FIRST AMENDMENT TO THE EMPLOYMENT AGREEMENT
Exhibit 10.5(a)
FIRST
AMENDMENT TO THE EMPLOYMENT AGREEMENT
This
First Amendment to the Employment Agreement (this
“Amendment”) is
dated as of October 26, 2016, among Yuma Energy, Inc. (as successor
to The Yuma Companies, Inc.) (“Yuma” or the “Company”) and Xxx X. Xxxxx
(“Employee”),
and amends that certain Employment Agreement effective as of
October 1, 2012 between the Company and Employee (the
“Employment
Agreement”). Capitalized terms used and not otherwise
defined in this Amendment shall have the respective meanings set
forth in the Employment Agreement (as defined below).
WHEREAS, the Company and Employee desire
to modify the Employment Agreement on the terms herein;
and
WHEREAS, in December 2014, the Board of
Directors (the “Board”) of the Company terminated
the Overriding Royalty Interest Plan (the “ORRI Plan”);
WHEREAS, as a result of the termination
of the ORRI Plan, the Board provided that Employee would no longer
receive any future grants under the ORRI Plan or the Employment
Agreement; and
WHEREAS, the Company and Employee desire
to amend the Employment Agreement to provide that Employee is not
entitled to any future grants of XXXXx as provided in the
Employment Agreement.
NOW, THEREFORE, in consideration of the
premises and mutual promises, representations, warranties,
covenants, conditions and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Employee,
intending to be legally bound by the terms hereof, agree as
follows:
ARTICLE
I
AMENDMENTS
Section
1.1 Amendments.
A. Section G of
Article IV of the Employment Agreement is hereby amended and
restated to read in its entirety as follows:
“G.
Employee is
entitled to the remaining overriding royalty interest
(“ORRI”) available on each Prospect after all other
contractual requirements have been fulfilled (such Employee’s
interest, the “Contractual ORRI”) on all projects or
Prospects existing and Sold on or before September 14, 2014, except
with respect to Prospects within the Amazon, Xxxxxxxxxx, Xxxxxxx or
Xxxxxx projects as set forth in Section I of Article IV
below.”
B. Section I is added
to Article IV of the Employment Agreement to read in its entirety
as follows:
“I.
As to xxxxx spudded
after September 14, 2014 in the following projects, Employee will
be entitled to XXXXx as set forth below:
Addison and Xxxxxx Projects
Employee’s
Contractual ORRI is, and Employee will be assigned, 25% of his
original Contractual ORRI on xxxxx that were not yet spudded as of
September 14, 2014, on the acreage in any designated spacing unit
(i.e. voluntary, commissioner or by adopted field rule) in the
Xxxxxx Xxxxxx Chalk Acreage and Addison Acquisition Acreage
Projects when the first well in that spacing unit has been spudded.
As an illustration, where Employee’s Contractual ORRI
originally was 0.3400%, then Employee’s resulting Contractual
ORRI shall be 0.0850%, subject to any applicable adjustments based
on the terms of the ORRI.
1
Amazon 3-D Project
Employee’s
Contractual ORRI for Prospects in the Amazon 3-D Project is
(i) for Prospects that, as of September 14, 2014, have been
accepted by the Company and which are “Leased and money
collected,” 50% of his original Contractual ORRI, and
(ii) for Prospects that, as of September 14, 2014, have been
accepted by the Company but not “Leased and money
collected,” 40% of his original Contractual ORRI.
Employee’s Contractual ORRI will be assigned on each such
Prospect once the Prospect is Sold and the initial test well has
been spudded on such Prospect in the Amazon 3-D Project. For
illustrative purposes and subject to the foregoing and any
applicable adjustments based on the terms of the ORRI,
Employee’s ORRI in the Prospects in the Amazon 3-D Project
are:
|
Prospect
|
Original Contractual ORRI1
|
Applicable Percentage2
|
Resulting Contractual ORRI1, 2, 3
|
|
Anaconda
|
0.239646%
|
40%
|
0.0958584%
|
|
Xxxx City
North
|
0.239646%
|
50%
|
0.119823%
|
|
Xxxxxx
|
0.239646%
|
50%
|
0.119823%
|
|
Jaguarundi
|
0.207503%
|
50%
|
0.103752%
|
|
N. Spider
Monkey
|
0.239646%
|
50%
|
0.119823%
|
|
S. Spider
Monkey
|
0.207503%
|
50%
|
0.103752%
|
|
Tambo
|
0.239646%
|
40%
|
0.0958584%
|
Notes:
1
– Subject to applicable adjustments based on the terms of the
ORRI.
2
– Subject to the terms of this Section I.
3
– The ORRI is as provided in the definition of
“ORRI,” which provides that the ORRI means the
overriding royalty interest, or interest in oil and gas produced at
the surface, free of the expense of Production, and in addition to
the usual land owner’s royalty reserved to the lessor in an
oil and gas lease. An ORRI shall be free and clear of any costs of
drilling, development and operations, but shall bear its
proportionate part of all severance and other taxes and all
marketing costs on Production, including costs incurred in
dehydrating, treating, transporting, boosting, compressing or
otherwise processing oil and gas in order to make same
marketable.
Xxxxxxxxxx 3-D Project
Employee’s
Contractual ORRI for Prospects in the Xxxxxxxxxx 3-D Project is
(i) for Prospects that, as of September 14, 2014, have been
accepted by the Company and which are “Leased and money
collected,” 50% of his original Contractual ORRI, and
(ii) for Prospects that, as of September 14, 2014, have been
accepted by the Company but not “Leased and money
collected,” 40% of his original Contractual ORRI.
Employee’s Contractual ORRI will be assigned on each such
Prospect once the Prospect is Sold and the initial test well has
been spudded on such Prospect in the Xxxxxxxxxx 3-D Project. For
illustrative purposes and subject to the foregoing and any
applicable adjustments based on the terms of the ORRI,
Employee’s ORRI in the Prospects in the Xxxxxxxxxx 3-D
Project are:
|
Prospect
|
Original Contractual ORRI1
|
Applicable Percentage2
|
Resulting Contractual ORRI1, 2, 3
|
|
Aztec
|
0.0900%
|
40%
|
0.03600%
|
|
Bandelier
|
0.0900%
|
40%
|
0.03600%
|
|
Bighorn
|
0.0900%
|
40%
|
0.03600%
|
|
Bryce
|
0.0900%
|
40%
|
0.03600%
|
|
Carlsbad
|
0.0900%
|
40%
|
0.03600%
|
|
Glacier
|
0.0900%
|
50%
|
0.04500%
|
|
Xxxxxx
|
0.0900%
|
50%
|
0.04500%
|
|
Mesa
Verde
|
0.0900%
|
50%
|
0.04500%
|
|
Ranier
|
0.0900%
|
40%
|
0.03600%
|
|
Ripken
|
0.0900%
|
40%
|
0.03600%
|
|
Xxxx
|
0.0900%
|
40%
|
0.03600%
|
2
Notes:
1
– Subject to applicable adjustments based on the terms of the
ORRI.
2
– Subject to the terms of this Section I.
3
– The ORRI is as provided in the definition of
“ORRI,” which provides that the ORRI means the
overriding royalty interest, or interest in oil and gas produced at
the surface, free of the expense of Production, and in addition to
the usual land owner’s royalty reserved to the lessor in an
oil and gas lease. An ORRI shall be free and clear of any costs of
drilling, development and operations, but shall bear its
proportionate part of all severance and other taxes and all
marketing costs on Production, including costs incurred in
dehydrating, treating, transporting, boosting, compressing or
otherwise processing oil and gas in order to make same
marketable.
Section
1.2 Miscellaneous.
A. No Further Amendments. Except
as expressly set forth in this Amendment, the Employment Agreement
is hereby ratified and confirmed in accordance with its
terms.
B. Governing Law. This Amendment
will be governed by and construed in accordance with the laws of
the State of Texas.
C. Counterparts. This Amendment
may be executed in counterparts, each of which shall be deemed an
original instrument, but all such counterparts together shall
constitute but one agreement. Any party’s delivery of an
executed counterpart signature page by facsimile or email is as
effective as executing and delivering this Amendment in the
presence of the other party. No party shall be bound until such
time as all of the parties have executed counterparts of this
Amendment.
[Remainder of Page Intentionally Left
Blank]
3
IN WITNESS WHEREOF, the undersigned have
executed this Amendment as of the date first above
written.
|
|
|
||
|
|
|
|
|
|
|
By:
|
/s/
Xxxx X.
XxXxxxxx
|
|
|
|
|
Name: Xxxx X. XxXxxxxx |
|
|
|
|
Title:
Executive Vice President and Chief Operating Officer
|
|
|
|
|
|
|
|
|
EMPLOYEE |
|
|
|
|
|
|
|
|
|
By: | /s/ Xxx X. Xxxxx |
|
|
|
|
Name: Xxx X. Xxxxx |
|
4
