Exhibit 10.1

 
FIRST AMENDMENT TO CREDIT AGREEMENT AND BORROWING BASE REDETERMINATION
 
 
 
 
THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND BORROWING BASE REDETERMINATION
(this “Amendment”) dated as of May 19, 2017, 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 DAVIS PETROLEUM CORP., a Delaware corporation (“Davis”, and together with
Yuma Energy, Yuma Exploration and Production Company, Inc., and Pyramid Oil LLC,
the “Borrowers”, and each a “Borrower”), 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,
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 Davis
and Hawkwood Energy East Texas, LLC, as buyer, have entered into a certain
Letter Agreement executed on May 19, 2017, pursuant to which Davis will sell all
of its Oil and Gas Properties that are located in Brazos County, Texas (the
disposition transaction contemplated therein, the “El Halcon Disposition”).
 
C.           The Borrowing Agent has provided the necessary reserve report
information in order for the Administrative Agent and the Lenders to complete
the spring 2017 Scheduled Redetermination of the Borrowing Base and, after
reviewing such reserve information and taking into account the El Halcon
Disposition, the Administrative Agent and the Lenders have recommended a
reduction in the Borrowing Base as set forth herein (to which the Borrowers do
hereby agree).
 
D.           The Borrowers have requested certain amendments and modifications
to the Credit Agreement and, subject to the conditions precedent set forth
herein, the parties hereto have agreed to so amend or otherwise modify 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, as the
same shall hereafter be amended from time to time.
 
2.           Amendment to Credit Agreement. Subject to the conditions precedent
set forth in Section 6 hereof, the Credit Agreement is amended as follows:
 
A.           Section 6.1(d) of the Credit Agreement is hereby amended by
replacing “$3,000,000” with “$4,000,000”.
 
B.           Section 6.5(d)(iv) of the Credit Agreement is hereby amended by
deleting the “(A)” at the beginning of such subsection and by inserting the word
“Party” immediately after the word “ Loan”.
 
 

 

 
 
 
3.           Redetermination of the Borrowing Base.
 
A.           Effective as of the Amendment Effective Date, the Borrowing Base
shall be maintained at $44,000,000, which Borrowing Base shall remain in effect
until further reduced in accordance with Section 3(B) below or otherwise
redetermined in accordance with the Credit Agreement. Each of the Borrowers, on
the one hand, and the Administrative Agent and the Lenders, on the other hand,
agree that the redetermination of the Borrowing Base pursuant to this
Section 3(A) shall constitute the spring 2017 Scheduled Redetermination.
 
B.           Upon consummation of the El Halcon Disposition, the Borrowing Base
shall be automatically reduced by $3,500,000 to $40,500,000 (unless, on or
before such date, the requisite Lenders determine to reduce the Borrowing Base
by or to a different amount in accordance with the Credit Agreement), which
Borrowing Base shall remain in effect until the next redetermination of the
Borrowing Base in accordance with the Credit Agreement; provided, however, that
each of the Borrowers acknowledges and agrees that the Administrative Agent and
the Required Lenders expressly reserve the right to further adjust the Borrowing
Base reduction specified in this Section 3(B) in accordance with the Credit
Agreement if consummation of the El Halcon Disposition has not occurred within
forty-five (45) days of the Amendment Effective Date. Each the Borrowers, 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 this Section 3(B) shall not
constitute an Interim Redetermination.
 
4.           Consummation of the El Halcon Disposition. Each of the Borrowers
acknowledges and agrees that (1) notwithstanding anything to the contrary
provided in Section 6.5(d)(i) of the Credit Agreement, 100% of the consideration
received in respect of the El Halcon Disposition shall be cash and (2)
notwithstanding anything to the contrary provided in Section 2.10(c) of the
Credit Agreement, within one (1) Business Day of the consummation of the El
Halcon Disposition, the Borrowing Agent shall make a single lump sum payment in
an amount equal to the proceeds received by the Borrowers in connection with El
Halcon Disposition.
 
5.           Scheduled Redetermination of Borrowing Base for Fall 2017.
Notwithstanding anything to the contrary in the Credit Agreement (including
Section 2.4(b) or Section 5.14 of the Credit Agreement), the parties hereto
agree that the Scheduled Redetermination of the Borrowing Base for the fall 2017
shall occur on or about September 15, 2017, and implemented as follows: (a) the
Reserve Report otherwise due September 1, 2017, and any other related
certificates or Engineering Reports shall be delivered the Administrative Agent
on or before August 15, 2017; (b) the Administrative Agent shall deliver notice
of the proposed redetermined Borrowing Base with respect to the Scheduled
Redetermination for the fall 2017 (that would otherwise be delivered to the
Lenders on or before September 15, 2017) on or before September 1, 2017; and (c)
the redetermined Borrowing Base (that would otherwise be effective on or about
October 1, 2017) shall become effective on or about September 15, 2017. Except
for the contemplated advancement of the Scheduled Redetermination of the
Borrowing Base for the fall 2017, each of the provisions of the Credit Agreement
with respect to any Scheduled Redetermination of the Borrowing Base shall
otherwise apply in the same manner as otherwise provided in the Credit
Agreement.
 
6.           Conditions Precedent. This Amendment shall become effective on the
date (the “Amendment Effective Date”) on which each of the following conditions
is satisfied:
 
A.           First 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 Required Lenders.
 
B.           Fees and Expenses. The Administrative Agent shall have received
from the Borrowing Agent (a) payment of all out-of-pocket fees and expenses
(including reasonable attorneys’ fees and expenses) incurred by the
Administrative Agent in connection with the preparation, negotiation and
execution of this Amendment and the other documents in connection herewith and
(b) all fees due and payable under the Credit Agreement and under any separate
fee agreement entered into by the parties pursuant to the Credit Agreement.
 
 
 
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C.           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.
 
7.           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 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.
 
8.           No Further Amendments. Except as amended hereby, the Credit
Agreement and the Loan Documents shall remain unchanged and all provisions shall
remain fully effective between the parties.
 
9.           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.
 
10.           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 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.
 
11.           Authorization to Release Liens. Each Lender party hereto hereby
authorizes and directs the Administrative Agent to execute and deliver such
collateral releases as the Administrative Agent determines with respect to Oil
and Gas Properties and other assets of the Borrowers that are the subject of the
El Halcon Disposition.
 
12.           Confirmation of Security. Each Borrower hereby confirms and agrees
that all of the Security Instruments, as may be amended in accordance herewith,
that presently secure the Indebtedness shall continue to secure, in the same
manner and to the same extent provided therein, the payment and performance of
the Indebtedness as described in the Credit Agreement as modified by this
Amendment.
 
 
 
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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 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.
 
BORROWERS
 
YUMA ENERGY, INC.
 
 
By: /s/ James J. Jacobs
Name: James J. Jacobs
Title: Executive Vice President, Chief Financial Officer and Treasurer
 
 
YUMA EXPLORATION AND PRODUCTION COMPANY, INC.
 
 
By: /s/ James J. Jacobs
Name: James J. Jacobs
Title: Officer
 
 
PYRAMID OIL LLC
 
 
By: /s/ James J. Jacobs
Name: James J. Jacobs
Title: Officer
 
 
DAVIS PETROLEUM CORP.
 
 
By: /s/ James J. Jacobs
Name: James J. Jacobs
Title: Officer
 
 
 
Signature Page to First Amendment and
Borrowing Base Redetermination
 

 
 

 
 
ADMINISTRATIVE AGENT
AND LENDER:
 
SOCIÉTÉ GÉNÉRALE
 
 
By: /s/ Max Sonnonstine
Name: Max Sonnonstine
Title: Director
 
 
LENDER:
 
CIT BANK, N.A.
 
 
By: /s/ John Feeley
Name: John Feeley
Title: Director
 
 
 
LENDER:
 
LEGACYTEXAS BANK
 
 
By: /s/ David Carter                                            
Name: David Carter
Title: Vice President
 
 
 
 
 
 
 
Signature Page to First Amendment and
Borrowing Base Redetermination
 

 
 

 
 
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/ James J. Jacobs
Name:  James J. Jacobs
Title:    Officer
 
 
DAVIS PETROLEUM ACQUISITION CORP.
 
 
 
By: /s/ James J. Jacobs
Name:  James J. Jacobs
Title:    Officer
 
 
 
 
 
 
 
 
 
 
Signature Page to First Amendment and
Borrowing Base Redetermination