AGREEMENT
Agreement is made this 30th day of July, 1999 between Delta
Petroleum Corporation ("Delta" or "Company") and Xxxxxx X. Xxxxxx,
Xx. and Xxxxx X. Xxxxxx ("Xxxxxx and Xxxxxx").
Whereas Xxxxxx and Xxxxxx have arranged for a loan of
$2,000,000 from Labyrinth Enterprises, LLC ("Labyrinth") to Delta
and Xxxxxx and Xxxxxx have each personally guaranteed the loan as
required by Labyrinth; and
Whereas the $2,000,000 loan proceeds are to be used by Delta
to acquire interests in oil and gas properties from Xxxxxxx
Petroleum Corporation ("Xxxxxxx") under an agreement dated June 8,
1999; and
Now therefore in consideration of the above:
1. Delta will assign a one-percent (1%) overriding royalty
interest to Xxxxxx X. Xxxxxx, Xx., or his designee(s) and a one-
percent (1%) overriding royalty interest to Xxxxx X. Xxxxxx, or his
designee(s) in the property interests ("Xxxxxxx Interests") to be
acquired by Delta under its June 8, 1999 agreement with Xxxxxxx.
Each 1% overriding royalty interest will be proportionately reduced
to the interest in each property acquired by Delta from Xxxxxxx.
Assignment will be made in a form acceptable to Xxxxxx and Xxxxxx.
Assignment will be made upon acquisition of each property interest
provided that appropriate consents to such assignments have been
obtained from third parties as may be required under various
agreements to which Delta is a party or assignment will be made
after such consents are no longer required. Until the assignment
is made an amount equal to the net proceeds form each override will
be paid to Messrs. Xxxxxx and Xxxxxx in the form of additional
salary and/or bonuses.
2. Notwithstanding the terms of the two aforementioned
notes, Delta recognizes that because of the significant risk
undertaken by Messrs. Xxxxxx and Xxxxxx in connection with these
loans, which risk is greatly disproportionate to their relatively
small ownership interests in Delta, Messrs. Xxxxxx and Xxxxxx do
not wish to be personally liable as either guarantors or lenders
relating to these loans beyond December 1, 1999. Consequently, if
financing in the form of equity or debt which effectively
eliminates the personal liability of each of Messrs. Xxxxxx and
Xxxxxx for the $2,000,000 loan from Labyrinth to Delta and which
discharges the previous $1,000,000 loan from Messrs. Xxxxxx and
Xxxxxx to Delta is not obtained by October 1, 1999, then Messrs.
Xxxxxx and Xxxxxx will have the right to cause the Xxxxxxx
Interests to be sold by Delta to a third party for a price and form
of consideration which is solely determined by them without the
consent of the board of directors of Delta or its shareholders.
The proceeds from any such sale will first be applied to the
aggregate $3,000,000 of indebtedness, plus interest and other
charges, resulting from the two aforementioned loans to Delta and
any excess balance of proceeds remaining will be retained by the
Company. The Company will indemnify and hold harmless Messrs.
Xxxxxx and Xxxxxx from any loss, including costs of litigation,
that may occur to either of them by reason of any sale of the
Xxxxxxx interests from any shareholder suit or other litigation
that may be directed against or include Messrs. Xxxxxx and Xxxxxx
which is in any way related to either of the two aforementioned
loans or to the Xxxxxxx properties, and from any loss, including
costs of litigation and/or collection, that may occur from non
payment and/or default under the terms of either of the
aforementioned loans.
DELTA PETROLEUM CORPORATION
BY: s/Xxxxxx X. Xxxxxx, Xx.
Authorized Officer
s/Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx, Xx.
s/Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
