Attached files
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EX-2.1 - EX-2.1 - BRIGHAM EXPLORATION CO | d85129exv2w1.htm |
EX-2.2 - EX-2.2 - BRIGHAM EXPLORATION CO | d85129exv2w2.htm |
EX-99.2 - EX-99.2 - BRIGHAM EXPLORATION CO | d85129exv99w2.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 17, 2011
BRIGHAM EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation) |
001-34224 (Commission File Number) |
75-2692967 (IRS Employer Identification No.) |
6300 Bridge Point Parkway, Building 2, Suite 500 Austin, Texas 78730 (Address of principal executive offices) |
78730 (Zip Code) |
Registrants telephone number, including area code: (512) 427-3300
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On October 17, 2011, Brigham Exploration Company, a Delaware corporation (the
Company), entered into an Agreement and Plan of Merger (the Merger Agreement)
with Statoil ASA, a public limited liability company organized under the laws of the Kingdom of
Norway (Parent), and Fargo Acquisition Inc., a Delaware corporation (Merger
Sub) and an indirect wholly owned subsidiary of Parent, pursuant to which Merger Sub will
commence an offer (the Offer) to acquire all of the outstanding shares of the Companys
common stock, par value $0.01 per share (the Shares), for $36.50 per Share, net to the
stockholders in cash (the Offer Price), without interest.
The Merger Agreement also provides that following consummation of the Offer and satisfaction
or waiver of certain customary conditions, Merger Sub will be merged with and into the Company (the
Merger), with the Company surviving as a wholly owned subsidiary of Parent (the
Surviving Corporation). Upon completion of the Merger, each untendered Share outstanding
immediately prior to the effective time of the Merger (excluding those Shares that are held by (i)
Parent, Merger Sub, the Company or their respective wholly owned subsidiaries and (ii) stockholders
of the Company who properly demand appraisal in connection with the Merger under the Delaware
General Corporation Law (the DGCL)) will be converted into the right to receive cash
consideration equal to the Offer Price.
If Merger Sub holds 90% or more of the outstanding Shares following the consummation of the
Offer (the Short-Form Threshold), the parties will effect the Merger as a short-form
merger under the DGCL without the need for approval by the Companys stockholders. In addition,
subject to the terms of the Merger Agreement and applicable law, the Company has granted Merger Sub
an irrevocable option (the Top-Up Option), exercisable after consummation of the Offer,
to purchase from the Company that number of Shares as would be necessary for Parent and Merger Sub
to own 100 Shares more than the Short-Form Threshold. If the Offer is consummated but the
Short-Form Threshold is not attained, the Company, Parent and Merger Sub will effect the Merger
following stockholder approval, pursuant to a special stockholders meeting. Merger Sub will vote
all Shares it acquires pursuant to the Offer in favor of the adoption of the Merger Agreement,
thereby assuring approval.
Consummation of the Offer is subject to several conditions, including: (i) that a number of
Shares that, together with any Shares already owned by Parent and Merger Sub, represents a majority
of the Shares outstanding (on a fully diluted basis) be validly tendered and not properly withdrawn
prior to the expiration date of the Offer (as such expiration date may be extended pursuant to the
Merger Agreement); (ii) the expiration or early termination of the applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) the absence of a
material adverse effect on the Company; and (iv) certain other customary conditions. The Offer is
not subject to a financing condition.
The Company has made customary representations, warranties and covenants in the Merger
Agreement. The Companys covenants include covenants relating to the Companys conduct of its
business between the date of the Merger Agreement and the closing of the Merger,
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public disclosures
and other matters. The Company has agreed not to solicit, initiate, knowingly facilitate or
knowingly encourage, or conduct or engage in discussions or negotiations with third parties seeking
to make any alternative proposals for the acquisition of the Company. However, subject to the
satisfaction of certain conditions and following receipt of an unsolicited proposal or the
occurrence of certain intervening events, the Company and its board of directors, as applicable,
would be permitted to take certain actions, which may, as more fully described in the Merger
Agreement, include terminating the Merger Agreement or changing the board of directors
recommendation, if the board of directors has concluded in good faith after consultation with its
advisors that failure to do so would be inconsistent with the directors fiduciary duties.
The Merger Agreement contains certain termination rights of Parent and the Company and
provides that, upon the termination of the Merger Agreement under specified circumstances, the
Company would be required to pay Parent a termination fee of approximately $136.6 million.
The board of directors of the Company has resolved to recommend that stockholders of the
Company tender their Shares into the Offer and, if necessary, vote to adopt the Merger Agreement.
The foregoing description of the Offer, the Merger and the Merger Agreement does not purport
to be complete and is qualified in its entirety by reference to the Merger Agreement, which is
attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Merger
Agreement has been incorporated herein by reference to provide information regarding the terms of
the Merger Agreement. Factual disclosures about Parent, Merger Sub or the Company or any of their
respective affiliates contained in this Current Report on Form 8-K or in their respective public
reports filed with the U.S. Securities and Exchange Commission (the SEC), as applicable,
may supplement, update or modify the factual disclosures about Parent, Merger Sub and the Company
or any of their respective affiliates contained in the Merger Agreement. The representations,
warranties and covenants made in the Merger Agreement by Parent, Merger Sub and the Company were
qualified and subject to important limitations agreed to by Parent, Merger Sub and the Company in
connection with negotiating the terms of the Merger Agreement. In particular, the representations
and warranties contained in the Merger Agreement and described in this summary were negotiated with
the principal purposes of establishing the circumstances in which a party to the Merger Agreement
may have the right not to consummate the Offer or the Merger if the representations and warranties
of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating
risk between the parties to the Merger Agreement, rather than establishing matters of fact. The
representations and warranties set forth in the Merger Agreement may also be subject to a
contractual standard of materiality different from that generally applicable to stockholders and
reports and documents filed with the SEC and in some cases were qualified by disclosures that were
made by each party to the other, which disclosures were not reflected in the Merger Agreement.
Moreover, information concerning the subject matter of the representations and warranties, which do
not purport to be accurate as of the date of this Current Report on Form 8-K, may have changed
since the date of the Merger Agreement and subsequent developments or new information qualifying a
representation or warranty may have been included in this Current Report on Form 8-K.
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Tender and Voting Agreement
In connection with the parties entry into the Merger Agreement, all of the directors and
executive officers of the Company (the Stockholder Parties) entered into a Tender and
Voting Agreement with Parent and Merger Sub (the Tender and Voting Agreement) pursuant to
which they have agreed, among other things, to tender their Shares into the Offer and, if required
by applicable law, to vote their Shares in favor of adopting the Merger Agreement. The Stockholder
Parties have agreed to comply with certain restrictions on the disposition of such Shares, subject
to the terms and conditions contained in the Tender and Voting Agreement. Pursuant to its terms,
the Tender and Voting Agreement will terminate upon, among other
things, the earliest of (i) the termination of the
Merger Agreement in accordance with its terms, (ii) the Effective Time (as defined in the Merger
Agreement) of the Merger, and (iii) the termination or
expiration of the Offer, without the tendered and not withdrawn Shares being accepted for payment
under the Merger Agreement.
The foregoing description of the Tender and Voting Agreement does not purport to be complete
and is qualified in its entirety by reference to the Tender and Voting Agreement, which is attached
hereto as Exhibit 2.2 and is incorporated herein by reference.
Employment and Consulting Agreements
The Company entered into Employment and Consulting Agreements (each, a Consulting
Agreement) with each of Ben M. Brigham (B. Brigham), Eugene B. Shepherd, Jr., and
David T. Brigham (D. Brigham) contemporaneously with the execution of the Merger
Agreement. The Consulting Agreements are to be effective at the initial time Parent accepts for
payment Shares validly tendered and not withdrawn pursuant to the terms and conditions of the Offer
(such time of acceptance, the Acceptance Time).
Under B. Brighams Consulting Agreement, from the Acceptance Time until the earlier of (i) 60
days after the Acceptance Time, (ii) such date that the Company notifies B. Brigham in writing that
his employment is terminated, or (iii) B. Brighams death (the earlier of (i), (ii) and (iii) being
referred to as the B. Brigham Employment Termination Date), B. Brigham is entitled to
receive (a) base salary at a rate no less than the rate in effect as of immediately prior to the
Acceptance Time and (b) a 2011 bonus equivalent to 80% of B. Brighams base annual salary in effect
as of immediately before the Acceptance Time, prorated through the B. Brigham Employment
Termination Date if such date occurs before December 31, 2011,
which bonus is in lieu of any 2011
annual bonus B. Brigham would otherwise be eligible to receive under his existing Employment
Agreement with the Company effective as of May 14, 1997, as
amended (his existing Employment
Agreement). Provided that B. Brigham has not voluntarily terminated his employment before the
B. Brigham Employment Termination Date, he will also be entitled to receive a retention bonus of
$650,000, less legally required withholdings, in a cash lump sum payable within three business days after the B. Brigham Employment Termination Date. This
retention bonus is in addition to amounts B. Brigham may be entitled to receive under his existing
Employment Agreement. The description of the severance benefits to which B. Brigham is entitled
under his existing Employment Agreement set forth in the Companys proxy statement for its 2011 annual meeting
is incorporated herein by reference and filed herewith as Exhibit 99.2.
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B.
Brighams existing Employment Agreement will terminate on the B. Brigham
Employment Termination Date, except that the Companys obligation to pay severance benefits to B.
Brigham, and B. Brighams confidentiality covenants thereunder, will continue notwithstanding the
termination of the agreement.
B. Brighams Consulting Agreement also provides that for the 90-day period beginning on the B.
Brigham Employment Termination Date (which period may be extended at the option of the Company for
an additional 90 days), B. Brigham will provide transition and consulting services to the Company.
The Company and B. Brigham anticipate that B. Brigham will devote no more than the equivalent of
eight hours per week to the provision of consulting services. B. Brigham will be entitled to
receive a consulting fee equal to $90,000 payable in three equal monthly installments for his
services under the Consulting Agreement, and if the Company elects to extend the Consulting
Agreement with B. Brigham, an additional consulting fee equal to $90,000 payable in three equal
monthly installments. The Company can terminate the Consulting Agreement with or without cause,
and B. Brigham can terminate the Consulting Agreement upon a material breach by the Company.
Except in the case of a termination by the Company for cause, the Company must pay B. Brigham the
full amount of any unpaid portion of the applicable consulting fee within 10 days after the date of
termination. B. Brighams Consulting Agreement also contains confidentiality requirements as well
as a covenant that B. Brigham will not engage in certain activities in competition with the Company
within certain areas for one year following the B. Brigham Employment Termination Date. This
non-competition covenant supersedes the non-competition covenant in B. Brighams Employment
Agreement.
Under the Consulting Agreements entered into with Mr. Shepherd and D. Brigham (each a
Consultant), from the Acceptance Time until the earlier of (i) 60 days after the
Acceptance Time, (ii) such date that the Company notifies the Consultant in writing that his
employment is terminated, or (iii) the Consultants death (the earlier of (i), (ii) and (iii) being
referred to as the Consultant Employment Termination Date), the Consultant is entitled to
receive (a) base salary at a rate no less than the rate in effect immediately prior to the
Acceptance Time and (b) a 2011 bonus equivalent to 80% of the Consultants gross salary (as that term is defined in the
Companys 2011 Performance Bonus Plan) in effect immediately before the Acceptance Time, prorated
through the Consultant Employment Termination Date if such date occurs before December 31, 2011
(which bonus is in lieu of the bonus the Consultant would otherwise be eligible to receive under
the Companys 2011 Performance Bonus Plan if he remained employed by the Company at the time such
bonus is paid). Provided that the Consultant has not voluntarily
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terminated his employment before
the Consultant Employment Termination Date, he will also be entitled to receive a retention bonus
in the amount of $650,000 for Mr. Shepherd and $575,000 for D. Brigham, payable in a lump sum cash
payment within three business days after the Consultant Employment Termination Date. This
retention bonus is in addition to amounts each Consultant may be entitled to receive under his
existing Change of Control Agreement with the Company (each, an
existing Change of Control Agreement), which agreements, except as
modified by the Consulting Agreements, continue in full force and effect and will survive the
termination of the Consulting Agreements regardless of the reason for such termination.
Each Consulting Agreement also provides that for the 90-day period beginning on the Consultant
Employment Termination Date (which period may be extended at the option of the Company for an
additional 90 days), the Consultant will provide transition and consulting services to the Company.
The Company and the Consultant anticipate that the Consultant will devote no more than the
equivalent of eight hours per week to the provision of consulting services. The Consultant will be
entitled to receive a consulting fee equal to $90,000 payable in three equal installments for his
services under the Consulting Agreement, and if the Company elects to extend the Consulting
Agreement with the Consultant, an additional consulting fee equal to $90,000 payable in three equal
monthly installments. The Company can terminate the Consulting Agreement with or without cause,
and the Consultant can terminate the Consulting Agreement upon a material breach by the Company.
Except in the case of a termination by the Company for cause, the Company must pay the Consultant
the full amount of any unpaid portion of the applicable consulting fee within 10 days after the date of termination. Each Consultants
Consulting Agreement also contains confidentiality requirements as well as a covenant that the
Consultant will not engage in certain activities in competition with the Company within certain
areas for one year following the Consultant Employment Termination Date. This non-competition
covenant supersedes the non-competition covenant in each Consultants existing Confidentiality and
Non-Competition Agreement.
The description of the severance benefits to which the Consultants are entitled under their existing
Change of Control Agreements set forth in the Companys proxy statement for its 2011 annual meeting
is incorporated herein by reference and filed herewith as Exhibit 99.2.
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Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
The information set forth in Item 1.01 under the heading Employment and Consulting
Agreements is incorporated by reference herein.
Item 7.01. Regulation FD Disclosure.
The Company issued a press release on October 17, 2011 regarding the matters described in Item
1.01 of this Current Report on Form 8-K. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
In accordance with
General Instruction B.2 of Form 8-K, the information in this Item 7.01, including Exhibit 99.1,
should not be deemed filed for purposes of Section 18 of the Securities Exchange Act
of 1934 (Exchange Act) or otherwise subject to the liabilities of that section, nor
shall such information, including Exhibit 99.1, be deemed incorporated by reference
in any filing under the Securities Act of 1933 or the Exchange Act except as may be expressly
set forth by specific reference in such filing.
Item 8.01. Other Items.
Additional Information
The Offer described in this communication has not yet commenced, and this communication is
neither an offer to purchase nor a solicitation of an offer to sell any shares of the common stock
of the Company or any other securities. On the commencement date of the Offer, (i) a tender offer
statement on Schedule TO, including an offer to purchase, a letter of transmittal and related
documents, will be filed by Parent and Merger Sub with the Securities and Exchange Commission (the
SEC), and (ii) a Solicitation/Recommendation Statement on Schedule 14D-9 will be filed by
the Company with the SEC. The offer to purchase shares of the Company common stock will only be
made pursuant to the offer to purchase, the letter of transmittal and related documents filed with
such Schedule TO. INVESTORS AND SECURITIES HOLDERS ARE URGED TO READ BOTH THE TENDER OFFER
STATEMENT AND THE SOLICITATION/RECOMMENDATION STATEMENT REGARDING THE OFFER, AS THEY MAY BE AMENDED
FROM TIME TO TIME, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders may obtain a free copy of these statements (when available) and
other public documents filed with the SEC at the website maintained by the SEC at www.sec.gov.
Forward-Looking Statements
Except for the historical information contained herein, the matters discussed or incorporated
by reference in this report are forward-looking statements within the meaning of the federal
securities laws. Important factors that could cause our actual results to differ materially from
those contained in or implied by the forward-looking statements include early initial production
rates which decline steeply over the early life of wells, particularly our Williston
Basin horizontal wells for which we estimate the average monthly production rates may decline
by approximately 70% in the first twelve months of production, our growth strategies, our ability
to successfully and economically explore for and develop oil and gas resources, anticipated trends
in our business, competition, our liquidity and ability to finance our exploration and development
activities, market conditions in the oil and gas industry, fluctuations in crude oil and natural
gas prices, general economic conditions, our ability to make and integrate acquisitions, the impact
of governmental regulation and other risks more fully described in the
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Companys filings with the
Securities and Exchange Commission from time to time, including the Companys most recent Annual
Report on Form 10-K for the year ended December 31, 2010 and Quarterly Reports on Form 10-Q.
Forward-looking statements are typically identified by use of terms such as may, will,
expect, anticipate, estimate and similar words, although some forward-looking statements may
be expressed differently. Such forward-looking statements are not guarantees or predictions of
future performance, and are subject to known and unknown risks, uncertainties and other factors,
many of which are beyond the Companys control, that could cause actual results, performance or
achievements of the Company or the Surviving Corporation following completion of the Merger to
differ materially from any future results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements include the ability of the Company,
Parent and Merger Sub to complete the transactions contemplated by the Merger Agreement, including
the parties ability to satisfy the conditions to the consummation of the Offer and the other
conditions set forth in the Merger Agreement and the possibility of any termination of the Merger
Agreement. Actual results may differ materially from current expectations because of risks
associated with uncertainties as to: the timing of the Offer and the subsequent Merger;
uncertainties as to how many of the Shares will be tendered in the Offer; the possibility that
competing offers or acquisition proposals will be made; the possibility that various conditions to
the consummation of the Offer or the Merger may not be satisfied or waived, including that a
governmental entity may prohibit, delay or refuse to grant approval for the consummation of the
Offer or the Merger; the effects of disruption from the Offer or Merger on the Companys business;
the fact that the announcement and pendency of the Offer and Merger may make it more difficult to
establish or maintain relationships with employees, suppliers and other business partners; the risk
that shareholder litigation in connection with the Offer or the Merger may result in significant
costs of defense, indemnification and liability; and other uncertainties pertaining to the business
of the Company. Many of these risks and uncertainties relate to factors that are beyond the
Companys ability to control or estimate precisely, and any or all of the Companys forward-looking
statements may turn out to be wrong. The Company cannot give any assurance that such
forward-looking statements will prove to have been correct. The reader is cautioned not to unduly
rely on these forward-looking statements. Nothing contained herein shall be deemed to be a
forecast, projection or estimate of the future financial performance of the Company or the
Surviving Corporation following the consummation of the Merger unless otherwise stated. The Company
undertakes no duty or obligation to update these forward-looking statements, whether as a result of
new information, subsequent events or developments, changes in expectations or otherwise.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Reference is made to the Exhibit Index hereto, which is incorporated by reference into this Item
9.01.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
BRIGHAM EXPLORATION COMPANY |
||||
Date: October 21, 2011 | By: | /s/ Eugene B. Shepherd, Jr. | ||
Eugene B. Shepherd, Jr. | ||||
Executive Vice President & Chief Financial Officer |
EXHIBIT INDEX
Exhibit | ||
No. | Description | |
2.1
|
Agreement and Plan of Merger, dated as of October 17, 2011, by and among Statoil ASA, Fargo Acquisition Inc. and Brigham Exploration Company.* | |
2.2
|
Tender and Voting Agreement, dated as of October 17, 2011, by and among Statoil ASA, Fargo Acquisition Inc. and the directors and executive officers of Brigham Exploration Company.* | |
99.1
|
Press Release issued by Brigham Exploration Company, dated October 17, 2011 (incorporated herein by reference to the Companys Schedule 14D-9C filed October 17, 2011). | |
99.2
|
Excerpt from Brigham Oil Company's proxy statement for its 2011 annual meeting.* |
* Filed herewith.