PLAN SUPPORT AGREEMENT
Exhibit 10.1
This Plan
Support Agreement (the “Agreement”) is made
and executed as of November 8, 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 ORRI
LLC, a Colorado limited liability company (“TORRI”), TETON DJCO
LLC, a Colorado limited liability company (“Teton DJ”), JPMORGAN
CHASE BANK, N.A., a national banking association, as administrative agent (in
such capacity, the “Administrative
Agent”) and each Lender under the Credit Agreement (as defined below)
(TEC, TNA, TP, DF, TW, TBH, TORRI, Teton DJ, the Administrative Agent, and the
Lenders are referred herein individually as a “Party” and referred
to herein collectively as the “Parties”).
RECITALS
A. TEC
owns certain interests in oil and gas properties both in its individual capacity
and through its subsidiaries TNA, TP, DF, TW, TBH, TORRI, and Teton DJ
(collectively, the “Subsidiaries”,
together with TEC, the “Debtors”).
B. Pursuant
to that certain Second Amended and Restated Credit Agreement dated April 2, 2008
(as modified, amended, or supplemented from time to time, the “Credit Agreement”),
executed by TEC, the
Administrative Agent, certain banks and other financial institutions (together
with their successors and assigns, “Lenders”) and the
Subsidiaries, as guarantors, the Debtors are indebted to the Lenders in the
outstanding principal amount of $22,484,296.00, plus accrued but unpaid interest
and fees and expenses (the “Indebtedness”). Repayment
of the Indebtedness is secured by, among other things, a first priority and
paramount lien on and security interest in the Debtors’ oil and gas assets (the
“Collateral”).
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, Administrative Agent,
each Lender signatory 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, and take any reasonable actions requested
by the Debtors to facilitate, 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 transfer of
the Assets in accordance with the Plan and receipt of no less than $18 million
as provided for under the Plan, plus such additional amounts necessary to
satisfy and repay in full any amounts outstanding, if any, under the DIP Loan
(as hereinafter defined), 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. In addition, each
Lender signatory hereto agrees that, so long as no Termination Event has
occurred, it will not sell or transfer any claims held by it to any person or
entity, unless such person or entity executes and delivers a written instrument,
in form and substance satisfactory to the Debtors, pursuant to such person or
entity agreeing to be subject to all of the terms and provisions of this
Agreement applicable to such Lender.
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2. The
Debtors covenant and agree that, in each case except as otherwise approved by
Administrative Agent and the Lenders and subject to the exercise by Debtors and
their Boards of Directors of their respective fiduciary duties (i) they will use
their commercially reasonable efforts to (x) promptly but no later than November 9, 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 prior written consent of the Lenders, 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.
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3. Immediately
prior to the Chapter 11 filing, the Debtors and the Lenders will agree upon
terms of a debtor-in-possession working capital line of credit in the sum of
$750,000 (the “DIP
Loan”), which line of credit will mature and become due and payable no
later than January 31,
2010 (the “Termination
Date”). The DIP Loan shall have usual and customary terms,
conditions, defaults, and remedies. Repayment of the DIP Loan shall
be secured by a first lien on the Debtors’ assets. The DIP Loan will
mature and become immediately due and payable on the Termination
Date. The Debtors will seek expeditious approval of the DIP Loan by
the Bankruptcy Court.
4. 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,
including wire transfer of proceeds of the auction, which includes
amounts, if any, necessary for repayment of the DIP Loan in
full;
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(iii)
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the
Plan shall be modified or amended in any respect without prior written
consent of Lenders;
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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;
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(v)
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the
Court shall have entered an order that the proceeds resulting from the
Court approved auction process for the transfer of the Assets or the
Collateral be paid to or reserved for potential payment to any person
other than Administrative Agent and Lenders (unless and until
Administrative Agent and Lenders have been indefeasibly paid in
full);
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(vi)
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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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(vii)
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the
DIP Loan and any of the commitments made thereunder are terminated;
and
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(viii)
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a
breach or termination of the Plan Support Agreement for the Noteholders or
the Plan Sponsorship Agreement
occurs.
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(ix)
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An
Event of Default shall occur under and as defined in the Interim Agreed
Order Authorizing Limited Use of Cash Collateral and Granting Adequate
Protection to Existing Lienholders or any final order authorizing use of
cash collateral order or the Financing Order (as such term is defined in
the Credit Agreement).
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Anything herein to the contrary
notwithstanding, neither the Debtors nor the Lenders 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 Lenders, as the case may
be.
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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.
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.
9. Nothing
in this Agreement shall be construed to prohibit the Administrative Agent or the
Lenders from appearing as a party-in-interest in any matter to be adjudicated in
the Bankruptcy Cases so long as such appearance and the positions advocated in
connection therewith are not materially inconsistent with this Agreement and are
not for the purpose of hindering or delaying (or reasonably likely to hinder or
delay) implementation of the transactions and other matters contemplated by this
Agreement. In no event shall any provision of this Agreement prohibit
or prevent the Administrative Agent or any Lender from taking any action, or
require it to take any action, or to perform any obligation or refrain from
exercising any right or remedy in respect of the DIP Loan and no default of any
of its obligations hereunder shall exist by virtue or any such action taken or
omitted in such capacity.
[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
Colorado limited liability company
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By:
Name:
Title:
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TETON
PICEANCE LLC,
a
Colorado limited liability company
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By:
Name:
Title:
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TETON
DJ LLC,
a
Colorado limited liability company
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By:
Name:
Title:
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TETON
WILLISTON LLC,
a
Colorado limited liability company
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By:
Name:
Title:
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TETON
BIG HORN LLC,
a
Colorado limited liability company
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By:
Name:
Title:
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TETON
DJCO LLC,
a
Colorado 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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JPMORGAN
CHASE BANK, N.A.,
Administrative
Agent and Lender
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By:
Name:
Title:
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ROYAL BANK OF CANADA,
Lender
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By:
Name:
Title:
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GUARANTY BANK AND TRUST COMPANY,
Lender
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By:
Name:
Title:
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US BANK NATIONAL ASSOCIATION,
Lender
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By:
Name:
Title:
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