CONTINGENT PAYMENT RIGHTS PURCHASE
AGREEMENT
DELTA PETROLEUM
CORPORATION
Dated as of March 26,
2009
CONTINGENT PAYMENT RIGHTS
PURCHASE AGREEMENT
This CONTINGENT
PAYMENT RIGHTS PURCHASE AGREEMENT, dated as of March 26, 2009
(this “ Agreement ”), is entered into by and
among Delta Petroleum Corporation, a Delaware corporation (the
“ Company ”) and Tracinda Corporation, a Nevada
corporation (“ Purchaser ”).
WHEREAS, the
Company wishes to issue and sell to Purchaser, and Purchaser wishes
to purchase, certain contingent payment rights pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE,
for and in consideration of the premises and the consummation of
the transactions referred to above, it is mutually covenanted and
agreed as follows:
Section 1.1
Definitions . Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to them as
follows:
“
Additional Closing ” has the meaning set forth in
Section 2.3.
“
Affiliate ” of a Person means a Person that, directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned
Person.
“ Agreed
Conditions ” means: (a) the Company shall have cured
all Defaults (as defined in the Credit Agreement); and (b) the
repurchase contemplated by Section 5.4 will not constitute
such a Default.
“
Amber ” means Amber Resources Company of Colorado, a
Delaware corporation and a 91.68%-owned Subsidiary of the
Company.
“ Annual
Report ” has the meaning set forth in
Section 3.1(e).
“ Board
of Directors ” means the board of directors of the
Company.
“
Business Day ” means any day other than a Saturday,
Sunday or a day on which banking institutions in Denver, Colorado
or Los Angeles, California are authorized or obligated by law or
executive order to remain closed.
“ Cash
Equivalents ” means (a) securities issued or
directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having
maturities of not more than six months from the date of
acquisition, (b) certificates of deposit with maturities of
six months or less from the date of acquisition, bankers’
acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any commercial bank organized and
in existence under the laws of the United States and having capital
and surplus in excess of $500 million, (c) repurchase
obligations with a term of not more than seven days for underlying
securities of the types described in clauses (a) and
(b) above entered into with any financial institution meeting
the qualifications specified in clause (b) above,
(d) commercial paper having the highest rating obtainable from
Moody’s Investors Service, Inc. or Standard &
Poor’s Ratings Services and in each case maturing within
180 days after the date of acquisition, (e) investments
in commercial paper, maturing not more than 180 days after the
date of acquisition, issued by a corporation organized and in
existence under the laws of the United States or any foreign
country
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recognized by
the United States with a rating at the time as of which any
investment therein is made of “P-1” (or higher)
according to Moody’s Investor Service, Inc. or
“A-1” (or higher) according to Standard &
Poor’s Ratings Services, and (f) money market mutual
funds substantially all of the assets of which are of the type
described in the foregoing clauses (a) through (e)
above.
“ Claims
Expenses ” means the sum of all fees, costs and expenses
(including attorneys’ fees and expenses, including fees paid
in exchange for services provided by outside counsel in connection
with prosecuting the Litigation that are contingent on the success
of the Litigation) incurred or accrued by the Company in
prosecuting, defending and/or settling the Litigation; provided
that the Royalties shall not be deemed to be Claims
Expenses.
“
Closings ” means the Initial Closing and the
Additional Closing, each of which may from time to time be referred
to as a “Closing.”
“ Common
Stock ” means the Company’s common stock, par value
$0.01 per share.
“
Commission ” means the Securities and Exchange
Commission of the United States of America.
“
Control ” (including the terms
“controlled,” “controlled by” and
“under common control with”) means the possession,
directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management or policies of a
Person, whether through the ownership of stock, including the power
to dispose of or vote such stock, as trustee or executor, by
contract or otherwise.
“ CPR
” means a right to receive a payment in cash from the Net
Proceeds pursuant to the terms of this Agreement.
“ CPR
Payment Amount ” for the CPR purchased at the Initial
Closing, means up to $16,619,288.69 of the Net Proceeds, and for
the CPR purchased at the Additional Closing, if any, means up to
$11,265,423.87 of the Net Proceeds, and in the aggregate for both
CPRs up to $27,884,712.56 of the Net Proceeds.
“ CPR
Payment Date ” means the date on which Purchaser receives
payment pursuant to Section 2.5(a).
“ CPR
Purchase Price ” has the meaning set forth in
Section 2.
“ Credit
Agreement ” means that certain Second Amended and
Restated Credit Agreement dated as of November 3, 2008, as
amended by that certain First Amendment to Second Amended and
Restated Credit Agreement dated as of March 2, 2009, by and
among the Company, as borrower, JPMorgan Chase Bank, N.A., as
administrative agent and each of the other financial institutions
party thereto, as the same may be amended, supplemented or
otherwise modified from time to time.
“
Delivery Instructions ” means instructions addressed
to Bank of Oklahoma, in form and substance reasonably satisfactory
to Purchaser, directing the delivery to Purchaser, via wire
transfer in immediately available funds, of the CPR Payment Amount
promptly, but in no event later than two Business Days after
receipt by the Company of the Litigation Proceeds.
“
Encumbrances ” means any and all liens, charges,
security interests, financing statements, encumbrances, options,
claims, mortgages, pledges, proxies, voting trusts or agreements,
obligations, understandings or arrangements, defects or
imperfections of title or other restrictions on title or transfer
of any nature whatsoever, including any conditional sale or other
title retention agreement.
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“
Exchange Act ” means the Securities and Exchange Act
of 1934, as amended from time to time, or any successor
legislation, and any regulations or rules promulgated
thereunder.
“
Governmental Entity ” means any domestic or foreign
court, arbitral tribunal, administrative agency or commission or
other governmental or other regulatory authority or
agency.
“ Initial
Closing ” has the meaning set forth in
Section 2.3(a).
“
Litigation ” means the portion of the case entitled
Amber Resources Co., et al. v. United States, Civ. Act.
No. 2-30, filed in the United States Court of Federal Claims
on January 9, 2002, covered by judgments in the amounts of
$58,527,277 entered in favor of the Company and $1,496,234.86
entered in favor of Amber, and against the United States of America
by the United States Court of Federal Claims on January 12,
2007, and described in the decision of the United States Court of
Appeals for the Federal Circuit dated August 25,
2008.
“
Litigation Proceeds ” means the gross amount of all
judgments, compensation, damages, penalties, interest and other
payments in the form of cash or Cash Equivalents, if any, received
by the Company relating to claims of the Company and Amber in the
Litigation, whether pursuant to court order at trial or upon appeal
or pursuant to the terms of any settlement agreement.
“
Material Adverse Effect ” means a material adverse
effect on the business, assets, liabilities, financial condition or
results of operations of the Company and its Subsidiaries taken a
whole, or a material adverse effect on the ability of the Company
to perform its obligations under this Agreement; provided however,
that none of the following individually or in the aggregate, will
be deemed to have a Material Adverse Effect: (x) fluctuations
in the market price of the Common Stock; or (y) any change or
effect arising out of general economic conditions or conditions
generally affecting the petroleum and natural gas
industries.
“ Net
Proceeds ” means the sum of (a) the Litigation
Proceeds relating to the claims of Amber in the Litigation and
(b) 50% of the difference between the Litigation Proceeds
relating to the claims of the Company in the Litigation and the
Royalties.
“
Opinion ” has the meaning set forth in
Section 4.1(c).
“
Parties ” means the Company and Purchaser, and
“Party” means either, as applicable.
“
Person ” means any individual, corporation,
partnership, joint venture, limited liability company, business
trust, association, joint-stock company, trust, estate,
unincorporated organization or government or any agency or
political subdivision thereof.
“
Royalties ” means the overriding royalties on the
Litigation Proceeds, in the approximate amount of 8% of the
Litigation Proceeds, referred to in Item 3 of the Annual
Report.
“
Securities Act ” means the Securities Act of 1933, as
amended from time to time, or any successor legislation, and any
regulations or rules promulgated thereunder.
“
Subsidiary ” when used with respect to any Person
means any corporation or other organization, whether incorporated
or unincorporated, of which such Person directly or indirectly owns
or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar
functions with respect to such corporation or other organization,
or any organization of which such Person is a general
partner.
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“
Surviving Person ” has the meaning set forth in
Section 7.1.
ARTICLE II
PURCHASE OF CONTINGENT PAYMENT RIGHTS
Section 2.1
Purchase of CPRs . Subject to the terms and conditions of
this Agreement, at the Closings, Purchaser shall be obligated to
purchase, and the Company shall be obligated to sell to Purchaser,
the CPRs, as set forth in this Article II, free and clear of
all Encumbrances, except for any restrictions on transfer arising
under the Securities Act or any applicable state securities
laws.
Section 2.2
Purchase Price . The Purchaser agrees to pay to the Company
Fourteen Million Nine Hundred Thousand dollars ($14,900,000) at the
Initial Closing as the purchase price for the CPR purchased and
sold at such Closing, and Ten Million One Hundred Thousand dollars
($10,100,000) at the Additional Closing as the purchase price for
the CPR purchased and sold at such Closing, for an aggregate
purchase price of Twenty Five Million dollars ($25,000,000) (the
“ CPR Purchase Price ”). The Parties agree that
the portion of the CPR Purchase Price allocable to the Litigation
Proceeds relating to the claims of Amber in the Litigation is
$100,000.
Section 2.3
Closings; Closing Deliveries .
(a)
Closings . The Closings of the purchase and sale of the CPRs
pursuant to this Agreement shall occur at the offices of Davis
Graham & Stubbs LLP located at 1550 Seventeenth Street,
Suite 500, Denver, CO 80202 at 10:00 a.m., Mountain Time,
or at such other time or location as agreed in writing by the
Parties. The initial Closing of the first CPR shall occur
concurrently with the execution and delivery of this Agreement (the
“ Initial Closing ”), and a second Closing of
the second CPR shall occur on the first Business Day following the
date on which the Company and Purchaser receive the Opinion
described in Section 4.1(c) (the “ Additional
Closing ”). In the event the Company and Purchaser do not
receive the Opinion on or prior to April 15, 2009, then the
Parties’ obligations under this Agreement with respect to the
second CPR shall terminate, and neither Party shall have any
obligation to the other relating to the second CPR; provided that
the failure to receive the Opinion did not arise from a breach of
this Agreement by such Party.
(b)
Closing Deliveries by the Company . At each Closing, the
Company shall deliver: (i) one or more certificates
representing the CPR being purchased at such Closing in
substantially the form attached hereto as Exhibit A
(each, a “ CPR Certificate ”), each such
certificate to be duly and validly issued in favor of Purchaser (or
an Affiliate thereof designated by Purchaser) and otherwise
sufficient to vest in Purchaser (or an Affiliate thereof designated
by Purchaser) good title to such CPR; (ii) an original
execution copy of the Delivery Instructions dated the date of such
Closing; and (iii) an opinion of Davis Graham & Stubbs LLP
in form and substance reasonably satisfactory to
Purchaser.
(c)
Closing Deliveries by Purchaser . At each Closing, Purchaser
shall deliver: (i) the CPR Purchase Price by wire transfer of
immediately available funds to an account designated by the Company
at least two Business Days prior to such Closing; and (ii) an
opinion of Glaser, Weil, Fink, Jacobs & Shapiro, LLP in form
and substance reasonably satisfactory to the Company.
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Section 2.4
Assignment; Voting; Interest in the Company .
(a) No
Assignment . The CPRs shall not be assignable or otherwise
transferable by Purchaser, except by operation of law; provided
that Purchaser may assign and/or pledge the CPRs as security to
third party financing sources.
(b) No
Voting Rights . The CPRs shall not have any voting or dividend
rights and shall not bear a stated rate of interest.
(c) No
Ownership Interest . The CPRs shall not represent any equity or
ownership interest in the Company.
Section 2.5
Payment of the CPR Payment Amount . Within one day after
each receipt by the Company of any Litigation Proceeds, the Company
shall notify Purchaser in writing of the amount of the Litigation
Proceeds received by the Company (the “ Notice
”). The Company will cause the CPR Payment Amount relating to
the Litigation Proceeds described in the Notice to be paid to
Purchaser or Purchaser’s transferee out of the Net Proceeds
promptly, but in no event later than two Business Days, after
tender by Purchaser or Purchaser’s transferee of the
applicable CPR Certificate. In the event that the Company receives
Litigation Proceeds on more than one date, then the CPR Payment
Amount with respect to any such Litigation Proceeds shall be paid
with respect to each such receipt of Litigation Proceeds. The
calculation of the CPR Payment Amount following the calculation of
the initial CPR Payment Amount shall be made on a cumulative basis
to reflect the receipt of all Litigation Proceeds received to date
and the prior payment of any CPR Payment Amounts. Upon partial
payment of the CPR Payment Amount represented by a CPR Certificate,
the Company shall promptly issue a new CPR Certificate representing
the remaining CPR Payment Amount owing hereunder.
ARTICLE III
COMPANY REPRESENTATIONS AND WARRANTIES
Section 3.1
Company Representations and Warranties . The Company hereby
represents and warrants to Purchaser as follows:
(a)
Organization . The Company is a corporation, duly organized,
validly existing and in good standing under the laws of the State
of Delaware. The Company has the requisite corporate power and
authority to own, lease and operate its assets and properties and
to carry on its business as it is now being conducted. The Company
is qualified to transact business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by
it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so
qualified and in good standing would not reasonably be expected to
have a Material Adverse Effect.
(b)
Authorization; Validity of Agreement . The Company has full
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The
execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated
hereby have been duly approved and authorized by (i) a majority of
the Board of Directors and (ii) a majority of the members of
the Board of Directors other than Messrs. Parker, Murren and
Taylor, which approvals and authorizations included a determination
that the fair market value of the CPRs is no greater than the CPR
Purchase Amount. No other corporate action, including the vote or
consent of the Company’s stockholders on the part of the
Company is necessary to authorize the exe
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