Exhibit 10.1

 

SIXTH AMENDMENT TO CREDIT AGREEMENT

 

This SIXTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as
of August 14,  2019 (the “Sixth Amendment Execution Date”), among EPSILON ENERGY
USA INC (“Borrower”), the LENDERS (as hereinafter defined), and TEXAS CAPITAL
BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders (in such
capacity, “Administrative Agent”').

 

WHEREAS, Borrower, the financial institutions party thereto (collectively,
together with their respective successors and assigns, the “Lenders”), and
Administrative Agent are parties to that certain Credit Agreement dated as of
July 29, 2013, as amended by First Amendment to Credit Agreement dated as of
December 10, 2015, Second Amendment to Credit Agreement dated as of October 11,
2016, Third Amendment to Credit Agreement dated as of February 21, 2017, Fourth
Amendment to Credit Agreement dated as of August 4, 2017, and Fifth Amendment to
Credit Agreement dated as of January 7, 2019 (as so amended, the “Credit
Agreement”);

 

WHEREAS, Borrower has requested that Administrative Agent and the Lenders amend
the Credit Agreement as hereinafter provided;

 

WHEREAS, subject to the terms and conditions set forth herein, Administrative
Agent and the Lenders are willing to agree to such amendments; and

 

WHEREAS, Borrower, the Lenders and Administrative Agent acknowledge that the
terms of this Amendment constitute an amendment and modification of, and not a
novation of, the Credit Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1.   Definitions. Unless otherwise defined in this Amendment,
capitalized terms used in this Amendment that are defined in the Credit
Agreement shall have the meanings assigned to such terms in the Credit
Agreement.

 

SECTION 2.   Amendments to the Credit Agreement. Subject to satisfaction of the
conditions of effectiveness set forth in Section 3 of this Amendment, the
parties hereto agree that:

 

(a)      Section 7.1(a) of the Credit Agreement is hereby amended to delete the
reference to “ninety (90) days” and to replace it with “one hundred twenty (120)
days”.

 

(b)      Article 7 of the Credit Agreement is hereby amended to add new Section
7.17 to read as follows:

 

Section 7.17   Commodity Hedging. To the extent Utilization at any time exceeds
25%, Borrower shall either (a) immediately prepay the entire amount of such
excess to Administrative Agent, for the ratable account of Revolving Credit
Lenders, or (b) within 3 Business Days of such occurrence, enter into, and
thereafter maintain,

 

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Acceptable Commodity Hedging Agreements at strike prices acceptable to
Administrative Agent covering at least 75% of Projected Production of natural
gas for the first full 12 months after such occurrence and 50% of Projected
Production of natural gas for the succeeding 6 months.

 

SECTION 3.   Conditions of Effectiveness. The amendments set forth in Section 2
of this Amendment, as well as any other terms and conditions set forth herein,
shall be effective as of date Administrative Agent shall have received each of
the following, which shall be in form and substance satisfactory to
Administrative Agent:

 

(a)      counterparts of this Amendment executed by Borrower, Guarantors, the
Lenders and Administrative Agent;

 

(b)      all fees and expenses required to be paid pursuant to the Loan
Documents, including, without limitation, the fees and expenses of Winstead PC
invoiced on or prior to the Sixth Amendment Execution Date; and

 

(c)      such other certificates, documents, consents or opinions as the
Administrative Agent reasonably may require.

 

SECTION 4.   Reaffirmation of Borrowing Base. Subject to the satisfaction of the
conditions of effectiveness set forth in Section 3 of this Amendment and
effective as of the Sixth Amendment Execution Date, the Borrowing Base is hereby
reaffirmed at $23,000,000. The foregoing redetermination of the Borrowing Base
is a periodic redetermination of the Borrowing Base under Section 2.10(b) of the
Credit Agreement. The Borrowing Base as so redetermined shall remain in effect
until the next periodic redetermination of the Borrowing Base under Section
2.10(b) of the Credit Agreement, unless otherwise adjusted pursuant to the other
provisions of Section 2.10 of the Credit Agreement.

 

SECTION 5.   Acknowledgment and Ratification. As a material inducement to
Administrative Agent and the Lenders to execute and deliver this Amendment, each
Obligated Party acknowledges and agrees that the execution, delivery, and
performance of this Amendment shall, except as expressly provided herein, in no
way release, diminish, impair, reduce, or otherwise affect the obligations of
any Obligated Party under the Loan Documents, which Loan Documents shall remain
in full force and effect.

 

SECTION 6.   Borrower’s Representations and Warranties. As a material inducement
to Administrative Agent and the Lenders to execute and deliver this Amendment,
each Obligated Party represents and warrants to Administrative Agent and the
Lenders (with the knowledge and intent that Administrative Agent and the Lenders
are relying upon the same in entering into this Amendment) that, as of the Sixth
Amendment Execution Date:

 

(a)      The execution, delivery, and performance by such Person of this
Amendment and compliance with the terms and provisions hereof have been duly
authorized by all requisite action on the part of such Person and do not and
will not (i) violate or conflict with, or result in a breach of, or require any
consent under (A) the Constituent Documents of such Person, (B) any applicable
law, rule, or regulation or any order, writ, injunction, or decree of any
Governmental

 

 

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Authority or arbitrator which could result in a Material Adverse Event, or (C)
any agreement or instrument to which such Person is a party or by which it or
any of its Properties is bound or subject which could result in a Material
Adverse Event, or (i) constitute a default under any such agreement or
instrument which could result in a Material Adverse Event, or result in the
creation or imposition of any Lien upon any of the revenues or assets of such
Person.

 

(b)      This Amendment constitutes legal, valid, and binding obligation of such
Person, enforceable against such Person in accordance with its terms, except as
limited by Debtor Relief Laws.

 

(c)      No authorization, approval, or consent of, and no filing or
registration with, any Governmental Authority or third party is or will be
necessary for the execution, delivery, or performance by such Person of this
Amendment or the validity or enforceability hereof.

 

(d)      All of the representations and warranties contained in Article 6 of the
Credit Agreement are true and correct on and as of the Sixth Amendment Execution
Date with the same force and effect as if such representations and warranties
had been made on and as of the Sixth Amendment Execution Date, except to the
extent that such representations and warranties specifically refer to an earlier
date, in which case they are true and correct as of such earlier date, and
except that for purposes of this Section 7(d), the representations and
warranties contained in Section 6.2 of the Credit Agreement shall be deemed to
refer to the most recent statements furnished pursuant to Section 7.l(a) and (b)
of the Credit Agreement, respectively.

 

(e)      At the time of and after giving effect to this Amendment, no Default
exists.

 

SECTION 7.   Effect of Amendment. This Amendment, except as expressly provided
herein, (a) shall not be deemed to be a consent to the modification or a waiver
of any other term or condition of the Credit Agreement, any Security Document or
any other Loan Document, (b) shall not prejudice any right or rights which
Administrative Agent or the Lenders may now or hereafter have under or in
connection with the Credit Agreement, any Security Document or any other Loan
Document, and (c) shall not be deemed to be a waiver of any existing or future
Default under the Credit Agreement, any Security Document or any other Loan
Document.

 

SECTION 8.   Miscellaneous. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of Texas. The captions in this
Amendment are for convenience of reference only and shall not define or limit
the provisions hereof. This Amendment may be executed in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which together shall constitute one instrument. In evidencing this Amendment,
 it shall not be necessary to produce or account for more than one such
counterpart. This Amendment, and any documents required or requested to be
delivered pursuant to Section 3 hereof, may be delivered by facsimile or pdf
transmission of the relevant signature pages hereof and thereof, as applicable.

 

SECTION 9.   Ratification. Each Obligated Party ratifies and acknowledges that
the Loan Documents to which it is a party are valid, subsisting and enforceable,
except as limited by Debtor Relief Laws.

 

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SECTION 10.   NOTICE OF FINAL AGREEMENT. THIS AMENDMENT, THE OTHER LOAN
DOCUMENTS AND THE INTERCREDITOR AGREEMENT REPRESENT THE FINAL AGREEMENT AMONG
THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF 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.

 

[Remainder of page intentionally left blank. Signature pages follow.]

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers as of the
Sixth Amendment Execution Date.

 

 

EPSILON ENERGY USA INC,

 

as Borrower

 

 

 

 

 

By:

/s/ B. Lane Bond

 

Name:

B. LANE BOND

 

Title:

CFO

 

 

 

 

 

ACKNOWLEDGED AND AGREED:

 

 

 

EPSILON ENERGY LTD.,

 

as a Guarantor

 

 

 

 

 

By:

/s/ B. Lane Bond

 

Name:

B. LANE BOND

 

Title:

CFO

 

 

 

 

 

EPSILON MIDSTREAM, LLC,

 

as a Guarantor

 

 

 

 

 

By:

Epsilon Energy USA Inc,

 

 

its Managing Member

 

 

 

 

 

 

 

By:

/s/ B. Lane Bond

 

Name:

B. LANE BOND

 

Title:

CFO

 

 

Sixth Amendment to Credit Agreement- Signature Page

 

 

 

 

 

 

ACKNOWLEDGED AND AGREED:

 

 

 

DEWEY ENERGY HOLDINGS, LLC,

 

as a Guarantor

 

 

 

 

 

By:

/s/ B. Lane Bond

 

Name:

B. LANE BOND

 

Title:

CFO

 

 

 

 

 

DEWEY ENERGY GP, LLC,

 

as a Guarantor

 

 

 

 

 

By:

/s/ B. Lane Bond

 

Name:

B. LANE BOND

 

Title:

CFO

 

 

Sixth Amendment to Credit Agreement- Signature Page

 

 

 

TEXAS CAPITAL BANK, NATIONAL

 

ASSOCIATION,

 

as Administrative Agent and a Lender

 

 

 

 

 

By:

/s/ Jamie Hibbert

 

Name:

Jamie Hibbert

 

Title:

Vice President

 

 

Sixth Amendment to Credit Agreement- Signature Page