|
Exhibit 10.2
EXECUTION COPY
TERMINATION AND SETTLEMENT
AGREEMENT
TERMINATION AND SETTLEMENT AGREEMENT, dated as of
December 16, 2008 (this "Agreement"), is entered into among
MAGNETAR FINANCIAL LLC, a Delaware limited liability company
("Magnetar Financial"), on behalf of itself and its Affiliates
(collectively, "Magnetar"), INVESTMENT PARTNERS II (B), LLC, a
Delaware limited liability company ("Investment Partners"), QRA SR,
LLC, a Delaware limited liability company ("QRA"), TRIANGLE PEAK
PARTNERS PRIVATE EQUITY, LP, a Delaware limited partnership
("Triangle Peak" and, together with Magnetar, Investment Partners
and QRA, the "Series B Investors"), POST OAK ENERGY CAPITAL, LP, a
Delaware limited partnership ("Post Oak"), CHAPARRAL ENERGY, INC.,
a Delaware Corporation ("Chaparral Energy"), on behalf of itself
and Chaparral Exploration, L.L.C. (collectively, "Chaparral"), and
EDGE PETROLEUM CORPORATION, a Delaware Corporation ("Edge").
RECITALS
WHEREAS, Chaparral Energy and Post Oak entered into a Letter of
Intent, dated as of June 16, 2008 (the "Letter of Intent"),
pursuant to which Post Oak proposed an equity investment in
Chaparral Energy;
WHEREAS, Magnetar and Chaparral Energy entered into a Stock
Purchase Agreement, dated as of July 14, 2008 (the "Stock
Purchase Agreement"), pursuant to which Magnetar, upon the
satisfaction of certain conditions, would purchase, for $150
million, 1.5 million shares of Series B convertible preferred
stock of Chaparral Energy (the "Series B preferred");
WHEREAS, Magnetar and Triangle Peak entered into an Assignment
and Assumption Agreement, dated as of August 15, 2008 (the
"Triangle Peak Assumption Agreement"), pursuant to which Magnetar
assigned to Triangle Peak the right to purchase 66,000 shares of
Series B preferred in accordance with, and Triangle Peak agreed to
become subject to, the terms and conditions of the Stock Purchase
Agreement;
WHEREAS, Magnetar, Investment Partners and QRA entered into an
Assignment and Assumption and Amendment Agreement, dated as of
August 15, 2008 (the "Investment Partner/QRA Assumption
Agreement" and, together with the Triangle Peak Assumption
Agreement, the "Assumption Agreements"), pursuant to which Magnetar
(i) assigned to Investment Partners the right to purchase
200,000 shares of Series B preferred in accordance with, and
Investment Partners agreed to become subject to, the terms and
conditions of the Stock Purchase Agreement, and (ii) assigned
to QRA the right to purchase 50,000 shares of Series B preferred in
accordance with, and QRA agreed to become subject to, the terms and
conditions of the Stock Purchase Agreement;
WHEREAS, the Series B Investors’
obligations to purchase shares of Series B preferred under the
Stock Purchase Agreement are subject to certain conditions set
forth in Section 6.02 of that Agreement, including (without
limitation) that Chaparral consummate a merger with Edge (the
"Merger"), as set forth in a July 14, 2008 Merger Agreement
among Chaparral Energy, Chaparral Exploration, L.L.C. ("Chaparral
Exploration") and Edge (the "Merger Agreement") no later than
December 31, 2008;
WHEREAS, Chaparral and Edge believe that the closing conditions
set forth in the Merger Agreement will not be met on or before
December 31, 2008, and have agreed to terminate the Merger
Agreement by mutual written agreement pursuant to Section 7.1
of the Merger Agreement as of the date of this Agreement pursuant
to the terms and conditions of that certain Merger Termination
Agreement attached hereto as Exhibit A (the "Merger Termination
Agreement");
WHEREAS, in light of the foregoing, Chaparral and the Series B
Investors have mutually agreed that it is in the best interests of
each entity to terminate the Stock Purchase Agreement prior to
December 31, 2008;
WHEREAS, the parties wish to amicably and efficiently resolve
all rights and obligations under or relating to the Letter of
Intent, Stock Purchase Agreement, Assumption Agreements, Commitment
Letter (as defined below), and, with respect to specified parties,
the Merger Agreement, including through the allocation of payment
and the mutual exchange of releases and other consideration set
forth herein; believe that any potential litigation or other
dispute resolution mechanisms relating to the foregoing matters
would be expensive, time-consuming, distracting and disruptive; and
are entering into this Agreement to avoid the expense, time,
distraction, disruption and other burdens of litigation relating
thereto; and
WHEREAS, the parties desire to settle and finally resolve any
and all potential claims or positions arising out of or relating to
the foregoing matters that have been or may be asserted in
connection with the terms of the Letter of Intent, Stock Purchase
Agreement, Assumption Agreements, Commitment Letter, or, with
respect to specified parties, the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the consideration and representations, warranties, covenants and
agreements contained herein and in Exhibit A hereto, and intending
to be legally bound, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . Unless otherwise
specifically defined herein, each capitalized term used but not
defined herein shall have the meaning assigned to such term in the
Stock Purchase Agreement.
2
ARTICLE II
TERMINATION AND SETTLEMENT
Section 2.1 Termination and Settlement .
(a) Termination of the Merger Agreement . The Merger
Agreement has been voluntarily terminated by Chaparral Energy,
Chaparral Exploration and Edge and is of no further force or effect
pursuant to the Merger Termination Agreement.
(b) Termination of the Letter of Intent, Stock Purchase
Agreement and Assumption Agreements . Upon payment of the
Termination Payment (as defined below), the Letter of Intent, Stock
Purchase Agreement and Assumption Agreements are hereby terminated
in their entirety, are null and void and there shall be no
liability or obligation on the part of the Series B Investors or
Chaparral under the Stock Purchase Agreement or Assumption
Agreements, or on the part of Post Oak or Chaparral under the
Letter of Intent. Without limiting the foregoing, the Series B
Investors waive any right to seek payment or reimbursement from
Chaparral as set forth in Sections 5.02(b), 7.02(b) and 8.01 of the
Stock Purchase Agreement, and Post Oak waives any right to seek
payment or reimbursement from Chaparral as set forth in the Letter
of Intent.
(c) Termination Payment . Within one business day of
receiving a fully executed Agreement: (i) Magnetar, on behalf
of the Series B Investors and Post Oak, shall cause payment to be
made to Chaparral in the sum of U.S. $5,000,000.00 (FIVE MILLION
DOLLARS) in respect of the termination and resolution of this
matter, including in consideration of the further rights provided
to Magnetar hereafter (the "Termination Payment") and
(ii) Chaparral hereby instructs Magnetar to pay $1.5 million
of the Termination Payment to Edge and Magnetar agrees to make such
payment as so instructed.
(d) Magnetar Investment Option . Chaparral Energy grants
to Magnetar Financial, on behalf of itself and its Affiliates, the
option to invest up to $25 million in shares of common stock of
Chaparral Energy, at a pre-money valuation of $900 million. The
purchase of such shares shall be subject to the terms set forth in
the definitive agreements to be negotiated in the event Magnetar
Financial exercises this option. Magnetar Financial and Chaparral
Energy shall negotiate the terms of such definitive agreements in
good faith. Magnetar Financial’s option expires on
June 30, 2009; provided , that if Magnetar Financial
has given notice of such exercise prior to June 30, 2009, the
option shall not expire until the parties have not been able to
negotiate, in good faith, such definitive documents.
3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Series
B Investors . Each Series B Investor hereby represents and
warrants that it has full power and authority to enter into this
Agreement. Each Series B Investor hereby represents and warrants
that (a) this Agreement has been duly authorized, executed and
delivered by such Series B Investor and, assuming and conditioned
that this Agreement constitutes the valid and binding agreement of
the other Series B Investors, Post Oak, Chaparral and Edge, is the
valid and binding obligation of such Series B Investor, enforceable
against such Series B Investor in accordance with its terms and
(b) no material consent of any third party is required for the
execution, delivery and performance of this Agreement by such
Series B Investor.
Section 3.2 Representations and Warranties of
Chaparral . Chaparral has full power and authority to enter
into this Agreement. Chaparral hereby represents and warrants that:
(a) this Agreement has been duly authorized, executed and
delivered by Chaparral and, assuming and conditioned that this
Agreement constitutes the valid and binding agreement of the Series
B Investors, Post Oak and Edge, this Agreement is the valid and
binding obligation of Chaparral, enforceable against Chaparral in
accordance with its terms and (b) no material consent of any
third party is required for the execution, delivery and performance
of this Agreement by Chaparral. Chaparral represents that the
parties thereto have terminated the June 26, 2008 Senior
Secured Credit Facility Commitment Letter and the Summary of
Indicative Terms and Conditions (the "Commitment Letter") by and
among Chaparral, Chaparral Energy, L.L.C., JP Morgan Chase Bank,
N.A., J.P. Morgan Securities Inc., The Royal Bank of Scotland plc,
RBS Securities Corporation d/b/a RBS Greenwich Capital, Suntrust
Bank and Suntrust Robinson Humphrey, Inc. for the contemplated debt
financing for the Merger.
Section 3.3 Representations and Warranties of Edge .
Edge has full power and authority to enter into this Agreement.
Edge hereby represents and warrants that: (a) this Agreement
has been duly authorized, executed and delivered by Edge and,
assuming and conditioned that this Agreement constitutes the valid
and binding agreement of the Series B Investors, Post Oak and
Chaparral, this Agreement is the valid and binding obligation of
Edge, enforceable against Edge in accordance with its terms and
(b) no material consent of any third party is required for the
execution, delivery and performance of this Agreement by Edge.
Section 3.4 Representations and Warranties of Post
Oak . Post Oak has full power and authority to enter into this
Agreement. Post Oak hereby represents and warrants that:
(a) this Agreement has been duly authorized, executed and
delivered by Post Oak and, assuming and conditioned that this
Agreement constitutes the valid and binding agreement of the Series
B Investors, Edge and Chaparral, this Agreement is the valid and
binding obligation of Post Oak, enforceable against Post Oak in
accordance with its terms and (b) no material consent of any
third party is required for the execution, delivery and performance
of this Agreement by Post Oak.
4
Section 3.5 No Other Representations or
Warranties . Each party disclaims the existence of or any
reliance upon any representation or warranty other than those set
forth herein.
ARTICLE IV
CHAPARRAL AND SERIES B INVESTOR RELEASES
Section 4.1 Series B Investor Release . Effective
upon the execution of this Agreement by all parties hereto, each of
the Series B Investors, for themselves and their officers,
directors, predecessor entities, successors and assigns, parents,
subsidiaries, affiliates and employees (collectively, the "Investor
Releasing Parties"), hereby fully releases and discharges Chaparral
and its respective parents, subsidiaries and affiliates and their
respective officers, directors, managing directors, stockholders,
partners, members, predecessor entities, successors and assigns,
parents, subsidiaries, affiliates, employees and attorneys and
other advisors and agents (including debt and equity financing
sources), from any and all claims, actions, causes of action,
demands and charges of whatever nature, known or unknown, arising
out of, or relating to the Letter of Intent, Stock Purchase
Agreement, Assumption Agreements, Merger Agreement or Commitment
Letter, including any claim relating to the termination of the
Letter of Intent, Stock Purchase Agreement, Assumption Agreements,
Merger Agreement or Commitment Letter (collectively, the "Investor
Released Claims"); provided, however, that, for the avoidance of
doubt, nothing contained herein shall be deemed to release or waive
any rights, or release any party hereto from its obligations, under
this Agreement.
Section 4.2 Post Oak Release . Effective upon the
execution of the Agreement by all parties hereto, Post Oak, for
itself and its officers, directors, predecessor entities,
successors and assigns, parents, subsidiaries, affiliates and
employees (collectively, the "Post Oak Releasing Parties"), hereby
fully releases and discharges Chaparral and its respective parents,
subsidiaries and affiliates and their respective officers,
directors, managing directors, stockholders, partners, members,
predecessor entities, successors and assigns, parents,
subsidiaries, affiliates, employees and attorneys and other
advisors and agents (including debt and equity financing sources),
from any and all existing obligations, continuing obligations,
claims, actions, causes of action, demands and charges of
whatsoever nature, known or unknown, arising out of, or relating to
the Letter of Intent, Stock Purchase Agreement, Assumption
Agreements, Merger Agreement or Commitment Letter, including any
claim relating to the termination of the Letter of Intent, Stock
Purchase Agreement, Assumption Agreements, Merger Agreement or
Commitment Letter (collectively, the "Post Oak Released Claims");
provided, however, that, for the avoidance of doubt, nothing
contained herein shall be deemed to release or waive any rights, or
release any party hereto from its obligations, under this
Agreement.
5
Section 4.3 Chaparral Release .
Effective upon the execution of the Agreement by all parties hereto
and the payment and receipt of the Termination Payment as provided
in Section 2.1(c), Chaparral, for itself and its officers,
directors, predecessor entities, successors and assigns, parents,
subsidiaries, affiliates, stockholders and employees (collectively,
the "Chaparral Releasing Parties"), hereby fully releases and
discharges each of the Series B Investors, Post Oak, and their
respective parents, subsidiaries and affiliates and their
respective officers, directors, managing directors, stockholders,
partners, members, predecessor entities, successors and assigns,
parents, subsidiaries, affiliates, employees and attorneys and
other advisors and agents (including debt and equity financing
sources), from any and all claims, actions, causes of action,
demands and charges of whatsoever nature, known or unknown, arising
out of, or relating to the Letter of Intent, Stock Purchase
Agreement, Assumption Agreements, Merger Agreement or Commitment
Letter, including any claim relating to the termination of the
Letter of Intent, Stock Purchase Agreement, Assumption Agreements,
Merger Agreement or Commitment Letter (collectively, the "Chaparral
Released Claims"); provided, however, that, for the avoidance of
doubt, nothing contained herein shall be deemed to release or waive
any rights, or release any party hereto from its obligations, under
this Agreement.
ARTICLE V
EDGE, CHAPARRAL AND SERIES B INVESTOR
RELEASES
Section 5.1 Series B Investor-Edge Release .
Effective upon the execution of this Agreement by all parties
hereto, each of the Series B Investors, for itself and to the
fullest extent allowed by law, those claiming through it
(collectively, the "Investor-Edge Releasing Parties"), hereby fully
releases and discharges Edge and its respective parents,
subsidiaries and affiliates and their respective officers,
directors, managing directors, stockholders, partners, members,
predecessor entities, successors and assigns, parents,
subsidiaries, affiliates, employees and attorneys and other
advisors and agents (including debt and equity financing sources),
from any and all claims, actions, causes of action, demands and
charges of whatever nature, known or unknown, arising out of, or
relating to the Letter of Intent, Stock Purchase Agreement,
Assumption Agreements, Merger Agreement or Commitment Letter,
including any claim relating to the termination of the Letter of
Intent, Stock Purchase Agreement, Assumption Agreements, Merger
Agreement or Commitment Letter (collectively, the "Investor-Edge
Released Claims"); provided, however, that, for the avoidance of
doubt, nothing contained herein shall be deemed to release or waive
any rights, or release any party hereto from its obligations, under
this Agreement.
Section 5.2 Post Oak-Edge Release . Effective upon
the execution of the Agreement by all parties hereto, Post Oak, for
itself and to the fullest extent allowed by law, those claiming
through it (collectively, the "Post Oak-Edge Releasing Parties"),
hereby fully releases and discharges Edge and its respective
parents, subsidiaries and affiliates and their respective officers,
directors
|
