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 


 


4

















 


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.


 


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,
managing directors, stockholders, partners, members, predecessor entities,
successors and assigns, parents, subsidiaries, 


 


6

















 


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-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 5.3 Chaparral-Edge 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 to the fullest
extent allowed by law, those claiming through it (collectively, the “Chaparral-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 whatsoever nature, known or unknown, arising out of, or relating
to the Letter of Intent, Stock Purchase Agreement or Assumption Agreements
including any claim relating to the termination of the Letter of Intent, Stock
Purchase Agreement,  Assumption
Agreements or Commitment Letter (collectively, the “Chaparral-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 5.4 Edge Release.


 


(a) Effective upon the execution of the Agreement by all parties
hereto and the payment and receipt of the Termination Payment as provided for
in Section 2.1(c), Edge, for itself and to the fullest extent allowed by
law, those claiming through it (collectively, the “Edge Releasing Parties”),
hereby fully releases and discharges 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; provided, however,  that, for the avoidance of doubt, nothing contained
herein 


 


7

















 


shall be deemed to release or waive any rights, or
release any party hereto from its obligations, under this Agreement.


 


(b) Effective upon the execution of the Agreement by all parties
hereto and the payment and receipt of the Termination Payment as provided for
in Section 2.1(c), the Edge Releasing Parties hereby fully release and
discharge Chaparral and its respective 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 or Assumption
Agreements, including any claim relating to the termination of the Letter of
Intent, Stock Purchase Agreement or Assumption Agreements (collectively, with
the claims released in Section 5.4(a), the “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.


 


ARTICLE VI


SCOPE OF
RELEASES, COVENANT NOT TO SUE AND INDEMNIFICATION


 


Section 6.1 Scope of Releases and Discharge.  The beneficiaries of the releases set forth
in Sections 4.1, 4.2, 4.3, 5.1, 5.2, 5.3 and 5.4 (collectively, as it relates
to the party granting a release, the “Released Claims”) are, collectively, the “Released
Persons.” The parties acknowledge and agree that they may be unaware of or may
discover facts in addition to or different from those which they now know or
believe to be true related to or concerning the Released Claims or the Released
Persons. The parties know that such presently unknown or unappreciated facts
could materially affect the claims or defenses of a party or parties and the
desirability of entering into this Agreement. It is nonetheless the intent of
the parties to give a full and complete release and discharge of the Released
Claims. To that end, with respect to the Released Claims only, the parties
expressly waive and relinquish any and all provisions, rights and benefits
conferred by any law of the United States or of any state or territory of the
United States or of any other relevant jurisdiction, or principle of common
law, which is similar, comparable or equivalent to Section 1542 of the
California Civil Code. With respect to the Released Claims only, the Parties
expressly waive and relinquish, to the fullest extent permitted by law, the
provisions, rights, and benefits of Section 1542 of the California Civil
Code, or any New York, Delaware, Illinois, Oklahoma, Texas or other state’s
counterpart thereto, which provides:


 


A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR.


 


8

















 


Section 6.2 Covenant Not to Sue.  Each of the parties hereto covenants, on
behalf of itself and (i) the Investor Releasing Parties and the
Investor-Edge Releasing Parties, in the case of the Series B Investors, (ii) the
Chaparral Releasing Parties and Chaparral-Edge Releasing Parties, in the case
of Chaparral, (iii) the Post Oak Releasing Parties and the Post Oak-Edge
Releasing Parties, in the case of Post Oak, and, (iv) to the fullest
extent allowed by law, the Edge Releasing Parties, in the case of Edge, and
with respect to the Chaparral Releasing Parties, the Chaparral-Edge Releasing
Parties and the Edge Releasing Parties, effective upon the payment and receipt
of the Termination Payment as provided in Section 2.1(c), not to bring any
Released Claim before any court, arbitrator, or other tribunal in any
jurisdiction, whether as a claim, cross-claim, or counterclaim.  However, any Released Person may plead this
Agreement as a complete defense and bar to any Released Claim brought or
threatened in derogation of this covenant not to sue.


 


Section 6.3 Accord and Satisfaction.  This Agreement and the releases reflected
herein shall be effective as a full and final accord and satisfaction and
release of all of the Released Claims.


 


Section 6.4 Indemnification
of the Series B Investors and Post Oak.


 


(a) Chaparral
agrees to hold harmless and indemnify the Series B Investors, Post Oak and each of 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) (collectively,
the “Chaparral Series B Indemnified Persons”), from and against any and
all losses, claims, demands, judgments, damages, liabilities and expenses,
including (without limitation) any payments made in settlement of any such
claims (each, a “Loss” and, collectively, the “Losses”) whatsoever (including
reasonable expenses incurred in preparing or defending against any litigation
or proceeding, commenced or threatened, or any claims whatsoever whether or not
resulting in any liability) imposed on or incurred by any Chaparral Series B
Indemnified Person, to the extent that such Loss results from any claim or
cause of action that is a Chaparral Released Claim brought by or on behalf of
any one or more of the Chaparral Releasing Parties.  Any person indemnified initially hereunder
shall remain so indemnified, regardless of any subsequent change in their
position or status that qualified such person for indemnification initially.


 


(b) Edge
agrees to hold harmless and indemnify the Series B Investors, Post Oak and each of 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) (collectively,
the “Edge Series B Indemnified Persons”), from and against any and all
Losses whatsoever (including reasonable expenses incurred in preparing or
defending against any litigation or proceeding, commenced or threatened, or any
claims whatsoever 


 


9

















 


whether
or not resulting in any liability) imposed on or incurred by any Edge Series B
Indemnified Person, to the extent that such Loss results from any claim or
cause of action that is an Edge Released Claim brought by Edge. Any person
indemnified initially hereunder shall remain so indemnified, regardless of any
subsequent change in their position or status that qualified such person for
indemnification initially.


 


(c) The beneficiaries of the indemnification
provisions set forth in Sections 6.4(a) and 6.4(b) are, collectively,
the “Indemnified Persons.”  If an
Indemnified Person intends to seek indemnification pursuant to this Section 6.4
with respect to any claim, demand or cause of action described in Sections 6.4(a) or
6.4(b) , such Indemnified Person shall promptly provide written notice to
the party from whom indemnification is being sought (in accordance with Section 7.5
hereof) describing such claim, demand or cause of action in reasonable detail
and providing copies of all material written evidence thereof and the estimated
amount of the Losses that have been or may be sustained by the Indemnified
Person; provided, however, that the failure to provide such notice or
information shall not affect the obligations of the indemnifying party unless
it is actually prejudiced thereby, and then it will be relieved of such
obligation only to the extent of the prejudice. 
Any Indemnified Person shall be entitled to retain its own counsel in
connection with any such asserted claim, demand or cause of action or defense
thereof.  No Indemnified Person shall
agree to a settlement of, or the entry of any judgment arising from, any claim
or cause of action, without the prior written consent of the indemnifying
party, such consent not to be unreasonably conditioned, withheld or delayed; provided,
however, that in no event shall an Indemnified Person be required to admit or
consent to any finding of any liability, wrongdoing, damages or injunctive
relief whatsoever.


 


ARTICLE VII


MISCELLANEOUS


 


Section 7.1 Publicity. 
Immediately following the execution and delivery of this Agreement,
Chaparral and Edge shall issue a press release and each shall file with the
Securities and Exchange Commission a current report on Form 8-K, in each
case announcing the execution of this Agreement.  Such press releases issued by Edge or
Chaparral regarding this Agreement, the Letter of Intent, Stock Purchase
Agreement, Assumption Agreements, Merger Agreement or Commitment Letter shall
be subject to the prior review and approval of Magnetar, which approval shall
not be unreasonably withheld. Any press release issued by a Series B
Investor or Post Oak regarding this Agreement, the Letter of Intent, Stock
Purchase Agreement, Assumption Agreements, Merger Agreement or Commitment
Letter shall be subject to the prior review and approval of Chaparral and, in
the case of the Merger Agreement, Edge, which approval shall not be
unreasonably withheld.  None of the
parties hereto will make any public statements (including in any filing with
the SEC or any other regulatory or governmental agency, including any stock
exchange) that are inconsistent with, or otherwise contrary to, the terms
hereof.


 


10
















 


Section 7.2 Non-Disparagement.  Other than as (and to the extent) a party may
determine is necessary or appropriate to respond to any legal or regulatory
process or proceeding or to give appropriate testimony or to file any necessary
documents in any legal or regulatory proceeding or is otherwise required by
law, legal process or regulation, no party to this Agreement shall make any
public statements or any private statements that disparage, denigrate or malign
any of the other parties or persons released herein, concerning the subject
matter of this Agreement, the Letter of Intent, Stock Purchase Agreement,
Assumption Agreements, Merger Agreement, Commitment Letter or the business or
practices of the other parties hereto. Notwithstanding anything set forth in
Sections 5.1 and 5.2 to the contrary, nothing herein shall prevent or limit any
parties’ right or ability to (a) accurately and fully describe the
transactions, agreements and other matters set forth herein or underlying this
Agreement to existing or potential investors, creditors or other third parties
or (b) make any other disclosure required by law, legal process or
regulation.  This Agreement constitutes
the termination of the Letter of Intent, Stock Purchase Agreement and
Assumption Agreements, and the settlement of potential or disputed claims
thereunder; it does not and shall not constitute or evidence or be an admission
of any wrongdoing, liability or damages by any of the parties hereto.


 


Section 7.3 Counterparts; Effectiveness.  This Agreement may be executed in two or more
counterparts (including by facsimile), each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument; provided that this Agreement shall become effective only after
one or more counterparts have been signed by each of the parties and delivered
(by telecopy or otherwise) to the other parties.


 


Section 7.4 Governing Law, Jurisdiction and Venue.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.  All parties expressly
agree to the exclusive jurisdiction of and venue in the state and federal
courts of the State of Delaware and waive any objection or defense thereto with
respect to any dispute regarding this Agreement, including any action for
indemnification hereunder. ALL PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY.


 


Section 7.5 Notices. 
Any notice shall be sufficient if in writing, and sent by facsimile
transmission with confirmation (provided that any notice received by facsimile
transmission or otherwise at the addressee’s location on any Business Day after
5:00 p.m. (addressee’s local time) shall be deemed to have been received
at 9:00 a.m. (addressee’s local time) on the next Business Day), by
reliable overnight delivery service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid), addressed as follows:


 


11

















 


(a) if to a Series B Investor or Post Oak,
to:


 


Magnetar Financial LLC


1603 Orrington Avenue, 13th Floor


Evanston, Illinois  60201


Attn: Chief Legal Officer


Telecopy: (847) 869-2064


 


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


 


Weil, Gotshal &
Manges LLP


767 Fifth Avenue


New York, New York 10153


Telecopy: (212) 310-8000


	
  Attention:

  	
   

  	
  Irwin H. Warren, Esq.

  
	
   

  	
   

  	
  Alexander D.
  Lynch, Esq.

  



 


(b) if to Post Oak, to:


 


Post Oak Energy Capital, LP


1111 Bagby, Suite 4900


Houston, Texas  77002


Attn: Robert H. Walls, Jr.


Phone: (713) 571-9393


Fax: (713) 571-9406


 


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


 


Weil, Gotshal & Manges LLP


767 Fifth Avenue


New York, New York 10153


Telecopy: (212) 310-8000


	
  Attention:

  	
   

  	
  Irwin H. Warren, Esq.

  
	
   

  	
   

  	
  Alexander D. Lynch, Esq.

  



 


(c) if to Investment
Partners, to:


 


BlackRock Financial
Management, Inc.


601 Union Street, 56th
Floor


Seattle, WA  98101


Attn:  General Counsel


Tel:  (206) 613-6700


Fax:  (206) 613-6708


 


12

















 


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


 


Weil, Gotshal & Manges LLP


767 Fifth Avenue


New York, New York 10153


Telecopy: (212) 310-8000


	
  Attention:

  	
   

  	
  Irwin H. Warren, Esq.

  
	
   

  	
   

  	
  Alexander D. Lynch, Esq.

  



 


(d) if to QRA, to:


 


BlackRock Financial
Management, Inc.


601 Union Street, 56th
Floor


Seattle, WA  98101


Attn:  General Counsel


Tel:  (206) 613-6700


Fax:  (206) 613-6708


 


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


 


Weil, Gotshal & Manges LLP


767 Fifth Avenue


New York, New York 10153


Telecopy: (212) 310-8000


	
  Attention:

  	
   

  	
  Irwin H. Warren, Esq.

  
	
   

  	
   

  	
  Alexander D. Lynch, Esq.

  



 


(e) if to Triangle
Peak, to:


 


Triangle Peak Partners
Private Equity, LP


PO Box 3788


2 SW 4th & Mission,
Suite 6


Carmel, CA 93921


Attn:  Michael C. Morgan


Telecopy: 831-622-0435


 


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


 


Bracewell &
Giuliani LLP


711 Louisiana Street, Suite 2300


Houston TX 77002-2770


Attn:  Steven R. Tredennick, Esq.


Telecopy: 713-222-3236


 


13

















 


(f) if to Chaparral,
to:


Chaparral Energy, Inc.


701 Cedar Lake Boulevard


Oklahoma City, Oklahoma  73114


Attn: Mark A. Fischer


Phone: (405) 478-8770


Fax: (405) 478-2906


 


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


 


McAfee & Taft A
Professional Corporation


10th Floor, Two Leadership
Square


Oklahoma City, Oklahoma  73102


Attention: David J.
Ketelsleger, Esq.


Telecopy: (405) 235-0439


 


(g) if to Edge, to:


 


Edge Petroleum Corporation


1301 Travis, Suite 2000


Houston, Texas  77002


Attention: Robert C. Thomas


Telephone: (713) 654-8960


Telecopy: (713) 650-6494


 


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


 


Baker
Botts L.L.P.


One Shell Plaza


910 Louisiana


Houston, Texas  77002


Attention: Gene J. Oshman


Telephone: (713) 229-1178


Telecopy: (713) 229-7778


 


Section 7.6 Assignment; Binding Effect.  Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto (including the Released Persons) and
their respective successors and, subject to the preceding sentence, assigns.


 


Section 7.7 Severability. 
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without rendering
invalid or 


 


14

















 


unenforceable the remaining terms and provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, such provision shall be interpreted to be only
as broad as is enforceable.


 


Section 7.8 Entire Agreement; No Third-Party Beneficiaries.  This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all other prior agreements and understandings, both written and
oral, between the parties, or any of them, with respect to the subject matter
hereof and thereof. Each party hereto acknowledges and agrees that each of the
non-party Released Persons are express third party beneficiaries of: (i) the
releases of such non-party Released Persons contained in Sections 4.1, 4.2,
4.3, 5.1, 5.2, 5.3 and 5.4, (ii) the covenants not to sue contained in Section 6.2
and (iii) the indemnification provisions contained in Section 6.4 of
this Agreement, and such non-party Released Persons are entitled to enforce
rights under such sections to the same extent that such non-party Released
Persons could enforce such rights if they were a party to this Agreement.  Except as provided in the preceding sentence,
there are no third party beneficiaries to this Agreement, and this Agreement is
not otherwise intended to and shall not otherwise confer upon any person other
than the parties hereto any rights or remedies hereunder.


 


Section 7.9 Headings. Headings of the Articles and Sections
of this Agreement are for convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever.


 


Section 7.10 Interpretation. When a reference is made in
this Agreement to an Article or Section, such reference shall be to an Article or
Section of this Agreement unless otherwise indicated. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to
be followed by the words “without limitation.” The words “hereof,” “herein,” “hereafter”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. The word “or” shall be deemed to mean “and/or.” The definitions
contained in this Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as to the feminine and
neuter genders of such term. Any agreement, instrument or statute defined or
referred to herein or in any agreement or instrument that is referred to herein
means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. Each of the parties has participated in the drafting and
negotiation of this Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement must be construed as if it is drafted by
all the parties, and no provision of this Agreement shall be construed against
any party based on its authorship of any of the provisions of this Agreement.


 


[Remainder
of the Page Intentionally Left Blank]


 


15

















 


IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered as of the date first above written.


 


 


	
   

  	
  MAGNETAR FINANCIAL LLC

  
	
   

  	
  (on behalf of one or more
  of its affiliates)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew
  Hinerfeld

  
	
   

  	
   

  	
  Name: 

  	
  Matthew Hinerfeld

  
	
   

  	
   

  	
  Title: 

  	
  Chief Legal Officer

  



 


 


[SIGNATURE PAGE — TERMINATION AND SETTLEMENT AGREEMENT]


 


16

















 


	
   

  	
  CHAPARRAL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark A.
  Fischer

  
	
   

  	
   

  	
  Mark A. Fischer

  
	
   

  	
   

  	
  President & CEO

  



 


 


[SIGNATURE PAGE — TERMINATION AND SETTLEMENT AGREEMENT]


 


17

















 


	
   

  	
  EDGE PETROLEUM CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John W.
  Elias

  
	
   

  	
   

  	
  Name:

  	
  John W. Elias

  
	
   

  	
   

  	
  Title:

  	
  Chairman, President and

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  



 


 


[SIGNATURE PAGE — TERMINATION AND SETTLEMENT AGREEMENT]


 


18

















 


	
   

  	
  INVESTMENT PARTNERS II
  (B), LLC

  
	
   

  	
  By:

  	
  BAA Co-Investment Fund II
  (GenPar),

  LLC, its managing member

  
	
   

  	
  By:

  	
  BlackRock Alternative
  Advisors GP 

  Holdings, LLC, its sole member

  
	
   

  	
  By:

  	
  BlackRock Financial
  Management, Inc., its 

  managing member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Norman D.
  Bontje

  
	
   

  	
   

  	
  Name:

  	
  Norman D. Bontje

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marie M.
  Bender

  
	
   

  	
   

  	
  Name:

  	
  Marie M. Bender

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  



 


 


[SIGNATURE PAGE — TERMINATION AND SETTLEMENT AGREEMENT]


 


19

















 


	
   

  	
  QRA SR, LLC

  
	
   

  	
  By:

  	
  BAA Real Assets II
  (GenPar), LLC, its 

  managing member

  
	
   

  	
  By:

  	
  BlackRock Alternative
  Advisors GP 

  Holdings, LLC, its sole member

  
	
   

  	
  By:

  	
  BlackRock Financial
  Management, Inc., its 

  managing member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Norman D.
  Bontje

  
	
   

  	
   

  	
  Name:

  	
  Norman D. Bontje

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marie M.
  Bender

  
	
   

  	
   

  	
  Name:

  	
  Marie M. Bender

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  



 


 


[SIGNATURE PAGE — TERMINATION AND SETTLEMENT AGREEMENT]


 


20

















 


	
   

  	
  POST OAK ENERGY CAPITAL,
  LP,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rob Walls

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  



 


 


[SIGNATURE PAGE — TERMINATION AND SETTLEMENT AGREEMENT]


 


21

















 


	
   

  	
  TRIANGLE PEAK PARTNERS

  
	
   

  	
  PRIVATE EQUITY, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael C.
  Morgan

  
	
   

  	
   

  	
  Name:

  	
  Michael C. Morgan

  
	
   

  	
   

  	
  Title:

  	
  Managing Member of

  
	
   

  	
   

  	
   

  	
  Triangle Peak Partners
  Private Equity GP,

  
	
   

  	
   

  	
   

  	
  LLC which is the general
  partner of Triangle Peak Partners Private Equity, LP

  



 


 


[SIGNATURE PAGE — TERMINATION AND SETTLEMENT AGREEMENT]


 


22