PLAN SUPPORT AGREEMENT
Exhibit 10.2
This Plan
Support Agreement (the “Agreement”) is made
and executed as of November 5, 2009 among TETON ENERGY CORPORATION, a
Delaware corporation (“TEC”), TETON NORTH
AMERICA LLC, a Colorado limited liability company (“TNA”), TETON PICEANCE
LLC, a Colorado limited liability company (“TP”), TETON DJ LLC, a
Colorado limited liability company (“DJ”), TETON WILLISTON
LLC, a Colorado limited liability company (“TW”), TETON BIG HORN
LLC, a Colorado limited liability company (“TBH”), TETON DJCO
LLC, a Colorado limited liability company (“DJCO”), Teton ORRI
LLC a Colorado limited liability company (“TORRI”) and the
Holders under the Global Debenture (as defined below) signatories hereto (TNA,
TP, DJ, TW, TBH, DJCO, TORRI and the Holders signatories hereto are referred
herein individually as a “Party” and referred
to herein collectively as the “Parties”).
RECITALS
A. TEC
owns certain oil and gas interests both in its individual capacity and through
its subsidiaries, TP, TNA, DJ, TW, TBH, DJCO and TORRI (collectively, the “Subsidiaries”,
together with TEC, the “Debtors”).
B. Pursuant
to that certain Secured Subordinated Convertible Debenture Indenture dated
September 19, 2008 (as modified, amended, or supplemented from time to time, the
“Global
Debenture”), executed by TEC, the Subsidiaries, and the Bank of New York
Mellon Trust Company, N.A. (the “Indenture Trustee”),
TEC entered into an exchange transaction in the amount of $30 million pursuant
to which TEC exchanged the Global Debenture with the holders of the 10.75%
Secured Convertible Debentures due on June 18, 2013 (each a “Holder” and
collectively, the “Holders”). Repayment
to the Holders is secured by a second lien on all assets in which Debtors’
senior lenders maintain a first lien (the “Collateral”). Reference
is made to that certain Amended and Restated Intercreditor and Subordination
Agreement, which memorializes the respective priorities in the Collateral
between the Indenture Trustee, on behalf of the Holders, and the Debtors’ senior
lenders.
C. The
Parties have determined that it is in their respective best interests that the
Debtors seek a transfer of the ownership interests of TEC, as reorganized, (the
“Assets”), free
and clear of claims, liens, encumbrances and interests pursuant to a plan of
reorganization (the “Plan”), through
Chapter 11 bankruptcy cases (the “Bankruptcy
Cases”). The Plan will provide that all assets of each of the
Debtors, including all avoidance actions under Chapter 5 of the Bankruptcy Code,
shall re-vest in each respective prepetition owner, as reorganized, free and
clear of all preconfirmation liens, claims, encumbrances and
interests. Copies of the Plan and proposed disclosure statement are
attached hereto as Exhibit
A.
D. Each
of the Parties has been provided a copy of and has reviewed the Plan and
disclosure statement. The Parties desire to memorialize their
respective undertakings in regard to the Bankruptcy Cases and the
Plan.
NOW, THEREFORE, in consideration of the
foregoing, the Parties agree as follows:
1. So
long as no Termination Event (defined below) has occurred the Holders
signatories hereto each agrees: (i) to vote its claims in the Bankruptcy Cases
to accept the Plan upon the Bankruptcy Court’s approval of the disclosure
statement pursuant to section 1125 of the Bankruptcy Code; (ii) not to object to
or otherwise commence any proceeding to oppose confirmation of the Plan; (iii)
not to support or vote to accept any other plan; (iv) to cooperate with the
Debtors in connection with the taking of any actions on their part in connection
with the Plan described in Section 2; (v) not to seek modification or
termination of the automatic stay; and (vi) concurrently with the sale of the
Assets in accordance with the Plan and receipt of the distributions contemplated
under the Plan, authorize and, as requested by the Debtors, execute and deliver
to the Debtors a complete and unconditional release of liens and deed of trust,
together with any appropriate Uniform Commercial Code termination statements,
terminating all liens, security interests and deeds of trust in favor of the
Parties in respect of the Collateral.
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2. The
Debtors covenant and agree that, in each case except as otherwise approved by
the Holders and subject to the exercise by the Debtors and their board of
directors of their respective fiduciary duties: (i) they will use
their commercially reasonable efforts to (x) promptly but no later than November 5, 2009 file the
Bankruptcy Cases in the United States Bankruptcy Court for the District of
Delaware (the “Court”) and (y) file
and seek confirmation only of the Plan substantially in the form and content of
the Plan attached hereto as Exhibit A; (ii) they
will use commercially reasonable efforts promptly to prosecute confirmation of
the Plan; (iii) they will not seek confirmation of and will oppose any plan
other than the Plan; (iv) they will not seek to amend or modify the Plan in any
respect without the consent of the signatories hereto and will oppose any effort
by any person to seek modification or amendment of the Plan in any such respect;
and (v) they will take all actions and file all motions and seek the entry of
all appropriate orders that in their reasonable judgment are incident to
carrying out the purposes and intent of this Agreement and the
Plan. In addition, the Debtors agree that each Holder signatory
hereto may sell or transfer any claims held by and among any Holder signatory
hereto; provided that, such sale or transfer complies with the applicable
securities laws.
3. The
obligations of the Parties as set forth in Section 1 above shall
cease immediately upon the occurrence of a Termination Event. A
“Termination
Event” shall occur if any one or more of the following events shall have
occurred:
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(i)
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The
Debtors shall have breached, or failed to diligently perform, any of their
obligations as set forth in Section 2
above;
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(ii)
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the
Court shall not confirm the Plan, and it shall not have been implemented
and consummated prior to or on January 31,
2010;
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(iii)
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the
Plan shall be modified or amended in any respect without the consent of
the signatories hereto;
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(iv)
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a
trustee or examiner is appointed in the Bankruptcy Cases, the Bankruptcy
Cases are converted to a Chapter 7 Case or the Bankruptcy Cases are
dismissed; and
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(v)
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the
Bidding Procedures Order attached hereto as Exhibit B is
not entered prior to or on November 23,
2009.
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4. Anything
contained herein to the contrary notwithstanding, neither the Debtors nor the
Holders shall be responsible for any delays hereunder caused by any third
parties or by circumstances that are not within the control of the Debtors or
the Holders, as the case may be.
5. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to its conflict of law
provisions.
6. No
modification or amendment to the terms of this Agreement shall be valid unless
such modification or amendment is in writing and has been signed by each of the
Parties hereto.
7. This
Agreement may be executed by facsimile signature transmission in one or more
counterparts, any one of which need not contain the signature of more than one
Party, and all of which taken together shall constitute one and the same
Agreement.
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8. This
Agreement is intended to bind and inure to the benefit of the Parties and their
respective successors, assigns, heirs, executors, administrators, and
representatives.
[Remainder
of page intentionally left blank. Signature pages
follow.]
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DATED as
of the date first above stated.
TETON ENERGY
CORPORATION,
a
Delaware corporation
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By:
Name:
Title:
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TETON NORTH AMERICA
LLC,
a
Delaware limited liability company
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By:
Name:
Title:
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TETON
PICEANCE LLC,
a
Delaware limited liability company
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By:
Name:
Title:
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TETON
DJ LLC,
a
Delaware limited liability company
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By:
Name:
Title:
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TETON
WILLISTON LLC,
a
Delaware limited liability company
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By:
Name:
Title:
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TETON
BIG HORN LLC,
a
Delaware limited liability company
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By:
Name:
Title:
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TETON
DJCO LLC,
a
Delaware limited liability company
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By:
Name:
Title:
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TETON
ORRI LLC,
a
Colorado limited liability company
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By:
Name:
Title:
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HOLDERS:
WHITEBOX
TETON, LTD.
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By:
Name:
Title:
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INTERLACHEN
CONVERTIBLE INVESTMENTS LIMITED
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By:
Name:
Title:
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IRONMAN
PI FUND (QP), L.P.
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By:
Name:
Title:
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UBS
X’XXXXXX LLC F/B/O: X’XXXXXX PIPES CORPORATE STRATEGIES MASTER
LIMITED
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By:
Name:
Title:
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UBS
X’XXXXXX LLC F/B/O: X’XXXXXX GLOBAL CONVERTIBLE ARBITRAGE MASTER
LIMITED
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By:
Name:
Title:
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9
UBS
X’XXXXXX LLC F/B/O: X’XXXXXX GLOBAL CONVERTIBLE ARBITRAGE II MASTER
LIMITED
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By:
Name:
Title:
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