Exhibit 10.1

 

Execution Version

 

THIRD AMENDMENT AND WAIVER TO THIRD AMENDED AND RESTATED

CREDIT AGREEMENT

 

THIRD AMENDMENT AND WAIVER TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this
“Amendment”) is entered into as of September 6, 2016, by and among PDC
ENERGY, INC., a Delaware corporation formerly known as Petroleum Development
Corporation (the “Borrower”), CERTAIN SUBSIDIARIES OF THE BORROWER, as
Guarantors (the “Guarantors”), the LENDERS party hereto and JPMORGAN CHASE BANK,
N.A., as Administrative Agent (the “Administrative Agent”).  Unless the context
otherwise requires or unless otherwise expressly defined herein, capitalized
terms used but not defined in this Amendment have the meanings assigned to such
terms in the Credit Agreement (as defined below) as amended hereby.

 

WITNESSETH:

 

WHEREAS, the Borrower, the Guarantors, the Administrative Agent and the Lenders
have entered into that certain Third Amended and Restated Credit Agreement dated
as of May 21, 2013 (as the same has been and may hereafter be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, the Borrower and the Guarantors have requested that the Administrative
Agent and the Lenders amend the Credit Agreement in certain respects in order
to, among other things, provide for a $250.0 million increase in the Aggregate
Commitment thereunder (the “Incremental Facility”) and the Administrative Agent
and the Lenders constituting the Required Lenders have agreed to do so on the
terms and conditions hereinafter set forth.

 

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, the Borrower, the
Guarantors, the Administrative Agent and the Lenders party hereto hereby agree
as follows:

 

SECTION 1.                                       Amendments to Credit
Agreement.  Subject to the satisfaction or waiver in writing of each applicable
condition precedent set forth in Section 3 of this Amendment, and in reliance on
the representations, warranties, covenants and agreements contained in this
Amendment  to the extent effective as of the Limited Effective Date or the Third
Amendment Effective Date, as applicable, the Credit Agreement shall be amended
in the manner provided in this Section 1 on the Limited Effective Date and the
Third Amendment Effective Date as set forth in Section 3. For the avoidance of
doubt, (a) until an amendment to a Section of the Credit Agreement contemplated
herein becomes effective pursuant to Section 3, such Section shall not be
amended hereby and (b) if the conditions set forth in Section 3.2 are not met,
the effectiveness of the amendments and waiver that became effective on the
Limited Effective Date shall not be affected.

 

1.1                               Amendments to Section 1.01.

 

(a)                                                Subject to Section 3, the
following defined terms are hereby amended and restated in their entirety or
added in their entirety, in each case to read as follows:

 

PDC - Third Amendment

 

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“Arris” means Arris Petroleum Corporation, a Delaware corporation.

 

“Asset Purchase Agreement” means that certain Asset Purchase and Sale Agreement,
dated as of August 23, 2016, by and between the Target Asset Sellers, Kimmeridge
and the Borrower.

 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA
Financial Institution.

 

“Bail-In Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule.

 

“Bridge Facility” means Indebtedness of the Borrower consisting of the Bridge
Loans incurred pursuant to the terms of the Bridge Loan Agreement.

 

“Bridge Loans” means loans made pursuant to the Bridge Loan Agreement.

 

“Bridge Loan Agreement” means a bridge loan agreement which may be entered into
by and between the Borrower, the Administrative Agent and the lenders from time
to time party thereto in an amount not to exceed $600.0 million.

 

“Control Agreement” means a deposit account control agreement or securities
account control agreement (or similar agreement), as applicable, in form and
substance reasonably satisfactory to the Administrative Agent, executed by the
applicable Credit Party, the Administrative Agent and the relevant financial
institution party thereto. Such agreement shall provide a first priority
perfected Lien in favor of the Administrative Agent, for the benefit of the
Secured Parties, in the applicable Credit Party’s Deposit Account and/or
Securities Account.

 

“Controlled Account” means a Deposit Account or Securities Account that is
subject to a Control Agreement.

 

“Deposit Account” has the meaning assigned to such term in the Uniform
Commercial Code of the State of New York or of any other state the laws of which
are required to be applied in connection with the perfection of security
interests in any Collateral.

 

“EEA Financial Institution” means (a) any institution established in any EEA
Member Country which is subject to the supervision of an EEA Resolution
Authority, (b) any entity established in an EEA Member Country which is a parent
of an institution described in clause (a) of this definition, or (c) any
institution established in an EEA Member Country which is a subsidiary of an
institution described in clauses (a) or (b) of this definition and is subject to
consolidated supervision with its parent.

 

“EEA Member Country” means any of the member states of the European
Union, Iceland, Liechtenstein, and Norway.

 

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“EEA Resolution Authority” means any public administrative authority or any
Person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA
Financial Institution.

 

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor Person), as in effect
from time to time.

 

“Exchange Notes” means any Senior Notes received by a lender under the Bridge
Loan Agreement in exchange for Bridge Loans outstanding after the Initial Bridge
Loan Maturity Date in accordance with the terms of the Bridge Loan Agreement.

 

“Initial Bridge Loan Maturity Date” means the first anniversary of the closing
date of the Bridge Facility.

 

“Kimmeridge” means Kimmeridge Energy Management Company GP, LLC, a Delaware
limited liability company.

 

“Kimmeridge Acquisition” means, collectively, (a) the Acquisition by the
Borrower of Arris and its Subsidiaries pursuant to the Stock Purchase Agreement
and (b) the Acquisition by the Borrower of certain assets (collectively, the
“Target Assets”) owned by the Target Asset Sellers pursuant to the Asset
Purchase Agreement.

 

“Kimmeridge Acquisition Financing” means, collectively, the initial financing of
the Kimmeridge Acquisition and the refinancing of any interim Indebtedness for
the Kimmeridge Acquisition.

 

“Offering” means one or more public or private offerings by the Borrower or its
Affiliates of debt securities (including any debt convertible into equity),
preferred stock, mandatorily convertible securities, other equity or
equity-linked securities or common equity (or any combination thereof)
constituting a Kimmeridge Acquisition Financing through (a) the issuance of
Senior Notes in a public offering or Rule 144A private placement, (b) the
issuance of convertible debt securities in a public offering or Rule 144A
private placement and/or (c) the sale of common equity in a public offering.

 

“Securities Account” has the meaning assigned to such term in the Uniform
Commercial Code of the State of New York or of any other state the laws of which
are required to be applied in connection with the perfection of security
interests in any Collateral.

 

“Stock Purchase Agreement” means that certain Stock Purchase and Sale Agreement,
dated as of August 23, 2016, by and between the sellers party thereto,
Kimmeridge, Arris and the Borrower.

 

“Target Assets” shall have the meaning assigned to such term in the definition
of Kimmeridge Acquisition.

 

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“Target Asset Sellers” means, collectively, 299 Resources, LLC, a Delaware
limited liability company, 299 Production, LLC, a Delaware limited liability
company, and 299 Pipeline, LLC, a Delaware limited liability company.

 

“Third Amendment” means that certain Third Amendment and Waiver to Third Amended
and Restated Credit Agreement, dated as of September 6, 2016, between the
Borrower, the Guarantors, the Administrative Agent and the Lenders party
thereto.

 

“Third Amendment Effective Date” shall have the meaning assigned to such term in
the Third Amendment.

 

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution
Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member
Country, which write-down and conversion powers are described in the EU Bail-In
Legislation Schedule.

 

(b)                                                The definition of “Aggregate
Commitment” is hereby amended by (a) replacing the words “Effective Date” with
the words “Third Amendment Effective Date” in the last sentence thereof and
(b) replacing “$450,000,000” with “$700,000,000” in the last sentence thereof.

 

(c)                                                 The pricing grid contained
in the definition of “Applicable Rate” is hereby amended and restated in its
entirety to read as follows:

 

Borrowing Base Usage:

 

ABR
Spread

 

Eurodollar
Spread

 

Unused
Commitment Fee
Rate

 

Equal to or greater than 90%

 

2.250

%

3.250

%

0.500

%

Equal to or greater than 75% and less than 90%

 

2.000

%

3.000

%

0.500

%

Equal to or greater than 50% and less than 75%

 

1.750

%

2.750

%

0.500

%

Equal to or greater than 25% and less than 50%

 

1.500

%

2.500

%

0.500

%

Less than 25%

 

1.250

%

2.250

%

0.500

%

 

(d)                                                The definition of “Defaulting
Lender” is hereby amended by (i) deleting the “or” at the end of clause
(c) thereof, (ii) replacing the “.” with “, or” at the end of clause (d) thereof
and (iii) inserting a new clause (e) to read as follows:

 

(e)                                                 has, or has a Parent that
has, become the subject of a Bail-In Action.

 

1.2                               Amendment to Section 2.03.  Section 2.03 of
the Credit Agreement is hereby amended and restated in its entirety to read as
follows:

 

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Section 2.03.                          Additional Lenders; Increases in the
Aggregate Commitment.  If (a) no Default exists as of the date of such increase
or would be caused by such increase, (b) the Borrower shall concurrently pay any
additional fees required as a result of such increase, (c) immediately after
giving effect to such increase, the Aggregate Commitment does not exceed the
Borrowing Base then in effect, and (d) at the time of and immediately after
giving effect to such increase and any Borrowing made on the date of such
increase, the Borrower is in pro forma compliance with the financial covenants
set forth in Section 7.11 as of the last day of the most recently ended fiscal
quarter for which the financial statements and compliance certificate required
under Section 6.01 have been delivered to the Administrative Agent and the
Lenders (calculated as though any Borrowing made on the date of such increase
had been made as of the last day of such fiscal quarter), the Borrower may, at
any time and from time to time, with the consent of the Administrative Agent,
increase the Aggregate Commitment to an amount not to exceed the Maximum
Facility Amount by providing written notice of such increase to the
Administrative Agent, and the Administrative Agent shall promptly notify the
Lenders of such increase. To satisfy such requested increase in the Aggregate
Commitment, one or more financial institutions reasonably acceptable to the
Administrative Agent and the Borrower may elect to participate in such requested
increase by executing and delivering to the Borrower and the Administrative
Agent, within 30 Business Days of the Administrative Agent’s notice to the
Lenders of such requested increase, a certificate substantially in the form of
Exhibit F hereto (a “Lender Certificate”) and, in the case of a financial
institution that is not a Lender, may become a Lender under this Agreement by
executing and delivering to the Borrower and the Administrative Agent a Lender
Certificate within such 30 Business Day period.  Upon receipt by the
Administrative Agent of Lender Certificates representing increases to existing
Lender Commitments and/or Commitments from new Lenders as provided in this
Section 2.03 in an aggregate amount equal to or greater than the requested
increase (as the same may have been adjusted by the Borrower), (i) the Aggregate
Commitment (including the Commitment of any Person that becomes a Lender by
delivery of such a Lender Certificate) shall be increased on the effective date
set forth in such Lender Certificates by the amount indicated in such Lender
Certificates or by such lesser amount as necessary such that the Aggregate
Commitment is increased only by the amount of the requested increase, with
Commitment increases to be allocated among such increasing Lenders in the
discretion of the Administrative Agent in consultation with the Borrower, but
for the avoidance of doubt, no Lender’s Commitment shall be increased beyond the
amount specified in such Lender’s Lender Certificate, (ii) the Register shall be
amended to add the Commitment of each additional Lender or to reflect the
increase in the Commitment of each existing Lender, and the Applicable
Percentages of the Lenders shall be adjusted accordingly to reflect each
additional Lender or the increase in the Commitment of each existing Lender,
(iii) any such additional Lender shall be deemed to be a party in all respects
to this Agreement and any other Loan Documents to which the Lenders are a party,
and (iv) upon the effective date set forth in such Lender Certificate, any such
Lender party to the Lender Certificate shall purchase and each existing Lender
shall assign to such Lender a pro rata portion of the outstanding Credit
Exposure of each of the existing Lenders such that the Lenders (including any
additional Lender, if applicable) shall have the appropriate portion of the
Aggregate Credit Exposure of the Lenders (based in each case on such Lender’s
Applicable Percentage, as revised pursuant to this Section), and the Borrower
shall have paid to the Lenders any amounts due pursuant to Section 2.16 as a
result of such purchase and assignment.

 

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1.3                               Amendment to Section 2.17.  Section 2.17 of
the Credit Agreement is hereby amended by inserting a new Subsection 2.17(j) to
read as follows:

 

(j)                        FATCA Grandfathering. For purposes of determining
withholding Taxes imposed under FATCA, from and after the Third Amendment
Effective Date, the Borrower and the Administrative Agent shall treat (and the
Lenders hereby authorize the Administrative Agent to treat) this Agreement as
not qualifying as a “grandfathered obligation” within the meaning of Treasury
Regulation Section 1.1471-2(b)(2)(i).

 

1.4                               Amendment to Article IV.  Article IV of the
Credit Agreement is hereby amended by inserting a new Section 4.24 to read as
follows:

 

Section 4.24.  EEA Financial Institutions.  No Credit Party is an EEA Financial
Institution.

 

1.5                               Amendment to Section 6.09.  Section 6.09 of
the Credit Agreement is hereby amended by (a) replacing the word “and” with “,”
at the end of Subsection 6.09(e) thereof, (b) replacing “.” with “,” at the end
of Subsection 6.09(f) thereof and (c) inserting new Subsections 6.09(g) and
(h) to read as follows:

 

(g) pay cash consideration for the Kimmeridge Acquisition (including deposits
relating thereto) and (h) pay fees and expenses in connection with the
Kimmeridge Acquisition, the Bridge Facility and the Offering.

 

1.6                               Amendment to Section 6.11.  Section 6.11 of
the Credit Agreement is hereby amended by replacing each occurrence of “80%”
contained therein with “85%”.

 

1.7                               Amendment to Section 6.12.  Section 6.12 of
the Credit Agreement is hereby amended by replacing each occurrence of “80%”
contained in Subsection 6.12(a) thereof with “85%”.

 

1.8                               Amendment to Section 6.18.  Section 6.18 of
the Credit Agreement is hereby amended by inserting a new Subsection 6.18(c) to
read as follows:

 

(c)  The Borrower shall use commercially reasonable efforts to grant and perfect
Liens in Oil and Gas Interests with Mortgages representing 50% of the Engineered
Value of the Direct Interests of Arris and its Subsidiaries and the Target
Assets and shall, in any case, grant and perfect such Liens with Mortgages
representing 85% of the Engineered Value of the Direct Interests included in the
Borrowing Base Properties after giving effect to the Kimmeridge Acquisition no
later than January 15, 2017; provided that, notwithstanding anything to the
contrary herein, including, without limitation, Sections 6.11 and 6.12, the
Borrower shall not be required to grant and perfect Liens in Oil and Gas
Interests of Arris or the Target Assets prior to January 15, 2017.

 

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1.9                               Amendment to Article VI.  Article VI of the
Credit Agreement is hereby amended by inserting a new Section 6.20 to read as
follows:

 

Section 6.20                 Account Control Agreements. The Borrower will, and
will cause each other Credit Party to (a) upon the Administrative Agent’s
request, cause each bank or other financial institution in which it maintains a
Deposit Account and/or Securities Account to enter into a Control Agreement with
the Administrative Agent in order to cause such Deposit Account and/or
Securities Account to become a Controlled Account (unless such Deposit Account
or Securities Account is already a Controlled Account) and (b) upon the
Administrative Agent’s request after the occurrence and during the continuation
of an Event of Default, deliver to each such bank or other financial institution
a letter, in form and substance acceptable to the Administrative Agent,
transferring ownership of the Deposit Account and/or Securities Account to the
Administrative Agent until such time as no Event of Default exists. In the event
the Borrower or another Credit Party shall establish, hold or maintain any
Deposit Account and/or Securities Account not established, held or maintained on
or prior to the Limited Effective Date (as defined in the Third Amendment), the
Borrower shall promptly notify the Administrative Agent of the existence of such
Deposit Account and/or Securities Account.

 

1.10                        Amendments to Section 7.01.  Section 7.01 of the
Credit Agreement is hereby amended by (a) deleting the word “and” at the end of
Subsection 7.01(j) thereof, (b) replacing “.” with “;” at the end of Subsection
7.01(k) thereof and (c) inserting new Subsections 7.01(l), (m) and (n) to read
as follows:

 

(l) Indebtedness incurred by the Borrower pursuant to the Offering;

 

(m) the Bridge Facility; and

 

(n) the Exchange Notes.

 

1.11                        Amendments to Section 7.04.   Section 7.04 of the
Credit Agreement is hereby amended by (a) deleting the word “and” at the end of
Subsection 7.04(l) thereof, (b) replacing “.” with “;” at the end of Subsection
7.04(m) thereof and (c) inserting new Subsections 7.04(n) and (o) to read as
follows:

 

(n)                     the Kimmeridge Acquisition; and

 

(o)                     any deposits made in connection with any Investment
permitted under clauses (e), (j) or (n) of this Section 7.04.

 

1.12                        Amendment to Section 7.11.  Section 7.11 of the
Credit Agreement is hereby amended by replacing “June 30, 2013” with the words
“the Third Amendment Effective Date” and replacing “4.25” with “4.00” in
Subsection 7.11(b) thereof.

 

1.13                        Amendment to Article XI.  Article XI of the Credit
Agreement is hereby amended by inserting a new Section 11.20 to read as follows:

 

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Section 11.20.  Acknowledgement and Consent to Bail-In of EEA Financial
Institutions.  Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among any such parties,
each party hereto acknowledges that any liability of any EEA Financial
Institution arising under any Loan Document may be subject to the write-down and
conversion powers of an EEA Resolution Authority and agrees and consents to, and
acknowledges and agrees to be bound by:

 

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution
Authority to any such liabilities arising hereunder which may be payable to it
by any party hereto that is an EEA Financial Institution; and

 

(b) the effects of any Bail-In Action on any such liability, including, if
applicable:

 

(i) a reduction in full or in part or cancellation of any such liability;

 

(ii) a conversion of all, or a portion of, such liability into shares or other
instruments of ownership in such EEA Financial Institution, its parent entity,
or a bridge institution that may be issued to it or otherwise conferred on it,
and that such shares or other instruments of ownership will be accepted by it in
lieu of any rights with respect to any such liability under this Agreement or
any other Loan Document; or

 

(iii) the variation of the terms of such liability in connection with the
exercise of the Write-Down and Conversion Powers of any EEA Resolution
Authority.

 

1.14                        Amendment to Schedules.  Schedule 2.01 of the Credit
Agreement is hereby amended by deleting such Schedule in its entirety and
replacing it with Schedule 2.01 attached hereto.

 

SECTION 2.                                       Waivers

 

2.1                               Waiver of Borrowing Base Reduction.  The
Administrative Agent, acting at the direction of the Required Lenders, hereby
waives (such waiver, the “Borrowing Base Reduction Waiver”)  the application of
Section 3.06 of the Credit Agreement in connection with the Offering and any
issuance of Exchange Notes; provided that the waiver contained in this
Section 2.1 shall constitute a limited, one-time waiver, and nothing contained
herein shall obligate the Lenders to grant any additional or future waiver with
respect to, or in connection with, any provision of any Loan Document.

 

2.2                               Call Spread Waiver.  The Administrative Agent,
acting at the direction of the Majority Lenders, hereby waives (such waiver, the
“Call Spread Waiver” and together with the Borrowing Base Reduction Waiver, the
“Waivers”) (a) compliance by the Borrower with the requirements and limitations
set forth in Sections 6.13, 7.01, 7.04, 7.05, 7.06, 7.09, 7.13(a) and 9(g) of
the Credit Agreement (in each case, as may be amended by this Amendment) to the
extent, and only to the extent that, performance under Permitted New Convertible
Notes Swap Agreements would violate such requirements and/or limitations or
result in a Default or Event of Default under the Credit Agreement due to the
application of such requirements and/or

 

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limitations, (b) compliance by the Borrower with the requirements and
limitations set forth in Sections 7.06 and 7.13(a) of the Credit Agreement (in
each case, as may be amended by this Amendment) to the extent, and only to the
extent that, the issuance of and the performance under the New Convertible Notes
by the Borrower would violate such requirements and/or limitations or result in
a Default or Event of Default under the Credit Agreement due to the application
of such requirements and/or limitations; provided that in the case of this
clause (b) cash payments upon conversion of the New Convertible Notes (other
than cash in lieu of fractional shares and other than cash payments pursuant to
a Permitted Refinancing) may only be made if, immediately after giving effect to
such cash payment upon conversion, the Aggregate Commitment exceeds the
Aggregate Credit Exposure by 30%, (c) any Default or Event of Default under
Section 9(g) of the Credit Agreement resulting from the occurrence of an event
or condition under the New Convertible Notes that results in the New Convertible
Notes being or becoming convertible at the option of the holder thereof, and
(d) any Default or Event of Default that would result from treating Permitted
New Convertible Notes Swap Agreements as “Indebtedness” under the Credit
Agreement.  Each of the waivers contained in this Section 2.2 shall constitute a
limited, one-time waiver, and nothing contained herein shall obligate the
Lenders to grant any additional or future waiver with respect to, or in
connection with, any provision of any Loan Document. For purposes of this Call
Spread Waiver, the following terms shall have the following meanings:

 

“New Convertible Notes” means any convertible debt securities issued by the
Borrower pursuant to the Offering.

 

“New Convertible Notes Call Options” means any call options or capped call
options purchased by the Borrower from one or more financial institutions
relating to the New Convertible Notes and pursuant to which the Borrower is
entitled to receive an amount of cash or Equity Interests of the Borrower (or
any combination of cash and such Equity Interests) upon conversions of New
Convertible Notes from time to time, at maturity of the New Convertible Notes
and/or upon termination of such New Convertible Notes Call Options.

 

“New Convertible Notes Warrants” means any warrants to purchase Equity Interests
of the Borrower issued to one or more financial institutions substantially
contemporaneously with the purchase by the Borrower of New Convertible Notes
Call Options from such financial institutions.

 

“Permitted New Convertible Notes Swap Agreements” means each of the New
Convertible Notes Call Options and New Convertible Notes Warrants, if any;
provided that the aggregate premium payable by the Borrower in connection with
the purchase of all such New Convertible Notes Call Options, less the aggregate
premium received by the Borrower in connection with the issuance of all such New
Convertible Notes Warrants, if any, shall not exceed 20% of the aggregate
principal amount of the New Convertible Notes issued pursuant to the Offering.

 

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SECTION 3.                                       Conditions.

 

3.1                               Limited Effective Date.  Each of the
amendments to the Credit Agreement contained in Sections 1.1(a), 1.1(d), 1.2,
1.4, 1.5, 1.9, 1.10, 1.11, and 1.13 of this Amendment, the Waivers contained in
Section 2 of this Amendment and Section 5 of this Amendment shall be effective
upon the satisfaction or waiver in writing of each of the following conditions
set forth in this Section 3.1 (the date on which each such condition has been
satisfied or waived in writing is referred to herein as the “Limited Effective
Date”):

 

(a)                     Execution and Delivery.  Each Credit Party, the Lenders
constituting the Required Lenders, each entity that will become a Lender on the
Third Amendment Effective Date (each a “New Lender”), each Lender whose
Commitment is increased pursuant to Sections 1.1(b) and 3.2 hereof and the
Administrative Agent shall have executed and delivered this Amendment and each
other required document, all in form and substance satisfactory to the
Administrative Agent.

 

(b)                     No Default.  No Default shall have occurred and be
continuing or shall result from the effectiveness of the Amendment.

 

(c)                      Representations and Warranties. After giving effect to
the amendments and waivers contained in the Sections of this Amendment specified
above in this Section 3.1, each representation and warranty of the Credit
Parties contained in the Credit Agreement and in each of the other Loan
Documents is true and correct in all material respects on the Limited Effective
Date (except to the extent such representations and warranties relate solely to
an earlier date, in which case they are true and correct in all material
respects as of such earlier date).

 

(d)                     Officer’s Certificates. The Administrative Agent shall
have received (i) a certificate from the principal financial officer of the
Borrower, in form and substance reasonably acceptable to the Administrative
Agent, certifying that the Borrower and its Restricted Subsidiaries, taken as a
whole, after giving effect to the transactions contemplated hereby to occur on
or prior to the Limited Effective Date, are Solvent and (ii) a customary closing
certificate from a Responsible Officer of the Borrower in form and substance
reasonably satisfactory to the Administrative Agent.

 

3.2                               Third Amendment Effective Date.  Each of the
amendments to the Credit Agreement contained in Sections 1.1(b), 1.1(c), 1.3,
1.6, 1.7, 1.8, 1.12 and 1.14 of this Amendment and Section 4 of this Amendment
shall be effective upon the satisfaction or waiver in writing of each of the
following conditions set forth in this Section 3.2 (the date on which each such
condition has been satisfied or waived in writing is referred to herein as the
“Third Amendment Effective Date”); provided that the Third Amendment Effective
Date occurs on or prior to December 31, 2016; provided further that if the
Purchase Agreements are amended solely to extend their respective termination
dates, this date may be extended to the termination date set forth in such
amendments, but in no case shall this date be extended beyond January 15, 2017:

 

(a)                     Limited Effective Date. The Limited Effective Date shall
have occurred.

 

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(b)                     Legal Opinions.  The Administrative Agent shall have
received an opinion by Davis Graham & Stubbs LLP, as counsel to the Credit
Parties, in a form reasonably satisfactory to the Administrative Agent.

 

(c)                      Officer’s Certificates. The Administrative Agent shall
have received (i) a certificate from the principal financial officer of the
Borrower, in form and substance reasonably acceptable to the Administrative
Agent, certifying that the Borrower and its Restricted Subsidiaries, taken as a
whole, after giving effect to the transactions contemplated hereby, are Solvent
and (ii) a customary closing certificate from a Responsible Officer of the
Borrower in form and substance reasonably satisfactory to the Administrative
Agent.

 

(d)                     Minimum Gross Cash Proceeds.  The Borrower shall have
received $600.0 million in aggregate gross cash proceeds from (i) the Offering,
(ii) the Bridge Facility and/or (iii) any asset sales for cash between
August 23, 2016 and the Third Amendment Effective Date exceeding, individually
or in the aggregate, $5.0 million.

 

(e)                      Equity Issuance.  As partial consideration for the
Kimmeridge Acquisition, the Borrower shall have issued the amount of equity
contemplated to be issued by it under the Stock Purchase Agreement, Asset
Purchase Agreement and those certain Investment Agreements entered into
simultaneously with the closings of the transactions contemplated by the Asset
Purchase Agreement and Stock Purchase Agreement, by and between the Borrower and
the Investors (as defined in each Investment Agreement) party thereto (the
“Investment Agreements”).

 

(f)                       No Other Indebtedness. After giving effect to this
Amendment, the Kimmeridge Acquisition, the Bridge Facility and the Offering,
neither the Borrower nor any of its Subsidiaries shall have any material
Indebtedness for borrowed money other than (i) the Obligations, (ii) the Bridge
Facility (or any securities constituting Indebtedness issued pursuant to the
Offering in lieu of the Bridge Facility), (iii) Indebtedness permitted under
Section 7.01 of the Credit Agreement (as amended hereby), (iv) the Original
Senior Notes and (v) the Convertible Notes.

 

(g)                      Kimmeridge Acquisition.  The consummation of the
Kimmeridge Acquisition pursuant to the terms of the Stock Purchase Agreement and
the Asset Purchase Agreement (together, the “Purchase Agreements”) shall be a
concurrent condition to the Third Amendment Effective Date, and no provision of
either Purchase Agreement shall have been amended or waived, and no consent
shall have been given thereunder by the Borrower or its Affiliates in any manner
materially adverse to the interests of the Administrative Agent or the Lenders
without the prior written consent of the Administrative Agent, not to be
unreasonably withheld, conditioned or delayed (it being understood that (i) any
amendment to the definition of “Company Material Adverse Effect” in the Stock
Purchase Agreement (as in effect on the date thereof) or “Seller Material
Adverse Effect” in the Asset Purchase Agreement (as in effect on the date
thereof) shall be deemed material and adverse to the interests of the
Administrative Agent and Lenders and (ii) any increase or decrease in the
purchase price in respect of the Kimmeridge Acquisition pursuant to any purchase
price or similar adjustment provisions (including with respect to New

 

11

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Leases (as defined in the Purchase Agreements), title defects, environmental
defects, required consents, preferential purchase rights, and uncured casualty
losses) set forth in the Purchase Agreements (as in effect on the date thereof)
shall not constitute an alteration, amendment, change, supplement, waiver,
consent or other modification to the Purchase Agreements, and shall not be
deemed to be materially adverse to the interests of the Administrative Agent and
Lenders, unless and until the aggregate value of such adjustments would cause
Borrower’s closing condition set forth in Section 7.2(f) of the Asset Purchase
Agreement and Section 7.2(g) of the Stock Purchase Agreement not to be
satisfied).

 

(h)                     Production and Accounting Statements. The Administrative
Agent shall have received such production and monthly accounting statements with
respect to the Target Assets that are received by the Borrower pursuant to the
Asset Purchase Agreement.

 

(i)                         Audited Financial Statements; Other Reports. The
Administrative Agent shall have received (i) audited consolidated balance sheets
and related statements of income, stockholders’ equity and cash flows of the
Borrower and its Subsidiaries, for the three most recently completed fiscal
years ended at least 90 days before the Third Amendment Effective Date,
(ii) unaudited consolidated balance sheets and related statements of income,
stockholders’ equity and cash flows of the Borrower and its Subsidiaries, for
each subsequent fiscal quarter (other than the fourth fiscal quarter of any
fiscal year) ended at least 45 days before the Third Amendment Effective Date
(in each case, together with the corresponding comparative period from the prior
fiscal year), (iii) audited consolidated balance sheets and related statements
of income, stockholders’ equity and cash flows of Arris for the two most
recently completed fiscal years ended at least 90 days before the Third
Amendment Effective Date, (iv) unaudited consolidated balance sheets and related
statements of income, stockholders’ equity and cash flows of Arris, for each
subsequent fiscal quarter (other than the fourth fiscal quarter of any fiscal
year) ended at least 45 days before the Third Amendment Effective Date (in each
case, together with the corresponding comparative period from the prior fiscal
year), (v) with respect to the Target Assets, such financial statements to the
extent required for a shelf takedown from Borrower’s existing registration
statement on Form S-3 under the Securities Act, and (vi) the reserve reports for
the proved oil and gas properties of the Borrower and its Subsidiaries and, to
the extent required for a shelf takedown from Borrower’s existing registration
statement on Form S-3 under the Securities Act, Arris and the Target Assets, in
each case for the most recently completed fiscal year ended at least 90 days
before the Third Amendment Effective Date (which reports shall be prepared
according to SEC guidelines by one or more reputable third party engineers);
provided that filing of the required financial statements in clauses (i) and
(ii) above on form 10-K and form 10-Q by the Borrower with the Securities and
Exchange Commission through the “Electronic Data Gathering, Analysis and
Retrieval” system will satisfy the foregoing requirements.

 

(j)                        Pro Forma Financial Statements. The Administrative
Agent shall have received a pro forma consolidated balance sheet and related pro
forma consolidated statement of income of the Borrower and its Subsidiaries as
of and for the twelve-month period ending on the last day of the most recently
completed four-fiscal quarter period ended at least 45 days prior to the Third
Amendment Effective Date, in each case, prepared in accordance with Regulation
S-X after

 

12

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giving effect to each of the Kimmeridge Acquisition, the Offering, this
Amendment and the closing of the Bridge Facility as if the Kimmeridge
Acquisition, the Offering, this Amendment and the closing of the Bridge Facility
had occurred as of such date (in the case of such balance sheet) or at the
beginning of such period (in the case of such statement of income), in each case
to the extent necessary for a shelf takedown from Borrower’s existing
registration statement on Form S-3 under the Securities Act.

 

(k)                     Fees.  The Administrative Agent shall have received, for
its own account and for the account of the Lenders, the fees separately agreed
upon in the fee letter executed by the Borrower and the Administrative Agent on
August 23, 2016.

 

(l)                         First Priority Liens; Mortgages. (i) All actions
necessary to establish that the Administrative Agent will have a perfected first
priority Lien (subject to Liens permitted under the Credit Agreement as amended
hereby) in the Collateral under the Credit Agreement shall have been taken,
including, without limitation, a Mortgage Lien (and receipt of title
information) on 85% of the Engineered Value of the Direct Interests included in
the Borrowing Base Properties (prior to giving effect to the Kimmeridge
Acquisition); provided that, to the extent any Collateral (including the grant
or perfection of any security interest) is not or cannot be provided on the
Third Amendment Effective Date (other than the grant and perfection of liens
(x) in assets with respect to which a lien may be perfected solely by the filing
of a financing statement under the Uniform Commercial Code, (y) in capital stock
with respect to which a lien may be perfected by the delivery of a stock
certificate or (z) the Mortgage Liens referred to above in this clause (i)),
after the Borrower’s use of commercially reasonable efforts to do so without
undue burden or expense, then the provision of such Collateral shall not
constitute a condition precedent to the Third Amendment Effective Date, but
shall instead be provided within thirty (30) days of the Third Amendment
Effective Date, subject to the application of Section 6.18(c) of the Credit
Agreement as amended hereby (such proviso being referred to herein as the
“Limited Conditionality Provision”) and (ii) (x) all prior material Indebtedness
for borrowed money secured by a Lien in the Target Assets (other than
Indebtedness permitted under the Credit Agreement as amended hereby) shall have
been paid, redeemed, defeased and discharged in full, (y) the Administrative
Agent shall have received a customary payoff letter in connection with the same,
and (z) all prior Liens in the Target Assets (other than Liens permitted under
the Credit Agreement as amended hereby) shall have been released.

 

(m)                 PATRIOT Act. The Administrative Agent shall have received,
at least 3 days prior to the Third Amendment Effective Date, to the extent
requested by the Administrative Agent or its counsel at least 10 days prior to
the Third Amendment Effective Date, all documentation and other information
required by regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including the PATRIOT Act.

 

(n)                     Representations and Warranties.  After giving effect to
the amendments contained herein, each representation and warranty of (i) Arris
contained in the Stock Purchase Agreement (as in effect on August 23, 2016) that
is material to the interests of the Lenders, but only to the extent the accuracy
of any such representation is a condition to the obligation of the Borrower (or
an Affiliate thereof) to close under the Stock Purchase Agreement, or the
Borrower

 

13

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(or an Affiliate thereof) has the right to terminate the Stock Purchase
Agreement as a result of a breach of such representation, (ii) the Target Asset
Sellers contained in the Asset Purchase Agreement (as in effect on August 23,
2016) that is material to the interests of the Lenders, but only to the extent
the accuracy of any such representation is a condition to the obligation of the
Borrower (or an Affiliate thereof) to close under the Asset Purchase Agreement,
or the Borrower (or an Affiliate thereof) has the right to terminate the Asset
Purchase Agreement as a result of a breach of such representation and (iii) such
Credit Party contained in Sections 4.01, 4.02, 4.03 (except to the extent such
conflict has not resulted in a Company Material Adverse Effect (as defined in
the Stock Purchase Agreement (as in effect on August 23, 2016)) or a Seller
Material Adverse Effect (as defined in the Asset Purchase Agreement (as in
effect on August 23, 2016))), 4.07, 4.08, 4.14, 4.17, 4.21 (subject to the
application of the Limited Conditionality Provision), 4.22, and 4.23 of the
Credit Agreement shall be true and correct in all material respects on the Third
Amendment Effective Date (except to the extent such representations and
warranties relate solely to an earlier date, in which case they are true and
correct in all material respects as of such earlier date).

 

SECTION 4.                                       Representations and Warranties
of Credit Parties.  To induce the Lenders to enter into this Amendment, each
Credit Party hereby represents and warrants to the Lenders as follows:

 

4.1                               Corporate Authority; No Conflicts.  The
execution, delivery and performance by such Credit Party of this Amendment and
all documents, instruments and agreements contemplated herein are within such
Credit Party’s corporate or other organizational powers, have been duly
authorized by necessary action, require no action by or in respect of, or filing
with, any court or agency of government and do not violate or constitute a
default under any provision of any applicable law or other agreements binding
upon such Credit Party or result in the creation or imposition of any Lien upon
any of the assets of such Credit Party.

 

4.2                               Enforceability.  This Amendment constitutes
the valid and binding obligation of such Credit Party enforceable in accordance
with its terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditor’s rights generally,
and (ii) the availability of equitable remedies may be limited by equitable
principles of general application.

 

4.3                               No Default.  As of the date hereof, both
before and immediately after giving effect to this Amendment, no Default or
Event of Default has occurred and is continuing.

 

SECTION 5.                                       Miscellaneous.

 

5.1                               Reaffirmation of Loan Documents and Liens. 
Any and all of the terms and provisions of the Credit Agreement and the other
Loan Documents shall, except as amended and modified hereby, remain in full
force and effect and are hereby in all respects ratified and confirmed by each
Credit Party.  Each Credit Party hereby agrees that the amendments and
modifications herein contained shall in no manner affect or impair the
liabilities, duties and

 

14

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obligations of any Credit Party under the Credit Agreement and the other Loan
Documents or the Liens securing the payment and performance thereof.

 

5.2                               Parties in Interest.  All of the terms and
provisions of this Amendment shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns.

 

5.3                               Legal Expenses.  Each Credit Party hereby
agrees to pay all reasonable fees and expenses of counsel to the Administrative
Agent incurred by the Administrative Agent in connection with the preparation,
negotiation and execution of this Amendment and all related documents.

 

5.4                               Request for Account Control Agreements.  The
Administrative Agent hereby requests that the Borrower cause, and cause each
other Credit Party to cause, each Deposit Account and/or Securities Account
established, held or maintained by the Borrower or such other Credit Party on or
prior to the Third Amendment Effective Date to become a Controlled Account no
later than the Third Amendment Effective Date in accordance with Section 6.20 of
the Credit Agreement as amended hereby.

 

5.5                               Counterparts.  This Amendment may be executed
in one or more counterparts and by different parties hereto in separate
counterparts each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.  Delivery of photocopies of
the signature pages to this Amendment by facsimile or electronic mail shall be
effective as delivery of manually executed counterparts of this Amendment.

 

5.6                               Complete Agreement.  THIS AMENDMENT, THE
CREDIT AGREEMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.

 

5.7                               Headings.  The headings, captions and
arrangements used in this Amendment are, unless specified otherwise, for
convenience only and shall not be deemed to limit, amplify or modify the terms
of this Amendment, nor affect the meaning thereof.

 

5.8                               Governing Law.  This Amendment shall be
construed in accordance with and governed by the law of the State of New York
without regard to conflicts of law.

 

5.9                               New Lenders.  Each New Lender shall execute a
Lender Certificate to evidence the Commitments of such New Lender which Lender
Certificate will be effective, and such New Lender shall be deemed to be a
Lender in all respects under the Credit Agreement and the other Loan Documents,
concurrently with the satisfaction of the conditions set forth in Section 3.2
hereto on the Third Amendment Effective Date.

 

15

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[Remainder of Page Intentionally Blank.  Signature Pages Follow.]

 

16

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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed
as of the date first above written.

 

 

BORROWER:

 

 

 

PDC ENERGY, INC.

 

 

 

 

 

By:

/s/ Barton R. Brookman, Jr.

 

Name: Barton R. Brookman, Jr.

 

Title: President and Chief Executive Officer

 

 

 

GUARANTORS:

 

 

 

RILEY NATURAL GAS COMPANY

 

 

 

 

 

By:

/s/ Lance A. Lauck

 

Name: Lance A. Lauck

 

Title: President

 

Signature Page

 

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JPMORGAN CHASE BANK, N.A., as

 

Administrative Agent, Issuing Bank and as a Lender

 

 

 

 

 

By:

/s/ Jo Linda Papadakis

 

Name: Jo Linda Papadakis

 

Title: Authorized Officer

 

Signature Page

 

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BANK OF AMERICA, N.A., as a Lender

 

 

 

 

 

By:

/s/ Ronald E. McKaig

 

Name: Ronald E. McKaig

 

Title: Managing Director

 

Signature Page

 

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BANK OF MONTREAL, as a Lender

 

 

 

 

 

By:

/s/ Gumaro Tijerina

 

Name: Gumaro Tijerina

 

Title: Managing Director

 

Signature Page

 

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COMPASS BANK, as a Lender

 

 

 

 

 

By:

/s/ Kathleen J. Bowen

 

Name: Kathleen J. Bowen

 

Title: Managing Director

 

Signature Page

 

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CREDIT AGRICOLE CORPORATE AND
INVESTMENT BANK, as a Lender

 

 

 

 

 

By:

/s/ Michael D. Willis

 

 

Name: Michael D. Willis

 

 

Title: Managing Director

 

 

 

 

 

 

 

By:

/s/ Darrell Stanley

 

 

Name: Darrell Stanley

 

 

Title: Managing Director

 

Signature Page

 

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THE BANK OF NOVA SCOTIA, as a Lender

 

 

 

 

 

By:

/s/ Alan Dawson

 

Name: Alan Dawson

 

Title: Director

 

Signature Page

 

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SCOTIABANC INC.,

 

as a Lender

 

 

 

 

 

By:

/s/ K. Zhou

 

Name: K. Zhou

 

Title: Director

 

Signature Page

 

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WELLS FARGO BANK, N.A.,

 

as a Lender

 

 

 

 

 

By:

/s/ Dalton Harris

 

Name: Dalton Harris

 

Title: Vice President

 

Signature Page

 

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BOKF, NA d/b/a BANK OF OKLAHOMA,

 

as a Lender

 

 

 

 

 

By:

/s/ Eric Griffin

 

Name: Eric Griffin

 

Title: Senior Vice President

 

Signature Page

 

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CAPITAL ONE, NATIONAL ASSOCIATION,

 

as a Lender

 

 

 

 

 

By:

/s/ Kristin N. Oswald

 

Name: Kristin N. Oswald

 

Title: Vice President

 

Signature Page

 

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COMERICA BANK,

 

as a Lender

 

 

 

 

 

By:

/s/ Garrett R. Merrell

 

Name: Garrett R. Merrell

 

Title: Relationship Manager

 

Signature Page

 

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NATIXIS, NEW YORK BRANCH,

 

as a Lender

 

 

 

 

 

By:

/s/ Timothy Polvado

 

Name: Timothy Polvado

 

Title: Senior Managing Director

 

 

 

 

 

By:

/s/ Leila Zomorrodian

 

Name: Leila Zomorrodian

 

Title: Director

 

Signature Page

 

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TEXAS CAPITAL BANK, N.A.,

 

as a Lender

 

 

 

 

 

By:

/s/ Gabriela A. Ramirez

 

Name: Gabriela A. Ramirez

 

Title: Vice President

 

Signature Page

 

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U.S. BANK NATIONAL ASSOCIATION,

 

as a Lender

 

 

 

 

 

By:

/s/ Tara McLean

 

Name: Tara McLean

 

Title: Vice President

 

Signature Page

 

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KEYBANK NATIONAL ASSOCIATION,

 

as a Lender

 

 

 

 

 

By:

/s/ George McKean

 

Name: George McKean

 

Title: Senior Vice President

 

Signature Page

 

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CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY,

 

as a Lender

 

 

 

 

 

By:

/s/ Trudy Nelson

 

Name: Trudy Nelson

 

Title: Authorized Signatory

 

 

 

 

 

By:

/s/ Daria Mahoney

 

Name: Daria Mahoney

 

Title: Authorized Signatory

 

Signature Page

 

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TORONTO DOMINION (TEXAS), LLC,

 

as a Lender

 

 

 

 

 

By:

/s/ Savo Bozic

 

Name: Savo Bozic

 

Title: Authorized Signatory

 

Signature Page

 

--------------------------------------------------------------------------------

 

 

GOLDMAN SACHS BANK USA,

 

as a New Lender

 

 

 

 

 

By:

/s/ Josh Rosenthal

 

Name: Josh Rosenthal

 

Title: Authorized Signatory

 

Signature Page

 

--------------------------------------------------------------------------------

 

 

ABN AMRO CAPITAL USA LLC,

 

as a New Lender

 

 

 

 

 

By:

/s/ Kelly Hall

 

Name: Kelly Hall

 

Title: Vice President

 

 

 

 

 

By:

/s/ Darrell Holley

 

Name: Darrell Holley

 

Title: Managing Director

 

Signature Page

 

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FIFTH THIRD BANK,

 

as a New Lender

 

 

 

 

 

By:

/s/ Jonathan H Lee

 

Name: Jonathan H Lee

 

Title: Director

 

Signature Page

 

--------------------------------------------------------------------------------

 

 

PNC BANK, NATIONAL ASSOCIATION,

 

as a New Lender

 

 

 

 

 

By:

/s/ Sandra Aultman

 

Name: Sandra Aultman

 

Title: Managing Director

 

Signature Page

 

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