September 27, 2000
Timothy L. Hoops, President
Kestrel Energy, Inc.
Victoria Exploration, Inc.
999 18th Street
Denver, CO 90202
Dear Mr. Hoops:
This letter amendment (this "Amendment") is to confirm the changes
agreed upon between WELLS FARGO BANK WEST, NATIONAL ASSOCIATION, formerly
known as NORWEST BANK COLORADO, NATIONAL ASSOCIATION ("Bank") and KESTREL
ENERGY, INC. and VICTORIA EXPLORATION, INC. ("Borrower") to the terms and
conditions of that certain letter agreement between Bank and Borrower
dated as of February 21, 2000, as amended from time to time (the
"Agreement"). For valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Bank and Borrower hereby agree that the
Agreement shall be amended as follows to reflect said changes.
1. All references in the Agreement to the terms "Lender" and "Norwest"
shall hereinafter mean and refer to "Bank".
2. The RATE under Paragraph I. TERMS of the Agreement is hereby deleted
in its entirety, and the following substituted therefor
"Interest shall accrue at an annual rate equal to the
fluctuating prime rate established from time to time by Bank,
plus 1.75%."
3. The second Paragraph of BORROWING BASE AMOUNT under Paragraph I.
TERMS of the Agreement is hereby deleted In Its entirety, and the
following substituted therefor:
"Effective the date hereof, the Borrowing Base Amount is
$2,000,000.00."
4. Paragraph III 1.(g) is hereby deleted in its entirety, and the
following substituted therefor:
"(g) maintain a Current Ratio of 1.00 or higher at all
time; for calculation purposes, with "Current Ratio" defined as
current asset plus unused availability under the Revolving Line
of Credit divided by current liabilities (excluding debt to
Bank)."
5. Paragraph 111. I.(k) shall hereinafter be refer as Paragraph Ill. I
(1).
6. The following is hereby added to the Agreement as Paragraph III.
l.(k):
"(k) submit, within 30 days of each month end, a report
detailing accounts payable and aging;"
7. In consideration of the changes set forth herein and as a condition
to the effectiveness hereof, immediately upon signing this Amendment,
Borrower shall pay to Bank a non-refundable fee of $14,000.00 for the
Revolving Line of Credit, and an engineering fee of $1,500.00 for the
reserve analysis, which fees shall be due and payable in full upon
execution of this amendment.
8. Except as specifically provided herein, all terms and conditions of
the Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Agreement shall have the same
meaning when used herein. This Amendment and the Agreement shall be read
together, as one document.
9. Borrower hereby remakes all representations and warranties contained
in the Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date of Borrower's acknowledgment set
forth below there exists no default or defined event of default under the
Agreement or any promissory note or other contract, instrument or document
executed in connection therewith, nor any condition, act or event which
with the giving of notice or the passage of time or both would constitute
such a default or defined event of default.
Your acknowledgment of this Amendment shall constitute acceptance of
the foregoing terms and conditions.
Sincerely,
WELLS FARGO BANK WEST, NATIONAL
ASSOCIATION, formerly known as NORWEST
BANK COLORADO, NATIONAL ASSOCIATION
By:/s/Duc Duong
Duc Duong
Commercial Banking
Acknowledged and accepted
as of --------------------:
KESTREL ENERGY, INC.
By./s/Timothy L. Hoops
Timothy L. Hoops
President
VICTORIA EXPLORATION, INC.
By:/s/Timothy L. Hoops
Timothy L. Hoops
President
FIRST MODIFICATION TO PROMISSORY NOTE
THIS FIRST MODIFICATION TO PROMISSORY NOTE (this "Modification") is
entered into as of September 27, 2000, by and between KESTREL ENERGY, INC.
and VICTORIA EXPLORATION, INC. ("Borrower"), and WELLS FARGO BANK WEST,
NATIONAL ASSOCIATION, formerly known as NORWEST BANK COLORADO, NATIONAL
ASSOCIATION ("Bank").
RECITALS
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms
and conditions of that certain 360 Day Promissory Note in the maximum
principal amount of $2,000,000.00, executed by Borrower and payable to the
order of Bank, dated as of February 21, 2000 (the "Note"), which Note is
subject to the terms and conditions of a letter agreement between Borrower
and Bank dated as of February 21, 2000, as amended from time to time (the
"Agreement").
WHEREAS, Bank and Borrower have agreed to certain changes in the
terms and conditions set forth in the Note, and have agreed to modify the
Note to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree
that the Note shall be modified as follows:
1. The variable rate of interest applicable to the Note is hereby
modified to be one and three-quarters percent (1.75%) above the Prime Rate
in effect from time to time.
2. The effective date of the change set forth herein shall be
September 27, 2000.
3. Except as expressly set forth herein, all terms and conditions
of the Note remain in full force and effect, without waiver or
modification. All terms defined in the Note or the Agreement shall have
the same meaning when used in this Modification. This Modification and
the Note shall be read together, as one document.
4. Borrower certifies that as of the date of this Modification
there exists no Event of Default under the Note, nor any condition. act or
event which with the giving of notice or the passage of time or both would
constitute any such Event of Default. Borrower further certifies that,
notwithstanding the modifications set forth herein, all of the real
property securing the Note shall remain subject to the lien, charge or
encumbrance of the deed of trust, mortgage or other document pursuant to
which such lien, charge or encumbrance is created, and nothing contained
herein or done pursuant hereto shall affect or be construed to affect the
priority of the lien, charge or encumbrance of any such deed of trust,
mortgage or other document over any other liens, charges or encumbrances.
IN WITNESS WHEREOF, the parties hereto have caused this Modification
to be executed as of the day and year first written above.
KESTREL ENERGY, INC. WELLS FARGO BANK WEST, NATIONAL
ASSOCIATION, formerly known as
NORWEST BANK COLORADO, NATIONAL
ASSOCIATION
By:/s/Timothy L. Hoops
Timothy L. Hoops By:/s/Duc Duong
President Duc Duong
Commercial Banking Officer
VICTORIA EXPLORATION, INC.
By:/s/Timothy L. Hoops
Timothy L. Hoops
President
