Exhibit 10.6

SHAREHOLDERS AGREEMENT

dated as of

March 1, 2017

by and between

GAVILAN RESOURCES HOLDCO, LLC

and

SANCHEZ ENERGY CORPORATION

 

 

 

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TABLE OF CONTENTS

 

 

Page

 

 

Article I Definitions

1

Section 1.01

Definitions

1

Section 1.02

Other Definitional and Interpretative Provisions.

2

 

 

 

Article II Board Representation

2

Section 2.01

Board Observer.

2

 

 

 

Article III Miscellaneous

3

Section 3.01

Successors and Assigns

3

Section 3.02

Notices

3

Section 3.03

Amendments and Waivers

4

Section 3.04

Governing Law

4

Section 3.05

Jurisdiction

4

Section 3.06

WAIVER OF JURY TRIAL

4

Section 3.07

Specific Performance

4

Section 3.08

Counterparts; Effectiveness; Third Party Beneficiaries

4

Section 3.09

Entire Agreement

4

Section 3.10

Severability

4

Section 3.11

Termination

5

Section 3.12

Independent Nature of Obligations

5

 

 

 

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SHAREHOLDERS AGREEMENT

This SHAREHOLDERS AGREEMENT (this “Agreement”) dated as of March 1, 2017, by and
between Sanchez Energy Corporation, a Delaware corporation (the “Company”), and
Gavilan Resources HoldCo, LLC (f/k/a Aguila Production HoldCo, LLC), a Delaware
limited liability company (the “Investor”).

W I T N E S S E T H :

WHEREAS, the Company entered into that certain Purchase and Sale Agreement,
dated as of January 12, 2017, by and between Anadarko E&P Onshore LLC and
Kerr-McGee Oil & Gas Onshore LP, and SN EF Maverick, LLC, a Delaware limited
liability company (“SN”), SN EF UnSub, LP, a Delaware limited partnership (“SN
UnSub”), and Gavilan Resources, LLC (f/k/a Aguila Production, LLC), a Delaware
limited liability company (“Gavilan”) (the “Purchase Agreement”);

WHEREAS, Investor and the Company desire to enter into this Agreement in order
to set forth their respective rights and responsibilities, and to establish
various arrangements and restrictions with respect to the governance of the
Company and other related matters.

NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

Section 1.01     Definitions.  As used herein, the following terms have the
following meanings:

 “Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person;
provided that (i) no securityholder of the Company shall be deemed an Affiliate
of any other securityholder solely by reason of any investment in the Company,
(ii) no portfolio company in which Investor or any of its Affiliates have an
investment shall be deemed an Affiliate of Investor or any of its Affiliates and
(iii) the Company, its subsidiaries and any of the Company’s other controlled
Affiliates shall not be deemed an Affiliate of Investor.  For the purpose of
this definition, the term “control” (including, with correlative meanings, the
terms “controlling”, “controlled by” and “under common control with”), as used
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.

“Board” means the board of directors of the Company.

“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized by law to close.

“Closing” means the consummation of the transactions contemplated by the
Purchase Agreement.

“Common Stock” means the common stock, par value $0.01 per share, of the
Company, and any stock into which such Common Stock may thereafter be converted
or changed.

“Company Securities” means (i) the Common Stock, (ii) preferred stock, (iii)
securities convertible into or exchangeable for Common Stock, (iv) any other
equity or equity-linked security issued by the Company and (v) options, warrants
or other rights to acquire Common Stock or any other equity or equity-linked
security issued by the Company.

“Governmental Authority” means any transnational, or domestic or foreign,
federal, state or local governmental authority, department, court, agency or
official, including any political subdivision thereof.

“Investor Parties” means Investor and any Affiliate of Investor that holds
Company Securities and has executed and delivered to the Company a joinder to
this Agreement.

“Joint Development Agreement” means that certain Joint Development Agreement by
and among the Company (for the limited purposes set forth therein), SN, SN UnSub
and Gavilan, dated as of March 1, 2017.

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“Person” means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
Governmental Authority.

“Purchase Agreement” has the meaning given in the recitals.

“Representative” means, with respect to any Person, such Person’s Affiliates and
its and their respective directors, officers, employees, stockholders, members,
general or limited partners, agents, counsel, investment advisers or other
representatives.

Section 1.02     Other Definitional and Interpretative Provisions.  The words
“hereof”, “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.  References to Articles and Sections are to Articles and Sections of
this Agreement unless otherwise specified.  Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the
singular.  Whenever the words “include”, “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation”, whether or not they are in fact followed by those words or words of
like import.  “Writing”, “written” and comparable terms refer to printing,
typing and other means of reproducing words (including electronic media) in a
visible form.  References to any statute shall be deemed to refer to such
statute as amended from time to time and to any rules or regulations promulgated
thereunder.  References to any agreement or contract are to that agreement or
contract as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.  References to any Person include the
successors and permitted assigns of that Person. References from or through any
date mean, unless otherwise specified, from and including or through and
including, respectively.

ARTICLE II
BOARD REPRESENTATION

Section 2.01     Board Observer.  

(a) Following the Closing and until the earlier of (i) the termination of the
Joint Development Agreement, (ii) sale of all or substantially all of the
“Assets” (as defined in the Purchase Agreement) acquired by Gavilan and (iii)
the consummation of a “Sale Transaction” pursuant to Section 4.5 of the Joint
Development Agreement, the Investor Parties shall have the right, but not the
obligation, exercisable by the delivery of written notice to the Company, to
appoint one observer representative (such Person, the “Board Observer”) to be
present (whether in person or by telephone) at all regularly scheduled meetings
of the full Board; provided,  however, that (A) the initial Board Observer shall
be Angelo Acconcia (provided, that the Company shall be entitled to reject any
Board Observer who is (1) not an officer or employee of Investor or its
Affiliates or (2) an officer or employee of a business significantly engaged
(other than by investment) in the exploration, production, gathering,
processing, transportation or storage of oil, gas and/or other hydrocarbons or
refined products, other than any private equity professional of Blackstone
Energy Partners II, L.P. or Blackstone Capital Partners VII, L.P. and their
successor funds); (B) the Board Observer shall satisfy any character and fitness
requirements of applicable law and stock exchange rules that apply to board
observers or regular members of the Board; (C) the Board Observer shall have no
voting rights or rights to participate in Board or committee discussions; and
(D) the Board Observer shall agree to abide by the terms of the Company’s
insider trading policy as if the Board Observer were a member of the Board.

(b) Once appointed, the Company shall send such Board Observer all of the
notices, information and other materials (including meeting notices and agendas)
that are distributed to the members of the Board in such capacity for a regular
meeting, all at the same time and in the same manner as such notices, agenda,
information and other materials are provided to the members of the Board, as
applicable. The Company shall provide the Board Observer with the same travel
and expense reimbursement with respect to such Board Observer’s attendance at
regular Board meetings as is provided to the directors. The rights of the Board
Observer in this Agreement shall apply only with respect to meetings, notices,
information and other materials of the full Board for regularly scheduled
meetings and not any committee of the Board or any special meetings of the
Board.

(c) Notwithstanding anything to the contrary in this Section 2.01, the Investor
Parties agree that the Board Observer may be excluded from such portions of any
Board  meeting and that such information and other materials referred to in
Section 2.01(b) may be withheld from the Board Observer, in each case, as and
solely to the extent (i) relating to an executive session of the Board, (ii) the
Company reasonably determines that there is a competitive reason or other reason
of material importance to the Company for such exclusion or (iii) the Board
reasonably determines, based on the advice of counsel, (A) is necessary to avoid
any conflict of interest with respect to any potential transaction or matter
related to the Company or its Affiliates, on the one hand, and Investor, the
Board Observer or any of their respective Affiliates or portfolio companies, on
the other hand, (B) would adversely affect the attorney-client privilege between
the Board, the Company or the Company’s Affiliates and its or their counsel, (C)
is required to avoid any disclosure that is restricted by any material agreement
between the Company or its Affiliates, on the one hand, and another
non-Affiliated Person, on the other hand, or (D) is appropriate to prevent

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the Board Observer from being considered a member of the Board under applicable
law or stock exchange rules; provided that, before the Company may exclude the
Board Observer from any portion of any Board meeting or withhold from the Board
Observer any Board materials pursuant to the foregoing provisions of this
sentence, the Company shall notify the Board Observer of its determination to do
so, and consult with the Board Observer to minimize or eliminate the need for
such exclusion or withholding.

(d) The Board Observer shall be entitled to provide to the Investor Parties any
and all information received by such Board Observer pursuant to this Section
2.01;  provided that, for the sake of clarity, in no event shall such
information be shared with any portfolio company of the Investor
Parties.  Notwithstanding the foregoing, the Investor Parties agree, and any
representative of the Investor Parties (including the Board Observer) will
agree, to hold in confidence and trust and not disclose any confidential
information provided to or learned by it in connection with its rights under
this Agreement and shall not use such information (i) in any litigation or
proceeding or (ii) otherwise except in connection with the Joint Development
Agreement and its investment in Company Securities, and the Investor Parties and
Board Observer shall execute a confidentiality agreement with respect to such
information as may be reasonably requested by the Company.

ARTICLE III
MISCELLANEOUS

Section 3.01     Successors and Assigns.  This Agreement shall inure to the
benefit of and be binding upon the Investor Parties and the Company (each, a
“Party”) and their respective heirs, successors and permitted assigns. Neither
this Agreement nor any right, remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by any Party.  Nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto, and their respective heirs, successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.

Section 3.02     Notices.  All notices, requests and other communications to any
Party (excluding, for the sake of clarity, the notices, information and other
materials to be provided to the Board Observer pursuant to Section 2.01) shall
be in writing (including facsimile transmission) and shall be given,

if to Investor, to:

c/o Blackstone Management Partners L.L.C.
345 Park Avenue, 31st Floor
New York, NY 10154
Attention:  Angelo Acconcia
Facsimile:  (212) 201-2874

with a copy to:

Kirkland & Ellis LLP
600 Travis Street, Suite 3300
Houston, Texas 77002
Attention:  Andrew T. Calder
                  Rhett A. Van Syoc
Email:       andrew.calder@kirkland.com
                  rhett.vansyoc@kirkland.com

Facsimile:      (713) 835-3601

if to the Company, to:

Sanchez Energy Corporation
1000 Main Street, Suite 3000
Houston, Texas 77002
Attention:  Antonio R. Sanchez, III

                  General Counsel

Email:        tony@sanchezog.com

                   gkopel@sanchezog.com

Facsimile:  (713) 756-2782

with a copy to:

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Akin Gump Strauss Hauer & Feld LLP
1111 Louisiana, 44th Floor
Houston, Texas 77002
Attention:  David Elder

                  Patrick Hurley

Email:       delder@akingump.com

                  phurley@akingump.com

Facsimile: (713) 236-0822

or such other address, email address or facsimile number as such Party may
hereafter specify for the purpose by notice to the other parties hereto.  All
notices, requests and other communications shall be deemed received on the date
of receipt by the recipient thereof if received prior to 5:00 p.m. in the place
of receipt and such day is a Business Day; provided that all facsimiles and
emails shall be deemed received only upon confirmation of receipt.  Otherwise,
any such notice, request or communication shall be deemed not to have been
received until the next succeeding Business Day.

Section 3.03     Amendments and Waivers.  Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each Party to this Agreement, or in the
case of a waiver, by the Party against whom the waiver is to be effective.  No
failure or delay by any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 3.04     Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to the conflicts of laws rules of such state.

Section 3.05     Jurisdiction.  The parties hereby agree that any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in the Delaware Chancery Court or, if such
court shall not have jurisdiction, any federal court located in the State of
Delaware or other Delaware state court, and each of the parties hereby
irrevocably consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.  Process in
any such suit, action or proceeding may be served on any Party anywhere in the
world, whether within or without the jurisdiction of any such court. 

Section 3.06     WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

Section 3.07     Specific Performance.  Each Party hereto acknowledges that the
remedies at law of the other parties for a breach or threatened breach of this
Agreement would be inadequate and, in recognition of this fact, any Party to
this Agreement, without posting any bond, and in addition to all other remedies
that may be available, shall be entitled to obtain equitable relief in the form
of specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy that may then be available.

Section 3.08     Counterparts; Effectiveness; Third Party Beneficiaries.  This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.  This Agreement shall become effective when each Party
shall have received a counterpart hereof signed by all of the other parties
hereto.  Until and unless each Party has received a counterpart hereof signed by
the other parties hereto, this Agreement shall have no effect and no Party shall
have any right or obligation hereunder (whether by virtue of any other oral or
written agreement or other communication).  Except as expressly set forth in
this Agreement, no provision of this Agreement is intended to confer any rights,
benefits, remedies, obligations, or liabilities hereunder upon any Person other
than the parties hereto and their respective successors and assigns.

Section 3.09     Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, among the parties hereto with respect to the subject matter of this
Agreement.

Section 3.10     Severability.  If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this

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Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any Party.  Upon such a determination, the parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner so that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.

Section 3.11     Termination.  This Agreement shall terminate with respect to
each Investor Party at the time at which the rights and restrictions granted in
Sections 2.01(a) are no longer in effect, except that such termination shall not
affect (a) the rights perfected or the obligations incurred by such Investor
Party under this Agreement prior to such termination (including any liability
for breach of this Agreement) and (b) the obligations expressly stated to
survive termination hereof and this Article 3.

Section 3.12     Independent Nature of Obligations.  The obligations of each
Party are several and not joint with the obligations of any other Party, and no
Party shall be responsible in any way for the performance or nonperformance of
the obligations of any other Party under this Agreement.  Nothing contained
herein and no action taken by any Party pursuant hereto, shall be deemed to
constitute the Parties as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Parties are in any way
acting in concert or as a group with respect to such obligations.

[Signature page follows]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

 

 

GAVILAN RESOURCES HOLDCO, LLC

 

 

 

/s/ Angelo Acconcia

 

Name:

Angelo Acconcia

 

Title:

President

 

 

 

SANCHEZ ENERGY CORPORATION

 

 

 

/s/ Antonio R. Sanchez, III

 

Name:

Antonio R. Sanchez, III

 

Title:

Chief Executive Officer

 

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