upon Contango, each
Purchaser and their respective successors and permitted assigns. Except as
expressly provided in this Agreement, this Agreement shall not be construed so
as to confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and permitted assigns; provided that,
the representations and warranties of Contango in Article III and the
representations and warranties of the Purchasers in Article IV may be relied
upon by the Placement Agents, in their capacity as placement agents for the
offering and sale of the Purchased Securities, as third party beneficiaries
thereof.

 

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(b) Assignment of Rights. Without the written consent of Contango, no portion of
the rights and obligations of any Purchaser under this Agreement may be assigned
or transferred by such Purchaser. No portion of the rights and obligations of
Contango under this Agreement may be transferred or assigned without the prior
written consent of the Purchasers.

Section 7.06 Communications. All notices and demands provided for hereunder
shall be (i) in writing and shall be given by registered or certified mail,
return receipt requested, air courier guaranteeing overnight delivery or
personal delivery, and (ii) via e-mail, to the following addresses:

(a) If to the Purchasers:

At such address indicated on Schedule A attached hereto.

(b) If to Contango:

Contango Oil & Gas Company

717 Texas Avenue, Suite 2900

Houston, Texas 77002

Attention: Wilkie S. Colyer, Jr.

E-mail: WColyer@contango.com

with a copy (which shall not constitute notice) to:

Gibson, Dunn & Crutcher LLP

811 Main Street, Suite 3000

Houston, Texas 77002

Attention: Hillary H. Holmes

E-mail: HHolmes@gibsondunn.com

or to such other address as Contango or such Purchaser may designate in writing.
All notices and communications shall be deemed to have been duly given: at the
time delivered by hand, if personally delivered; upon actual receipt if sent by
certified or registered mail, return receipt requested, or regular mail, if
mailed; upon actual receipt if sent by overnight courier copy; when receipt is
acknowledged, if sent via e-mail; and upon actual receipt when delivered to an
air courier guaranteeing overnight delivery.

Section 7.07 Entire Agreement. This Agreement, the other Basic Documents and the
other agreements and documents referred to herein are intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein or the other Basic Documents with respect to the rights
granted by Contango or any of its Affiliates or the Purchasers or any of their
Affiliates set forth herein or therein. This Agreement, the other Basic
Documents and the other agreements and documents referred to herein or therein
supersede all prior agreements and understandings between the parties with
respect to such subject matter.

 

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Section 7.08 Governing Law; Submission to Jurisdiction. This Agreement, and all
claims or causes of action (whether in contract or tort) that may be based upon,
arise out of or relate to this Agreement or the negotiation, execution or
performance of this Agreement (including any claim or cause of action based
upon, arising out of or related to any representation or warranty made in or in
connection with this Agreement), will be construed in accordance with and
governed by the laws of the State of Texas without regard to principles of
conflicts of laws. Any action against any party relating to the foregoing shall
be brought in any federal or state court of competent jurisdiction located
within the State of Texas, and the parties hereto hereby irrevocably submit to
the non-exclusive jurisdiction of any federal or state court located within the
State of Texas over any such action. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable Law, any objection which they may now
or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law.

Section 7.09 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT EACH
HEREBY WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY
OR OTHERWISE. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 7.10 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement. A signed copy of this Agreement delivered by
facsimile, portable document format (PDF) or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement; provided, however, that each party
hereto shall deliver an original signed copy of this Agreement executed by such
party to any other party hereto promptly upon the request of any such other
party.

 

30

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Section 7.11 Recapitalizations, Exchanges, Etc. Affecting the Purchased
Securities. The provisions of this Agreement shall apply to the full extent set
forth herein with respect to any and all equity interests of Contango or any
successor or assign of Contango (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for or in
substitution of, the Purchased Securities.

Section 7.12 Certain Tax Matters. Contango agrees that, provided that each
Purchaser delivers to Contango a properly executed IRS Form W-9, or similar form
sufficient to cause under current Law Contango (including any paying agent of
Contango) to avoid a requirement to withhold on any payments or deemed payments
to any such Purchaser, Contango (including any paying agent of Contango) will
not withhold on any payments or deemed payments to any such Purchaser.

[Remainder of Page Left Intentionally Blank]

 

31

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of
the date first above written.

 

CONTANGO OIL & GAS COMPANY

By:

 

/s/ E. Joseph Grady

 

Name:  E. Joseph Grady

 

Title:   Senior Vice President and Chief

Financial Officer

[Signatures continued on following page.]

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PURCHASER: JCG 2016 HOLDINGS, LP By:  

/s/ John C. Goff

 

Name:  John C. Goff

 

Title:   Manager, JCG 2016 Management,

LLC as General Partner

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PURCHASER: GOFF FAMILY INVESTMENTS, LP By:  

/s/ John C. Goff

 

Name:  John C. Goff

 

Title:   Chief Executive Officer, Goff

Capital, Inc. as General Partner

--------------------------------------------------------------------------------

PURCHASER:

JOHN C. GOFF 2010 FAMILY TRUST

By:

 

/s/ John C. Goff

 

Name: John C. Goff

 

Title: Trustee

--------------------------------------------------------------------------------

PURCHASER:

KULIK PARTNERS, LP

By:

 

/s/ John C. Goff

 

Name:  John C. Goff

 

Title:   Manager, Kulik GP, LLC, as

 

General Partner

--------------------------------------------------------------------------------

PURCHASER:

WILKIE COLYER

By:

 

/s/ Wilkie Colyer

 

Name: Wilkie Colyer

 

Title: Individual

--------------------------------------------------------------------------------

PURCHASER:

WILL FARLEY DAKAN

By:

 

/s/ W. Farley Dakan

 

Name: W. Farley Dakan

 

Title: Individual

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SCHEDULE A

Schedule of Purchasers

 

Purchaser

   Notice
Address      Number of Shares
of Preferred Stock      Allocated
Purchase Price  

John C. Goff 2020 Family Trust

     [Redacted]        820,000      $ 2,050,000  

JCG 2016 Holdings, LP

     [Redacted]        800,000      $ 2,000,000  

Goff Family Investments, LP

     [Redacted]        400,000      $ 1,000,000  

Kulik Partners, LP

     [Redacted]        200,000      $ 500,000  

Wilkie S. Colyer, Jr.

     [Redacted]        60,000      $ 150,000  

W. Farley Dakan

     [Redacted]        60,000      $ 150,000        

 

 

    

 

 

 

Total

        2,340,000      $ 5,850,000        

 

 

    

 

 

 

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SCHEDULE B

Schedule of Subsidiaries

 

Subsidiary

   Ownership
Percentage  

Crimson Exploration Inc.

     100 % 

Crimson Exploration Operating, Inc.

     100 % 

Contango Energy Company

     100 % 

Contango Rocky Mountain Inc.

     100 % 

Contango Operators, Inc.

     100 % 

Contango Mining Company

     100 % 

Conterra Company

     100 % 

Contaro Company

     100 % 

Contango Alta Investments, Inc.

     100 % 

Contango Venture Capital Corporation

     100 % 

LTW Pipeline Co.

     100 % 

Contango Resources, Inc.

     100 % 

Contango Midstream Company

     100 % 

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EXHIBIT A

FORM OF REGISTRATION RIGHTS AGREEMENT

--------------------------------------------------------------------------------

Execution Version

REGISTRATION RIGHTS AGREEMENT

by and among

CONTANGO OIL & GAS COMPANY

and

THE PURCHASERS PARTY HERETO

--------------------------------------------------------------------------------

Table of Contents

 

ARTICLE I DEFINITIONS

     1  

Section 1.1

     Definitions      1  

Section 1.2

     Registrable Securities      4  

ARTICLE II REGISTRATION RIGHTS

     4  

Section 2.1

     Shelf Registration      4  

Section 2.2

     Piggyback Registration      6  

Section 2.3

     Secondary Underwritten Offering      8  

Section 2.4

     Sale Procedures      10  

Section 2.5

     Cooperation by Holders      14  

Section 2.6

     [Reserved]      14  

Section 2.7

     Expenses      14  

Section 2.8

     Indemnification      14  

Section 2.9

     Rule 144 Reporting      17  

Section 2.10

     Transfer or Assignment of Registration Rights      17  

Section 2.11

     Aggregation of Registrable Securities      17  

ARTICLE III MISCELLANEOUS

     18  

Section 3.1

     Communications      18  

Section 3.2

     Successors and Assigns      18  

Section 3.3

     Assignment of Rights      18  

Section 3.4

     Recapitalization (Exchanges, etc. Affecting the Registrable Securities)   
  18  

Section 3.5

     Specific Performance      19  

Section 3.6

     Counterparts      19  

Section 3.7

     Headings      19  

Section 3.8

     Governing Law, Submission to Jurisdiction      19  

Section 3.9

     Waiver of Jury Trial      19  

Section 3.10

     Severability of Provisions      20  

Section 3.11

     Entire Agreement      20  

Section 3.12

     Term; Amendment      20  

Section 3.13

     No Presumption      20  

Section 3.14

     Obligations Limited to Parties to Agreement      20  

Section 3.15

     Interpretation      21  

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REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into
as of December 23, 2019 by and between Contango Oil & Gas Company, a Texas
corporation (“Contango”), and the parties set forth on Schedule A hereto (each,
a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, this Agreement is made in connection with the closing of the issuance
and sale of the Purchased Securities pursuant to the Purchase Agreement, dated
as of December 19, 2019, by and between Contango and the Purchasers (the
“Purchase Agreement”);

WHEREAS, Contango has agreed to provide the registration and other rights set
forth in this Agreement for the benefit of the Purchasers pursuant to the
Purchase Agreement; and

WHEREAS, it is a condition to the obligations of the Purchasers and Contango
under the Purchase Agreement that this Agreement be executed and delivered.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each party hereto, the parties
hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. The terms set forth below are used herein as so
defined:

“Affiliate” means, with respect to a specified Person, any other Person,
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
“control” (including, with correlative meanings, “controlling,” “controlled by,”
and “under common control with”) means the power to direct or cause the
direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning specified therefor in the introductory paragraph.

“Business Day” means any day other than a Saturday, Sunday, any federal legal
holiday or day on which banking institutions in the State of Texas are
authorized or required by law or other governmental action to close.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” means the common stock, par value $0.04 per share, of Contango.

“Common Stock Price” means the volume weighted average closing price of the
Common Stock as reported by the NYSE American for the 10 trading days
immediately preceding the date on which the determination is made.

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“Contango” has the meaning specified therefor in the introductory paragraph of
this Agreement.

“Effective Date” means the initial date of effectiveness of the Shelf
Registration Statement.

“Effectiveness Deadline” has the meaning specified therefor in Section 2.1(a) of
this Agreement.

“Effectiveness Period” has the meaning specified therefor in Section 2.1(a) of
this Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.

“Filing Deadline” has the meaning specified therefor in Section 2.1(a) of this
Agreement.

“Holder” means the record holder of any Registrable Securities.

“Included Registrable Securities” has the meaning specified therefor in
Section 2.2(a) of this Agreement.

“Law” shall have the meaning set forth in the Purchase Agreement.

“Losses” has the meaning specified therefor in Section 2.8(a) of this Agreement.

“Managing Underwriter” means, with respect to any Underwritten Offering, the
left lead book running manager of such Underwritten Offering.

“Minimum Commitment” has the meaning specified therefor in Section 2.3(a) of
this Agreement.

“Other Holder” has the meaning specified in Section 2.2(b) of this Agreement.

“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization, government or any agency, instrumentality or political subdivision
thereof, or any other form of entity.

“Piggyback Notice” has the meaning specified therefor in Section 2.2(a) of this
Agreement.

“Piggyback Opt-Out Notice” has the meaning specified therefor in Section 2.2(a)
of this Agreement.

“Piggyback Registration” has the meaning specified therefor in Section 2.2(a) of
this Agreement.

“Purchase Agreement” has the meaning specified therefor in the Recitals of this
Agreement.

 

2

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“Purchased Securities” means the Series C Preferred Stock to be issued and sold
to the Purchasers pursuant to the Purchase Agreement.

“Purchaser” or “Purchasers” has the meaning set forth in the introductory
paragraph of this Agreement.

“Registrable Securities” means, subject to Section 1.2 of this Agreement, the
shares of Common Stock issued upon conversion of the Purchased Securities in
accordance with the terms of the Statement of Resolution.

“Registration” means any registration pursuant to this Agreement, including
pursuant to the Shelf Registration Statement.

“Registration Expenses” has the meaning specified therefor in Section 2.7(a) of
this Agreement.

“Resale Opt-Out Notice” has the meaning specified therefor in Section 2.1(c) of
this Agreement.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the Commission promulgated thereunder.

“Selling Expenses” has the meaning specified therefor in Section 2.7(a) of this
Agreement.

“Selling Holder” means a Holder who is selling Registrable Securities pursuant
to a Registration.

“Selling Holder Election Notice” has the meaning specified therefor in
Section 2.3(a) of this Agreement.

“Series C Preferred Stock” means the Series C Contingent Convertible Preferred
Stock of Contango and having the rights and obligations specified in the
Statement of Resolution.

“Shelf Registration Statement” means a registration statement under the
Securities Act to permit the public resale of the Registrable Securities from
time to time as permitted by Rule 415 of the Securities Act (or any similar
provision then in force under the Securities Act).

“Statement of Resolution” means the statement of resolution setting forth the
terms of the Series C Preferred Stock.

“Underwritten Offering” means an offering (including an offering pursuant to a
Shelf Registration Statement) in which Common Stock is sold to an underwriter on
a firm commitment basis for reoffering to the public or an offering that is a
“bought deal” with one or more investment banks.

“WKSI” means a well-known seasoned issuer (as defined in Rule 405 under the
Securities Act).

 

3

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Section 1.2 Registrable Securities. Any Registrable Security will cease to be a
Registrable Security at the earliest of the following: (a) when a registration
statement covering such Registrable Security has been declared effective by the
Commission and such Registrable Security has been sold or disposed of pursuant
to such effective registration statement; (b) when such Registrable Security is
held by Contango or one of its subsidiaries; (c) when such Registrable Security
has been sold in a private transaction in which the transferor’s rights under
this Agreement are not assigned to the transferee of such securities; and
(d) the date on which such Registrable Security has been sold pursuant to any
section of Rule 144 under the Securities Act (or any similar provision then in
force under the Securities Act, “Rule 144”) or any other exemption from the
registration requirements of the Securities Act as a result of which the legend
on any certificate or book-entry notation representing such Registrable Security
restricting transfer of such Registrable Security has been removed.

ARTICLE II

REGISTRATION RIGHTS

Section 2.1 Shelf Registration.

(a) Shelf Registration. Contango shall use its commercially reasonable efforts
to prepare and file an initial Shelf Registration Statement under the Securities
Act covering all Registrable Securities at such time of filing within 30 days of
the date on which the shares of Series C Preferred Stock are first converted
into Common Stock (the “Filing Deadline”); provided Contango may satisfy such
requirement by filing a post-effective amendment to an effective Shelf
Registration Statement to include the Registrable Securities and, in such case,
references to “Shelf Registration Statement” in this Agreement shall include any
such amendment. Contango shall use its commercially reasonable efforts to cause
such initial Shelf Registration Statement to become effective on or as soon as
practicable after the filing thereof and no later than 90 days (or if reviewed
by the staff of the Commission, 120 days) from the date on which the shares of
Series C Preferred Stock are first converted into Common Stock (the
“Effectiveness Deadline”). Contango will use its commercially reasonable efforts
to cause such initial Shelf Registration Statement filed pursuant to this
Section 2.1(a) to be continuously effective under the Securities Act until the
earliest of (1) all Registrable Securities covered by the Shelf Registration
Statement have been distributed in the manner set forth and as contemplated in
such Shelf Registration Statement, (2) there are no longer any Registrable
Securities outstanding and (3) three years from the Effective Date (the
“Effectiveness Period”). A Shelf Registration Statement filed pursuant to this
Section 2.1(a) shall be on such appropriate registration form of the Commission
as shall be selected by Contango. A Shelf Registration Statement when declared
effective (including the documents incorporated therein by reference) will
comply as to form in all material respects with all applicable requirements of
the Securities Act and the Exchange Act and will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the case
of any prospectus contained in such Shelf Registration Statement, in the light
of the circumstances under which a statement is made). As soon as practicable
following the date that a Shelf Registration Statement becomes effective, but in
any event within one Business Day of such date, Contango shall provide the
Holders with written notice of the effectiveness of a Shelf Registration
Statement.

 

4

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(b) Notwithstanding Contango’s registration obligations set forth in
Section 2.1(a), if the Commission does not permit, as a result of the
application of Rule 415, all of the Registrable Securities (after giving effect
to all Resale Opt-Out Notices) to be registered for resale as a secondary
offering on a single registration statement, Contango shall use its commercially
reasonable efforts to file amendments to the initial Shelf Registration
Statement as required by the Commission, covering the maximum number of
Registrable Securities, applied on a pro rata basis among the Holders, permitted
by the Commission to be registered on such Shelf Registration Statement. In the
event Contango amends the initial Shelf Registration Statement in accordance
with the foregoing, Contango shall use its commercially reasonable efforts to
file with the Commission, as promptly as allowed by Commission, one or more
Shelf Registration Statements covering those Registrable Securities that were
not registered for resale on the initial Shelf Registration Statement, as
amended.

(c) Resale Registration Opt-Out. At least three Business Days before the initial
filing of the Shelf Registration Statement required by Section 2.1(a), Contango
shall provide advance written notice to each Holder that it plans to file a
Shelf Registration Statement. Any Holder may deliver advance written notice (a
“Resale Opt-Out Notice”) to Contango requesting that such Holder not be included
in a Shelf Registration Statement prior to its initial filing. Following receipt
of a Resale Opt-Out Notice from a Holder, Contango shall not be required to
include the Registrable Securities of such Holder in such Shelf Registration
Statement.

(d) Delay Rights. Notwithstanding anything to the contrary contained herein,
Contango may, upon written notice to any Selling Holder whose Registrable
Securities are included in the Shelf Registration Statement, suspend such
Selling Holder’s use of any prospectus which is a part of the Shelf Registration
Statement (in which event the Selling Holder shall discontinue sales of the
Registrable Securities pursuant to the Shelf Registration Statement) if
(i) Contango is pursuing an acquisition, merger, reorganization, disposition or
other similar transaction and Contango determines in good faith that Contango’s
ability to pursue or consummate such a transaction would be materially and
adversely affected by any required disclosure of such transaction in the Shelf
Registration Statement or (ii) Contango has experienced some other material
non-public event the disclosure of which at such time, in the good faith
judgment of Contango, would materially and adversely affect Contango; provided,
however, that in no event shall the Selling Holders be suspended from selling
Registrable Securities pursuant to the Shelf Registration Statement for a period
of 45 consecutive days or an aggregate of 120 days in any 365-day period. Upon
disclosure of such information or the termination of the condition described
above, Contango shall provide prompt notice (which notice shall not contain any
material, non-public information regarding Contango), to the Selling Holders
whose Registrable Securities are included in the Shelf Registration Statement,
and shall promptly terminate any suspension of sales it has put into effect and
shall take such other actions necessary or appropriate to permit registered
sales of Registrable Securities as contemplated in this Agreement.

Section 2.2 Piggyback Registration Participation. If at any time Contango
proposes to file (i) at a time when Contango is not a WKSI, a registration
statement and such Holder has not previously included its Registrable Securities
in a Shelf Registration Statement contemplated by Section 2.1(a) of this
Agreement that is currently effective, or (ii) a prospectus supplement to an

 

5

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effective “automatic shelf registration statement” (as defined in Rule 405 under
the Securities Act), so long as Contango is a WKSI at such time or, whether or
not Contango is a WKSI, so long as the Registrable Securities were previously
included in the underlying Shelf Registration Statement, or in any case in which
Holders may participate in such offering without the filing of a post-effective
amendment, in each case, for the sale of Common Stock in an Underwritten
Offering for its own account and/or another Person, other than (a) a
registration relating solely to employee benefit plans, (b) a registration
relating solely to a Rule 145 transaction, or (c) a registration statement on
any registration form which does not permit secondary sales, then Contango shall
give not less than three Business Days advance notice (including, but not
limited to, notification by e-mail; such notice, a “Piggyback Notice”) of such
proposed Underwritten Offering to each Holder that, together with its
Affiliates, owns more than $2.5 million of Registrable Securities, and such
notice shall offer such Holder the opportunity to participate in any
Underwritten Offering and to include in such Underwritten Offering such number
of Registrable Securities (the “Included Registrable Securities”) as each such
Holder may request in writing (a “Piggyback Registration”); provided, however,
that Contango (A) shall not be required to include the Registrable Securities of
the Holders in such Registration if the Holders do not offer a minimum of
$2.5 million of Registrable Securities, or (B) if Contango has been advised by
the Managing Underwriter that the inclusion of Registrable Securities for sale
for the benefit of the Holders will have material and adverse effect on the
offering price, timing or probability of success of the distribution of the
Common Stock in the Underwritten Offering, then the amount of Registrable
Securities to be offered for the accounts of Holders shall be determined based
on the provisions of Section 2.2(b). If Contango is not required to offer the
opportunity for a Piggyback Registration in respect of a proposed Underwritten
Offering as a result of the circumstance described in clause (B) of the proviso
of the immediately preceding sentence, then Contango shall nevertheless be
required to furnish to such Holders the Piggyback Notice in respect of such
proposed Underwritten Offering, which notice shall describe Contango’s intention
to conduct an Underwritten Offering and, if the determination described in
clause (B) of the proviso of the immediately preceding sentence has been made at
the time that the Piggyback Notice is required to be given by Contango, shall
include notification that the Holders do not have the opportunity to include
Registrable Securities in such Underwritten Offering because Contango has been
advised by the Managing Underwriter that the inclusion of Registrable Securities
for sale for the benefit of the Holders will have a material and adverse effect
on the offering price, timing or probability of success of the distribution of
the Common Stock in the Underwritten Offering. If the circumstance described in
clause (B) of the proviso of the preceding sentence is made after the Piggyback
Notice has been given, then Contango shall notify the Holders who were provided
such Piggyback Notice (or if the two Business Day period referred to in the next
sentence has lapsed, the Holders who have timely elected to include Registrable
Securities in such offering) in writing of such circumstance and the aggregate
number of Registrable Securities, if any, that can be included in such offering.
Each Piggyback Notice shall be provided to Holders on a Business Day pursuant to
Section 3.1 hereof and confirmation of receipt of such notice shall be requested
in the notice. The Holder will have two Business Days after notice has been
delivered to request in writing the inclusion of Registrable Securities in the
Underwritten Offering. If no request for inclusion from a Holder is received
within the specified time, such Holder shall have no further right to
participate in such Piggyback Registration. If, at any time after giving written
notice of its intention to undertake an Underwritten Offering and prior to the
closing of such Underwritten Offering, Contango shall determine for any reason
not to undertake or to delay such Underwritten Offering, Contango may, at its
election, give

 

6

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written notice of such determination to the Selling Holders and, (x) in the case
of a determination not to undertake such Underwritten Offering, shall be
relieved of its obligation to sell any Included Registrable Securities in
connection with such terminated Underwritten Offering, and (y) in the case of a
determination to delay such Underwritten Offering, shall be permitted to delay
offering any Included Registrable Securities for the same period as the delay in
the Underwritten Offering. Any Selling Holder shall have the right to withdraw
such Selling Holder’s request for inclusion of such Selling Holder’s Registrable
Securities in such Underwritten Offering by giving written notice to Contango of
such withdrawal up to and including the time of pricing of such offering. Any
Holder may deliver written notice (a “Piggyback Opt-Out Notice”) to Contango
requesting that such Holder not receive notice from Contango of any proposed
Underwritten Offering; provided, however, that such Holder may later revoke any
such Piggyback Opt-Out Notice in writing. Following receipt of a Piggyback
Opt-Out Notice from a Holder (unless subsequently revoked), Contango shall not
be required to deliver any notice to such Holder pursuant to this Section 2.2(a)
and such Holder shall no longer be entitled to participate in Underwritten
Offerings by Contango pursuant to this Section 2.2(a), unless such Piggyback
Opt-Out Notice is revoked by such Holder.

(b) Priority of Piggyback Registration. If the Managing Underwriter or
Underwriters of any proposed Underwritten Offering of shares of Common Stock
included in a Piggyback Registration advises Contango that the total shares of
Common Stock which the Selling Holders and any other Persons intend to include
in such offering exceeds the number which can be sold in such offering without
being likely to have a material and adverse effect on the offering price, timing
or probability of success of the distribution of the Common Stock offered or the
market for the Common Stock, then the Piggyback Notice provided by Contango
pursuant to Section 2.2(a) shall include notification of such determination or,
if such determination is made after the Piggyback Notice has been given, then
Contango shall furnish notice in writing (including by e-mail) to the Holders
(or to those who have timely elected to participate in such Underwritten
Offering), and the Common Stock to be included in such Underwritten Offering
shall include the number of shares of Common Stock that such Managing
Underwriter or Underwriters advises Contango can be sold without having such
material and adverse effect, with such number to be allocated (i) if such
Piggyback Registration was initiated by Contango, (A) first, to Contango,
(B) second, pro rata among the Selling Holders and any other Persons who have
been or after the date hereof are granted registration rights on parity with the
registration rights granted under this Agreement (the “Other Holders”) who have
requested participation in the Piggyback Registration (based, for each such
Selling Holder or Other Holder, on the percentage derived by dividing (1) the
number of shares of Common Stock proposed to be sold by such Selling Holder or
such Other Holder in such offering; by (2) the aggregate number of shares of
Common Stock proposed to be sold by all Selling Holders and all Other Holders in
the Piggyback Registration), and (C) third, to any other holder of shares of
common stock with registration rights that are subordinate to the rights of the
Holders hereunder and (ii) if such Piggyback Registration was not initiated by
Contango, (A) first, to the Persons initiating such Registration, (B) second,
pro rata among the Selling Holders and any Other Holders who have requested
participation in the Piggyback Registration (based, for each such Selling Holder
or Other Holder, on the percentage derived by dividing (1) the number of shares
of Common Stock proposed to be sold by such Selling Holder or such Other Holder
in such offering; by (2) the aggregate number of shares of Common Stock proposed
to be sold by all Selling Holders and all Other Holders in the Piggyback
Registration other than the Persons initiating such Registration), and
(C) third, to any other holder of shares of common stock with registration
rights that are subordinate to the rights of the Holders hereunder.

 

7

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Section 2.3 Secondary Underwritten Offering.

(a) S-3 Registration. In the event that a Selling Holder or a group of Selling
Holders elects to dispose of Registrable Securities under the Shelf Registration
Statement pursuant to an Underwritten Offering for its own account of at least
$5.0 million (such amount, the “Minimum Commitment”), such Selling Holder shall
give notice of such election in writing (including, but not limited to,
notification by e-mail; such notice, the “Selling Holder Election Notice”) to
Contango not less than 20 Business Days before the date such Selling Holder
intends for such Underwritten Offering to commence marketing (whether on a
confidential basis or on a public basis); provided that Contango shall not be
required to conduct more than one Underwritten Offering pursuant to this
Section 2.3 in any 180-day period pursuant to Selling Holder Election Notices.
The Selling Holder Election Notice shall specify the number of Registrable
Securities that the Selling Holder intends to offer in such Underwritten
Offering and the expected commencement date thereof. Contango shall, at the
request of such Selling Holder, enter into an underwriting agreement in
customary form with the Managing Underwriter or Underwriters, which shall
include, among other provisions, indemnities to the effect and to the extent
provided in Section 2.8, and shall take all such other reasonable actions as are
requested by the Managing Underwriter in order to expedite or facilitate the
disposition of the Registrable Securities.

(b) Notice to Holders. Not later than two Business Days after receipt by
Contango of the Selling Holder Election Notice, unless Contango determines in
accordance with Section 2.1(d) to delay such Underwritten Offering (in which
event Contango shall promptly notify the initiating Selling Holder in writing of
such determination), then Contango shall provide written notice (including, but
not limited to, notification by e-mail) to the other Holders of Registrable
Securities of the Selling Holder’s intention to conduct an Underwritten Offering
and such notice shall offer such other Holders the opportunity to participate in
such Underwritten Offering and to include in such Underwritten Offering such
number of Registrable Securities as each such Holder may request in writing.
Each such other Holder will have five Business Days after notice has been
delivered to request in writing submitted to Contango the inclusion of
Registrable Securities in the Underwritten Offering. If no request for inclusion
from a Holder is received by Contango within the specified time, such Holder
shall have no further right to participate in such Underwritten Offering. If, at
any time after giving written notice of its intention to undertake an
Underwritten Offering and prior to the closing of such Underwritten Offering,
the Selling Holder giving the notice shall determine for any reason not to
undertake or to delay such Underwritten Offering, such Selling Holder may, at
its election, give written notice of such determination to Contango and, if the
failure of such Selling Holder to participate would cause the aggregate amount
of Registrable Securities participating in the Underwritten Offering to fall
below the Minimum Commitment, Contango shall notify the other Holders and,
(x) in the case of a determination not to undertake such Underwritten Offering,
shall be relieved of its obligation to include Registrable Securities of any
other Holder, and (y) in the case of a determination to delay such Underwritten
Offering, shall be permitted to delay offering any Registrable Securities of any
other Holder for the same period as the delay in the Underwritten Offering. Any
other Holder shall have the right to withdraw such Holder’s request for
inclusion of such Holder’s Registrable Securities in such Underwritten Offering
by giving written notice to Contango of such withdrawal

 

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up to and including the time of pricing of such offering. If the Managing
Underwriter or Underwriters of any proposed Underwritten Offering of Registrable
Securities under a Shelf Registration Statement advises Contango that the total
amount of Registrable Securities which the Selling Holders and any other Persons
intend to include in such offering exceeds the number which can be sold in such
offering without being likely to have a material and adverse effect on the
offering price, timing or probability of success of the distribution of the
Registrable Securities offered or the market for the Registrable Securities,
then the Registrable Securities to be included in such Underwritten Offering
shall include the number of Registrable Securities that such Managing
Underwriter or Underwriters advises Contango can be sold without having such
material and adverse effect, with such number to be allocated pro rata among the
Selling Holders and the other Holders who have requested participation in the
Underwritten Offering (based, for each such Selling Holder or other Holder, on
the percentage derived by dividing (A) the number of Registrable Securities
proposed to be sold by such Selling Holder or such other Holder in such
offering; by (B) the aggregate number of Registrable Securities proposed to be
sold by all Selling Holders and all other Holders in such Underwritten
Offering).

Section 2.4 Sale Procedures.

(a) General Procedures. In connection with any Underwritten Offering (i) under
Section 2.2 of this Agreement, Contango shall be entitled to select the Managing
Underwriter or Underwriters, and (ii) under Section 2.3 of this Agreement, the
Selling Holders shall be entitled to select the Managing Underwriter or
Underwriters. In connection with an Underwritten Offering contemplated by this
Agreement in which a Selling Holder participates, each Selling Holder and
Contango shall be obligated to enter into an underwriting agreement with the
Managing Underwriter or Underwriters which contains such representations,
covenants, indemnities and other rights and obligations as are customary in
underwriting agreements for firm commitment offerings of equity securities. No
Selling Holder may participate in such Underwritten Offering unless such Selling
Holder agrees to sell its Registrable Securities on the basis provided in such
underwriting agreement and completes and executes all questionnaires, powers of
attorney, indemnities and other documents reasonably required under the terms of
such underwriting agreement. Each Selling Holder may, at its option, require
that any or all of the representations and warranties by, and the other
agreements on the part of, Contango to and for the benefit of such underwriters
also be made to and for such Selling Holder’s benefit and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement also be conditions precedent to its obligations. No
Selling Holder shall be required to make any representations or warranties to or
agreements with Contango or the underwriters other than representations,
warranties or agreements regarding such Selling Holder’s ownership of the
securities being registered on its behalf and its intended method of
distribution and any other representation required by law. If any Selling Holder
disapproves of the terms of an underwriting, such Selling Holder may elect to
withdraw therefrom by notice to Contango and the Managing Underwriter; provided,
however, that such withdrawal must be made at least one Business Day prior to
the time of pricing of such Underwritten Offering to be effective. No such
withdrawal or abandonment shall affect Contango’s obligation to pay Registration
Expenses. Upon the receipt by Contango of a written request from the Holders of
at least $5.0 million dollars of Registrable Securities that are participating
in any Underwritten Offering contemplated by this Agreement, Contango’s
management shall be required to participate in a roadshow or similar marketing
effort in connection with any Underwritten Offering.

 

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(b) In connection with its obligations under this Article II, Contango will, as
expeditiously as possible:

(i) prepare and file with the Commission such amendments and supplements to the
Shelf Registration Statement and the prospectus used in connection therewith as
may be necessary to keep a Shelf Registration Statement effective for the
Effectiveness Period and as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
covered by a Shelf Registration Statement;

(ii) if a prospectus supplement will be used in connection with the marketing of
an Underwritten Offering from a Shelf Registration Statement and the Managing
Underwriter at any time shall notify Contango in writing that, in the sole
judgment of such Managing Underwriter, the inclusion of detailed information to
be used in such prospectus supplement is of material importance to the success
of the Underwritten Offering of such Registrable Securities, Contango shall use
its commercially reasonable efforts to include such information in the
prospectus supplement;

(iii) furnish to each Selling Holder (A) as far in advance as reasonably
practicable before filing a Shelf Registration Statement or any other
registration statement contemplated by this Agreement or any supplement or
amendment thereto, upon request, copies of reasonably complete drafts of all
such documents proposed to be filed (including exhibits and each document
incorporated by reference therein to the extent then required by the rules and
regulations of the Commission), and provide each such Selling Holder the
opportunity to object to any information pertaining to such Selling Holder and
its plan of distribution that is contained therein and make the corrections
reasonably requested by such Selling Holder with respect to such information
prior to filing such Shelf Registration Statement or such other registration
statement and the prospectus included therein or any supplement or amendment
thereto, and (B) such number of copies of such Shelf Registration Statement or
such other registration statement and the prospectus included therein and any
supplements and amendments thereto as such Persons may reasonably request in
order to facilitate the public sale or other disposition of the Registrable
Securities covered by such Shelf Registration Statement or other registration
statement;

(iv) if applicable, use its commercially reasonable efforts to register or
qualify the Registrable Securities covered by a Shelf Registration Statement or
any other registration statement contemplated by this Agreement under the
securities or blue sky laws of such jurisdictions as the Selling Holders shall
reasonably request, provided that Contango will not be required to qualify
generally to transact business in any jurisdiction where it is not then required
to so qualify or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;

(v) promptly notify each Selling Holder, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of (A) the filing
of a Shelf Registration Statement or any other registration statement
contemplated by this Agreement or any prospectus included therein or any
amendment or supplement thereto (other than any amendment or supplement
resulting from the filing of a document

 

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incorporated by reference therein), and, with respect to such Shelf Registration
Statement or any other registration statement or any post-effective amendment
thereto, when the same has become effective; and (B) the receipt of any written
comments from the Commission with respect to any filing referred to in clause
(A) and any written request by the Commission for amendments or supplements to
such Shelf Registration Statement or any other registration statement or any
prospectus or prospectus supplement thereto;

(vi) immediately notify each Selling Holder, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
(A) the happening of any event as a result of which the prospectus contained in
a Shelf Registration Statement or any other registration statement contemplated
by this Agreement or any supplemental amendment thereto, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; (B) the issuance or threat of issuance
by the Commission of any stop order suspending the effectiveness of such Shelf
Registration Statement or any other registration statement contemplated by this
Agreement, or the initiation of any proceedings for that purpose; or (C) the
receipt by Contango of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the applicable
securities or blue sky laws of any jurisdiction. Following the provision of such
notice, Contango agrees to as promptly as practicable amend or supplement the
prospectus or prospectus supplement or take other appropriate action so that the
prospectus or prospectus supplement does not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing and to take such other action as is necessary to
remove a stop order, suspension, threat thereof or proceedings related thereto;

(vii) upon request and subject to appropriate confidentiality obligations,
furnish to each Selling Holder copies of any and all transmittal letters or
other correspondence with the Commission or any other governmental agency or
self-regulatory body or other body having jurisdiction (including any domestic
or foreign securities exchange) relating to such offering of Registrable
Securities;

(viii) in the case of an Underwritten Offering, furnish upon request a “comfort”
letter, dated the pricing date of such Underwritten Offering and a letter of
like kind dated the date of the closing under the underwriting agreement, in
each case, signed by the independent public accountants who have certified
Contango’s financial statements included or incorporated by reference into the
applicable registration statement, and the “comfort” letter shall be in
customary form and covering substantially the same matters with respect to such
registration statement (and the prospectus included therein and any supplement
thereto) and as are customarily covered in accountants’ letters delivered to the
underwriters in underwritten offerings of securities;

(ix) in the case of an Underwritten Offering, use commercially reasonable
efforts to furnish upon request a letter, dated the pricing date of such
Underwritten Offering and a letter of like kind dated the date of the closing
under the underwriting agreement, in each case, signed by the reserve engineers
who have prepared

 

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reserve reports of estimated net proved oil and natural gas reserves with
respect to certain oil and gas properties included or incorporated by reference
into the applicable registration statement, and the letter shall be in customary
form and covering substantially the same matters with respect to such
registration statement (and the prospectus included therein and any supplement
thereto) and as are customarily covered in reserve engineers’ letters delivered
to the underwriters in underwritten offerings of securities;

(x) in the case of an Underwritten Offering, use commercially reasonable efforts
to furnish upon request an opinion of counsel to Contango, dated the date of the
closing under the underwriting agreement, in form and substance satisfactory to
the underwriters of such Underwritten Offering;

(xi) otherwise use its commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, but not more than 18 months,
beginning with the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

(xii) make available to the appropriate representatives of the underwriters
access to such information and Contango personnel as is reasonable and customary
to enable such parties and their representatives to establish a due diligence
defense under the Securities Act; provided that Contango need not disclose any
non-public information to any such representatives unless and until such
representatives have entered into a confidentiality agreement with Contango;

(xiii) cause all such Registrable Securities registered pursuant to this
Agreement to be listed or quoted on each securities exchange or nationally
recognized quotation system on which similar securities issued by Contango are
then listed or quoted, and cause to be satisfied all requirements and conditions
of such securities exchange or nationally recognized quotation system to the
listing or quoting of such Registrable Securities that are reasonably within the
control of Contango, including, without limitation, registering the Registrable
Securities under the Exchange Act, if appropriate, and using commercially
reasonable efforts to cause such registration to become effective pursuant to
the rule of the Commission;

(xiv) use its commercially reasonable efforts to cause the Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
Contango to enable the Selling Holders to consummate the disposition of such
Registrable Securities;

(xv) provide a transfer agent and registrar for all Registrable Securities
covered by such registration statement; and

(xvi) enter into customary agreements and take such other actions as are
reasonably requested by the Selling Holders in order to expedite or facilitate
the disposition of such Registrable Securities.

 

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(c) Each Selling Holder, upon receipt of notice from Contango of the happening
of any event of the kind described in Section 2.4(b)(vi), shall forthwith
discontinue disposition of the Registrable Securities until such Selling
Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 2.4(b)(vi) or until it is advised in writing by Contango
that the use of the prospectus may be resumed, and has received copies of any
additional or supplemental filings incorporated by reference in the prospectus,
and, if so directed by Contango, such Selling Holder will, or will request the
Managing Underwriter or underwriters, if any, to deliver to Contango (at
Contango’s expense) all copies in their possession or control, other than
permanent file copies then in such Selling Holder’s possession, of the
prospectus and any prospectus supplement covering such Registrable Securities
current at the time of receipt of such notice.

Section 2.5 Cooperation by Holders. Contango shall have no obligation to include
Registrable Securities of a Holder in the Shelf Registration Statement or in an
Underwritten Offering under Article II of this Agreement if such Selling Holder
has failed to timely furnish such information which, after consultation with its
counsel, is reasonably required in order for the registration statement or
prospectus supplement, as applicable, to comply with the Securities Act.

Section 2.6 [Reserved].

Section 2.7 Expenses.

(a) Certain Definitions. “Registration Expenses” means all expenses incident to
Contango’s performance under or compliance with this Agreement to effect the
registration of Registrable Securities in a Shelf Registration Statement
pursuant to Section 2.1, a Piggyback Registration pursuant to Section 2.2, or an
Underwritten Offering pursuant to Section 2.3 and the disposition of such
securities, including, without limitation, all registration, filing, securities
exchange listing and fees, all registration, filing, qualification and other
fees and expenses of complying with securities or blue sky laws, fees of the
Financial Industry Regulatory Authority, transfer taxes and fees of transfer
agents and registrars, all word processing, duplicating and printing expenses,
all roadshow expenses borne by it and the fees and disbursements of independent
public accountants and counsel for Contango, including the expenses of any
special audits or “comfort” letters required by or incident to such performance
and compliance. Except as otherwise provided in Section 2.8 hereof, Contango
shall not be responsible for legal fees incurred by Holders in connection with
the exercise of such Holders’ rights hereunder. In addition, Contango shall not
be responsible for any “Selling Expenses,” which means all underwriting fees,
discounts and selling commissions and transfer taxes allocable to the sale of
the Registrable Securities.

(b) Expenses. Contango will pay all reasonable Registration Expenses in
connection with a Shelf Registration Statement, Piggyback Registration or
Underwritten Offering, whether or not any sale is made pursuant to such Shelf
Registration Statement, Piggyback Registration or Underwritten Offering. Each
Selling Holder shall pay its pro rata share of all Selling Expenses in
connection with any sale of its Registrable Securities hereunder.

 

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Section 2.8 Indemnification.

(a) By Contango. In the event of a registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, to the extent permitted by
applicable law, Contango will indemnify and hold harmless each Selling Holder
thereunder, its directors, officers, partners, members, employees, investment
advisers, agents, representatives and managers, and each other Person, if any,
who controls such Selling Holder, within the meaning of the Securities Act and
the Exchange Act, and the directors, officers, partners, members, employees,
investment advisers, agents, representatives and managers of such controlling
Person, against any losses, claims, damages, expenses or liabilities (including
reasonable attorneys’ fees and expenses), including any of the foregoing
incurred in settlement of any litigation commenced or threatened by any party
other than a Selling Holder (collectively, “Losses”), joint or several, to which
such Selling Holder or controlling Person or directors, officers, employees,
agents, representatives or managers may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such Losses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact (in the case of any prospectus, in light of the circumstances
under which such statement is made) contained in the Shelf Registration
Statement or any other registration statement contemplated by this Agreement,
any preliminary prospectus or final prospectus contained therein, or any free
writing prospectus related thereto, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus, in light of the circumstances
under which they were made) not misleading, and will reimburse each such Selling
Holder, its directors and officers, and each such controlling Person and each
such director, officer, employee, agent, representatives or manager for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Loss or actions or proceedings; provided,
however, that Contango will not be liable in any such case if and to the extent
that any such Loss arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such Selling Holder or such controlling Person in
writing specifically for use in the Shelf Registration Statement or such other
registration statement, or prospectus supplement, as applicable. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Selling Holder or any such director, officer, partner, member,
employee, investment adviser, agent, representatives, manager or controlling
Person, and shall survive the transfer of such securities by such Selling
Holder.

(b) By Each Selling Holder. Each Selling Holder agrees severally and not jointly
to indemnify and hold harmless Contango, its directors, officers, employees,
representatives and agents and each Person, if any, who controls Contango within
the meaning of the Securities Act or of the Exchange Act to the same extent as
the foregoing indemnity from Contango to the Selling Holders, but only with
respect to information regarding such Selling Holder furnished in writing by or
on behalf of such Selling Holder expressly for inclusion in the Shelf
Registration Statement or prospectus supplement relating to the Registrable
Securities, or any amendment or supplement thereto. The maximum liability of
each Selling Holder for any such indemnification shall not exceed the amount of
net proceeds received by such seller from the sale of such Selling Holder’s
Registrable Securities.

 

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(c) Notice. Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party other than under this Section 2.8(c) except to the extent
that the indemnifying party is materially prejudiced by such failure. In any
action brought against any indemnified party, it shall notify the indemnifying
party of the commencement thereof. The indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 2.8 for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; provided, however, that, (i) if the
indemnifying party has failed to assume the defense and employ counsel
reasonably satisfactory to the indemnified party or (ii) if the defendants in
any such action include both the indemnified party and the indemnifying party
and counsel to the indemnified party shall have concluded that there may be
reasonable defenses available to the indemnified party that are different from
or additional to those available to the indemnifying party, or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party or representation by both parties by the same counsel
is otherwise inappropriate under the applicable standards of professional
conduct, then the indemnified party shall have the right to select a separate
counsel and to assume such legal defense and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such separate
counsel and other reasonable expenses related to such participation to be
reimbursed by the indemnifying party as incurred. Notwithstanding any other
provision of this Agreement, the indemnifying party shall not settle any
indemnified claim without the consent of the indemnified party, unless the
settlement thereof imposes no liability or obligation on, includes a complete
release from liability of, and does not contain any admission of wrong doing by,
the indemnified party.

(d) Contribution. If the indemnification provided for in this Section 2.8 is
held by a court or government agency of competent jurisdiction to be unavailable
to Contango or any Selling Holder or is insufficient to hold them harmless in
respect of any Losses, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses in such proportion
as is appropriate to reflect the relative fault of Contango on the one hand and
of such Selling Holder on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations; provided, however, that in no event shall such Selling Holder be
required to contribute an aggregate amount in excess of the dollar amount of
proceeds (net of Selling Expenses) received by such Selling Holder from the sale
of Registrable Securities giving rise to such indemnification less the amount of
any damages that such Selling Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. The relative fault of Contango on the one hand and each Selling Holder
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact has been made by, or relates to,
information supplied by such party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this paragraph were to be determined by pro rata
allocation or by any other method of allocation which

 

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does not take account of the equitable considerations referred to in the first
sentence of this paragraph. The amount paid by an indemnified party as a result
of the Losses referred to in the first sentence of this paragraph shall be
deemed to include any legal and other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any Loss which
is the subject of this paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who is not guilty of such
fraudulent misrepresentation.

(e) Other Indemnification. The provisions of this Section 2.8 shall be in
addition to any other rights to indemnification or contribution which an
indemnified party may have pursuant to law, equity, contract or otherwise.

Section 2.9 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission that may permit the sale of the
Registrable Securities to the public without registration, Contango agrees to
use its commercially reasonable efforts to:

(a) Make and keep public information regarding Contango available, as those
terms are understood and defined in Rule 144;

(b) File with the Commission in a timely manner all reports and other documents
required of Contango under the Securities Act and the Exchange Act; and

(c) So long as a Holder, together with its Affiliates, owns any Registrable
Securities, (i) unless otherwise available at no charge by access electronically
to the Commission’s EDGAR filing system (or any successor system), furnish to
such Holder forthwith upon request a copy of the most recent annual or quarterly
report of Contango, and such other reports and documents so filed as such Holder
may reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any such securities without registration
and (ii) to the extent accurate, furnish to such Holder upon reasonable request
a written statement of Contango that it has complied with the reporting
requirements of Rule 144.

Section 2.10 Transfer or Assignment of Registration Rights. The rights to cause
Contango to register Registrable Securities granted to the Purchasers by
Contango under this Article II may be transferred or assigned by any Purchaser
to one or more transferees or assignees of Registrable Securities; provided,
however, that (a) unless the transferee or assignee is an Affiliate of, and
after such transfer or assignment continues to be an Affiliate of, such
Purchaser, the amount of Registrable Securities transferred or assigned to such
transferee or assignee shall represent at least $2.5 million of Registrable
Securities (based on the Common Stock Price) or, if less, 100% of the
Registrable Securities then held by such Purchaser, (b) Contango is given
written notice prior to any said transfer or assignment, stating the name and
address of each such transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned, and
(c) each such transferee or assignee assumes in writing responsibility for its
portion of the obligations of such Purchaser under this Agreement.

 

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Section 2.11 Aggregation of Registrable Securities. (a) All Registrable
Securities held or acquired by Persons who are Affiliates of one another shall
be aggregated together for the purpose of determining the availability of any
rights under this Agreement.

(b) All other shares of Common Stock held by a Person and for which such Person
has similar registration rights pursuant to an agreement between such Person and
Contango shall be aggregated together for the purpose of determining such
Person’s rights under this Agreement solely as such shares relate to minimum
quantity requirements contemplated herein; provided that, for the avoidance of
doubt, such Common Stock shall not otherwise be deemed Registrable Securities
for any other purpose under this Agreement.

ARTICLE III

MISCELLANEOUS

Section 3.1 Communications. All notices and demands provided for hereunder shall
be in writing and shall be given by registered or certified mail, return receipt
requested, facsimile, air courier guaranteeing overnight delivery or personal
delivery to the following addresses:

(a) If to a Purchaser, to such addresses indicated on Schedule A attached
hereto.

(b) If to Contango:

Contango Oil & Gas Company

717 Texas Avenue, Suite 2900

Houston, Texas 77002

Attention: Wilkie S. Colyer, Jr.

E-mail: WColyer@contango.com

with a copy (which shall not constitute notice) to:

Gibson, Dunn & Crutcher LLP

811 Main Street, Suite 3000

Houston, Texas 77002

Attention: Hillary H. Holmes

Facsimile: (346) 718-6902

E-mail: HHolmes@gibsondunn.com

or, if to a transferee of a Purchaser, to the transferee at the address provided
pursuant to Section 2.10 above. All notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if personally delivered;
upon actual receipt if sent by certified or registered mail, return receipt
requested, or regular mail, if mailed; upon actual receipt of the facsimile copy
or e-mail, if sent via facsimile or e-mail; and upon actual receipt when
delivered to an air courier guaranteeing overnight delivery.

Section 3.2 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
subsequent Holders of Registrable Securities to the extent permitted herein.

 

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Section 3.3 Assignment of Rights. All or any portion of the rights and
obligations of any Purchaser under this Agreement may be transferred or assigned
by such Purchaser in accordance with Section 2.10 hereof.

Section 3.4 Recapitalization (Exchanges, etc. Affecting the Registrable
Securities). The provisions of this Agreement shall apply to the full extent set
forth herein with respect to any and all shares of capital stock of Contango or
any successor or assign of Contango (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for or in
substitution of, the Registrable Securities, and shall be appropriately adjusted
for combinations, recapitalizations and the like occurring after the date of
this Agreement.

Section 3.5 Specific Performance. Damages in the event of breach of this
Agreement by a party hereto would be difficult, if not impossible, to ascertain,
and it is therefore agreed that each such Person, in addition to and without
limiting any other remedy or right it may have, will have the right to an
injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach, and enforcing specifically the terms and provisions
hereof, and each of the parties hereto hereby waives (a) any and all defenses it
may have on the ground of lack of jurisdiction or competence of the court to
grant such an injunction or other equitable relief or that a remedy at law would
be adequate and (b) any requirement under any law to post securities as a
prerequisite to obtaining equitable relief. The existence of this right will not
preclude any such Person from pursuing any other rights and remedies at law or
in equity which such Person may have.

Section 3.6 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Agreement.

Section 3.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

Section 3.8 Governing Law, Submission to Jurisdiction. NOTWITHSTANDING THE PLACE
WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES
EXPRESSLY AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF
SUCH JURISDICTION. Each of the parties hereto irrevocably agrees that any legal
action or proceeding with respect to this Agreement or the transactions
contemplated hereby shall be brought and determined by courts of the State of
Texas located in Houston, Texas and the federal courts of the United States of
America located in Houston, Texas, and each of the parties hereto irrevocably
submits to the exclusive jurisdiction of such courts solely in respect of any
legal proceeding arising out of or related to this Agreement.

Section 3.9 Waiver of Jury Trial. THE PARTIES TO THIS AGREEMENT EACH HEREBY
WAIVE, AND AGREE TO CAUSE THEIR AFFILIATES TO WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (i) ARISING UNDER THIS

 

18

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AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS
AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE
PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 3.10 Severability of Provisions. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting or impairing the validity or enforceability of such provision in any
other jurisdiction.

Section 3.11 Entire Agreement. This Agreement and the Purchase Agreement are
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein or therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or therein with respect to the rights
granted by Contango set forth herein or therein. This Agreement and the Purchase
Agreement supersede all prior agreements and understandings between the parties
with respect to such subject matter.

Section 3.12 Term; Amendment. This Agreement shall automatically terminate and
be of no further force and effect on the date on which there are no Registrable
Securities. This Agreement may be amended only by means of a written amendment
signed by Contango and the Holders of a majority of the then outstanding
Registrable Securities; provided, however, that no such amendment shall
materially and adversely affect the rights of any Holder hereunder without the
consent of such Holder.

Section 3.13 No Presumption. In the event any claim is made by a party relating
to any conflict, omission, or ambiguity in this Agreement, no presumption or
burden of proof or persuasion shall be implied by virtue of the fact that this
Agreement was prepared by or at the request of a particular party or its
counsel.

Section 3.14 Obligations Limited to Parties to Agreement. Each of the parties
hereto covenants, agrees and acknowledges that no Person other than the
Purchasers, Selling Holders, their respective permitted assignees and Contango
shall have any obligation hereunder and that, notwithstanding that one or more
of Contango and the Purchasers may be a corporation, partnership or limited
liability company, no recourse under this Agreement or under any documents or
instruments delivered in connection herewith or therewith shall be had against
any former, current or future director, officer, employee, agent, general or
limited partner, manager, member, stockholder or Affiliate of any of Contango,
the Purchasers, Selling Holders or their respective permitted assignees, or any
former, current or future director, officer, employee, agent, general or limited
partner, manager, member, stockholder or Affiliate of any of the foregoing,

 

19

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whether by the enforcement of any assessment or by any legal or equitable
proceeding, or by virtue of any applicable law, it being expressly agreed and
acknowledged that no personal liability whatsoever shall attach to, be imposed
on or otherwise by incurred by any former, current or future director, officer,
employee, agent, general or limited partner, manager, member, stockholder or
Affiliate of any of Contango, the Purchasers, Selling Holders or any of their
respective assignees, or any former, current or future director, officer,
employee, agent, general or limited partner, manager, member, stockholder or
Affiliate of any of the foregoing, as such, for any obligations of Contango, the
Purchasers, Selling Holders or their respective permitted assignees under this
Agreement or any documents or instruments delivered in connection herewith or
therewith or for any claim based on, in respect of or by reason of such
obligation or its creation, except in each case for any assignee of the
Purchasers or a Selling Holder hereunder.

Section 3.15 Interpretation. Article and Section references in this Agreement
are references to the corresponding Article and Section to this Agreement,
unless otherwise specified. All references to instruments, documents, contracts
and agreements are references to such instruments, documents, contracts and
agreements as the same may be amended, supplemented and otherwise modified from
time to time, unless otherwise specified. The word “including” shall mean
“including but not limited to.” Whenever any determination, consent or approval
is to be made or given by a Purchaser under this Agreement, such action shall be
in such Purchaser’s sole discretion unless otherwise specified.

[Signature Pages Follow]

 

20

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

CONTANGO OIL & GAS COMPANY By:  

                

Name:

 

E. Joseph Grady

Title:

 

Senior Vice President and

 

Chief Financial Officer

[Signatures continue on following page.]

--------------------------------------------------------------------------------

[●]

By:  

                

Name:

 

Title:

 

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Schedule A

Purchasers

 

Purchaser

  

Notice Address

John C. Goff 2020 Family Trust

JCG 2016 Holdings, LP

Goff Family Investments, LP

Kulik Partners, LP

  

[Redacted]

[Redacted]

[Redacted]

[Redacted]

Wilkie S. Colyer, Jr.

  

[Redacted]

W. Farley Dakan

  

[Redacted]

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF STATEMENT OF RESOLUTION

--------------------------------------------------------------------------------

STATEMENT OF RESOLUTION ESTABLISHING SERIES

OF SHARES DESIGNATED

SERIES C CONTINGENT CONVERTIBLE PREFERRED STOCK

OF CONTANGO OIL & GAS COMPANY

Pursuant to Section 21.155 and Section 21.156 of the Texas Business
Organizations Code (the “Code”):

CONTANGO OIL & GAS COMPANY, a Texas corporation (the “Corporation”), certifies
that pursuant to the authority contained in Article IV of its Amended and
Restated Certificate of Formation (the “Certificate of Formation”), and in
accordance with the provisions of Section 21.155 and Section 21.156 of the Code,
the Board of Directors of the Corporation (the “Board”) duly approved and
adopted on December 19, 2019, the following resolution creating and providing
for the establishment and issuance of a series of shares of Series C Preferred
Stock (defined below) as hereinafter described, providing for the designations,
preferences, limitations and relative rights, voting, redemption and other
rights thereof and the qualifications, limitations or restrictions thereof, in
addition to those set forth in the Certificate of Formation, all in accordance
with the provisions of Section 21.155 and Section 21.156 of the Code, which
resolution remains in full force and effect on the date hereof:

RESOLVED, that the rights, powers and preferences, and the qualifications,
limitations and restrictions, of the Series C Contingent Convertible Preferred
Stock as set forth in the Statement of Resolution are hereby approved and
adopted by the Board and the Series C Contingent Convertible Preferred Stock is
hereby authorized out of the Corporation’s authorized preferred stock, par value
$0.04 per share; and the form, terms and provisions of the Statement of
Resolution are hereby approved, adopted, ratified and confirmed in all respects
as follows:

Section 1. Designation and Amount; Ranking.

(a) The shares of such series shall be designated the “Series C Contingent
Convertible Preferred Stock” (the “Series C Preferred Stock”).

(b) Each share of Series C Preferred Stock shall be identical in all respects
with the other shares of Series C Preferred Stock.

(c) The authorized number of shares of Series C Preferred Stock shall initially
be 2,700,000, which number may from time to time be increased or decreased by
resolution of the Board as permitted by the Code. The initial shares of Series C
Preferred Stock shall be issued and sold by the Corporation pursuant to that
certain Purchase Agreement dated December 19, 2019 among the Company and the
Purchasers (the “Purchase Agreement”) named therein.

(d) For purposes of this Statement of Resolution, “Capital Stock” of any person
means any and all shares, interests, participations or other equivalents however
designated of corporate stock or other equity participations, including
partnership interests, whether general or limited, of such person and any rights
(other than debt securities convertible or exchangeable into an equity
interest), warrants or options to acquire an equity interest in such person. The
Series C Preferred Stock shall, with respect to dividend rights and rights upon
a liquidation, winding-up or dissolution of the Corporation, rank:

 

1

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(i) senior to any class or series of Capital Stock of the Corporation, the terms
of which do not expressly provide that such class or series ranks senior to or
on a parity with the Series C Preferred Stock with respect to dividend rights or
rights upon a liquidation, winding-up or dissolution of the Corporation
(collectively, together with any warrants, rights, calls or options exercisable
for or convertible into such Capital Stock, the “Junior Stock”);

(ii) on parity with: (A) the Common Stock, par value $0.04 per share, of the
Corporation (“Common Stock”), (B) the Series A Contingent Convertible Preferred
Stock, par value $0.04 per share, of the Corporation (“Series A Preferred
Stock”), (C) the Series B Contingent Convertible Preferred Stock, par value
$0.04 per share, of the Corporation (“Series B Preferred Stock”), and (D) any
class or series of Capital Stock of the Corporation, the terms of which provide
that such class or series ranks on a parity with the Series C Preferred Stock
with respect to dividend rights or rights upon a liquidation, winding-up or
dissolution of the Corporation (collectively, together with any warrants,
rights, calls or options exercisable for or convertible into such Capital Stock,
the “Parity Stock”); and

(iii) junior to any class or series of Capital Stock of the Corporation (other
than Common Stock), the terms of which expressly provide that such class or
series ranks senior to the Series C Preferred Stock with respect to dividend
rights or rights upon a liquidation, winding-up or dissolution of the
Corporation (collectively, together with any warrants, rights, calls or options
exercisable for or convertible into such Capital Stock, the “Senior Stock”).

Section 2. Definitions.

For purposes of this Statement of Resolution, the following terms have meanings
set forth in the Section indicated:

 

Term

  

Section

Board

  

Preamble

Business Day

  

Section 11(c)

Capital Stock

  

Section 1(d)

Certificate of Formation

  

Preamble

Code

  

Preamble

Common Stock

  

Section 1(d)(ii)

Conversion Ratio

  

Section 8(a)

Conversion Requirements

  

Section 8(a)

Corporation

  

Preamble

Junior Stock

  

Section 1(d)(i)

Liquidation

  

Section 4(a)

Liquidation Distribution

  

Section 4(a)

National Securities Exchange

  

Section 8(a)

Original Issue Date

  

Section 3(a)

Original Issue Price

  

Section 3(a)

Parity Stock

  

Section 1(d)(ii)

 

2

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Purchase Agreement

  

Section 1(c)

Transfer Agent

  

Section 7(b)

Senior Stock

  

Section 1(d)(iii)

Series A Preferred Stock

  

Section 1(d)(ii)

Series B Preferred Stock

  

Section 1(d)(ii)

Series C Preferred Stock

  

Section 1(a)

Section 3. Dividends.

(a) Holders of shares of Series C Preferred Stock shall be entitled to receive,
when and as declared by the Board and declared by the Corporation, out of funds
that are legally available therefor, cash dividends of ten percent (10%) of the
Original Issue Price per annum on each outstanding share of Series C Preferred
Stock. Such dividends shall accrue from the first anniversary of the Original
Issue Date of the Series C Preferred Stock and shall cease to accrue on the date
immediately preceding the date on which the Conversion Requirements described in
Section 8 are satisfied. The “Original Issue Price” means $2.50 per share (as
adjusted for any stock split, combination or similar event or transaction
directly affecting the Series C Preferred Stock but not by any accrued
dividends). The “Original Issue Date” means December 23, 2019.

(b) Following the first anniversary of the Original Issue Date, dividends
pursuant to this Section 3 shall be payable quarterly in cash, on March 31,
June 30, September 30 and December 31 of each year, beginning December 31, 2020,
when, as and if declared by the Board, until the time at which the Conversion
Requirements are satisfied; provided, however, that when the Series C Preferred
Stock is no longer outstanding, no dividends shall be payable to the holders of
the Series C Preferred Stock or the holders of the Common Stock into which the
Series C Preferred Stock converts. Payments of any dividends pursuant to this
Section 3 shall be payable only if the Corporation has surplus income and such
payment is permissible under the Corporation’s debt instruments then in effect.

(c) No dividends or distributions shall be paid with respect to the Common Stock
(i) prior to the holders of the Series C Preferred Stock having received all
accrued but unpaid dividends on the Series C Preferred Stock or (ii) unless and
until all shares of Series C Preferred Stock have been converted to shares of
Common Stock.

(d) Holders of Series C Preferred Stock shall fully participate, on an
as-converted basis, in any dividends declared and paid or distributions on
Common Stock as if the Series C Preferred Stock were converted into shares of
Common Stock as of the record date for such dividend or distribution at the
Conversion Ratio.

Section 4. Liquidation.

(a) Prior to conversion pursuant to Section 8, in the event of a liquidation
(complete or partial), dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary (a “Liquidation”), after payment
or provision for payment of the debts and other liabilities of the Corporation,
the holders of Series C Preferred Stock shall be entitled to receive, in respect
of any shares of Series C Preferred Stock held by them, out of assets of the
Corporation available for distribution to shareholders of the Corporation or
their assignees, and subject to the

 

3

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rights of any outstanding shares of Senior Stock and before any amount shall be
distributed to the holders of Junior Stock, a liquidating distribution (the
“Liquidation Distribution”) in an amount equal to the amount such holder of
Series C Preferred Stock would have been entitled to receive had such holder
converted its shares of Series C Preferred Stock into shares of Common Stock at
the Conversion Ratio immediately prior to such Liquidation.

(b) If, upon any Liquidation, the amount payable with respect to the Liquidation
Distribution is not paid in full, the holders of the Series C Preferred Stock
and any Parity Stock shall share equally and ratably in any distribution of the
Corporation’s assets in proportion to the respective liquidation distributions
to which they are entitled.

(c) After the payment in cash or proceeds to the holders of shares of the Series
C Preferred Stock of the full amount of the Liquidation Distribution with
respect to outstanding shares of Series C Preferred Stock, the holders of
outstanding shares of Series C Preferred Stock shall have no right or claim,
based on their ownership of shares of Series C Preferred Stock, to the remaining
assets of the Corporation, if any. Whenever any such distribution shall be paid
in property other than cash, the value of such distribution shall be the fair
market value of such property as determined in the good faith reasonable
discretion of the Board or liquidating trustee, as the case may be.

Section 5. Voting.

Except as set forth herein or as otherwise required by the Code or other
applicable law, the holders of shares of Series C Preferred Stock shall have no
voting rights and their consent shall not be required for taking any corporate
action.

Section 6. Reservation of Common Stock.

(a) Subject to the Conversion Requirements set forth in Section 8, at any time
that any Series C Preferred Stock is outstanding, the Corporation shall from
time to time take all lawful action within its control to cause the authorized
capital stock of the Corporation to include a number of authorized but unissued
shares of Common Stock equal to 2,700,000 shares (for the avoidance of doubt,
taking into account any other obligations of the Corporation to reserve Common
Stock upon the conversion, exchange or exercise of other securities of the
Corporation such that any other reservation may not be counted toward the
reservation of Common Stock hereunder) (such authorized but unissued shares, the
“Reserved Shares”). If, at any time, the Corporation lacks a sufficient number
of Reserved Shares, the Corporation shall use its reasonable best efforts to
take all lawful action within its control to effect an amendment to the
Certificate of Formation to increase the authorized but unissued shares of
Common Stock of the Corporation to provide for a sufficient number of Reserved
Shares.

(b) If any shares of Common Stock to be reserved for the purpose of conversion
of the Series C Preferred Stock require registration or listing with or approval
of any governmental authority, stock exchange or other regulatory body under any
federal or state law or regulation or otherwise before such shares may be
validly issued or delivered upon conversion, the Corporation shall, at its sole
cost and expense, in good faith and as expeditiously as possible following
satisfaction of the Conversion Requirements set forth in Section 8, endeavor to
secure such registration, listing or approval, as the case may be.

 

4

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Section 7. Form.

(a) Notwithstanding anything to the contrary herein, the shares of Series C
Preferred Stock and any shares of Common Stock issued upon conversion thereof
shall be in uncertificated, book-entry form or, if requested by any holder of
the Series C Preferred Stock, such holder’s shares may be issued in certificated
form, in each case as permitted by the Bylaws of the Corporation and the Code,
and shall bear a legend in substantially the following form:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.”

(b) The duly appointed transfer agent for the Series C Preferred Stock shall be
Continental Stock Transfer & Trust Company (the “Transfer Agent”). The
Corporation may, in its sole discretion, remove the Transfer Agent in accordance
with the agreement between the Corporation and the Transfer Agent; provided,
that if the Corporation removes Continental Stock Transfer & Trust Company, the
Corporation shall appoint a successor transfer agent who shall accept such
appointment prior to the effectiveness of such removal.

(c) Transfers of Series C Preferred Stock or any shares of Common Stock issued
upon conversion thereof shall be made only upon receipt of proper transfer
instructions and, if applicable, the surrender of the certificate representing
such shares (or, if such registered holder alleges that such certificate has
been lost, stolen or destroyed, a lost certificate affidavit and agreement
reasonably acceptable to the Corporation to indemnify the Corporation against
any claim that may be made against the Corporation on account of the alleged
loss, theft or destruction of such certificate), from the registered owner or
from a duly authorized attorney or from an individual presenting proper evidence
of succession, assignment or authority to transfer the stock. The Corporation
may refuse any requested transfer until furnished evidence satisfactory to it
that such transfer is proper.

Section 8. Conversion.

(a) Following the approval by the shareholders of the Corporation, in accordance
with applicable law and the applicable rules and regulations of the principal
national securities exchange on which the Common Stock is listed for trading
(the “National Securities Exchange”), of the issuance of the shares of Common
Stock to be issued upon conversion of the Series C Preferred Stock pursuant to
this Section 8 (the “Conversion Requirements”), each share of Series C Preferred
Stock shall automatically convert into one share of Common Stock (the
“Conversion Ratio”).

 

5

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(b) Any Common Stock delivered as a result of conversion pursuant to this
Section 8 following satisfaction of the Conversion Requirements shall be validly
issued, fully paid and non- assessable, free and clear of any preemptive right,
liens, claims, rights or encumbrances other than those arising under the Code or
the Bylaws of the Corporation. Immediately following the settlement of
conversion, the rights of the holders of converted Series C Preferred Stock
shall cease and the persons entitled to receive shares of Common Stock upon the
conversion of shares of Series C Preferred Stock shall be treated for all
purposes as having become the owners of such shares of Common Stock.
Concurrently with such conversion, the converted shares of Series C Preferred
Stock shall cease to be outstanding and shall be canceled, and the shares of
Series C Preferred Stock formerly designated pursuant to this Statement of
Resolution shall be restored to authorized but unissued shares of Series C
Preferred Stock.

(c) If, after the Original Issue Date, the Corporation (i) makes a distribution
on its Common Stock in cash, securities (including Common Stock) or other
property or assets, (ii) subdivides or splits its outstanding Common Stock into
a greater number of Common Stock, (iii) combines or reclassifies its Common
Stock into a smaller number of Common Stock or (iv) issues by reclassification
of its Common Stock any securities (including any reclassification in connection
with a merger, consolidation or business combination in which the Corporation is
the surviving person), then the Conversion Ratio in effect at the time of the
record date for such distribution or of the effective date of such subdivision,
split, combination, or reclassification shall be proportionately adjusted so
that the conversion of the Series C Preferred Stock after such time shall
entitle the holder to receive the aggregate number of Common Stock (or shares of
any securities into which such shares of Common Stock would have been combined,
consolidated, merged or reclassified pursuant to clauses (iii) and (iv) above)
that such holder would have been entitled to receive if the Series C Preferred
Stock had been converted into Common Stock immediately prior to such record date
or effective date, as the case may be, and in the case of a merger,
consolidation or business combination in which the Corporation is the surviving
person, the Corporation shall provide effective provisions to ensure that the
provisions in this Statement of Resolution relating to the Series C Preferred
Stock shall not be abridged or amended and that the Series C Preferred Stock
shall thereafter retain the same powers, preferences and relative participating,
optional and other special rights, and the qualifications, limitations and
restrictions thereon, that the Series C Preferred Stock had immediately prior to
such transaction or event. An adjustment made pursuant to this Section 8(c)
shall become effective immediately after the record date in the case of a
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination, reclassification (including any
reclassification in connection with a merger, consolidation or business
combination in which the Corporation is the surviving person) or split. Such
adjustment shall be made successively whenever any event described above shall
occur.

(d) Notwithstanding any of the other provisions of this Section 8, no adjustment
shall be made to the Conversion Ratio pursuant to Section 8(c) as a result of
any of the following:

(i) the grant of Common Stock or options, warrants or rights to purchase Common
Stock to employees, officers or directors of the Corporation or its
subsidiaries, under compensation plans and agreements approved in good faith by
the Board; provided, that in the case of options, warrants or rights to purchase
Common Stock, the exercise price per Common Stock shall not be less than the
closing price of the Common Stock (as reported by the National Securities
Exchange) on the date such option, warrant or other right is issued;

 

6

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(ii) the issuance of any Common Stock as all or part of the consideration to
effect (A) the closing of any acquisition by the Corporation of assets of a
third party or (B) the consummation of a merger, consolidation or other business
combination of the Corporation with another entity in which the Corporation
survives and the Common Stock remain outstanding to the extent such
transaction(s) is or are validly approved by the vote or consent of the Board;

(iii) without duplication of Section 8(d)(i) above, the issuance of options,
warrants or other rights to purchase Common Stock, or securities exercisable or
convertible into or exchangeable for Common Stock (or options, warrants or other
rights to purchase any such securities that are exercisable or convertible into
or exchangeable for Common Stock, in each case, that are outstanding on the date
of first issuance of shares of Series C Preferred Stock); and

(iv) the issuance of securities for which an adjustment is made under another
provision of this Section 8.

(e) The Corporation shall pay any and all issue, documentary, stamp and other
taxes, excluding any income, franchise, property or similar taxes, that may be
payable in respect of any issue or delivery of Common Stock on conversion of
Series C Preferred Stock pursuant hereto. However, the holder of any Series C
Preferred Stock shall pay any tax that is due because Common Stock issuable upon
conversion thereof is issued in a name other than such holder’s name.

(f) No fractional Common Stock shall be issued upon the conversion of any Series
C Preferred Stock. All Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series C Preferred Stock by a holder
thereof shall be aggregated for purposes of determining whether the conversion
would result in the issuance of any fractional stock. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a Common Stock, the Corporation shall not issue a fractional Common
Stock but shall round the fractional Common Stock to the nearest whole Common
Stock (and a 0.5 of a share of Common Stock shall be rounded up to the next
higher share of Common Stock).

Section 9. Additional Procedures.

(a) In connection with any conversion pursuant to Section 8, the holder of
Series C Preferred Stock must deliver transfer instruments reasonably
satisfactory to the Corporation, at the principal office of the Corporation (or
such other place mutually acceptable to the holder of Series C Preferred Stock
and the Corporation), in accordance with Section 7(c).

(b) On the date of conversion pursuant to Section 8, the number of shares of
Common Stock into which the applicable shares of Series C Preferred Stock are
converted shall be promptly issued in uncertificated, book-entry form and
evidence thereof shall be delivered or, if requested by any holder of the Series
C Preferred Stock, such shares of Common Stock may be issued in certificated
form and such certificates shall be delivered, to the holder of Series C
Preferred Stock thereof or such holder’s designee upon the furnishing of
appropriate endorsements and transfer documents and the payment of all transfer
and similar taxes, if any, allocable to such holder.

 

7

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Section 10. No Other Rights.

The shares of Series C Preferred Stock shall not have any powers, designations,
preferences or relative, participating, optional, or other special rights, nor
shall there be any qualifications, limitations or restrictions or any powers,
designations, preferences or rights of such shares, other than as set forth
herein or in the Certificate of Formation, or as may be provided by law.

Section 11. Other Provisions.

(a) The shares of Series C Preferred Stock shall not be subject to the operation
of any retirement or sinking fund.

(b) In case any one or more of the provisions contained in this Statement of
Resolution shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. Furthermore, in
lieu of any such invalid, illegal or unenforceable provision, there shall be
added automatically as a part of this Statement of Resolution a provision as
similar in terms to such invalid, illegal or unenforceable provision as may be
possible and be legal, valid and enforceable, unless the requisite parties
separately agree to a replacement provision that is valid, legal and
enforceable.

(c) Any amendment, modification, waiver or alteration of, or supplement to, this
Statement of Resolution shall require approval of a majority of the members of
the Board not affiliated with any beneficial owner of the Series C Preferred
Stock.

(d) Any payments, issuances or distributions required to be made hereunder on
any day that is not a Business Day shall be made on the next succeeding Business
Day without interest or additional payment for such delay. For the purposes of
this Statement of Resolution, “Business Day” shall mean each day that is not a
Saturday, Sunday or other day on which banking institutions in Houston, Texas
are authorized or required by law to close. All payments required hereunder
shall be made by wire transfer of immediately available funds in United States
Dollars to the holders in accordance with the payment instructions as such
holders may deliver by written notice to the Corporation from time to time.

Section 12. Effective Date.

This Statement of Resolution shall become effective on December 23, 2019.

[The Remainder of this Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, Contango Oil & Gas Company has caused this Statement of
Resolution to be duly executed on December 20, 2019.

 

CONTANGO OIL & GAS COMPANY

By:

 

 

Name:

 

E. Joseph Grady

Title:

 

Senior Vice President and Chief Financial

Officer

 

 

[Signature Page to Statement of Resolution]