Exhibit 10.18

 

Providence Energy Partners III, LP

16400 North Dallas Parkway, Suite 400

Dallas, Texas 75248

 

March 30, 2017

 

PetroShare Corp.

9635 Maroon Circle

Suite 400

Englewood, CO 80112

Attn: Mr. Stephen J. Foley

 

Re:                             Adjustment to Credit Facility

 

Dear Steve:

 

Pursuant to this letter agreement (this “Letter Agreement”), between Providence
Energy Partners III, LP, whose address is 16400 North Dallas Parkway, Suite 400,
Dallas, TX 75248 (“PEP III”) and PetroShare Corp., whose address is 9635 Maroon
Circle, Suite 400, Englewood, CO 80112 (formerly at 7200 S. Alton Way, Suite
B220, Centennial, CO 80112) (“PetroShare” and, together with PEP III, the
“Parties”), the parties intend to address and agree, as between PEP III and
PetroShare, to the treatment of certain payments under, and related amendments
to, the Revolving Line of Credit Facility Agreement, dated October 13, 2016,
between PEP III (as lender) and PetroShare (as borrower) (the “Credit
Agreement”), together with the Promissory Note, dated March 13, 2016, issued by
PetroShare (as borrower) to PEP III (as lender) in conjunction with the Credit
Agreement (the “Promissory Note”).  Capitalized terms used but not defined in
this Letter Agreement will have the meanings given to them in the Credit
Agreement and the Promissory Note, as applicable.

 

Please indicate PetroShare’s agreement with the terms of this Letter Agreement
by executing the applicable signature block below, and by executing and
returning the amendments to the Credit Agreement and the Promissory Agreement
that are attached as Exhibits A and B hereto (the “Amendments”).  This Letter
Agreement and the Amendments shall become binding upon PEP III and PetroShare
upon the execution of this Letter Agreement by each of PEP III and PetroShare,
with the date of such full execution referred to herein as the “Effective Date”.

 

The Parties hereby agree to the following:

 

1.  Repayment of 50% of Principal Balance.  In its capacity as Borrower under
the Credit Agreement and the Promissory Note, on April 13, 2017, PetroShare
shall repay to PEP III fifty percent (50%) of its then-outstanding principal
balance under the Line of Credit established pursuant to the Credit Agreement
(the “April Payment”).  The Parties estimate that, as of the date of this
letter, PetroShare’s current outstanding principal balance under the Line of
Credit is $7,105,000.00; and that the April Payment will be in the amount of
$3,552,500.00.  The April Payment shall be made in accordance with the terms of
the Credit Agreement and the Promissory

 

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Note, including terms pertaining to payments made thereunder; provided that the
Parties agree that failure to make the April Payment by April 13, 2017 shall
constitute an immediate Event of Default under the Credit Agreement and an
immediate Event of Acceleration under the Promissory Note.

 

2.  Repayment of Remainder of Balance.  In its capacity as Borrower under the
Credit Agreement and the Promissory Note, on June 13, 2017, PetroShare shall
repay all amounts then-outstanding under the Line of Credit established pursuant
to the Credit Agreement, including principal and interest (the “June Payment”). 
The Parties estimate that, taking into account the Parties estimate of
PetroShare’s current outstanding principal balance under the Line of Credit and
assuming that PetroShare makes the April Payment by the applicable deadline, in
each case as set forth in paragraph 1 above, and assuming that PetroShare does
not obtain any further Advances under the Line of Credit, PetroShare’s total
outstanding balance under the Line of Credit as of June 13, 2017 will be a
principal balance in the amount of $3,552,500.00 and accrued interest in the
amount of $255,734.55; and that the June Payment will be in the amount of
$3,808,234.55.

 

3.  Extension of Maturity Date; No Further Advances.  The Parties recognize that
the date of the June Payment represents an extension of the Maturity Date under
the Credit Agreement and the Promissory Note from April 13, 2017 to June 13,
2017, which is agreed to by PEP III in exchange for the April Payment and
PetroShare’s other commitments under this Letter Agreement and the amendments to
the Credit Agreement and the Promissory Note, as contemplated in paragraphs 4
and 5 below.  As further consideration for the extension of the Maturity Date,
PetroShare further agrees that, as of and following the Effective Date, it shall
not have any further right under the Credit Agreement and the Promissory Note to
request or receive any Advances under the Line of Credit established under the
Credit Agreement (also referred to as the “Credit Facility” under the Promissory
Note), nor shall PEPIII have any further obligation to make any further Advances
under the Line of Credit.

 

4.  Amendment to Credit Agreement.  The Credit Agreement shall be amended in
accordance with that certain First Amendment to Revolving Line of Credit
Facility Agreement, attached as Exhibit A hereto.

 

5.  Amendment to Promissory Note.  The Promissory Note shall be amended in
accordance with that certain First Amendment to Promissory Note, attached as
Exhibit B hereto.

 

6.  Incorporated Provisions; Conflicts. The Section of the Credit Agreement
titled “Miscellaneous” is hereby incorporated herein, mutatis mutandis, as if
set forth in its entirety herein; provided that, in the event of any conflict
between the Credit Agreement, the Promissory Note or any document executed by
the Parties in accordance therewith, and this Letter Agreement, this Letter
Agreement shall apply.  Notwithstanding any adjustments to the Credit Agreement
and the Promissory Note pursuant to this Letter Agreement or the Amendments, all
security established in favor of PEP III pursuant to the Credit Agreement and
the Promissory Note, including the Deeds of Trust, shall remain in effect and
shall continue to apply to repayment of PetroShare’s indebtedness under the
Credit Agreement and the Promissory Note.

 

If the foregoing is consistent with your understanding and is acceptable to you,
please execute one copy of this Letter Agreement and return it to us whereupon
this Letter Agreement shall become a binding agreement between the Parties. This
Letter Agreement may not be

 

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amended, or any provision thereof waived, unless each undersigned party consents
in writing thereto.

 

 

 

 

Very truly yours,

 

 

 

 

 

 

 

 

 

PEP II:

 

 

 

 

 

 

 

 

 

 

PROVIDENCE ENERGY PARTNERS III, LP

 

 

 

 

 

 

 

 

 

 

By:

Providence Energy Partners III GP, LLC

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ David Bissmeyer

 

 

 

 

 

 

 

 

Name:

David Bissmeyer

 

 

 

 

 

 

 

 

Title:

COO

 

 

AGREED TO AND ACCEPTED BY PETROSHARE:

 

 

PETROSHARE CORP.

 

 

 

 

 

By:

/s/ Stephen J. Foley

 

 

 

 

Name:

Stephen J. Foley

 

 

 

 

Title:

CEO

 

 

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EXHIBIT A TO LETTER AGREEMENT

 

Form of First Amendment to Revolving Line of Credit Facility Agreement

 

[see attached]

 

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FIRST AMENDMENT TO

REVOLVING LINE OF CREDIT FACILITY AGREEMENT

 

This FIRST AMENDMENT TO REVOLVING LINE OF CREDIT FACILITY AGREEMENT (this
“Amendment”) is made and entered into this 30 day of March 2017, by and between
Providence Energy Partners III, LP, whose address is 16400 North Dallas Parkway,
Suite 400, Dallas, TX 75248 (“Lender”) and PetroShare Corp., whose address is
9635 Maroon Circle, Suite 400, Englewood, CO 80112 (formerly at 7200 S. Alton
Way, Suite B220, Centennial, CO 80112) (“Borrower”).  Lender and Borrower may
sometimes be referred to as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Lender and Borrower are parties to that certain Revolving Line of
Credit Facility Agreement dated as of October 13, 2016 (the “Line of Credit”),
pursuant to which Lender agreed to loan to Borrower up to $10,000,000 in
accordance with the terms thereof; and

 

WHEREAS, pursuant to the Line of Credit, Borrower also executed and delivered to
Lender that certain Promissory Note dated as of October 13, 2016 (“Promissory
Note”), which Promissory Note provided the terms of repayment of all monies
borrowed under the Line of Credit; and

 

WHEREAS, both the Line of Credit and Promissory Note provide that all principal
and accrued interest shall be paid by Borrower to Lender not later than April
13, 2017; and

 

WHEREAS, Lender and Borrower have entered into a Letter Agreement on or around
the date of this Amendment, whereby they have agreed to amend the Line of Credit
and the Promissory Note to extend the maturity date of all monies borrowed
thereunder until June 13, 2017, in exchange for Borrower’s promise to repay, on
April 13, 2017, fifty percent (50%) of its then-outstanding principal balance
under the Line of Credit and the Promissory Note.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:

 

1.              Maturity Date. Subject to paragraph 2 below, the maturity date
of all monies extended by Lender and borrowed by Borrower is hereby extended to
June 13, 2017, and the paragraph of the Line of Credit entitled “Maturity Date”
is hereby amended and restated to read in its entirety as follows:

 

June 13, 2017, on which date Borrower agrees to repay the remaining unpaid
balance of the Line of Credit in its entirety, including all outstanding
principal, interest, fees, expenses and other amounts due in connection
therewith. Any extension of the Maturity Date shall be at Lender’s sole option
and discretion.

 

2.              Re-Payment of Principal. In consideration of the extension of
the maturity date as provided for in Section 1 above, Borrower agrees to pay to
Lender, on April 13, 2017, fifty percent (50%) of its then-outstanding principal
balance under the Line of Credit and the Promissory Note, such amount to be
credited to the principal then outstanding under the Line of Credit and the
Promissory Note; provided that Borrower’s failure to make such payment by such
date shall be deemed to be an immediate “Event of Default” under the Line of
Credit and an immediate “Event of Acceleration” under the Promissory Note, as
such terms are defined under the Line of Credit and the Promissory Note,
respectively.  For the avoidance of doubt, payment of such money shall be in
addition to any prior repayments of principal or payments of interest under the
Line of Credit and the Promissory Note that may have been made by Borrower to
Lender prior to the date of this Amendment.

 

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3.              Change of Address.  For any purpose required or permitted under
the Line of Credit, the address of Borrower shall be: 9635 Maroon Circle, Suite
400, Englewood, CO 80112.

 

4.              No Other Changes. Except as expressly amended and modified by
this Amendment, the remaining terms and conditions of the Line of Credit are and
shall continue to be in full force and effect in accordance with the terms
thereof.

 

5.              Representations of the Parties.  Each of the Lender and Borrower
hereby represent and warrant that the individual executing this Amendment has
been authorized by all necessary corporate or organizational power and
authority, and when so executed, this Amendment shall represent the binding
agreement of each such Party.

 

6.              Counterparts. This Amendment may be executed in any number of
counterparts and, when so executed, all of such counterparts together shall
constitute a single instrument binding upon all of the Parties hereto
notwithstanding the fact that all parties are not signatory to the original or
the same counterpart. Electronic signatures are acceptable as original
signatures.

 

[the remainder of this page has been intentionally left blank; signature page
follows.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to be
effective as of the day and year first above-written.

 

BORROWER:

 

 

 

PETROSHARE CORP.

 

 

 

 

 

By:

/s/ Stephen J. Foley

 

Name:

Stephen J. Foley

 

Title:

Chief Executive Officer

 

 

 

 

 

LENDER:

 

 

 

PROVIDENCE ENERGY PARTNERS III, LP

 

By: Providence Energy Partners III GP, LLC

 

 

 

By:

/s/ David Bissmeyer

 

Name:

David Bissmeyer

 

Title:

COO

 

 

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EXHIBIT B TO LETTER AGREEMENT

 

Form of Amendment to Promissory Note

 

[see attached]

 

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FIRST AMENDMENT TO PROMISSORY NOTE

 

This FIRST AMENDMENT TO PROMISSORY NOTE (this “Amendment”) is made and entered
into this 30 day of March 2017, by and between Providence Energy Partners III,
LP, whose address is 16400 North Dallas Parkway, Suite 400, Dallas, TX 75248
(“Lender”), and PetroShare Corp., whose address is 9635 Maroon Circle, Suite
400, Englewood, CO 80112 (formerly at 7200 S. Alton Way, Suite B220, Centennial,
CO 80112) (“Borrower”).  Lender and Borrower may sometimes be referred to as a
“Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Lender and Borrower are parties to that certain Revolving Line of
Credit Facility Agreement dated as of October 13, 2016 (the “Line of Credit”),
pursuant to which Lender agreed to loan to Borrower up to $10,000,000 in
accordance with the terms thereof; and

 

WHEREAS, pursuant to the Line of Credit, Borrower executed and delivered to
Lender that certain Promissory Note dated as of October 13, 2016 (“Promissory
Note”), which Promissory Note provided the terms of repayment of all monies
borrowed under the Line of Credit; and

 

WHEREAS, both the Line of Credit and Promissory Note provide that all principal
and accrued interest shall be paid by Borrower to Lender not later than April
13, 2017; and

 

WHEREAS, Lender and Borrower have entered into a Letter Agreement on or around
the date of this Amendment, whereby they have agreed to amend the Line of Credit
and the Promissory Note to extend the maturity date of all monies borrowed
thereunder until June 13, 2017, in exchange for Borrower’s promise to repay to
Lender, on April 13, 2017, fifty percent (50%) of its then-outstanding principal
balance under the Line of Credit and the Promissory Note.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:

 

1.              Payment of Interest and Principal. Subject to paragraph 2 below,
the paragraph of the Promissory Note entitled “PAYMENT OF INTEREST AND
PRINCIPAL” is hereby amended and restated to read in its entirety as follows:

 

PAYMENT OF INTEREST AND PRINCIPAL. Payments of interest only shall accrue based
on the amount outstanding hereunder at the end of the previous month and shall
be due and payable in monthly installments beginning on the first month
following the advancement of any capital or funds under the Revolving Line of
Credit Facility Agreement (the “Credit Facility”) and continuing each month
thereafter until the Note is paid in full. Payment of principal amounts may be
made at any time during the term hereof. All payments under this Note shall be
applied first to accrued but unpaid interest, and next to outstanding
principal.  If not sooner paid, the entire remaining indebtedness (including
accrued interest) shall be due and payable on June 13, 2017. Payments shall be
made to:

 

Providence Energy Partners III, LP

16400 North Dallas Parkway, Suite 400

Dallas, TX 75248

 

or any alternative location as requested by Lender

 

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2.              Re-Payment of Principal. In consideration of the extension of
the maturity date as provided for in Section 1 above, Borrower agrees to pay to
Lender, on April 13, 2017, fifty percent (50%) of its then-outstanding principal
balance under the Line of Credit and the Promissory Note, such amount to be
credited to the principal then outstanding under the Line of Credit and the
Promissory Note; provided that Borrower’s failure to make such payment by such
date shall be deemed to be an immediate “Event of Default” under the Line of
Credit and an immediate “Event of Acceleration” under the Promissory Note, as
such terms are defined under the Line of Credit and the Promissory Note,
respectively.  For the avoidance of doubt, payment of such money shall be in
addition to any prior repayments of principal or payments of interest under the
Line of Credit and the Promissory Note that may have been made by Borrower to
Lender prior to the date of this Amendment.

 

3.              Change of Address.  For any purpose required or permitted under
the Promissory Note, the address of Borrower shall be: 9635 Maroon Circle, Suite
400, Englewood, CO 80112.

 

4.              No Other Changes. Except as expressly amended and modified by
this Amendment, the remaining provisions of the Promissory Note shall continue
in full force and effect in accordance with the terms thereof.

 

5.              Counterparts. This Amendment may be executed in any number of
counterparts and, when so executed, all of such counterparts taken together
shall constitute a single instrument binding upon all of the parties hereto
notwithstanding the fact that all parties are not signatory to the original or
the same counterpart. Electronic signatures are acceptable as original
signatures.

 

[the remainder of this page has been intentionally left blank; signature page
follows.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
day and year first above written.

 

BORROWER:

 

 

 

PETROSHARE CORP.

 

 

 

 

 

By:

Stephen J. Foley

 

Name:

Stephen J. Foley

 

Title:

Chief Executive Officer

 

 

 

 

 

LENDER:

 

 

 

PROVIDENCE ENERGY PARTNERS III, LP

 

By: Providence Energy Partners III GP, LLC

 

 

 

 

 

By:

/s/ David Bissmeyer

 

Name:

David Bissmeyer

 

Title:

COO

 

 

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