LIMITED WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT AND BORROWING BASE REDETERMINATION
Exhibit 10.1
Execution Version
LIMITED WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT AND
BORROWING BASE REDETERMINATION
THIS
LIMITED WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT AND
BORROWING BASE REDETERMINATION (this “Amendment”)
dated as of May 8, 2018, but effective as of March 31, 2018, among
YUMA ENERGY, INC., a
Delaware corporation (“Yuma Energy”),
YUMA EXPLORATION AND PRODUCTION
COMPANY, INC., a Delaware corporation, PYRAMID OIL LLC, a California limited
liability company, and XXXXX
PETROLEUM CORP., a Delaware corporation (“Xxxxx”, and
together with Yuma Energy, Yuma Exploration and Production Company,
Inc., and Pyramid Oil LLC, the “Borrowers”,
and each a “Borrower”),
the Guarantors existing on the date hereof, the undersigned Lenders
party to the Credit Agreement (the “Lenders”) and
SOCIÉTÉ
GÉNÉRALE, in its capacity as Administrative Agent
(the “Administrative
Agent”).
RECITALS
A. The Borrowers, the
Lenders and the Administrative Agent are parties to that certain
Credit Agreement dated as of October 26, 2016, as amended by that
certain First Amendment to Credit Agreement and Borrowing Base
Redetermination dated as of May 19, 2017 (as so amended, and
as otherwise amended, restated, amended and restated, supplemented
or otherwise modified prior to the date hereof, the
“Credit
Agreement”).
B. Yuma Energy, in its
capacity as the Borrowing Agent, has notified the Administrative Agent and the Lenders
under the Credit Agreement that for the four fiscal quarter period
ended March 31, 2018 (the “Subject
Period”), the occurrence of several events beyond the
reasonable control of the Borrowers (including hurricanes and other
extraordinary weather, unforeseeable governmental mandates and
equipment maintenance), resulted in the Borrowers shutting-in
several of their xxxxx and suspending production from their
reserves for a period of time (the “2017 Shut-In
Events”). As a result of the 2017 Shut-In Events, the
Borrowers’ Consolidated Net Income for the Subject Period was
lower than projected.
C. The Borrowers have
requested certain amendments and waivers to the Credit Agreement
and, subject to the conditions precedent set forth herein, the
parties hereto have agreed to so amend and waive certain provisions
of the Credit Agreement as set forth herein.
NOW,
THEREFORE, in consideration of these premises and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as
follows:
1. Same Terms. All terms used
herein that are defined in the Credit Agreement shall have the same
meanings when used herein, unless the context hereof otherwise
requires or provides. In addition, (i) all references in the Loan
Documents to the “Agreement” shall mean the Credit
Agreement, as amended by this Amendment, and (ii) all references in
the Loan Documents to the “Loan Documents” shall mean
the Loan Documents, as amended by this Amendment.
2. Limited Waivers. At the
request of the Borrowers, the Administrative Agent and the Lenders,
hereby agree to waive any non-compliance (if any) by the
Borrowers’ with Section 6.1(a) of the Credit Agreement
for the four fiscal quarter period ended March 31, 2018
to the extent such non-compliance (if any) would not have occurred
but for the 2017 Shut-In Events (and any breach of any
representation or warranty under the Credit Agreement or any other
Loan Document as a result of the existence of such failure (if any)
to comply is hereby similarly waived), provided that, the Ratio of
Total Debt to EBITDAX for the four fiscal quarter period ended
March 31, 2018 (as reflected in the Borrowers’
Compliance Certificate for the four fiscal quarter period ended
March 31, 2018) does not exceed 3.75 to 1.00 (in which case, the
Borrowers’ non-compliance (if any) shall not be
waived).
The
waivers in this Section 2 are effective
only in respect of the matters and for the time periods expressly
set forth in this Section 2 and not for any
other period and, except as expressly set forth in this Amendment,
no other waivers are intended or made by this Amendment. No failure
or delay on the part of the Administrative Agent, any Lender, the
Issuing Bank or the holder of any Note in exercising any power or
right under the Credit Agreement or any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No
waiver or approval by the Administrative Agent, any Lender, the
Issuing Bank or the holder of any Note under this Amendment, the
Credit Agreement or any other Loan Document shall, except as may be
otherwise stated in such waiver or approval, be applicable to any
subsequent transaction or any Default or Event of Default under any
Loan Document.
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3. Amendments to Credit Agreement.
Subject to the conditions precedent set forth in Section 5 hereof,
the Credit Agreement is amended as follows:
A. Section 5.10(a) of
the Credit Agreement is hereby amended and restated in its entirety
to read as follows:
“(a) Unless
otherwise agreed to by the Administrative Agent and the Lenders,
the Borrowing Agent shall provide to the Administrative Agent on or
before May 18, 2018 evidence satisfactory to the
Administrative Agent that the Borrowers have entered into (and
thereafter, the Borrower shall maintain in effect) Hedge
Transactions with Approved Counterparties with respect to at least
the monthly notional volumes of natural gas and crude oil, as
applicable, set forth in on Schedule 5.10 for each such month
and having the floor price levels indicated therein (it being
acknowledged and agreed that the intention of the parties is that
the Borrowers shall have entered into (and shall thereafter
maintain) Hedge Transactions with Approved Counterparties
(including the Hedge Transactions described above) such that
(x) the notional volumes of all natural gas related Hedge
Transactions of the Borrowers and their respective Subsidiaries, in
the aggregate, equal or exceed 70% of the Borrowers’ and
their respective Subsidiaries’ reasonably anticipated
projected production of proved developed producing reserves from
natural gas for each month during the period from June 1, 2018
through December 31, 2019, (y) the notional volumes
of all natural gas related Hedge Transactions of the Borrowers and
their respective Subsidiaries, in the aggregate, equal or exceed
50% of the Borrowers’ and their respective
Subsidiaries’ reasonably anticipated projected production of
proved developed producing reserves from natural gas for the 2020
calendar year, and (z) the notional volumes of all crude oil
related Hedge Transactions of the Borrowers and their respective
Subsidiaries, in the aggregate, equal or exceed 80% of the
Borrowers’ and their respective Subsidiaries’
reasonably anticipated projected production of crude oil for each
month during the period from ten (10) Business Days after the
Effective Date through
December 31, 2019).”
B. Section 5 of the
Credit Agreement is hereby amended by adding a new Section 5.19
therein to read as follows:
“SECTION
5.19 Production
Reports and Lease Operating Statements. Commencing with the
calendar month ending April 30, 2018, within 45 days after the end
of each calendar month, a report setting forth, for such calendar
month (i) the volume of production and sales attributable to
production (and the prices at which such sales were made and the
revenues derived from such sales) for each such calendar month from
the Oil and Gas Properties, in the aggregate, and (ii) the related
ad valorem, severance and production taxes and lease operating
expenses attributable thereto and incurred for each such calendar
month.”
C. Section 6.1(b) of
the Credit Agreement is hereby amended and restated to read as
follows:
“(b) Current
Ratio. Yuma Energy will not permit, as of the last day of
any fiscal quarter, commencing with the fiscal quarter ending
December 31, 2016, its ratio of (i) consolidated current
assets of such Borrower and its Subsidiaries (including the unused
amount of the total Commitments (but only to the extent that no
Event of Default then exists or that such Event of Default has been
waived by the requisite Lenders), but excluding non-cash assets
under ASC Topic 815 (formerly FAS 133) to (ii) consolidated current
liabilities of such Borrower and its Subsidiaries (excluding
(x) non-cash obligations under ASC Topic 815 (formerly FAS
133) that may be classified as current liabilities and (y) the
current portion of long-term Indebtedness outstanding under this
Agreement) to be less than 1.00 to 1.00.”
4. Borrowing Base Redetermination.
Upon May 8, 2018, until the next redetermination of the Borrowing
Base in accordance with the provisions of Section 2.4 of the
Credit Agreement, the amount of the Borrowing Base in effect
immediately prior to May 8, 2018 shall be decreased from
$40,500,000 to $35,000,000. Both the Borrower, on the one hand, and
the Administrative Agent and the Lenders, on the other hand, agree
that the reduction of the Borrowing Base pursuant to Section 4
shall constitute the spring 2018 Scheduled Redetermination
(and, in any event, shall not constitute an Interim
Redetermination).
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5. Conditions Precedent. This
Amendment shall become effective as of March 31, 2018
(the “Amendment Effective
Date”) upon each of the following conditions being
satisfied:
A. Amendment to Credit Agreement.
The Administrative Agent shall have received multiple original
counterparts, as requested by the Administrative Agent, of this
Amendment duly and validly executed and delivered by duly
authorized officers of the Borrowers, the Guarantors, the
Administrative Agent and the Majority Lenders.
B. Representations
and Warranties; No Defaults. Each Borrower shall have confirmed and
acknowledged to the Administrative Agent and the Lenders, and by
its execution and delivery of this Amendment, each Borrower does
hereby confirm and acknowledge to the Administrative Agent and the
Lenders, that (i) all representations and warranties contained
herein or in the other Loan Documents or otherwise made in writing
in connection herewith or therewith shall be true and correct with
the same force and effect as though such representations and
warranties have been made on and as of the Amendment Effective Date
and (ii) no Default or Event of Default exists under the Credit
Agreement or any of the other Loan Documents.
6. Amendment Fee. Upon the
effectiveness of this Amendment pursuant to Section 5, the Borrowing
Agent shall pay to the Administrative Agent for the account of each
Lender that has delivered an executed counterpart signature page to
this Amendment to the Administrative Agent or its counsel on or
before 5 p.m. central time on May 8, 2018, a fee equal to ten
(10) basis points on the amount of each Lender’s allocated
commitment amount of the Maximum Credit Amount after giving effect
to the Borrowing Base redetermination in Section 4 of this
Amendment.
7. Post Closing
Covenant. Not later than thirty
(30) days after May 8, 2018 (or such longer period as the
Administrative Agent may agree in its reasonable discretion), the
Borrower shall furnish to the Administrative Agent appropriate
evidence confirming that Mortgages have been filed that are
effective to create in favor of the Administrative Agent for the
benefit of the holders of Secured Obligations, a legal, valid and
enforceable Lien on the Borrowers’ Oil and Gas properties
located in Xxxxxx County, Texas (including but not limited to the
State 320 1H well).
8. Certain Representations. Each
Borrower represents and warrants that, as of the Amendment
Effective Date: (A) each Borrower has full power and authority
to execute this Amendment and the other documents executed in
connection herewith and this Amendment and such other documents
constitute the legal, valid and binding obligation of each Borrower
enforceable in accordance with their terms, except as
enforceability may be limited by general principles of equity and
applicable bankruptcy, insolvency, reorganization, moratorium, and
other similar laws affecting the enforcement of creditors’
rights generally; and (B) no authorization, approval, consent
or other action by, notice to, or filing with, any governmental
authority or other person is required for the execution, delivery
and performance by each Borrower thereof. In addition, each
Borrower represents that after giving effect to this Amendment all
representations and warranties contained in the Credit Agreement
and the other Loan Documents are true and correct in all material
respects on and as of the Amendment Effective Date as if made on
and as of such date except to the extent that any such
representation or warranty expressly relates solely to an earlier
date, in which case such representation or warranty is true and
correct in all material respects as of such earlier
date.
9. No Further Amendments or
Waivers. Except as amended or waived hereby, the Credit
Agreement and the Loan Documents shall remain unchanged and all
provisions shall remain fully effective between the
parties.
10. Acknowledgments and Agreements.
Each Borrower acknowledges that on the date hereof all outstanding
Obligations are payable in accordance with their respective terms,
and each Borrower waives any defense, offset, counterclaim or
recoupment with respect thereto. Each Borrower, the Administrative
Agent and each Lender do hereby adopt, ratify and confirm the
Credit Agreement, as amended hereby, and the Loan Documents and
acknowledge and agree that the Credit Agreement, as amended hereby,
and the Loan Documents are and remain in full force and effect.
Each Borrower acknowledges and agrees that its liabilities and
obligations under the Credit Agreement, as amended hereby, and
under the Loan Documents, are not impaired in any respect by this
Amendment. Any breach of any representations, warranties and
covenants under this Amendment shall be an Event of Default under
the Credit Agreement.
Page 3
11. Limitation on Agreements. The
modifications set forth herein are limited precisely as written and
shall not be deemed (A) to be a consent under or a waiver of
or an amendment to any other term or condition in the Credit
Agreement or any of the Loan Documents (other than the waiver
provided for in Section
2 of this Amendment), or (B) to prejudice any right or
rights that the Administrative Agent now has or may have in the
future under or in connection with the Credit Agreement and the
Loan Documents, each as amended hereby, or any of the other
documents referred to herein or therein. This Amendment shall
constitute a Loan Document for all purposes.
12. Confirmation of Security. Each
Borrower hereby confirms and agrees that all of the Security
Documents, as may be amended in accordance herewith, that presently
secure the Obligations shall continue to secure, in the same manner
and to the same extent provided therein, the payment and
performance of the Obligations as described in the Credit Agreement
as modified by this Amendment.
13. Counterparts. This Amendment
may be executed in any number of counterparts, each of which when
executed and delivered shall be deemed an original, but all of
which constitute one instrument. In making proof of this Amendment,
it shall not be necessary to produce or account for more than one
counterpart thereof signed by each of the parties
hereto.
14. Incorporation of Certain Provisions by
Reference. The provisions of Section 9.9 of the Credit
Agreement captioned “Governing Law; Jurisdiction; Waiver of
Venue; Service of Process” are incorporated herein by
reference for all purposes.
15. Entirety, Etc. This Amendment
and all of the other Loan Documents embody the entire agreement
between the parties. THIS AMENDMENT AND ALL OF THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES.
[The
rest of this page is intentionally left blank; the signature pages
follow.]
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IN
WITNESS WHEREOF, the parties hereto have executed this Amendment to
be effective as of the date and year first above
written.
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BORROWERS
By:
/s/ Xxx X.
Xxxxx
Name:
Xxx X. Xxxxx
Title:
CEO
YUMA
EXPLORATION AND PRODUCTION COMPANY, INC.
By:
/s/ Xxx X.
Xxxxx
Name:
Xxx X. Xxxxx
Title:
CEO
PYRAMID
OIL LLC
By:
/s/ Xxx X.
Xxxxx
Name:
Xxx X. Xxxxx
Title:
CEO
XXXXX
PETROLEUM CORP.
By:
/s/ Xxx X.
Xxxxx
Name:
Xxx X. Xxxxx
Title:
CEO
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Signature
Page to Limited Waiver and Second Amendment
ADMINISTRATIVE
AGENT
AND
LENDER:
SOCIÉTÉ
GÉNÉRALE
By:
/s/ Xxx
Xxxxxxxxxxx
Name:
Xxx Xxxxxxxxxxx
Title:
Director
LENDER:
CIT
BANK, N.A.
By:
/s/ Xxxx
Xxxxxx
Name:
Xxxx Xxxxxx
Title:
Director
LENDER:
LEGACYTEXAS
BANK
By:
/s/ Xxxxxxx
Xxxxxxxx
Name:
Xxxxxxx Xxxxxxxx
Title:
Senior Vice President
Signature
Page to Limited Waiver and Second Amendment
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THE
GUARANTORS HEREBY CONSENT TO THE EXECUTION, DELIVERY AND
PERFORMANCE OF THE TERMS OF THIS AMENDMENT BY THE
BORROWERS.
THE
YUMA COMPANIES, INC.
By:
/s/ Xxx X.
Xxxxx
Name:
Xxx X. Xxxxx
Title:
CEO
XXXXX
PETROLEUM ACQUISITION CORP.
By:
/s/ Xxx X.
Xxxxx
Name:
Xxx X. Xxxxx
Title:
CEO
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Signature
Page to Limited Waiver and Second Amendment
