September 28, 2000
Delta Petroleum Corporation
555 17th Street, Suite 3310
Denver, Colorado 80202
Attn: Roger A. Parker, President
Re: Loan in the amount of $1,485,485.00 made to Delta
Petroleum Corporation by Hexagon Investments, LLC
Dear Roger:
The purpose of this letter agreement ("Letter Agreement") is
to confirm that, subject to the terms and conditions herein set
forth, Hexagon Investments, LLC, a Colorado limited liability
company ("Lender"), agrees to make the below-referenced loan to
Delta Petroleum Corporation, a Colorado corporation ("Borrower").
SECTION 1. LOAN
1.1 Loan. Borrower desires to receive a loan from Lender
in the amount of ONE MILLION FOUR HUNDRED EIGHTY FIVE THOUSAND
FOUR HUNDRED EIGHTY FIVE and No/100 Dollars ($1,485,485.00) (the
"Loan") for the purpose of purchasing certain interests in oil
and gas properties identified as the "Interests" in that certain
Conveyance, Assignment and Bill of Sale dated ______________,
2000 by and among Castle Offshore, L.L.C., a Louisiana limited
liability company, BWAB Limited Liability Company, a Colorado
limited liability company and Delta Petroleum Corporation, a copy
of which is attached hereto as more particularly described on
Exhibit A attached hereto and by this reference incorporated
herein (the "Interests").
SECTION 2. COMMITMENT
2.1 Note. The Loan shall be evidenced by a Promissory Note
(the "Note") from Borrower, in a form prepared by Lender,
executed and delivered simultaneously with the execution of this
Letter Agreement, in the amount of $1,485,485.00, payable to
Lender upon the terms and conditions contained therein which
shall include, but not be limited to, the following:
(a) Interest Rate. Interest shall accrue on the
unpaid principal balance of the Loan at a rate per annum equal to
fifteen percent (15%). Interest shall accrue and compound
monthly on the outstanding principal balance of the Note.
(b) Accrual of Interest. Unless the due date of the
Note is accelerated upon the occurrence of an Event of Default
(as hereinafter defined), no payment of principal or interest
shall be due hereunder until the Maturity Date (as hereinafter
defined), when the outstanding principal balance of this Note,
together with all accrued interest thereon and any other sums due
under the Note, shall be immediately due and payable.
(c) Maturity Date. The entire unpaid principal
balance, all accrued and unpaid interest and all other amounts
payable under the Note shall be due and payable in full October
30, 2000 (the "Maturity Date").
(d) Distributions to be Applied. Notwithstanding
anything above to the contrary, any and all distributions and
from or related to the Interests which would otherwise be payable
or credited to Borrower shall be paid and credited to Lender as
payment on the Note.
SECTION 3. LOAN FEES
3.1 Origination Fee. The parties acknowledge and agree
that an origination fee (the "Origination Fee") of $21,953.00 has
been included in the face amount of the note, and same shall be
payable, with interest, on the Maturity Date. The Origination
Fee has been earned and shall be non-refundable under any
circumstances.
SECTION 4. SECURITY
4.1 Security. Borrower shall cause the Loan and Borrower
obligation's under this Letter Agreement to be secured by a
security interest, mortgage or other right satisfactory to Lender
in and to the Interests.
4.2 Personal Guarantee. Borrower's directors, officers
and/or significant shareholders, Roger A. Parker and Aleron H.
Larson, Jr., shall cause to be executed contemporaneously
herewith an agreement personally guaranteeing the Loan (the
"Guaranty Agreement").
4.3 Security Documents. All of the documents required by
Lender to grant and perfect the guarantees, liens and security
interests required herein shall be in a form satisfactory to
Lender and may be referred to herein as the "Security Documents."
Borrower agrees to execute such additional Security Documents as
Lender may request, from time to tome, to evidence, create and/or
perfect Lender's security interest in the Interests.
SECTION 5. CONDITIONS PRECEDENT
5.1 The obligation of Lender to make the Loan is subject to
the following express conditions precedent, all of which, unless
otherwise provided below, shall have been satisfied prior to the
granting of the Loan:
(a) Loan Documents. Borrower shall have executed (or
obtained the execution or issuing of) and delivered to Lender
this Letter Agreement together with the following documents
(collectively the "Loan Documents"), all in form satisfactory to
Lender:
(i) The Note;
(ii) The Security Documents; and
(iii) The Guaranty Agreement.
(b) Intentionally Omitted.
(c) Other Conditions. Unless waived by Lender, in
writing, Borrower, at its expense, shall have obtained and
delivered to Lender the following items, all of which shall be in
form and content satisfactory to Lender and shall be subject to
approval in writing by Lender:
(i) As to Borrower: (1) a copy of the
organizational documents for that entity, (2) evidence of the
proper formation and good standing of that entity in the state of
its organization, and (3) evidence of qualification or
registration of that entity in the State of Colorado and all
other states determined by Lender.
(ii) All minutes, resolutions and/or consents
authorizing Borrower to enter into and perform under the Loan.
(iii) A certified copy of the Purchase Agreement
affecting the Interests.
(d) Representations True. All representations and
warranties by Borrower set forth in the Loan Documents shall
remain true and correct and all agreements that Borrower is to
have performed or complied with by the date hereof shall have
been performed or complied with.
(e) No Event of Default. No Event of Default exists,
and no event has occurred and no condition exists that, after
notice or lapse of time, or both, would constitute an Event of
Default.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 Borrower represents and warrants to Lender as follows:
(a) Recitals and Statements. The recitals and
statements of intent appearing in this Letter Agreement are true
and correct.
(b) Organization and Good Standing. Borrower is a
corporation duly organized, validly existing and in good standing
under the laws of the state of its organization and is, to the
extent required by law, qualified to do business and is in good
standing in the State of Colorado and in each state in which it
is doing business.
(c) Power. Borrower has full power and authority to
own its properties and assets and to carry on its business as now
being conducted. The execution, delivery and performance of the
Loan Documents have been duly authorized by all requisite action
on the part of Borrower.
(d) Authority. Borrower is fully authorized and
permitted to enter into the Loan Documents, to execute any and
all documentation required therein, to borrow the amounts
contemplated herein upon the terms set forth herein and to
perform the terms of the Loan Documents, none of which conflicts
with any provision of any law, rule or regulation applicable to
Borrower. The Loan Documents are the valid and binding legal
obligations of Borrower, and each is enforceable in accordance
with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to the
rights of creditors generally and general principles of equity.
(e) Enforceable Liens. The liens, security interests
and assignments created by the Security Documents will, when
granted and recorded or filed, be valid, effective, properly
perfected and enforceable first liens, security interests and
assignments.
(f) No Other Liens. The Interests are free and clear
of any interests, liens or encumbrances other than the security
interests required pursuant to the terms hereof.
(g) No Breach. The execution, delivery and
performance by Borrower of the Loan Documents will not result in
any breach of the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument under
which Borrower is a party or is obligated. Borrower is not in
default in the performance or observance of any covenants,
conditions or provisions of any such agreement or instrument.
(h) No Actions. No actions, suits or proceedings are
pending or threatened against Borrower that might materially and
adversely affect the repayment of the Loan, the performance by
Borrower under the Loan Documents or the financial condition,
business or operations of Borrower.
(i) Affirmation of Representations and Warranties.
All representations and warranties made herein shall survive the
execution of this Letter Agreement, and the execution and
delivery of all other documents and instruments in connection
with the Loan, until the Loan and all indebtedness hereunder have
been paid in full and all of Borrower's obligations hereunder
have been fully discharged.
SECTION 7. AFFIRMATIVE COVENANTS
7.1 Until the Loan and all other indebtedness hereunder
have been paid in full and all of Borrower's obligations
hereunder have been fully discharged:
(a) Compliance with Loan Documents. Borrower shall
make all payments of interest and principal on the Loan and shall
keep and comply with all terms, conditions and provisions of the
Loan Documents.
(b) Subsequent Actions. Borrower shall immediately
inform Lender of any actions, suits or proceedings involving
Borrower that could materially and adversely affect the repayment
of the Loan, the performance by Borrower under the Loan
Documents, or the financial condition, business or operations of
Borrower.
(c) Further Assurances. Borrower shall execute and
deliver such additional documents and do such other acts as
Lender may reasonably require in connection with the Loan.
(d) Borrower Notices. Borrower shall promptly give
notice in writing to Lender of (i) the occurrence of any Event of
Default, (ii) any change in the name of Borrower, and in the case
of a reorganization, any change in name, identity or corporate
structure, or (iii) any uninsured or partially insured loss
through fire, theft, liability or property damage.
SECTION 8. NEGATIVE COVENANTS
8.1 Until the Loan and all other indebtedness hereunder
have been paid in full and all of Borrower's obligations
hereunder have been fully discharged, Borrower shall not, without
receiving the prior written consent of Lender:
(a) Dissolution or Liquidation. Dissolve or
liquidate, or merge or consolidate with or into any other entity,
or turn over the management or operation of its property, assets
or business to any other person, firm or corporation.
(b) Due on Sale or Encumbrance. Assign, transfer or
convey any of its right, title and interest in any property
whether real or personal encumbered by the Security Documents;
create or suffer to be created any mortgage, pledge, security
interest, encumbrance or other lien on any property encumbered by
the Security Documents; or create or suffer to be created any
mortgage, pledge, security interest, encumbrance or other lien on
any other property or assets which it now owns or hereafter
acquires except in consideration of the contemporaneous receipt
by it of benefits equal or greater in value to the lien created.
SECTION 9. WAIVER
9.1 Waiver. Borrower waives presentment, demand, protest
and notices of protest, nonpayment, partial payment and all other
notices and formalities except as expressly called for in this
Letter Agreement. Borrower consents to and waives notice of:
(i) the granting of indulgences or extensions of time of payment,
(ii) the taking or releasing of security, and (iii) the addition
or release of persons who may be or become primarily or
secondarily liable for the Loan or any other indebtedness arising
in connection with the Loan, or any part thereof, and all in such
manner and at such time as Lender may deem advisable.
9.2 Delay or Omission. No delay or omission by Lender in
exercising any right, power or remedy hereunder, and no
indulgence given to Borrower, with respect to any term, condition
or provision set forth herein, shall impair any right, power or
remedy of Lender under this Letter Agreement, or be construed as
a waiver by Lender of, or acquiescence in, any Event of Default.
Likewise, no such delay, omission or indulgence by Lender shall
be construed as a variation or waiver of any of the terms,
conditions or provisions of this Letter Agreement. Any actual
waiver by Lender of any Event of Default shall not be a waiver of
any other prior or subsequent Event of Default or of the same
Event of Default after notice to Borrower demanding strict
performance.
SECTION 10. DEFAULT
10.1 Event of Default. The occurrence of any of the
following events or conditions shall constitute an "Event of
Default" under this Letter Agreement:
(a) Any failure to pay any principal or interest under
the Note when the same shall become due and payable and such
failure continues for five (5) days thereafter, or the failure to
pay any other sum due under the Note, this Letter Agreement or
any Security Document when the same shall become due and payable
and such failure continues for ten (10) days after notice thereof
to Borrower. No notice, however, shall be required after
maturity of the Note.
(b) Any failure or neglect to perform or observe any
of the covenants, conditions or provisions of this Letter
Agreement, the Note, any Security Document or any other document
or instrument executed or delivered in connection with the Loan
(other than a failure or neglect described in one or more of the
other provisions of this Paragraph 10.1) and such failure or
neglect either cannot be remedied or, if it can be remedied, it
continues unremedied for a period of thirty (30) days after
notice thereof to Borrower. Notwithstanding the foregoing, in
the case of an Event of Default under this subparagraph 10.1(b),
if such Event of Default cannot be remedied within 30 days,
Borrower shall have an additional thirty (30) days to remedy such
Event of Default provided that Borrower commences its cure within
the first thirty (30) day period and diligently prosecutes such
cure. In no event shall Borrower have more than the sixty (60)
days allowed under this subparagraph 10.1(b) to effectuate a cure
of an Event of Default hereunder unless Lender agrees to extend
such period of time, which extension may be granted or denied in
Lender's sole discretion. Notwithstanding anything herein to the
contrary, Borrower agrees that Borrower's failure to comply with
the provisions of Section 8.1(b) is a failure that cannot be
remedied by Borrower and Borrower shall not be entitled to any
opportunity to cure such failure.
(c) Any warranty, representation or statement
contained in this Letter Agreement, in the Note or in any
Security Document or any other document or instrument executed or
delivered in connection with the Loan, or made or furnished to
Lender by or on behalf of Borrower, that shall be or shall prove
to have been false when made or furnished.
(d) The filing by Borrower (or against Borrower to
which Borrower acquiesces or that is not dismissed within sixty
(60) days after the filing thereof) of any proceeding under the
federal bankruptcy laws now or hereafter existing or any other
similar statute now or hereafter in effect; the entry of an order
for relief under such laws with respect to Borrower or such
guarantor; or the appointment of a receiver, trustee, custodian
or conservator of all or any part of the assets of Borrower or
such guarantor.
(e) The insolvency of Borrower; or the execution by
Borrower of an assignment for the benefit of creditors; or the
convening by Borrower of a meeting of its creditors, or any class
thereof, for purposes of effecting a moratorium upon or extension
or composition of its debts; or the failure of Borrower to pay
its debts as they mature; or if Borrower is generally not paying
its debts as they mature.
(f) The admission in writing by Borrower that it is
unable to pay its debts as they mature or that it is generally
not paying its debts as they mature.
(g) The liquidation, termination or dissolution of
Borrower.
(h) Any levy or execution upon, or judicial seizure
of, any portion of any collateral or security for the Loan.
(i) Any attachment or garnishment of, or the existence
or filing of any lien or encumbrance against any portion of any
collateral or security for the Loan, that is not removed or
released within thirty (30) days after its creation or is not
released within sixty (60) days of its creation if Borrower is
diligently contesting such lien or encumbrance in good faith and
has provided Lender with security therefor acceptable to Lender
in its sole discretion.
(j) The institution of any legal action or proceedings
to enforce any lien or encumbrance upon any portion of any
collateral or security for the Loan, that is not dismissed within
thirty (30) days after its institution, or is not released within
sixty (60) days of its institution if Borrower is diligently
contesting such action in good faith and has provided Lender with
security therefor acceptable to Lender in its sole discretion;
provided, however, that if such legal action or proceedings could
not result in an award, judgment or decision requiring an action
by the Borrower other than the payment of funds, no Event of
Default shall be deemed to occur or be continuing upon Borrower
establishing an escrow account in an amount equal to or greater
than any such threatened award, judgment or decision.
(k) The occurrence of any event of default under the
Loan Documents and the expiration of any applicable notice and
cure period.
(l) The occurrence of any adverse change in the
financial condition of Borrower that Lender, in its reasonable
discretion, deems material, or if Lender in good faith shall
believe that the prospect of payment or performance of the Loan
is impaired.
10.2 Remedies. Upon the occurrence of any Event of Default
and at any time while such Event of Default is continuing, Lender
may do one or more of the following:
(a) Declare the Loan and all other indebtedness of
Borrower hereunder immediately due and payable, without notice or
demand;
(b) Proceed to protect and enforce its rights and
remedies under this Letter Agreement, the Note, and all Security
Documents, including, without limitation, the Guaranty Agreement;
(c) Avail itself of any other relief to which Lender
may be legally or equitably entitled.
10.3 Enforcement Costs. Borrower shall pay all costs and
expenses, including without limitation costs of title searches
and title policy commitments, Uniform Commercial Code searches,
court costs and reasonable in-house and outside attorneys' fees,
incurred by Lender in enforcing payment and performance of the
Loan and the other indebtedness and obligations of Borrower
hereunder or in exercising the rights and remedies of Lender
hereunder. All such costs and expenses shall be secured by all
Security Documents. In the event of any court proceedings, court
costs and attorneys' fees shall be set by the court and not by
jury and shall be included in any judgment obtained by Lender.
SECTION 11. ACTION UPON AGREEMENT
11.1 No Third Party Beneficiaries. This Letter Agreement is
made for the sole protection and benefit of the parties hereto
and no other person or organization shall have any right of
action hereon.
11.2 Integration. This Letter Agreement embodies the entire
Letter Agreement of the parties with regard to the subject matter
hereof. There are no representations, promises, warranties,
understandings or agreements expressed or implied, oral or
otherwise, in relation thereto, except those expressly referred
to or set forth herein. Borrower acknowledges that the execution
and delivery of this Letter Agreement is its free and voluntary
act and deed, and that said execution and delivery have not been
induced by, nor done in reliance upon, any representations,
promises, warranties, understandings or agreements made by
Lender, its agents, officers, employees or representatives.
11.3 Modifications. No promise, representation, warranty or
agreement made subsequent to the execution and delivery of this
Letter Agreement by either party hereto, and no revocation,
partial or otherwise, or change, amendment or addition to, or
alteration or modification of, this Letter Agreement shall be
valid unless the same shall be in writing signed by all parties
hereto.
11.4 No Joint Venture. Lender and Borrower each have
separate and independent rights and obligations under this Letter
Agreement. Nothing contained herein shall be construed as
creating, forming or constituting any partnership, joint venture,
merger or consolidation of Borrower and Lender for any purpose or
in any respect.
SECTION 12. GENERAL
12.1 Survival. This Letter Agreement shall survive the
making of the Loan and shall continue so long as any part of the
Loan, or any extension or renewal thereof, remains outstanding.
12.2 Discretionary Rights. All rights, powers and remedies
granted Lender herein, or otherwise available to Lender, are for
the sole benefit and protection of Lender, and Lender may
exercise any such right, power or remedy at its option and in its
sole and absolute discretion without any obligation to do so. In
addition, if, under the terms hereof, Lender is given two or more
alternative courses of action, Lender may elect any alternative
or combination of alternatives, at its option and in its sole and
absolute discretion. All monies advanced by Lender under the
terms hereof and all amounts paid, suffered or incurred by Lender
in exercising any authority granted herein, including reasonable
attorneys' fees, shall be secured by the Security Documents,
shall bear interest at the highest rate payable on the Loan until
paid, and shall be due and payable by Borrower to Lender
immediately without demand.
12.3 Indemnity. Borrower shall indemnify and hold Lender
harmless from and against all claims, costs, expenses, actions,
suits, proceedings, losses, damages and liabilities of any kind
whatsoever, including but not limited to attorneys' fees and
expenses, arising out of any matter relating, directly or
indirectly, to the Loan, to the ownership, development,
construction, or sale of the Interests, whether resulting from
internal disputes of Borrower, disputes between Borrower and any
guarantor, or whether involving other third persons or entities,
or out of any other matter whatsoever related to this Letter
Agreement, the Security Documents, or any property encumbered
thereby, but excluding any claim or liability which arises as the
direct result of the gross negligence or willful misconduct of
Lender. This indemnity provision shall continue in full force
and effect and shall survive not only the making of the Loan and
the Advances but shall also survive the repayment of the Loan and
the performance of all of Borrower's other obligations hereunder.
12.4 Joint and Several. If Borrower consists of more than
one person or entity their liability shall be joint and several.
The provisions hereof shall apply to the parties according to the
context thereof and without regard to the number or gender of
words or expressions used.
12.5 Time of Essence. Time is expressly made of the essence
of this Letter Agreement.
12.6 Notices. All notices required or permitted to be given
hereunder shall be in writing and may be given in person or by
United States mail, by delivery service or by electronic
transmission. Any notice directed to a party to this Letter
Agreement shall become effective upon the earliest of the
following: (i) actual receipt by that party; (ii) delivery to the
designated address of that party, addressed to that party; or
(iii) if given by certified or registered United States mail,
seventy-two (72) hours after deposit with the United States
Postal Service, postage prepaid, addressed to that party at its
designated address. The designated address of a party shall be
the address of that party shown at the beginning of this Letter
Agreement or such other address as that party, from time to time,
may specify by notice to the other parties. Any notice to Lender
shall be sent Attention:_____________________________________
________________________________________ and ___________________
_______________________________________________________________.
Any notice to Borrower under this Letter Agreement shall be sent
simultaneously to_______________________________________________.
12.7 Payment of Costs. Borrower shall pay all costs and
expenses arising from the preparation of the Loan Documents, the
closing of the Loan and the monitoring and administration of the
Loan, including but not limited to title insurance premiums,
other title company charges, recording and filing fees, costs of
Uniform Commercial Code searches, Lender's attorneys' fees,
Lender's processing and closing fees, Lender's inspection fees,
appraisal and appraisal review fees, any intangible or recording
taxes and any other charges that may be imposed on Lender as a
direct result of this transaction.
12.8 Severability. The illegality or unenforceability of
any provision of this Letter Agreement or any instrument or
agreement required hereunder shall not in any way affect or
impair the legality or enforceability of the remaining provisions
of this Letter Agreement or any instrument or agreement required
hereunder.
12.9 Choice of Law. This Letter Agreement shall be governed
by and construed according to the laws of the State of Colorado,
without giving effect to conflict of laws principles.
12.10 Successors. Except as otherwise provided herein,
this Letter Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their successors and
assigns.
12.11 Headings. The headings or captions of sections
and paragraphs in this Letter Agreement are for reference only,
do not define or limit the provisions of such sections or
paragraphs, and shall not affect the interpretation of this
Letter Agreement.
12.12 Counterparts. This Letter Agreement may be
executed in counterparts, all of which executed counterparts
shall together constitute a single document. Signature pages may
be detached from the counterparts and attached to a single copy
of this Letter Agreement to physically form one document.
12.13 JURY WAIVER. BORROWER AND LENDER HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG
BORROWER AND LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THE
NOTE, THIS DOCUMENT OR ANY OTHER RELATED DOCUMENT OR ANY
RELATIONSHIP BETWEEN LENDER AND BORROWER. THIS PROVISION IS A
MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED
HEREIN OR IN THE OTHER RELATED DOCUMENTS.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
Please indicate your agreement with the terms and
provisions of this Letter Agreement by signing where indicated
below and returning an executed original to the undersigned at
the address set forth above.
Sincerely,
Hexagon Investments, LLC
a Colorado limited liability company
By: s/Brian Fleischmann
Name: Brian Fleischmann
Its: V.P.
AGREED TO AND ACCEPTED THIS
28th day of September, 2000
DELTA PETROLEUM CORPORATION
a Colorado corporation
By: s/Roger A. Parker
Roger A. Parker, President
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement"),
dated as of September 28, 2000, made by DELTA PETROLEUM
CORPORATION, a Colorado corporation having an office at 555
Seventeenth Street, Suite 3310, Denver, Colorado 80202
("Pledgor"), in favor of HEXAGON INVESTMENTS, LLC, a Colorado
limited liability company, having an office at ______________
_____________________________________________________ ("Pledgee").
W I T N E S S E T H:
WHEREAS, Pledgor is acquiring certain interests in oil
and gas properties (the "Interests") pursuant to, and identified
as the "Interests" in, that certain Conveyance, Assignment and
Bill of Sale (the "Assignment") dated _______________, 2000 by
and among Castle Offshore, L.L.C., a Louisiana limited liability
company, BWAB Limited Liability Company, a Colorado limited
liability company, and Delta Petroleum Corporation, a Colorado
corporation, a copy of which is attached hereto and incorporated
herein as Exhibit A which is being executed and delivered in
accordance with the terms of that certain Purchase and Sale
Agreement (the "Purchase Agreement") dated August 4, 2000;
WHEREAS, Pledgor is party to that certain Promissory
Note in favor of Pledgee dated of even date herewith in the
principal amount of One Million Four Hundred Eighty Five Thousand
Four Hundred Eighty Five and No/100 Dollars ($1,485,485.00) (as
amended, supplemented or modified from time to time, the "Note")
together with certain other loan documents executed in connection
therewith (the "Loan Documents");
WHEREAS, Pledgor acknowledges that, without this
Agreement, Pledgee would be unwilling to make the loan evidenced
by the Note; and
WHEREAS, to secure the obligations of Pledgor under the
Note, Pledgor agrees to pledge and grant to Pledgee a security
interest in (i) the Interests, (ii) any other interest in the
underlying oil and gas properties (the "Properties") now owned or
hereafter acquired by Pledgor and (iii) distributions, royalties
or other payments to Pledgor in connection with or on account of
either of the foregoing (each, a "Pledged Interest" and,
collectively, the "Pledged Interests");
NOW THEREFORE, in consideration of the premises and the
mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency whereof are
hereby acknowledged, the parties hereto hereby covenant and agree
as follows:
Section 1. Pledge. Pledgor hereby pledges, assigns,
hypothecates, delivers, sets over and grants to Pledgee a lien on
and first priority security interest in and to all right, title
and interest of Pledgor in the Pledged Interests, all options and
other rights, contractual or otherwise, in respect thereof, all
products and proceeds thereof, and all rents, dividends,
distributions, royalties, liquidation proceeds, cash, instruments
and other property to which Pledgor is entitled with respect to
(i.e., arising out of) the Pledged Interests, whether or not
received by or otherwise distributed to Pledgor, whether such
rents, dividends, royalties, distributions, liquidation proceeds,
cash, instruments and other property are paid or distributed in
respect of operating profits, sales, rents, royalties, exchanges,
refinancing, condemnations or insured losses of the Properties or
otherwise (collectively, the "Distributions") in respect of, on
account of or in exchange for any or all of the Pledged
Interests, and Pledgor's rights, remedies and benefits under the
Purchase Agreement, the Assignment and any other agreements in
connection with the Pledged Interests (collectively, the
"Acquisition Agreements") all rights and powers of Pledgor
arising under the Acquisition Agreements or under law; all
rights, remedies, powers, privileges, security interests, liens,
and claims of Pledgor for damages arising out of or for breach of
or default under the Acquisition Agreements; and all increases
and profits of any of the foregoing and all proceeds thereof.
The security interests, rights, remedies and benefits of Pledgee
granted by this Section 1 and all proceeds thereof are
hereinafter collectively referred to as the "Pledged Collateral."
Pledgor irrevocably and unconditionally waives all rights, if
any, which may exist in its favor to purchase or acquire any of
the Pledged Collateral to the extent the same may arise as a
result of the pledge thereof effected hereby, or the acquisition
or disposition thereof by Pledgee or any other person pursuant to
the rights and remedies afforded Pledgee hereunder or under the
Note or any exercise thereof.
Section 2. Security for Obligations. This Agreement secures
(i) the prompt payment when due, whether at the respective
stated maturity dates, by acceleration or otherwise, of all
obligations and any other amounts due or to become due under the
Note, whether for principal, interest, fees, expenses or
otherwise, and (ii) any and all obligations of Pledgor now or
hereafter existing under this Agreement (all such obligations
being hereinafter collectively referred to as the "Obligations").
Section 3. Delivery of Evidence of Pledge. At the request
of Pledgee, Pledgor shall deliver to Pledgee (i) such Uniform
Commercial Code (the "Code") financing statements, deeds of trust
or other documents, executed by Pledgor and in a form ready for
filing, as may be necessary or desirable to perfect and/or
evidence the security interests in the Pledged Collateral granted
to Pledgee pursuant to this Agreement, and (ii) satisfactory
evidence to Pledgee in its sole discretion that all other
filings, recordings, registrations and other actions Pledgee
deems necessary or desirable to establish, preserve and perfect
the security interests and other rights granted to Pledgee
pursuant to this Agreement shall have been made.
Section 4. Events of Default. The breach by Pledgor of any
covenant, representation, warranty or obligation hereunder and/or
the occurrence of any default and/or Event of Default under any
other Loan Document shall constitute an "Event of Default" under
this Agreement. Prior to the occurrence of an Event of Default,
Pledgor shall be deemed to be the sole and exclusive owner of the
Pledged Collateral, subject to the lien of Pledgee created
hereby.
Section 5. Representations, Warranties and Covenants.
Pledgor represents and warrants to, and agrees with, Pledgee as
follows:
Section 1.
(1) Pledgor is a duly formed corporation under the laws of the
State of Colorado, validly existing and in good standing under
the laws of the State of Colorado, and has full power and
authority to execute and deliver to Pledgee this Agreement, to
own its properties and to perform the obligations and carry out
the duties imposed upon Pledgor by this Agreement.
(2) Pledgor is, and at all times will be, the only record and
beneficial owner of the Pledged Collateral free and clear of any
other interests, liens or encumbrances.
The representations, warranties and covenants set forth
in this Section 5 shall survive the execution and delivery of
this Agreement.
Section 6. Further Assurances. Pledgor agrees that at any
time and from time to time Pledgor will promptly execute and
deliver all further instruments and documents, and take all
further action, that may be reasonably necessary or desirable, or
that Pledgee may request, in order to perfect and protect any
security interest granted or purported to be granted or to enable
Pledgee to exercise and enforce its rights and remedies hereunder
with respect to any Pledged Collateral.
Section 7. Distributions. Upon the occurrence of an Event of
Default:
(1) All rights of Pledgor to receive Distributions and any and
all proceeds arising from the Pledged Collateral (or any portion
thereof) which Pledgor would otherwise be authorized to receive
and retain shall cease, and all such rights shall thereupon
become vested in Pledgee, who shall have the sole right to
receive such Distributions and proceeds.
(2) All Distributions and proceeds which are received by Pledgor
contrary to the provisions of paragraph (a) of this Section 7
shall be received in trust for the benefit of Pledgee, shall be
segregated from other funds of Pledgor and shall be forthwith
paid over to Pledgee.
(3) All Distributions received by Pledgor in a partial or total
liquidation of the Properties shall, in the event that any of the
Obligations remain outstanding at the time of such partial or
total liquidation, be paid to Pledgee and applied by Pledgee to
such outstanding Obligations.
Section 8. Transfers and Other Liens; Additional Interests.
Pledgor agrees, so long as any of the Obligations are
outstanding, not to assign, transfer or convey any of its right,
title and interest in any Pledged Collateral or create or suffer
to be created any mortgage, pledge, security interest,
encumbrance or other lien on any Pledged Collateral.
Section 9. Appointment of Attorney-in-Fact. Pledgor hereby
appoints Pledgee the attorney-in-fact for Pledgor, with full
authority in the place and stead of Pledgor and in the name of
Pledgor or otherwise, from time to time in Pledgee's discretion
to take any action and to execute any instrument which Pledgee
may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation, to receive,
endorse and collect all Distributions and any instruments made
payable to Pledgor representing any dividend, interest payment or
other distribution in respect of the Pledged Collateral or any
part thereof and to give full discharge for the same. Pledgor
agrees that the foregoing power constitutes a power coupled with
an interest which may not be revoked and which shall survive
until all of the Obligations shall have been indefeasibly paid in
full and satisfied, provided that except with respect to the
execution and filing of the Uniform Commercial Code Financing
Statements, the foregoing shall not be effective until the
occurrence of an Event of Default.
Section 10. Pledgee to Perform. If Pledgor fails to perform
any agreement contained herein, Pledgee may itself perform, or
cause performance of, such agreement, and the expenses of Pledgee
incurred in connection therewith shall be payable by Pledgor in
accordance with Section 17 hereof.
Section 11. Remedies Upon Default. Upon the occurrence of any
Event of Default:
(1) Pledgee may, without any notice to Pledgor of the occurrence
of such Event of Default, exercise in respect of the Pledged
Collateral, in addition to the other rights and remedies provided
for herein or otherwise available to Pledgee, all the rights and
remedies of a secured party under the Code or otherwise at law in
effect at that time, and Pledgee may also, without notice except
as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any of Pledgee's offices or
elsewhere, for cash, on credit or for future delivery, and upon
such other terms as Pledgee may deem commercially reasonable.
Pledgor agrees that, to the extent notice of sale shall be
required by law, at least five (5) business days notice to
Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute
reasonable notification. Pledgee shall not be obligated to make
any sale of Pledged Collateral regardless of notice of sale
having been given. Pledgee may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(2) Pledgee may transfer all or any part of the Pledged
Collateral into Pledgee's name or the name of its nominee or
nominees.
(3) Any Pledged Collateral or proceeds thereof held by Pledgee
as Pledged Collateral and all proceeds thereof received by
Pledgee in respect of any sale of, collection from or other
realization upon all or any part of the Pledged Collateral may,
in the discretion of Pledgee, be held by Pledgee as collateral
for, and/or then or at any time thereafter, be applied (after
payment of any amounts payable to Pledgee pursuant to Section 14
hereof), in whole or in part by Pledgee for the benefit of
Pledgor, against all or any part of the Obligations and in such
order as Pledgee shall elect. Any surplus of such Pledged
Collateral or proceeds thereof held by Pledgee and remaining
after payment or satisfaction in full of all of the Obligations
and the expenses referred to in Section 14 hereof shall be
delivered or paid over to Pledgor or to whomsoever may be
lawfully entitled to receive such surplus.
(4) Pledgee shall be entitled, without notice to Pledgor, to its
rights as set forth in Section 7 hereof, and Pledgee shall be
entitled to deliver such notices to third parties as shall be
necessary or advisable to exercise such rights; however, the
delivery of any such notice shall not be a requirement in
connection with exercising the rights granted in Section 7 nor
shall the failure to send such notices affect Pledgee's rights to
the Distributions or otherwise hereunder.
(5) Each right, power and remedy of Pledgee provided for in this
Agreement or the Note or now or hereafter existing at law or in
equity or by statute shall be cumulative and concurrent and shall
be in addition to every other such right, power or remedy. The
exercise or beginning of the exercise by Pledgee of any one or
more of the rights, powers or remedies provided for in this
Agreement or the Note or now or hereafter existing at law or in
equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by Pledgee of all such other
rights, powers or remedies, and no failure or delay on the part
of Pledgee to exercise any such right, power or remedy shall
operate as a waiver thereof.
Section 12. Jurisdiction, Venue, Service of Process. ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE
NOTE SHALL BE BROUGHT, ONLY IN THE COURTS OF THE STATE OF
COLORADO, DENVER COUNTY OR OF THE UNITED STATES OF AMERICA FOR
THE DISTRICT IN WHICH THE COUNTY IS LOCATED. PLEDGOR HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS. PLEDGOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS AS SET
FORTH ABOVE. PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR THE NOTE BROUGHT IN THE COURTS
REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. NOTHING CONTAINED HEREIN SHALL AFFECT
THE RIGHT OF PLEDGEE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST PLEDGOR IN ANY OTHER JURISDICTION.
Section 13. Jury Trial Waiver. EACH OF PLEDGOR AND PLEDGEE
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND
ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION
WITH, THIS AGREEMENT OR THE NOTE, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF PLEDGOR OR PLEDGEE RELATING TO THE LOAN. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR PLEDGEE ENTERING INTO THIS
AGREEMENT.
Section 14. Expenses. Upon demand, Pledgor will pay to
Pledgee the amount of any and all expenses, including the
reasonable fees and expenses of Pledgee's counsel and of any
experts and agents, which Pledgee may incur in connection with
(i) the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (ii) the exercise or enforcement of
any of Pledgee's rights hereunder, or (iii) the failure by
Pledgor to perform or observe any of the provisions hereof.
Section 15. Amendments, Waivers, Etc. No amendment or waiver
of any provision of this Agreement, nor consent to any departure
by Pledgor herefrom, shall in any event be effective unless the
same shall be in writing and signed by Pledgee, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Section 16. Notices. All notices, demands, requests,
consents, approvals, and other communications (collectively
"Notices"), required or permitted to be given hereunder, shall be
in writing and sent by (i) hand delivery, (ii) facsimile (or
similar device), (iii) registered or certified mail, postage
prepaid, return receipt requested; or (iv) special delivery
service (e.g., Federal Express, DHL, UPS, etc.); addressed to the
Person to be so notified as follows:
If to Pledgee: Hexagon Investments, LLC
_______________________
_______________________
Attention: ____________
Facsimile:_____________
with copies to: Brownstein Hyatt & Farber, P.C.
_______________________
_______________________
Attn: _________________
Fax No.: ______________
If to Pledgor: Delta Petroleum Corporation
555 17th Street, Suite 3300
Denver, Colorado 80202
Attention: Roger Parker
Fax No.: (303) 298-8251
with a copy to: __________________________________
__________________________________
__________________________________
__________________________________
Attn:______________________________
Fax No.: __________________________
Each Notice sent in accordance with the requirements of this
section shall be deemed effectively given upon actual receipt.
Each person designated herein to receive any Notice or a copy
thereof may change the address at which, or the person to whom,
Notice or a copy thereof is to be delivered, by Notice given in
accordance with the requirements of this section.
Section 17. Continuing Security Interest; Transfer. This
Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect
until the indefeasible payment or satisfaction in full of the
Obligations, (ii) be binding upon Pledgor, its permitted
transferees, representatives, successors and assigns, and (iii)
inure, together with the rights and remedies of Pledgee
hereunder, to the benefit of Pledgee and its permitted
transferees, representatives, successors and assigns. Without
limiting the generality of the foregoing clause (iii), Pledgee
may assign or otherwise transfer this Agreement together with the
Pledged Collateral, the Note and any other Obligations to any
other persons, and such other persons shall thereupon become
vested with all the benefits in respect thereof granted to
Pledgee herein or otherwise. Upon the indefeasible payment or
satisfaction in full of the Obligations, (x) Pledgor shall be
entitled to the return, upon its request and at its expense, of
such portion of the Pledged Collateral as shall not have been
sold or otherwise applied or forfeited pursuant to the terms
hereof, and (y) this Agreement shall be of no further force or
effect.
Section 18. Severability. If for any reason any provision or
provisions hereof are determined to be invalid and contrary to
any existing or future law, such invalidity shall not impair the
operation of or affect those portions of this Agreement which are
valid.
Section 19. Governing Law; Terms. This Agreement shall be
governed by, and construed in accordance with, the internal laws
of the State of Colorado (without giving effect to principles of
conflicts of law). Unless otherwise defined herein, terms
defined in Article 9 of the Code are used herein as therein
defined.
Section 20. Recitals. The Recitals at the beginning of this
Agreement are hereby incorporated into the substantive provisions
of this Agreement.
Section 21. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall constitute an
original, and together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, Pledgor has caused this Agreement
to be executed and delivered by its duly authorized
representatives as of the date first set forth above.
PLEDGEE:
DELTA PETROLEUM CORPORATION, a Colorado corporation
By: s/Roger A. Parker
Name: Roger A. Parker
Title: President
PLEDGOR:
HEXAGON INVESTMENTS, LLC, a Colorado
limited liability company
By: s/Brian Fleischmann
Name: Brian Fleischmann
Title: V.P.
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty Agreement"), is
made as of September 28, 2000, by Roger A. Parker ("Parker") and
Aleron H. Larson, Jr. ("Larson") jointly and severally (Parker
and Larson are individually and collectively referred to herein
as the "Guarantors"), each of whose address is 555 17th Street,
Suite 3310, Denver, Colorado 80202, for the benefit of HEXAGON
INVESTMENTS, LLC, a Colorado limited liability company
("Hexagon"), whose address is ________________________________.
W I T N E S S E T H:
WHEREAS, Hexagon has made a loan (the "Loan") to Delta
Petroleum Corporation, a Colorado corporation ("Maker"), as
evidenced by that certain Promissory Note in the amount of $1,485,485.00
of even date herewith from Maker payable to the order
of Hexagon (the "Note"), that certain Letter Agreement of even
date herewith, this Guaranty Agreement and any other instrument
or documents now or hereafter evidencing, guaranteeing, securing
or relating to the indebtedness evidenced by the Note
(hereinafter collectively referred to as the "Loan Documents");
and
WHEREAS, each Guarantor are each a director, officer and/or
significant shareholder of Maker and each believes he shall
substantially benefit, directly or indirectly, from the making of
the Loan; and
WHEREAS, as a condition of making the Loan, Hexagon has
required the Guarantors to jointly and severally guarantee to
Hexagon the obligations of Maker under the Loan Documents, and
certain other items as herein set forth.
NOW, THEREFORE, in order to induce Hexagon to make the Loan,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Guarantor
hereby jointly and severally covenants and agrees as follows:
1. Each Guarantor irrevocably, unconditionally, jointly
and severally fully guarantees the due, prompt and complete
performance of each and every one of the following obligations:
(a) the payment and performance by Maker of each and every
obligation of Maker under the Note and the other Loan Documents
to which it is a party; and (b) the due, prompt and complete
payment of all costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred by Hexagon in collection or
enforcement of this Guaranty Agreement against the Guarantors
(the obligations described in this Paragraph 1 are hereinafter
collectively referred to as the "Indebtedness").
2. Each Guarantor hereby grants to Hexagon, in the
absolute discretion of Hexagon, and without notice to any
Guarantor, the power and authority to deal in any lawful manner
with the Indebtedness and the other obligations guaranteed
hereby, and without limiting the generality of the foregoing, the
further power and authority, from time to time:
(a) to renew, compromise, extend, accelerate or
otherwise change the time or place of payment of or to otherwise
change the terms of the Indebtedness;
(b) to modify or to waive any of the terms of the
obligations guaranteed hereby;
(c) to take and hold security for the payment of the
Indebtedness and/or performance of the other obligations
guaranteed hereby and to impair, exhaust, exchange, enforce,
waive or release any such security;
(d) to direct the order or manner of sale of any such
security as Hexagon, in its discretion, may determine;
(e) to grant any indulgence, forbearance or waiver
with respect to the Indebtedness or any of the other obligations
guaranteed hereby; and
(f) to release or waive rights against any one or more
Guarantors without releasing or waiving any rights against any
other Guarantor.
The liability of each Guarantor hereunder shall not be affected,
impaired or reduced in any way by any action taken by Hexagon
under the foregoing provisions or any other provision hereof, or
by any delay, failure or refusal of Hexagon to exercise any right
or remedy it may have against Maker or any other person, firm or
corporation, including other guarantors, if any, liable for all
or any part of the Indebtedness or any of the other obligations
guaranteed hereby.
3. The Guarantors agree that if any of the Indebtedness is
not fully and timely paid or performed according to the tenor
thereof, whether by acceleration or otherwise, the Guarantors
shall immediately upon receipt of written demand therefor from
Hexagon pay all of the Indebtedness hereby guaranteed in like
manner as if the Indebtedness constituted the direct and primary
obligation of the Guarantors. The Guarantors shall not have any
right of subrogation as a result of any payment hereunder or any
other payment made by the Guarantors or a Guarantor on account of
the Indebtedness, and each Guarantor hereby waives, releases and
relinquishes any claim based on any right of subrogation, any
claim for unjust enrichment or any other theory that would
entitle a Guarantor to a claim against Maker based on any payment
made hereunder or otherwise on account of the Indebtedness until
Hexagon is paid in full.
4. This Guaranty Agreement and the obligations of the
Guarantors hereunder shall be continuing and irrevocable until
the Indebtedness has been satisfied in full. Notwithstanding the
foregoing or anything else set forth herein, and in addition
thereto, if at any time all or any part of any payment received
by Hexagon from Maker or a Guarantor under or with respect to
this Guaranty Agreement is or must be rescinded or returned for
any reason whatsoever (including, but not limited to,
determination that said payment was a voidable preference or
fraudulent transfer under insolvency, bankruptcy or
reorganization laws), then Guarantors' obligations hereunder
shall, to the extent of the payment rescinded or returned, be
deemed to have continued in existence, notwithstanding such
previous receipt of payment by Hexagon, and Guarantors'
obligations hereunder shall continue to be effective or be
reinstated as to such payment, all as though such previous
payment to Hexagon had never been made. The provisions of the
foregoing sentence shall survive termination of this Guaranty
Agreement, and shall remain a valid and binding obligation of
each Guarantor until satisfied.
5. Each Guarantor hereby waives notice of acceptance of
this Guaranty Agreement by Hexagon and this Guaranty Agreement
shall immediately be binding upon each Guarantor. Any Guarantor
who executes this Guaranty Agreement shall be fully bound hereby
regardless of whether or not any other Guarantor subsequently
executes this Guaranty Agreement.
6. Each Guarantor hereby waives and agrees not to assert
or take advantage of:
(a) any right to require Maker to proceed against any
other person or to proceed against or exhaust any security held
by Maker at any time or to pursue any other remedy in Maker's
power before proceeding against any one or more Guarantors
hereunder;
(b) any right to require Hexagon to proceed against
Maker or any other person or to proceed against or exhaust any
security held by Hexagon at any time or to pursue any other
remedy in Hexagon's power before proceeding against any one or
more Guarantors hereunder;
(c) any defense that may arise by reason of the
incapacity, lack of authority, death or disability of any other
person or persons or the failure of Hexagon to file or enforce a
claim against the estate (in administration, bankruptcy or any
other proceeding) of any other person or persons;
(d) demand, presentment for payment, notice of
non-payment, protest, notice of protest and all other notices of
any kind, including, without limitation, notice of the existence,
creation or incurring of any new or additional indebtedness or
obligation or of any action or non-action on the part of Hexagon
or any endorser or creditor of Hexagon or any Guarantor or on the
part of any other person whomsoever under this or any other
instrument in connection with any obligation or evidence of
indebtedness held by Hexagon or in connection with the
Indebtedness;
(e) any election by Hexagon to exercise any right or
remedy it may have against Maker or any security held by Hexagon,
including, without limitation, the right to foreclose upon any
such security by judicial or non-judicial sale, without affecting
or impairing in any way the liability of Guarantors hereunder,
except to the extent the indebtedness has been paid, and the
Guarantors waive any default arising out of the absence,
impairment or loss of any right of reimbursement, contribution or
subrogation or any other right or remedy of the Guarantors
against Maker or any such security whether resulting from such
election by Hexagon or otherwise. The Guarantors understand that
if all or any part of the liability of Maker to Hexagon for the
Indebtedness is secured by real property the Guarantors shall be
liable for the full amount of their liability hereunder,
notwithstanding foreclosure on such real property by trustee sale
or any other reason impairing the Guarantors' right to proceed
against Maker; and
(f) all duty or obligation on the part of Hexagon to
perfect, protect, not impair, retain or enforce any security for
the payment of the Indebtedness or performance of any of the
other obligations guaranteed hereby.
7. All existing and future indebtedness of Maker to the
Guarantors or to any person controlled or owned in whole or in
part by any of the Guarantors and, the right of the Guarantors to
withdraw or to cause or permit any person controlled or owned in
whole or in part by any of the Guarantors to withdraw any capital
invested by any Guarantor in Maker, is hereby subordinated to the
Indebtedness at any time after a default exists under the
Indebtedness. Furthermore, without the prior written consent of
Hexagon, such subordinated indebtedness shall not be paid and
such capital shall not be withdrawn in whole or in part nor shall
any Guarantor accept or cause or permit any person controlled or
owned in whole or in part by a Guarantor to accept any payment of
or on account of any such subordinated indebtedness or as a
withdrawal of capital at any time after a default exists under
the Indebtedness. Any payment received by the Guarantors in
violation of this Guaranty Agreement shall be received by the
person to whom paid in trust for Hexagon, and Guarantors shall
cause the same to be paid to Hexagon immediately on account of
the Indebtedness. No such payment shall reduce or affect in any
manner the liability of the Guarantors under this Guaranty
Agreement.
8. The amount of each Guarantor's liability and all
rights, powers and remedies of Hexagon hereunder shall be
cumulative and not alternative and such rights, powers and
remedies shall be in addition to all rights, powers and remedies
given to Hexagon under any document or agreement relating in any
way to the terms and provisions hereof or otherwise by law. With
respect to each Guarantor, this Guaranty Agreement is in addition
to and exclusive of the guaranty of any other Guarantor executing
this Guaranty Agreement or any other person or entity which
guarantees the Indebtedness and/or the other obligations
guaranteed hereby.
9. The liability of each Guarantor under this Guaranty
Agreement shall be an absolute, direct, immediate and
unconditional guarantee of payment and not of collectability. The
obligations of each Guarantor hereunder are independent of the
obligations of Maker or any other party which may be initially or
otherwise responsible for performance or payment of the
obligations hereunder guaranteed and each other Guarantor, and,
in the event of any default hereunder, a separate action or
actions may be brought and prosecuted against any one or more
Guarantors, whether or not Maker is joined therein or a separate
action or actions are brought against Maker. Hexagon may
maintain successive actions for other defaults. Hexagon's rights
hereunder shall not be exhausted by its exercise of any of its
rights or remedies or by any such action or by any number of
successive actions until and unless the Indebtedness has been
paid in full.
10. The Guarantors hereby agree to pay to Hexagon, upon
demand, reasonable attorneys' fees and all costs and other
expenses which Hexagon expends or incurs in collecting or
compromising the Indebtedness or in enforcing this Guaranty
Agreement against each Guarantor whether or not suit is filed,
including, without limitation, all costs, attorneys' fees and
expenses incurred by Hexagon in connection with any insolvency,
bankruptcy, reorganization, arrangement or other similar
proceedings involving a Guarantor which in any way affect the
exercise by Hexagon of its rights and remedies hereunder. Any
and all such costs, attorneys' fees and expenses not so paid
shall bear interest at an annual interest rate equal to the
lesser of (i) 18%, or (ii) the highest rate permitted by
applicable law, from the date incurred by Hexagon until paid by
the Guarantors.
11. Should any one or more provisions of this Guaranty
Agreement be determined to be illegal or unenforceable, all other
provisions nevertheless shall be effective.
12. No provision of this Guaranty Agreement or right of
Hexagon hereunder can be waived nor can any Guarantor be released
from such Guarantor's obligations hereunder except by a writing
duly executed by Hexagon. This Guaranty Agreement may not be
modified, amended, revised, revoked, terminated, changed or
varied in any way whatsoever except by the express terms of a
writing duly executed by Hexagon.
13. When the context and construction so require, all words
used in the singular herein shall be deemed to have been used in
the plural, and the masculine shall include the feminine and
neuter and vice versa. The word "person" as used herein shall
include any individual, company, firm, association, partnership,
corporation, trust or other legal entity of any kind whatsoever.
14. If any or all of the Indebtedness is assigned by
Hexagon, this Guaranty Agreement shall automatically be assigned
therewith in whole or in part, as applicable, without the need of
any express assignment and when so assigned, each Guarantor shall
be bound as set forth herein to the assignee(s) without in any
manner affecting such Guarantor's liability hereunder for any
part of the Indebtedness retained by such Hexagon.
15. Parker's Social Security Number is_____________.
Larson's Social Security Number is ___________________.
16. This Guaranty Agreement shall inure to the benefit of
and bind the heirs, legal representatives, administrators,
executors, successors and assigns of Hexagon and Guarantors.
17. This Guaranty Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado
without regard to principles of conflicts of law. In any action
brought under or arising out of this Guaranty Agreement, each
Guarantor hereby consents to the jurisdiction of any competent
court within the City & County of Denver, Colorado and consents
to service of process by any means authorized by the laws of such
State. Except as provided in any other written agreement now or
at any time hereafter in force between Hexagon and any Guarantor,
this Guaranty Agreement shall constitute the entire agreement of
Guarantors with Hexagon with respect to the subject matter
hereof, and no representation, understanding, promise or
condition concerning the subject matter hereof shall be binding
upon Hexagon or any Guarantor unless expressed herein or in a
writing signed by Guarantors and Hexagon.
18. All notices, demands, requests or other communications
to be sent by one party to the other hereunder or required by law
shall be in writing and shall be deemed to have been validly
given or served by delivery of same in person to the addressee or
by depositing same with Federal Express for next business day
delivery or by depositing same in the United States mail, postage
prepaid, registered or certified mail, return receipt requested,
addressed as follows:
Hexagon: ________________________
________________________
Attention:______________
Telephone:______________
With a copy to: ________________________
________________________
________________________
Telephone:______________
Guarantor: Roger A. Parker
555 17th Street, Suite 3310
Denver, Colorado 80202
Guarantor: Aleron H. Larson, Jr.
555 17th Street, Suite 3310
Denver, Colorado 80202
With a copy to: __________________________
__________________________
__________________________
All notices, demands and requests shall be effective upon
such personal delivery or upon being deposited with Federal
Express or in the United States mail as required above. However,
with respect to notices, demands or requests so deposited with
Federal Express or in the United States mail, the time period in
which a response to any such notice, demand or request must be
given shall commence to run from the next business day following
any such deposit with Federal Express or, in the case of a
deposit in the United States mail as provided above, the date on
the return receipt of the notice, demand or request reflecting
the date of delivery or rejection of the same by the addressee
thereof. Rejection or other refusal to accept or the inability to
deliver because of changed address of which no notice was given
shall be deemed to be receipt of the notice, demand or request
sent. By giving to the other party hereto at least 30 days'
written notice thereof in accordance with the provisions hereof,
the parties hereto shall have the right from time to time to
change their respective addresses and each shall have the right
to specify as its address any other address within the United
States of America.
19. Each Guarantor hereby agrees that this Guaranty
Agreement, the Indebtedness and all other obligations guaranteed
hereby, shall remain in full force and effect at all times
hereafter until paid and/or performed in full notwithstanding any
action or undertakings by, or against, Hexagon, any Guarantor,
and/or any member in Hexagon in any proceeding in the United
States Bankruptcy Court, including, without limitation, any
proceeding relating to valuation of collateral, election or
imposition of secured or unsecured claim status upon claims by
Hexagon pursuant to any Chapter of the Bankruptcy Code or the
Rules of Bankruptcy Procedure as same may be applicable from time
to time.
20. This Guaranty Agreement may be executed in any number
of counterparts, each of which shall be effective only upon
delivery and thereafter shall be deemed an original, and all of
which shall be taken to be one and the same instrument, with the
same effect as if all parties hereto had signed the same
signature page. Any signature page of this Guaranty Agreement
may be detached from any counterpart of this Guaranty Agreement
without impairing the legal effect of any signatures thereon and
may be attached to another counterpart of this Guaranty Agreement
identical in form hereto but having attached to it one or more
additional signature pages. Execution by any Guarantor shall
bind such Guarantor regardless of whether any one or more other
Guarantors execute this Guaranty Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned Guarantors have executed
this Guaranty Agreement as of the day and year first above
written.
GUARANTORS:
s/Roger A. Parker
Roger A. Parker
s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this
28th day of September, 2000, by Roger A. Parker.
Witness my hand and notarial seal.
My commission expires: 5-18-01
[SEAL] s/Sheryl K. Shelton
Notary Public
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this
28th day of September, 2000, by Aleron H. Larson, Jr.
Witness my hand and notarial seal.
My commission expires: 5/18/01
[SEAL]
s/Sheryl K. Shelton
Notary Public
PROMISSORY NOTE
$1,485,485.00 September 28, 2000
Denver, Colorado
FOR VALUE RECEIVED, the undersigned DELTA PETROLEUM
CORPORATION, a Colorado corporation ("Maker"), whose address is
555 17th Street, Suite 3310, Denver, Colorado 80202, promises to
pay to the order of HEXAGON INVESTMENTS, LLC, a Colorado limited
liability company ("Holder"), whose address is _________________
______________________________________________, or at such other
address as Holder may from time to time designate, the principal
sum of One Million Four Hundred Eighty Five Thousand Four Hundred
Eighty Five and No/100 Dollars ($1,485,485.00), or so much
thereof as may be advanced by Holder hereunder and remain unpaid
from time to time, together with interest on said principal sum
or such part thereof disbursed by Holder, from the date of each
disbursement made by Holder until repaid in full, at the rate and
at the times set forth below. The loan evidenced by this
Promissory Note (the "Note") is not a revolving loan and,
therefore, Maker may not borrow, repay and reborrow the principal
indebtedness evidenced hereby.
1. Definitions. As used herein, the following terms shall
have the indicated meanings (definitions appear in alphabetical
order and defined terms used within definitions are defined
either above or in the appropriate alphabetical place within this
Paragraph 1):
(a) Default Fee. An amount equal to one percent (1%) of
the outstanding principal balance and all accrued but unpaid
interest and fees due hereunder, including, without limitation,
any previously assessed Default Fee(s).
(b) Guaranty Agreement. That certain Guaranty Agreement
dated of even date herewith executed jointly and severally by
Roger A. Parker and Aleron H. Larson Jr. for the benefit of
Holder.
(c) Loan Documents. Collectively, all documents and
instruments now or hereafter evidencing, securing, guaranteeing
and/or relating to the indebtedness evidenced by this Note, as
the same may be amended or replaced from time to time hereafter,
including, without limitation, this Note, that certain Letter
Agreement dated contemporaneously herewith, and the Guaranty
Agreement.
(d) Maturity Date. October 30, 2000.
(e) Maximum Rate. The maximum non-usurious rate of
interest per annum permitted by whichever of applicable United
States federal law or Colorado law permits the higher interest
rate, including, to the extent permitted by such applicable law,
any amendments thereof or any new law hereafter coming into
effect to the extent a higher maximum non-usurious rate of
interest is permitted thereby. The Maximum Rate shall be applied
by taking into account all amounts characterized by applicable
law as interest on the debt evidenced by this Note, so that the
aggregate of all interest does not exceed the maximum
non_usurious amount permitted by applicable law.
(f) Note. This Promissory Note.
2. Interest Rate. The outstanding principal balance of
this Note shall bear interest, from the date of each disbursement
of the loan proceeds made by Holder until repaid in full, at a
rate per annum at all times equal to fifteen percent (15%).
Interest shall accrue and compound monthly on the outstanding
principal balance of this Note. Interest on the principal
balance of this Note shall be due and payable on the Maturity
Date.
3. Accrual of Interest. Unless the due date of this Note
is accelerated upon the occurrence of an Event of Default (as
hereinafter defined), no payment of principal or interest shall
be due hereunder until the Maturity Date, when the outstanding
principal balance of this Note, together with all accrued
interest thereon and any other sums due under this Note, shall be
immediately due and payable.
4. Payment of Interest. All amounts due hereunder shall
be payable in lawful money of the United States of America.
Accrued interest and any fees incurred by Borrower hereunder
shall bear interest at the same rate as the principal of this
Note.
5. Prepayment. Maker may prepay this Note upon ten (10)
days' prior written notice to Holder without premium. Maker
shall not be entitled to reborrow any amounts prepaid hereunder.
6. Time. Time is of the essence hereof.
7. Events of Default. At the option of Holder, the
payment of all principal, any interest accrued thereon and any
other sums then due and payable under the provisions of this Note
will be accelerated and such principal, interest and such other
sums shall be immediately due and payable without notice or
demand upon the earlier to occur of any of the following events
(an "Event of Default"):
(a) the failure of Maker to pay any amounts hereunder or
under any other Loan Document when due, subject to any applicable
grace or cure period set forth herein or in such other Loan
Document;
(b) any other default hereunder or under any other Loan
Document, including, without limitation, any Event of Default set
forth in any other Loan Document, not cured within any applicable
grace period;
(c) the filing by Maker, any guarantor of the obligations
represented by this Note, or any Affiliate of Maker or any such
guarantor of a voluntary petition in bankruptcy; the commencement
of a bankruptcy or insolvency proceeding against any such party
(unless stayed or dismissed within 30 days); the filing by any
such party of an assignment for the benefit of creditors; or the
attachment, execution or judicial seizure, whether by enforcement
of money judgment, writ or warrant of attachment or any other
process, of all or substantially all of the assets of Maker or
such party which is not released within sixty (60) days after
such action; and
8. Default Fee. Upon (i) the failure of the Maker to
satisfy in full its payment obligations hereunder on or before
the Maturity Date or (ii) an Event of Default, and on every
thirtieth (30th) day thereafter, a Default Fee shall be assessed
against the Maker and shall be due and owing to Holder hereunder;
provided, however, as to any given Event of Default no further
assessments of Default Fee shall be made once such Event of
Default is cured to the satisfaction of Lender. Any assessment of
a Default Fee shall accrue interest hereunder from the date
assessed as though it was included in the principal amount due
hereunder. Notwithstanding anything in this Section 8 to the
contrary, in the event the Default Fee, together with the
interest accruing hereunder, exceed the Maximum Rate, the Default
Fee shall not be assessed and any unpaid principal and/or other
amounts due hereunder shall instead bear interest at the Maximum
Rate.
9. Release. Each Maker, endorser, cosigner and guarantor
of this Note hereby expressly grants to Holder the right to
release or to agree not to sue any other person, or to suspend
the right to enforce this Note against such other person or to
otherwise discharge such person; and each such Maker, endorser,
cosigner and guarantor hereby agrees that the exercise of such
rights by Holder shall have no effect on the liability of any
other person, primarily or secondarily liable hereunder.
10. Waivers. Maker, for itself and its legal
representatives, successors and assigns, expressly waives
presentment, protest, demand, notice of dishonor, notice of
nonpayment, notice of maturity, notice of protest, presentment
for the purposes of accelerating the maturity, and diligence in
collection, and consents that Holder may extend the time for
payment or otherwise modify the terms of payment of any part or
the whole of the debt evidenced hereby.
11. Attorneys' Fees. If Holder employs counsel to collect
this Note or otherwise to exercise its remedies, including
without limitation filing a claim in connection with any
bankruptcy or insolvency proceedings, Maker shall pay the
reasonable fees, costs and expenses of Holder, including without
limitation attorneys' fees, whether or not suit is brought.
12. Limitations on Interest. This Note is subject to the
express condition that at no time shall Maker be obligated or
required to pay interest on the principal balance at a rate which
could subject Holder to either civil or criminal liability as a
result of being in excess of the Maximum ate which Maker is
permitted by law to contract or agree to pay. If by the terms of
this Note Maker is at any time required or obligated to pay
interest on the principal balance at a rate in excess of such
Maximum Rate, the rate of interest under this Note shall be
deemed to be immediately reduced to such Maximum Rate and
interest payable hereunder shall be computed at such Maximum
Rate.
13. Notice. Whenever any party hereto shall desire to, or
be required to, give or serve any notice, demand, request or
other communication with respect to this Note, each such notice,
demand, request or communication shall be in writing and shall be
effective only if the same is delivered by personal service
(including, without limitation, courier or express service) or
mailed certified or registered mail, postage prepaid, return
receipt requested, or sent by telegram or facsimile transmission
with confirmation of receipt, to the parties at the addresses
shown throughout this Note or such other addresses which the
parties may provide to one another in accordance herewith. If
notice is sent to Holder, a copy of such notice shall also be
given to Steven C. Demby, Esq., Brownstein Hyatt & Farber, P.C.,
410 17th Street, Suite 2222, Denver, Colorado 80202. If notice
is sent to Maker, a copy of such notice shall also be given to
Roger A. Parker, c/o Delta Petroleum Corporation, 555 17th
Street, Suite 3310, Denver, Colorado 80202. Notice delivered
personally will be effective upon delivery to an authorized
representative of the party at the designated address; notices
sent by mail in accordance with the above paragraph will be
effective upon execution by the addressee of the Return Receipt.
Notices delivered via facsimile will be effective upon
confirmation of receipt.
14. Recourse Obligation. This Note is specifically a full
recourse obligation, and nothing herein contained shall be
construed to prevent Holder from proceeding personally against
Maker under this Note.
15. Business Purpose. Maker certifies that this loan is
obtained for business or commercial purposes and that the
proceeds thereof will not be used primarily for personal, family,
household or agricultural purposes.
16. Representations and Warranties. Maker makes the
following representations and warranties, which shall be deemed
to be continuing representations and warranties in favor of
Holder, and covenants and agrees to perform all acts necessary to
maintain the truth and correctness, in all material respects, of
the following:
(a) Maker's Employer Identification Number is: 84-1060803
and its principal place of business is 555 17th Street, Suite
3310, Denver, Colorado 80202.
(b) Maker agrees that it shall not, without prior written
notification to Holder, move or otherwise change its principal
place of business.
17. CHOICE OF LAW. THIS NOTE WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES
FURTHER AGREE THAT IN THE EVENT OF DEFAULT, THIS NOTE MAY BE
ENFORCED IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF
COLORADO AND THEY DO HEREBY SUBMIT TO THE JURISDICTION OF ANY AND
ALL SUCH COURTS REGARDLESS OF THEIR RESIDENCE OF WHERE THIS NOTE
OR ANY ENDORSEMENT HEREOF MAY BE EXECUTED.
18. WAIVER OF TRIAL BY JURY. TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, AND ACKNOWLEDGING THAT THE
CONSEQUENCES OF SAID WAIVER ARE FULLY UNDERSTOOD, MAKER HEREBY
EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY, THE RIGHT TO
INTERPOSE ANY DEFENSE BASED UPON ANY STATUTE OF LIMITATIONS, ANY
CLAIM OF LACHES AND ANY SET-OFF OR COUNTERCLAIM OF ANY NATURE OR
DESCRIPTION IN ANY ACTION OR PROCEEDING INSTITUTED AGAINST MAKER
OR ANY OTHER PERSON LIABLE ON THIS NOTE. MAKER ACKNOWLEDGES AND
AGREES THAT HOLDER SHALL HAVE ALL RIGHTS OF A THIRD PARTY
CREDITOR WITH RESPECT TO THIS NOTE, AND MAKER WAIVES AND RELEASES
FOR ITSELF ALL CLAIMS TO THE CONTRARY.
SIGNATURE PAGE TO THAT CERTAIN PROMISSORY NOTE GIVEN BY DELTA
PETROLEUM CORPORATION, A COLORADO CORPORATION, TO HEXAGON
INVESTMENTS, LLC, A COLORADO LIMITED LIABILITY COMPANY
EXECUTED as of the date set forth above.
DELTA PETROLEUM CORPORATION,
a Colorado corporation
By:s/Roger A. Parker
Roger A. Parker, President
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this
28th day of September, 2000, by Roger A. Parker as President of
Delta Petroleum Corporation.
Witness my hand and notarial seal.
My commission expires: 5-18-01
[SEAL]
s/Sheryl K. Shelton
Notary Public
