EXHIBIT 10.3
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated
effective as of June 20, 2003 by and between DELTA PETROLEUM CORPORATION, a
Colorado corporation, DELTA EXPLORATION COMPANY, INC., a Colorado corporation,
PIPER PETROLEUM COMPANY, a Colorado corporation (collectively referred to
herein as the "Borrowers" and each individually are sometimes referred to
herein as a "Borrower") and BANK OF OKLAHOMA, N.A., a national banking
association ("BOK"), and each of the financial institutions which is a party
thereto (as evidenced by the signature pages to the Credit Agreement described
below) or which may from time to time become a party thereto pursuant to the
provisions of Section 26 thereof or any successor or assignee thereof
(hereinafter collectively referred to as "Banks", and individually, "Bank")
and BOK, as Agent ("Agent").
W I T N E S S E T H:
WHEREAS, Borrower and Bank are parties to that certain Credit Agreement
dated as of May 31, 2002 (the "Agreement") whereby Borrower has executed those
certain promissory notes in the aggregate amount of $20,000,000.00, made
payable to each of BOK and Local Oklahoma Bank, N.A.(the "Note");
WHEREAS, the Borrower's obligations to the Bank pursuant to the Agreement
and Note are secured by certain collateral as described in the Agreement;
WHEREAS, all collateral securing the indebtedness evidenced by or
described in the Agreement and the Note shall continue to secure the
indebtedness described in the Agreement, as hereby amended;
WHEREAS, all capitalized terms not otherwise defined herein shall have
those meanings assigned to such terms in the Agreement; and
WHEREAS, Borrower and Bank desire to amend the Agreement for the first
time in order to, among other things not specifically set forth in this
recital, (i) increase the Revolving Commitment to $29,300,000; (ii) amend the
definition of "Current Liabilities"; (iii) amend the definition of "Current
Assets"; and (iv) certain other changes as more specifically described herein;
NOW, THEREFORE, in consideration of the foregoing and for such other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
A. CHANGES TO THE LOAN AGREEMENT
Borrower and Bank have agreed to modify, supplement and amend certain
portions and/or terms of the Agreement. The Agreement is hereby amended as
follows:
1. The definition of "Current Assets" set forth at Section 1 of the
Agreement, Definitions, is hereby amended and restated in its entirety as
follows:
"Current Assets" shall mean the total of the Borrowers'
consolidated current assets determined in accordance with GAAP, less the
value, as determined by Bank, of Borrower's current derivative
contracts, as of and for the time period in question.
2. The definition of "Current Liabilities" set forth at Section 1 of
the Agreement, Definitions, is hereby amended and restated in its entirety as
follows:
"Current Liabilities" shall mean the total of the Borrowers'
consolidated current obligations determined in accordance with GAAP,
less (i) the current portion of the Revolving Commitment, (ii) the
current portion of Borrower's loan evidenced by that certain Loan
Agreement and related documents between Xxxxxx-Xxxxxxx Oil Company and
Delta Petroleum Corporation dated December 1, 1999, and (iii) the value,
as determined by Bank, of Borrower's current derivative contracts, as of
and for the time period in question.
3. The definition of "Debt Service Coverage Ratio" set forth at
Section 1 of the Agreement, Definitions, is hereby amended and restated in its
entirety as follows:
"Debt Service Coverage Ratio" shall mean the quotient obtained by
dividing (i) a numerator consisting of (a) the annualized sum of the
Borrowers' consolidated net income for the fiscal quarter then ended, as
defined by GAAP, minus (b) the annualized sum of cash dividends or
distributions, as the case may be, declared or paid by Borrowers during
the fiscal quarter then ended, plus (c) the annualized sum for the
fiscal quarter then ended of Borrowers' depletion expense, depreciation
expense, deferred income tax expense, un-capitalized intangible drilling
expense, un-capitalized intangible material expense, un-capitalized
discretionary non-recurring reworking expense, amortization expense, and
lease impairment expense plus the annual projected interest expense for
the Revolving Commitment (determined as of the last day of the fiscal
quarter then ended), by (ii) a denominator consisting of (a) sixteen
point sixty six percent (16.66%) of the Revolving Commitment as of the
last day of the fiscal quarter then ended, plus (b) the annual projected
interest expense for the Revolving Commitment (determined as of the last
day of the fiscal quarter then ended) and (c) actual scheduled principal
reductions made to any other long term debt or capitalized lease
obligations for the fiscal quarter then ended, not to include
prepayments or the final payoff of the Xxxxxx-Xxxxxxx debt which is due
on July 1, 2004. Any dividend or distribution made in a fiscal quarter
which is intended as the only dividend or distribution to be made for
that fiscal year shall not be annualized for purposes of determining the
Debt Service Coverage Ratio.
4. The definition of "Revolving Commitment" set forth at Section 1 of
the Agreement is hereby amended and restated in its entirety to indicate the
extension of said date to February 1, 2004 as follows:
"Revolving Commitment" shall mean (A) for all Banks, the lesser of
(i) 29,300,000 or (ii) the Borrowing Base in effect from time to time,
in each case as reduced from time to time pursuant to Sections 2 and 7
hereof , and (B) as to any Bank, its obligation to make Advances
hereunder on the Revolving Loan and purchase participations in Letters
of Credit issued hereunder by the Agent in amounts not exceeding, in the
aggregate, an amount equal to such Bank's Revolving Commitment
Percentage times the total Revolving Commitment as of any date. The
Revolving Commitment of each Bank hereunder shall be adjusted from time
to time to reflect assignments made by such Bank pursuant to Section 26
hereof. Each reduction in the Revolving Commitment shall result in a
Pro Rata reduction in each Bank's Revolving Commitment.
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5. The reference to "$20,000,000.00" in the second line of paragraph
"(a)", Form of Revolving Notes, of Section 3 of the Agreement, Notes
Evidencing Loans, is hereby deleted and replaced with "$29,300,000.00" in
order to further evidence the increase to the Revolving Commitment.
6. A new sub-paragraph shall be added to Section 4 of the Agreement,
Collateral Security, as sub-paragraph "(d)" and shall be entitled "Pledge of
Amber Common Stock" which shall state as follows:
(d) Pledge of Amber Common Stock. The Borrowers shall pledge,
grant and assign to Agent for the ratable benefit of the Banks 100% of
the outstanding common stock of Amber Resources Company, a Colorado
corporation (to the satisfaction of the Agent) owned by Borrowers and
shall execute such pledge agreements, stock powers and other documents
and instruments as are deemed necessary by Agent.
7. To evidence the Borrowers' continuing obligation to repay the
Notes, the Borrowers shall make and deliver to the Bank the Replacement Notes
in the form of Annex "2" hereto attached (the "Replacement Notes"), which
shall substitute and replace in its entirety the Notes referred to in the
Agreement, without cancellation, novation or payment. A copy of the
Replacement Notes shall hereafter be affixed to and constitute Exhibit "B" to
the Agreement, and references in the Agreement to the Notes shall be deemed to
refer to the Replacement Notes.
B. REPRESENTATIONS AND WARRANTIES
Borrowers hereby represent and warrant to Bank that:
1. This Amendment, when duly executed and delivered, will constitute
the legal, valid and binding obligation of Borrower, enforceable in accordance
with its terms.
2. All balance sheets, income statements and other financial data
which have been or are hereafter furnished to Bank by the Borrower to induce
Bank to make or extend the loans hereunder due, and as to subsequent financial
statements will, fairly represent Borrowers' financial condition as of the
dates for which the same are furnished. All such financial statements,
reports, papers and other data furnished to Bank are and will be, when
furnished, accurate and correct in all material respects and complete insofar
as completeness may be necessary to give Bank a true and accurate knowledge of
the subject matter and, since the date of such financial statements, no
material adverse change has occurred in the operations or condition, financial
or otherwise, of Borrowers.
3. The applicable Borrower is the sole and lawful owner of the
Collateral, pledged, mortgaged or assigned by it, and has good right to cause
the Collateral to be hypothecated to Bank as security for the obligations
evidenced by the Agreement, Note and other loan documents.
4. Except for the mortgage liens and security interests granted by
any Borrower in favor of, or assigned to, the Bank pursuant to the Agreement,
none of the Collateral is subject to any mortgage, deed of trust, pledge,
title retention lien or any other lien, encumbrance, grant or security
interest.
5. All of the Borrowers' other representations and warranties set
forth in Section 9 of the Agreement, REPRESENTATIONS AND WARRANTIES, are true
and correct on and as of the date hereof with the same effect as though made
and repeated by Borrower as of the date hereof.
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C. CONDITIONS
Bank's obligations pursuant to this Amendment are subject to the
following conditions:
1. Each of the Banks and Borrowers shall have executed and delivered
this Amendment.
2. Borrowers shall have executed and delivered the Replacement Notes.
3. Borrowers, or any applicable Borrower, shall have executed a
pledge agreement acceptable to Agent pledging 100% of the common stock held by
the Borrowers of Amber Resources Company together with the stock certificates
and stock powers executed in blank.
4. Borrowers shall have executed and delivered to Bank any amendments
to the other Loan Documents (other than the Agreement and Notes) including,
but not limited to, amendments to the Security Instruments as required by
Agent.
5. Borrowers shall have paid a fee equal to one percent of the
additional amount advanced pursuant to this amendment which is equal to
$93,000.00.
6. The Borrowers' representations and warranties set forth in Section
B hereof shall be true and correct on and as of the date hereof.
7. Borrowers shall have satisfied all conditions set forth in Section
9 of the Agreement.
8. As of the date hereof, no Event of Default nor any event which,
with the giving of notice or lapse of time, would constitute an Event of
Default shall have occurred and be continuing.
D. OTHER WAIVERS, COVENANTS AND MISCELLANEOUS TERMS
1. Borrowers and Bank hereby acknowledge and agree that as of the
date hereof and continuing until the next redetermination, the Borrowing Base
is $29,300,000.00 and beginning August 1, 2003 the Monthly Commitment
Reduction shall be $600,000.00.
2. Banks hereby waive, on a temporary basis, Borrowers' compliance
with paragraph "(c)", Minimum Debt Service Coverage Ratio, of Xxxxxxx 00,
Xxxxxxxx Xxxxxxxxx, of the Agreement for the reporting period ending June 30,
2003. For all reporting periods thereafter, Borrowers shall comply with said
Section 11(c) as set forth in the Agreement.
3. Except as expressly amended and supplemented hereby, the Agreement
shall remain unchanged and in full force and effect, and the same is hereby
ratified and extended.
4. The indebtedness described in the Agreement, including but not
limited to the indebtedness or exposure evidenced by the Note, shall continue
to be secured by the Collateral, without interruption or impairment of any
kind.
5. The Borrowers hereby agree to pay all reasonable attorney fees and
legal expenses incurred by Bank in preparation, execution and implementation
of this Amendment, the Replacement Note, , and any mortgages, deeds of trust,
security agreements, pledge agreements or any amendments thereto.
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5. This Amendment shall be construed in accordance with and governed
by the laws of the State of Oklahoma, and shall be binding on and inure to the
benefit of the Borrowers and Bank, and their respective successors and
assigns. All obligations of the Borrowers under the Agreement and all rights
of Bank and any other holder of the Notes, whether expressed herein or in any
Note, shall be in addition to and not in limitation of those provided by
applicable law. Borrowers irrevocably agree that, subject to Bank's sole
election, all suits or proceedings arising from or related to the Agreement,
as amended, or the Note may be litigated in courts (whether State or Federal)
sitting in Oklahoma City, Oklahoma, and the Borrower hereby irrevocably waives
any objection to such jurisdiction and venue.
6. This Amendment may be executed in as many counterparts as are
deemed necessary or convenient, and it shall not be necessary for the
signature of more than any one party to appear on any single counterpart.
Each counterpart shall be deemed an original, but all shall be construed
together as one and the same instrument. The failure of any party to sign
shall not affect or limit the liability of any party executing any such
counterpart.
Executed effective the 20th day of June, 2003.
BORROWERS:
DELTA PETROLEUM CORPORATION,
a Colorado corporation
/s/ Xxxxx X. Xxxxx
---------------------------------------------
By: Xxxxx X. Xxxxx
Title: Treasurer and Chief Financial Officer
Address:
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
DELTA EXPLORATION COMPANY, INC.,
a Colorado corporation
/s/ Xxxxx X. Xxxxx
---------------------------------------------
By: Xxxxx X. Xxxxx
Title: Treasurer and Chief Financial Officer
Address:
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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PIPER PETROLEUM COMPANY,
a Colorado corporation
/s/ Xxxxx X. Xxxxx
---------------------------------------------
By: Xxxxx X. Xxxxx
Title: Treasurer and Chief Financial Officer
Address:
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK:
BANK OF OKLAHOMA, N.A.,
a national banking association
/s/ Xxx Xxxxxxxx
---------------------------------------------
By: Xxx Xxxxxxxx
Title: Senior Vice President
Address:
000 Xxxxxx X. Xxxx Xxx.
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: 405/000-0000
Facsimile: 405/272-2588
LOCAL OKLAHOMA BANK, N.A.,
a national banking association
/s/ Xxxx X. Xxxx, Xx.
---------------------------------------------
By: Xxxx X Xxxx, Xx.
Title: Senior Vice President
Address: 0000 X.X. 00xx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: 405/000-0000
Facsimile: 405/841-2175
AGENT:
BANK OF OKLAHOMA, N.A.,
a national banking association
/s/ Xxx Xxxxxxxx
---------------------------------------------
By: Xxx Xxxxxxxx
Title: Senior Vice President
Address:
000 Xxxxxx X. Xxxx Xxx.
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: 405/000-0000
Facsimile: 405/272-2588
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