Exhibit 10.1

 

EXECUTION

 

SEVENTH AMENDMENT TO SECOND AMENDED

AND RESTATED CREDIT AGREEMENT

 

THIS SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
“Seventh Amendment”), dated as of March 18, 2016, is entered into by and among
SANCHEZ ENERGY CORPORATION, a Delaware corporation (“Borrower”), each of SN
PALMETTO, LLC, a Delaware limited liability company f/k/a SEP Holdings III, LLC
(“SN Palmetto”), SN MARQUIS LLC, a Delaware limited liability company (“SN
Marquis”), SN COTULLA ASSETS, LLC, a Texas limited liability company (“SN
Cotulla”), SN OPERATING, LLC, a Texas limited liability company (“SN
Operating”), SN TMS, LLC, a Delaware limited liability company (“SN TMS”), and
SN CATARINA, LLC, a Delaware limited liability company (“SN Catarina; together
with SN Palemetto, SN Marquis, SN Cotulla, SN Operating and SN TMS collectively,
the “Guarantors” and each, a “Guarantor”), the Required Lenders party hereto,
and ROYAL BANK OF CANADA, as Administrative Agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”).

 

RECITALS

 

A.                                    The Borrower, the Guarantors, the Lenders,
RBC, as Issuing Bank, and the Administrative Agent previously entered into that
certain Second Amended and Restated Credit Agreement dated as of June 30, 2014
(as amended by that certain First Amendment to Second Amended and Restated
Credit Agreement dated as of September 9, 2014, that certain Second Amendment to
Second Amended and Restated Credit Agreement dated as of March 31, 2015, that
certain Third Amendment to Second Amended and Restated Credit Agreement dated as
of July 20, 2015, that certain Fourth Amendment to Second Amended and Restated
Credit Agreement dated as of September 29, 2015, that certain Fifth Amendment to
Second Amended and Restated Credit Agreement dated as of October 30, 2015, that
certain Sixth Amendment to Second Amended and Restated Credit Agreement dated as
of January 22, 2016 and as it may be further amended, restated, supplemented or
modified from time to time, the “Credit Agreement”) and certain other Loan
Documents (as defined in the Credit Agreement) in connection therewith.

 

B.                                    The Borrower has requested that the
Administrative Agent and the Lenders amend the Credit Agreement as set forth
herein to (i) increase the existing limit for Investments in Senior Unsecured
Notes and Equity Interests issued by the Borrower, (ii) provide for Investments
in an Unrestricted Subsidiary to purchase Senior Unsecured Notes and Equity
Interests issued by the Borrower and (iii) make certain amendments as set forth
herein. The Administrative Agent and the Required Lenders are willing to amend
the Credit Agreement on the terms and conditions contained in this Seventh
Amendment.

 

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AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set
forth in this Seventh Amendment and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged by the parties hereto, the
Borrower, the Guarantors, the Required Lenders, the Issuing Bank and the
Administrative Agent agree as follows:

 

1.                                      Defined Terms. Unless otherwise defined
herein, capitalized terms used herein have the meanings assigned to them in the
Credit Agreement.

 

2.                                      Specific Amendments to Credit
Agreement.      The Credit Agreement is hereby amended as follows:

 

(i)                                     The following defined terms are hereby
added to Section 1.02 of the Credit Agreement in the proper alphabetical order:

 

“Available Cash” means as of the date of determination thereof, the aggregate
amount of cash held by the Borrower, its Restricted Subsidiaries and
Unrestricted Subsidiaries; provided that, except for any cash that is held in a
Deposit Account subject to a Deposit Account Control Agreement in favor of the
Administrative Agent, such cash (i) is not held in a dedicated cash collateral
account and (ii) is not subject to any restriction against access (other than
restrictions set forth by regulations promulgated by the Board) by the Borrower,
Restricted Subsidiary or Unrestricted Subsidiary, as applicable, that is the
depositor under the Deposit Account in which such cash is held.

 

“Buyback Availability” means at any time of determination thereof, an amount
equal to the excess of (i) Loan Party Cash over (ii) the sum of the Credit
Exposures of the Lenders at such time.

 

“Commodity Account” has the meaning specified in the Security Agreement.

 

“Commodity Account Control Agreement” has the meaning specified in the Security
Agreement.

 

“Deposit Account” has the meaning specified in the Security Agreement.

 

“Deposit Account Control Agreement” has the meaning specified in the Security
Agreement.

 

“First Lien Debt” means as of the date of determination, the total Credit
Exposure of the Lenders on such date.

 

“Loan Party Cash” means as of the date of determination thereof, the aggregate
amount of cash held by the Borrower and the Restricted Subsidiaries; provided
that, except for any cash that is held in a Deposit Account subject to a

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

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Deposit Account Control Agreement in favor of the Administrative Agent, such
cash (i) is not held in a dedicated cash collateral account and (ii) is not
subject to any restriction against access (other than restrictions set forth by
regulations promulgated by the Board) by the Borrower or Restricted Subsidiary,
as applicable, that is the depositor under the Deposit Account in which such
cash is held.

 

“Securities Account” has the meaning specified in the Security Agreement.

 

“Securities  Account Control Agreement” has the meaning specified in the
Security Agreement.

 

“Seventh Amendment” means that certain Seventh Amendment to Second Amended and
Restated Credit Agreement dated the Seventh Amendment Effective Date among the
Borrower, the Guarantors, the Required Lenders, RBC, as Issuing Bank, and the
Administrative Agent.

 

“Seventh Amendment Effective Date” means March 18, 2016.

 

“SN Palmetto” means SN Palmetto, LLC, a Delaware limited liability company,
known prior to its name change on March 14, 2016 as SEP Holdings III, LLC.

 

“Special Purpose Unrestricted Subsidiary” means SN Capital, LLC, a Delaware
limited liability company whose immediate parent is either the Borrower or a
Restricted Subsidiary and whose organizational documents provide that its only
permitted business activities are (i) receiving cash Investments from its
immediate parent, which will be either the Borrower or a Restricted Subsidiary,
(ii) holding cash received as an Investment from its immediate parent in a
Deposit Account maintained with a Lender, (iii) purchasing, holding and
disposing, including by way of distribution to its immediate parent, of Senior
Unsecured Notes and Equity Interests issued by Borrower and (iv) distributing
cash to its immediate parent.

 

(ii)                                  The defined term “Aggregate Elected
Commitment Amount” in Section 1.02 of the Credit Agreement is hereby deleted and
the following is substituted therefor:

 

“Aggregate Elected Commitment Amount” at any time shall equal the sum of the
Elected Commitments, as the same may be increased, reduced or terminated
pursuant to Section 2.06(c). As of the Seventh Amendment Effective Date, the
Aggregate Elected Commitment Amount is $300,000,000.

 

(iii)                               The defined term “Agreement” in Section 1.02
of the Credit Agreement is hereby deleted and the following is substituted
therefor:

 

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“Agreement” means this Second Amended and Restated Credit Agreement, as amended
by the First Amendment, Second Amendment, Third Amendment, Fourth Amendment,
Fifth Amendment, Sixth Amendment, Seventh Amendment and as the same may from
time to time be amended, modified, supplemented or restated.

 

(iv)                              The defined term “Annualized Consolidated
EBITDA” in Section 1.02 of the Credit Agreement is hereby deleted.

 

(v)                                 The defined term “Applicable Margin” is
Section 1.02 of the Credit Agreement is hereby deleted and the following
substituted therefor:

 

“Applicable Margin” means, for any day with respect to any ABR Loan or
Eurodollar Loan, or with respect to the Letter of Credit Fee Rate, as the case
may be, the rate per annum set forth in the Borrowing Base Utilization Grid
below based upon the Borrowing Base Utilization Percentage then in effect:

 

Borrowing Base Utilization Grid

 

Borrowing Base Utilization Percentage

 

<25%

 

>25% and <50%

 

>50% and <75%

 

>75% and <90%

 

>90%

ABR Loans

 

1.00%

 

1.25%

 

1.50%

 

1.75%

 

2.00%

Eurodollar Loans

 

2.00%

 

2.25%

 

2.50%

 

2.75%

 

3.00%

Letter of Credit Fee Rate

 

2.00%

 

2.25%

 

2.50%

 

2.75%

 

3.00%

 

For any day, “Applicable Margin” means, with respect to the Commitment Fee Rate,
the rate per annum set forth in the Elected Commitment Utilization Grid below
based upon the Elected Commitment Utilization Percentage then in effect:

 

Elected Commitment Utilization Grid

 

Elected Commitment Utilization Percentage

 

<25%

 

>25% and <50%

 

>50% and <75%

 

>75% and <90%

 

>90%

Commitment Fee Rate

 

0.500%

 

0.500%

 

0.500%

 

0.500%

 

0.500%

 

Each change in the Applicable Margin shall apply during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change; provided, however, that if at any
time the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a),
then the “Applicable Margin” means the rate per annum set forth on the then
applicable grid above when it is at its highest level; provided further that the
Applicable Margin shall be the Applicable Margin determined without regard to
the preceding proviso upon the Borrower’s delivery of such Reserve Report.

 

(vi)                              Clause (e) of the defined term “Consolidated
EBITDA” in Section 1.02 of the Credit Agreement is hereby deleted and the
following substituted therefor:

 

(e) fees and expenses expensed and paid in cash in connection with (1) the
public offering of Borrower’s Equity Interests, (2) the 2012 Credit Agreement,
(3) 

 

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the 2013 Credit Agreement, (4) the Senior Unsecured Notes, (5) any Permitted
Second Lien Debt and (6) this Agreement; and

 

(vii)                           The defined term “Intercreditor Agreement” in
Section 1.02 of the Credit Agreement is hereby deleted and the following
substituted therefor:

 

“Intercreditor Agreement” means (a) an Intercreditor Agreement (in form approved
by the Administrative Agent and the Required Lenders) among the Borrower, the
other Loan Parties, the Administrative Agent and the trustee, administrative
agent or other relevant representative of the holders of Permitted Second Lien
Debt under the Permitted  Second  Lien  Documents, and (b) if the Permitted
Second Lien Debt is refinanced or replaced in accordance with the terms of such
Intercreditor Agreement, any successor agreement entered into in accordance with
such terms, in each case as the same may be amended, modified, supplemented or
restated from time to time in accordance with the terms of the then effective
Intercreditor Agreement.

 

(viii)                        So much of clause (a) of the defined term
“Permitted Second Lien Debt” in Section 1.02 of the Credit Agreement as precedes
the proviso to such clause (a) is hereby deleted and the following substituted
therefor:

 

(a) Debt incurred on or after the Sixth Amendment Effective Date by the Borrower
pursuant to a second lien indenture or credit facility;

 

(ix)                              The defined term “Permitted Second Lien
Documents” in Section 1.02 of the Credit Agreement is hereby deleted and the
following substituted therefor:

 

“Permitted Second Lien Documents” means each indenture, credit or other loan
agreement governing Permitted Second Lien Debt, all guarantees thereof and all
other agreements, documents or instruments executed and delivered by any Loan
Party in connection with, or pursuant to, the incurrence of Permitted Second
Lien Debt.

 

(x)                                 The defined term “Security Agreement” in
Section 1.02 of the Credit Agreement is hereby deleted and the following
substituted therefor:

 

“Security Agreement” means the Amended and Restated Security and Pledge
Agreement dated as of June 30, 2014 among the Borrower and the Restricted
Subsidiaries, as grantors, and the Administrative Agent, as amended by the First
Amendment to Security and Pledge Agreement dated as of the Seventh Amendment
Effective Date and as it may be further amended, restated, supplemented or
modified from time to time.

 

(xi)                              The defined term “Senior Secured Debt” in
Section 1.02 of the Credit Agreement is hereby deleted.

 

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(xii)                           The defined term “SEP” in Section 1.02 of the
Credit Agreement is hereby deleted and the following is substituted therefor:

 

“SEP” has the meaning given in Recital A; from and after the date on which SEP
Holdings III, LLC changes its name to SN Palmetto, LLC all references in the
Loan Documents to SEP shall be deemed to be references to SN Palmetto.

 

(xiii)                        The introductory clause of the defined term
“Unrestricted Subsidiary” in Section 1.02 of the Credit Agreement is hereby
deleted and the following is substituted therefor:

 

“Unrestricted Subsidiary” means SN Midstream, SN Services, SN UR Holdings, SN
Terminal, the Special Purpose Unrestricted Subsidiary and each other Subsidiary
of the Borrower that is designated by the Board of Directors of the Borrower as
an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors of
Borrower (in each case for so long as such Person remains a Subsidiary), but
only to the extent that such Subsidiary:

 

(xiv)                       Section 2.06(c)(ii) of the Credit Agreement is
hereby amended by deleting the word “and” at the end of Section 2.06(c)(6),
deleting the period at the end of Section 2.06(c)(7) and inserting a semicolon
followed by the word “and” and adding a new Section 2.06(c)(8) to read in its
entirety as follows:

 

“(8)                           notwithstanding anything in this Section 2.06 to
the contrary, without the written consent of each Lender, the Borrower will not
increase the $300,000,000 Elected Commitment in effect on the Seventh Amendment
Effective Date until the first Scheduled Redetermination Date following the
Seventh Amendment Effective Date.”

 

(xv)                          The first sentence of Section 3.04(c)(iii) is
hereby amended by deleting the words “then the Borrower shall, within ten
(10) days” and substituting therefor the words “then the Borrower shall, subject
to the provisions of the next sentence, within ten (10) days” and adding a new
second sentence at the end thereof to read in its entirety as follows:

 

“Notwithstanding the foregoing, if at the time the Borrower is notified in
writing by the Administrative Agent that a Borrowing Base Deficiency exists and 
Available Cash exceeds $35,000,000 (such excess, “Excess Available Cash”), the
Borrower will, within one Business Day of receiving written notice from the
Administrative Agent of such Borrowing Base Deficiency, use Excess Available
Cash to (A) prepay the Borrowings to eliminate the Borrowing Base Deficiency to
the extent of the Excess Available Cash and (B) if, as a result of LC Exposure,
any Borrowing Base Deficiency remains after prepaying all of the Borrowings,
deposit with the Administrative Agent on behalf of the Lenders an amount equal
to the remaining Borrowing Base Deficiency to the extent of the remaining Excess
Available Cash to be held as cash collateral as provided in Section 2.08(j);
provided, if any Borrowing Base Deficiency remains after the prepayments and

 

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deposits described in clauses (A) and (B) of this Section 3.04(c)(iv), the
provisions of the preceding sentence will apply to the remaining Borrowing Base
Deficiency.”

 

(xvi)                       Section 8.01(n) of the Credit Agreement is hereby
designated as Section 8.01(o) and the following Section 8.01(n) is added to read
in its entirety as follows:

 

“(n)                           Deposit Account and Other Information.  Promptly,
but in any event within two (2) Business Days after receipt of a request from
Administrative Agent therefor made, a report on the current cash balances or
securities and/or commodity contracts credited to the account of the Borrower
and its Subsidiaries held for the benefit of the Borrower or any Subsidiary in
any Deposit Account, Securities Account or Commodity Account, in such detail as
reasonably requested by Administrative Agent; provided if the aggregate Lenders’
Credit Exposure is less than fifty percent (50%) of the total Commitment at the
time such request is made, such request shall be made no more frequently than
once every 30 calendar days and if the Lenders’ Credit Exposure is more than
fifty percent (50%) of the total Commitment at the time such request is made,
such request shall be made no more frequently than once every 7 calendar days.”

 

(xvii)                    Each reference to “eighty percent (80%)” in
Section 8.12, Section 8.13 and Section 8.14 of the Credit Agreement is hereby
deleted and “ninety percent (90%)” is substituted therefor.

 

(xviii)                 Section 8.16(b) of the Credit Agreement is hereby
amended by adding the following proviso at the end thereof to read in its
entirety as follows:

 

“; provided, the Equity Interest in the Special Purpose Unrestricted Subsidiary
is to be subject to a Lien securing the Obligations within a reasonable period
of time after the formation of the Special Purpose Unrestricted Subsidiary.”

 

(xix)                       A new Section 8.17 is hereby added to the Credit
Agreement to read in its entirety to read as follows:

 

“Section 8.17   Accounts With Lenders; Control Agreements.

 

“(a)                           No later than 30 days after the Seventh Amendment
Effective Date, each Loan Party shall close all Deposit Accounts maintained with
any Person not a Lender and cause all of its Deposit Accounts, whether then
existing or thereafter created, including all operating, collections, payroll,
trust, and other depository or disbursement accounts, to be maintained with a
Person who is a Lender.  No later than 30 days after the Seventh Amendment
Effective Date, in the case of any Deposit Account maintained by a Loan Party
with a Lender as of the Seventh Amendment Effective Date, such Loan Party shall
deliver to the Administrative Agent a Deposit Account Control Agreement with
respect to such Deposit Account executed by the applicable Loan Party and the
Lender maintaining such Deposit Account.  If a Loan Party establishes a Deposit
Account with a Lender after the Seventh Amendment Effective Date, such Loan
Party shall

 

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enter into a Deposit Account Control Agreement contemporaneously with the
establishment of such Deposit Account and promptly thereafter deliver to the
Administrative Agent a Deposit Account Control Agreement with respect to such
Deposit Account executed by the applicable Loan Party and the Lender maintaining
such Deposit Account. If any Lender maintaining a Deposit Account for any Loan
Party ceases to be a Lender, then within 30 days of such Person ceasing to be a
Lender the Loan Party whose Deposit Accounts were maintained by such Person
shall close all Deposit Accounts maintained with that Person.

 

(b)                                 No later than 10 Business Days after the
Seventh Amendment Effective Date, each Loan Party shall close all Securities
Accounts and Commodity Accounts maintained with any Person not a Lender or an
Affiliate of a Lender and cause all of its Securities Accounts and Commodity
Accounts, whether then existing or thereafter created, to be maintained with a
Person who is a Lender or an Affiliate of a Lender.  If a Loan Party establishes
a Securities Account or Commodity Account with a Lender or an Affiliate of a
Lender after the Seventh Amendment Effective Date, such Loan Party shall enter
into a Securities Account Control Agreement or Commodity Account Control
Agreement, as applicable, contemporaneously with the establishment of such
Securities Account or Commodity Account and promptly thereafter deliver to the
Administrative Agent a copy of such control agreement with respect to such
Securities Account or Commodity Account executed by the applicable Loan Party
and the Lender or Lender Affiliate maintaining such Securities Account or
Commodity Account.  If any Lender or Affiliate of a Lender maintaining a
Securities Account or Commodity Account for any Loan Party ceases to be a Lender
(or an Affiliate of a Lender), then within 30 days of such Person ceasing to be
a Lender (or Affiliate of a Lender) the Loan Party whose Securities Accounts or
Commodity Account were maintained by such Person shall close all securities
accounts, securities entitlements and commodity accounts maintained with that
Person.”

 

(xix)                       A new Section 8.18 is hereby added to the Credit
Agreement to read in its entirety as follows:

 

“Section 8.18  Remittance of Cash by Special Purpose Unrestricted Subsidiary. 
The Borrower shall cause the Special Purpose Unrestricted Subsidiary to remit to
the Borrower or another Restricted Subsidiary all cash held by or in the name of
the Special Purpose Subsidiary as of the close of business on December 31, 2016,
such remittance to be made no later than noon on Tuesday, January 3, 2017, with
evidence of such remittance to be provided, in form and substance satisfactory
to the Administrative Agent.”

 

(xx)                          Section 9.01(b) of the Credit Agreement is hereby
deleted and the following is substituted therefor:

 

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“(b)                           Net First Lien Leverage Ratio.  The Borrower will
not permit, as of the last day of any fiscal quarter, commencing with the fiscal
quarter ending March 31, 2016, the ratio of (i) the excess of (A) First Lien
Debt as of such date over (B) Loan Party Cash as of such date to
(ii) Consolidated EBITDA of the Borrower and the Restricted Subsidiaries for the
Rolling Period ending on such day to exceed 2.00 to 1.0;”

 

(xxi)                       Section 9.04 of the Credit Agreement is hereby
amended by deleting Section 9.04(f) and the provisos following such Section and
substituting therefor the following:

 

“(f) so long as at the time of and after giving effect to any such repurchase,
there is Buyback Availability (i) repurchases for aggregate cash consideration
not to exceed $50,000,000 (less the amount of the Sixth Amendment Effective Date
Replenishment Amount attributable to Equity Interests other than Preferred Stock
issued by Borrower) of Equity Interests other than Preferred Stock issued by
Borrower and (ii) repurchases for aggregate cash consideration not to exceed
$100,000,000 (less the amount of the Sixth Amendment Effective Date
Replenishment Amount attributable to Preferred Stock issued by Borrower) of
Preferred Stock issued by Borrower; provided, that the sum of repurchases
pursuant to clause (i) and (ii) of this Section 9.04(f) together with the
purchase or other acquisition of Equity Interests issued by the Borrower
pursuant to Section 9.05(r) and Section 9.05(s) shall not exceed $100,000,000 in
the aggregate; provided, further, Restricted Payments made under this
Section 9.04, other than (x) pursuant to clauses (c) and (e) above and
(y) Permitted Preferred Stock Distributions comprised of common stock of
Borrower and cash payments in lieu of the issuance of fractional shares in
connection therewith, may be made only so long as no Default or Event of Default
exists or will exist after giving effect to such Restricted Payment.”

 

(xxii)                    Section 9.05 of the Credit Agreement is hereby amended
by deleting Section 9.05(f) and substituting therefor the following:

 

“(f)                             deposits maturing within one year from the date
of creation thereof with, including certificates of deposit issued by, any
Lender;”

 

(xxiii)                 Section 9.05 of the Credit Agreement is hereby amended
by (i) deleting the word “and” at the end of Section 9.05(q), and (ii) replacing
Section 9.05(r) with the following amended Section 9.05(r) and adding a new
Section 9.05(s) to read in their entirety as follows:

 

“(r)                              Investments consisting of the purchase or
other acquisition of Senior Unsecured Notes and Equity Interests issued by the
Borrower; provided, that at the time of such Investment, Buyback Availability
exists; and provided further, that the aggregate cash consideration paid by the
Borrower and the Restricted Subsidiaries to purchase Senior Unsecured Notes and
Equity Interests issued by the Borrower is not greater than the remainder of
(i) $300,000,000 minus (ii) the Sixth Amendment Effective Date Replenishment
Amount minus (iii) the

 

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outstanding amount of Investments made pursuant to Section 9.05(s); and provided
further, purchases or other acquisitions of Equity Interests issued by the
Borrower are subject to the limitation set forth in the first proviso in
Section 9.04(f); and provided, further, for the sake of clarity that the
limitation in the foregoing proviso shall not apply to the issuance of Permitted
Second Lien Debt in exchange for Senior Unsecured Notes and/or Equity Interests
issued by the Borrower;

 

(s)                                   Investments of up to $150,000,000 in the
Special Purpose Unrestricted Subsidiary for the sole purpose of financing the
purchase or other acquisition by the Special Purpose Unrestricted Subsidiary, at
such time or times as the Special Purpose Unrestricted Subsidiary elects, of
Senior Unsecured Notes and Equity Interests issued by the Borrower; provided,
that at the time of such Investment, Buyback Availability exists and
availability remains under Section 9.05(r) sufficient to make such Investment;
and provided further, purchases or other acquisitions of Equity Interests issued
by the Borrower are subject to the limitation set forth in the first proviso in
Section 9.04(f); and provided further, that (i) all Deposit Accounts of the
Special Purpose Unrestricted Subsidiary are maintained with a Lender (it being
agreed, for the avoidance of doubt, that no Deposit Account Control Agreement
shall be required relating to Deposit Accounts of such Special Purpose
Unrestricted Subsidiary), and (ii) no Default or Event of Default exists or will
exist after giving effect to such Investment; and”.

 

(xxiii)                 The heading of Section 9.20 of the Credit Agreement is
hereby deleted and the following is substituted therefore:

 

“Section 9.20     Change in Business; Unrestricted Subsidiaries.”

 

(xxiv)                The proviso in the last sentence of Section 9.20(a) of the
Credit Agreement is hereby deleted and the following is substituted therefore:

 

“provided, that Borrower may not permit any Unrestricted Subsidiary other than
the Special Purpose Unrestricted Subsidiary to acquire any Debt of or Equity
Interests in Borrower on or after the Sixth Amendment Effective Date.”

 

(xxv)                   Section 9.20 of the Credit Agreement is hereby amended
by adding the following new Section 9.20(d) thereto to read in its entirety as
follows:

 

“(d)                           The Borrower shall not, and shall not permit the
Special Purpose Unrestricted Subsidiary to, alter, amend or modify in any manner
the organizational documents of the Special Purpose Unrestricted Subsidiary.”

 

(xxvi)                A new Schedule 7.01 to the Credit Agreement, “Corporate
Organizational Chart” in the form attached as Schedule 7.01 to this Seventh
Amendment is hereby added to the Credit Agreement in substitution for the prior
Schedule 7.01.

 

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(xxvii)             A new Schedule 7.14 to the Credit Agreement, “Subsidiaries”
in the form attached as Schedule 7.14 to this Seventh Amendment is hereby added
to the Credit Agreement in substitution for the prior Schedule 7.14.

 

(xxviii)          The Financial Covenant Calculation Worksheet attached to
Exhibit D Form of Compliance Certificate is hereby deleted and the Financial
Covenant Calculation Worksheet attached as Exhibit D to this Seventh Amendment
is substituted therefor.

 

3.                                      Loan Parties’ Ratification. Subject to
the conditions set out in Section 5, Borrower (and each Loan Party by its
execution in the space provided below under “ACKNOWLEDGED for purposes of
Sections 3 and 4”) hereby ratifies all of its Obligations under the Credit
Agreement and each of the Loan Documents to which it is a party (other than the
Guaranty which is specifically addressed in Section 4), and agrees and
acknowledges that the Credit Agreement and each of the Loan Documents to which
it is a party (other than the Guaranty which is specifically addressed in
Section 4) are and shall continue to be in full force and effect. Nothing in
this Seventh Amendment extinguishes, novates or releases any right, claim, Lien,
security interest or entitlement of any of the Lenders, any Issuing Bank or the
Administrative Agent created by or contained in any of such documents nor is any
Loan Party released from any covenant, warranty or obligation created by or
contained herein or therein.  Each Loan Party (other than the Borrower) agrees
that its execution and delivery of this Seventh Amendment does not indicate or
establish an approval or consent requirement by any such Loan Party under the
Credit Agreement in connection with the execution and delivery of amendments to
the Credit Agreement, the Notes or any of the other Loan Documents (other than
any Loan Document to which such a Loan Party is a party).

 

4.                                      Guarantors’ Ratification. Each Guarantor
by its execution in the space provided below under “ACKNOWLEDGED for purposes of
Sections 3 and 4” hereby ratifies, confirms, acknowledges and agrees that its
obligations under the Guaranty are in full force and effect and that such
Guarantor continues to unconditionally and irrevocably guarantee the full and
punctual payment, when due, whether at stated maturity or earlier by
acceleration or otherwise, of the Obligations, and its execution and delivery of
this Seventh Amendment does not indicate or establish an approval or consent
requirement by any Guarantor under the Guaranty in connection with the execution
and delivery of amendments to the Credit Agreement, the Notes or any of the
other Loan Documents (other than the Guaranty or any other Loan Document to
which a Guarantor is a party).

 

5.                                      Conditions to Effectiveness of Seventh
Amendment. This Seventh Amendment shall be effective upon the satisfaction, in
the Administrative Agent’s sole discretion, of the following conditions
precedent:

 

(i)                                    The Administrative Agent shall have
executed, and shall have received from the Borrower and the Required Lenders
duly executed signature pages to, this Seventh Amendment, and shall have
received a duly executed acknowledgement of Sections 3 and 4 of this Seventh
Amendment from each Guarantor;

 

11

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

 

(ii)                                 The Administrative Agent shall have
executed, and shall have received from the Borrower and the Guarantors duly
executed signature pages to, the First Amendment to Security and Pledge
Agreement in the form attached hereto as Exhibit A;

 

(iii)                              the Administrative Agent shall have received
such other documents as the Administrative Agent or its counsel may reasonably
request;

 

(iv)                             the Administrative Agent shall have notified
the Borrower and the Lenders in a New Borrowing Base Notice of the redetermined
Borrowing Base of $350,000,000 which shall be effective as of the next Business
Day following delivery of such New Borrowing Base Notice; and

 

(v)                                the Borrower shall have paid the
Administrative Agent the agreed upon fee.

 

6.                                      No Implied Amendment, Waiver or Consent.
This Seventh Amendment shall not constitute an amendment or waiver of any
provision not expressly referred to herein and shall not be construed as a
consent to any action on the part of the Borrower that would require a waiver or
consent of the Lenders or Required Lenders, as applicable, or an amendment or
modification to any term of the Loan Documents except as expressly stated
herein.

 

7.                                      Miscellaneous. This Seventh Amendment is
a Loan Document. Except as affected by this Seventh Amendment, the Loan
Documents are unchanged and continue in full force and effect. However, in the
event of any inconsistency between the terms of the Credit Agreement, as amended
by this Seventh Amendment, and any other Loan Document, the terms of the Credit
Agreement will control and the other document will be deemed to be amended to
conform to the terms of the Credit Agreement. All references to the Credit
Agreement will refer to the Credit Agreement as amended by this Seventh
Amendment and any other amendments properly executed among the parties. Borrower
agrees that all Loan Documents to which it is a party (whether as an original
signatory or by assumption of the Obligations) remain in full force and effect
and continue to evidence its legal, valid and binding obligations enforceable in
accordance with their terms (as the same are affected by this Seventh Amendment
or are amended in connection with this Seventh Amendment). AS A MATERIAL
INDUCEMENT TO THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND LENDERS PARTY
HERETO TO ENTER INTO THIS SEVENTH AMENDMENT, BORROWER RELEASES THE
ADMINISTRATIVE AGENT, THE ISSUING BANKS, THE LENDERS AND THEIR RESPECTIVE
PREDECESSORS, SUCCESSORS, ASSIGNS, DIRECTORS, OFFICERS, EMPLOYEES, TRUSTEES,
AGENTS AND ATTORNEYS FROM ANY LIABILITY FOR ACTIONS OR FAILURES TO ACT IN
CONNECTION WITH THE LOAN DOCUMENTS PRIOR TO THE SEVENTH AMENDMENT EFFECTIVE
DATE. NO COURSE OF DEALING BETWEEN BORROWER OR ANY OTHER PERSON, ON THE ONE
HAND, AND THE ADMINISTRATIVE AGENT, ISSUING BANKS AND THE LENDERS, ON THE OTHER,
WILL BE DEEMED TO HAVE ALTERED OR AMENDED THE CREDIT AGREEMENT OR AFFECTED
BORROWER’S, THE ADMINISTRATIVE AGENT’S, THE ISSUING BANKS’ OR THE LENDERS’ RIGHT
TO ENFORCE THE CREDIT AGREEMENT

 

12

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

 

AS WRITTEN. This Seventh Amendment will be binding upon and inure to the benefit
of each of the undersigned and their respective successors and permitted
assigns.

 

8.                                      Form. Each agreement, document,
instrument or other writing to be furnished to the Administrative Agent and/or
the Lenders under any provision of this instrument must be in form and substance
satisfactory to the Administrative Agent and its counsel.

 

9.                                      Headings. The headings and captions used
in this Seventh Amendment are for convenience only and will not be deemed to
limit, amplify or modify the terms of this Seventh Amendment, the Credit
Agreement, or the other Loan Documents.

 

10.                               Interpretation. Wherever possible each
provision of this Seventh Amendment shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Seventh
Amendment shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Seventh Amendment.

 

11.                               Multiple Counterparts. This Seventh Amendment
may be separately executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to constitute one and the same agreement. This Seventh Amendment may be
transmitted and/or signed by facsimile, telecopy or electronic mail. The
effectiveness of any such documents and signatures shall, subject to applicable
law, have the same force and effect as manually-signed originals and shall be
binding on all Loan Parties, all Lenders, the Administrative Agent and the
Issuing Banks. The Administrative Agent may also require that any such documents
and signatures be confirmed by a manually-signed original thereof; provided,
however, that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.

 

12.                               Governing Law. THIS SEVENTH AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO ANY CHOICE-OF-LAW PROVISIONS THAT WOULD REQUIRE THE
APPLICATION OF THE LAW OF ANOTHER JURISDICTION.

 

[Signature Pages Follow]

 

13

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Seventh Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.

 

 

BORROWER:

 

 

 

SANCHEZ ENERGY CORPORATION,

 

a Delaware corporation

 

 

 

By:

/s/ Garrick A. Hill

 

 

Garrick A. Hill

 

 

Interim Co-Chief Financial Officer

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 1

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

 

 

ACKNOWLEDGED for the purposes stated in Sections 3 and 4:

 

 

 

 

 

GUARANTORS:

 

 

 

 

 

SN PALMETTO, LLC,

 

a Delaware limited liability company, f/k/a

 

SEP Holdings III, LLC

 

 

 

SN MARQUIS LLC,

 

a Delaware limited liability company

 

 

 

SN COTULLA ASSETS, LLC,

 

a Texas limited liability company

 

 

 

SN OPERATING, LLC,

 

a Texas limited liability company

 

 

 

SN TMS, LLC,

 

a Delaware limited liability company

 

 

 

SN CATARINA, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

/s/ Garrick A. Hill

 

 

Garrick A. Hill

 

 

Interim Co-Chief Financial Officer

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 2

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

 

 

ADMINISTRATIVE AGENT:

 

 

 

 

 

ROYAL BANK OF CANADA, as Administrative Agent

 

 

 

 

 

By:

/s/ Yvonne Brazier

 

Name:

Yvonne Brazier

 

Title:

Manager, Agency

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 3

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

 

 

LENDERS:

 

 

 

ISSUING BANK AND LENDER:

 

 

 

ROYAL BANK OF CANADA

 

 

 

By:

/s/ Evans Swann Jr.

 

Name:

Evans Swann Jr.

 

Title:

Authorized Signatory

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 4

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

 

 

CAPITAL ONE, NATIONAL ASSOCIATION

 

 

 

 

 

By:

/s/ Matthew Brice

 

Name:

Matthew Brice

 

Title:

Vice President

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 5

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

 

 

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

 

 

 

By:

/s/ Nupur Kumar

 

Name:

Nupur Kumar

 

Title:

Authorized Signatory

 

 

 

By:

/s/ Warren Van Heyst

 

Name:

Warren Van Heyst

 

Title:

Authorized Signatory

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 6

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

 

 

COMPASS BANK

 

 

 

 

 

By:

/s/ Les Werme

 

Name:

Les Werme

 

Title:

Director

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 7

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

 

 

SUNTRUST BANK

 

 

 

By:

/s/ William S. Krueger

 

Name:

William S. Krueger

 

Title:

First Vice President

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 8

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

 

 

ING CAPITAL LLC

 

 

 

 

 

By:

/s/ Josh Strong

 

Name:

Josh Strong

 

Title:

Director

 

 

 

By:

/s/ Juli Bieser

 

Name:

Juli Bieser

 

Title:

Managing Director

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 9

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

 

 

BRANCH BANKING AND TRUST COMPANY

 

 

 

By:

Lender did not sign the seventh amendment

 

Name:

 

 

Title:

 

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 10

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

 

 

IBERIABANK

 

 

 

 

 

By:

/s/ Tyler S. Thoer

 

Name:

Tyler S. Thoer

 

Title:

Sr. Vice President

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 11

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

 

 

MUFG UNION BANK, N.A., f/k/a Union Bank, N.A.

 

 

 

By:

Lender did not sign the seventh amendment

 

Name:

 

 

Title:

 

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 12

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

 

 

SOCIÉTÉ GENÉRALÉ

 

 

 

 

 

By:

Lender did not sign the seventh amendment

 

Name:

 

 

Title:

 

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 13

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

 

 

BMO HARRIS BANK, N.A.

 

 

 

 

 

 

By:

/s/ James V. Ducote

 

Name:

James V. Ducote

 

Title:

Managing Director

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 14

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

 

 

CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK

 

 

 

 

 

 

By:

/s/ Michael Willis

 

Name:

Michael Willis

 

Title:

Managing Director

 

 

 

 

 

 

 

By:

/s/ Mark Roche

 

Name:

Mark Roche

 

Title:

Managing Director

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 15

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

 

 

SUMITOMO MITSUI BANKING CORPORATION

 

 

 

 

 

 

By:

/s/ James D. Weinstein

 

Name:

James D. Weinstein

 

Title:

Managing Director

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 16

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

 

 

U.S. BANK NATIONAL ASSOCIATION

 

 

 

 

 

 

By:

Lender did not sign the seventh amendment

 

Name:

 

 

Title:

 

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 17

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

 

 

COMERICA BANK

 

 

 

 

 

 

 

By:

/s/ Jason Klesel

 

Name:

Jason Klesel

 

Title:

Commercial Banking Officer

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 18

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

 

 

FIFTH THIRD BANK

 

 

 

 

 

 

By:

/s/ Justin Bellamy

 

Name:

Justin Bellamy

 

Title:

Director

 

Seventh Amendment to Sanchez

Second Amended and Restated Credit Agreement

 

Signature Page 19

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

 

SCHEDULE 7.01

 

CORPORATE ORGANIZATIONAL CHART

 

[g68891km09i001.gif]

 

All of the membership interests in each of SN Catarina, LLC, SN Palmetto, LLC
(f/k/a SEP Holdings III, LLC), SN Marquis LLC, SN Cotulla Assets, LLC, SN
Operating, LLC, SN TMS, LLC, SN Capital, LLC, and SN UR Holdings, LLC are owned
by Sanchez Energy Corporation.

 

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

 

SCHEDULE 7.14

 

SUBSIDIARIES

 

Name of Subsidiary

 

Jurisdiction of
Organization

 

Federal Taxpayer ID

 

Ownership Interest

SN Palmetto, LLC (f/k/a SEP Holdings III, LLC)

 

Delaware

 

45-3193696

 

100% Membership Interest held by Borrower

SN Catarina, LLC

 

Delaware

 

45-3090102

 

100% Membership Interest held by Borrower

SN Cotulla Assets, LLC

 

Texas

 

45-3090102

 

100% Membership Interest held by Borrower

SN Marquis LLC

 

Delaware

 

45-3090102

 

100% Membership Interest held by Borrower

SN Operating, LLC

 

Texas

 

38-3902143

 

100% Membership Interest held by Borrower

SN Midstream, LLC

 

Delaware

 

45-3090102

 

100% Membership Interest held by SN UR Holdings, LLC

SN Services, LLC

 

Delaware

 

45-3090102

 

100% Membership Interest held by SN UR Holdings, LLC

SN Terminal, LLC

 

Delaware

 

45-3090102

 

100% Membership Interest held by SN UR Holdings, LLC

SN TMS, LLC

 

Delaware

 

45-3090102

 

100% Membership Interest held by Borrower

SN UR Holdings, LLC

 

Delaware

 

45-3090102

 

100% Membership Interest held by Borrower

SN Capital, LLC

 

Delaware

 

45-3090102

 

100% Membership Interest held by Borrower

 

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

 

Exhibit D

 

FINANCIAL COVENANT CALCULATION WORKSHEET

 

Summary of Financial Ratios

Section 9.01 Financial Covenants

 

 

 

 

In Compliance?

 

Current Ratio

min. 1.0 to 1.0

 

 

 

Net First Lien Leverage Ratio

max. [2.00] to 1.0

 

 

 

 

Current Ratio

 

 

 

 

 

Consolidated Current Assets (including unused Commitments to the extent that the
Borrower is permitted to borrow such amount under the terms of the Agreement,
but excluding non-cash assets under FAS 133)

 

=

 

$

 

 

Consolidated Current Liabilities (excluding outstanding Obligations to the
extent included in consolidated current liabilities, non-cash obligations under
FAS 133 and any accrual related to non-cash compensation arising from any grant
of stock, stock options or other equity based awards)

 

 

 

$

 

 

 

 

 

 

 

 

Net First Lien Leverage Ratio

 

 

 

 

 

 

 

 

 

 

 

First Lien Debt minus Loan Party Cash

 

=

 

$

 

 

Consolidated EBITDA

 

 

 

$

 

 

 

Section 8.13(a)

[Provide details of compliance/non-compliance]

 

1

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

 

Current Ratio

Section 9.01 Financial Covenants

 

Consolidated Current Assets

 

$

 

 

(+) Unused Commitments to the extent that the Borrower is permitted to borrow
such amount under the terms of the Agreement

 

$

 

 

(-) Non-cash assets under FAS 133

 

$

 

 

Total Consolidated Current Assets

 

$

 

 

 

 

 

 

Consolidated Current Liabilities

 

$

 

 

(-) Outstanding Obligations to the extent included in consolidated current
liabilities

 

$

 

 

(-)Non-cash obligations under FAS 133

 

$

 

 

(-) Accrual related to non-cash compensation arising from any grant of stock,
stock options or other equity based awards

 

$

 

 

Total Consolidated Current Liabilities

 

$

 

 

 

Current Ratio is     to 1.00.

 

2

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

 

Net First Lien Leverage Ratio

Section 9.01 Financial Covenants

 

First Lien Debt at end of

 

Q    201 

 

(-) Loan Party Cash

 

$

 

 

Net First Lien Debt

 

 

 

Consolidated EBITDA for [•] Quarters ended[•] /1[•]

 

 

 

Consolidated Net Income (the following to be added, without duplication and to
the extent deducted (and not added back) in calculating such Consolidated Net
Income)

 

$

 

 

(+) Consolidated Net Interest Expense

 

$

 

 

(+) Consolidated Income Tax Expense

 

$

 

 

(+) Consolidated depletion, depreciation and amortization expense of the
Borrower and its Restricted Subsidiaries

 

$

 

 

(+) Other non-cash charges to the extent not included in the foregoing

 

$

 

 

(+) Fees and expenses expensed and paid in cash in connection with (1) the
public offering of Borrower’s Equity Interests, (2) the 2012 Credit Agreement,
(3) the 2013 Credit Agreement, (4) the Senior Unsecured Notes and (5) the
Agreement, including any amendments to date

 

$

 

 

(+) Unrestricted Person Cash Dividends

 

$

 

 

(-) All-non-cash income to the extent included in determining Consolidated Net
Income

 

$

 

 

 

 

 

 

Consolidated EBITDA for prior 4 quarters

 

$

 

 

 

Net First Lien Leverage Ratio is    to 1.00.

 

3

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

 

Exhibit A

 

FIRST AMENDMENT TO SECURITY AND PLEDGE AGREEMENT

 

(Sanchez Energy Corporation)

(SN Palmetto, LLC)

(SN Marquis LLC)

(SN Cotulla Assets, LLC)

(SN Operating, LLC)

(SN TMS, LLC)

(SN Catarina LLC)

 

THIS FIRST AMENDMENT TO AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT dated
as of March 18, 2016 (this “First Security Agreement Amendment”) is among
Sanchez Energy Corporation, a Delaware corporation (“Borrower”), the Guarantors
party hereto including SN Palmetto, LLC, a Delaware limited liability company
f/k/a SEP Holdings III, LLC, (“Palmetto”), SN Marquis LLC, a Delaware limited
liability company (“Marquis”), SN Cotulla Assets, LLC, a Texas limited liability
company (“Cotulla”), SN TMS, LLC, a Delaware limited liability company (“TMS”),
SN OPERATING, LLC, a Texas limited liability company (“Operating”), and SN
Catarina LLC, a Delaware limited liability company (“Catarina”; and together
with Palmetto, Marquis, Cotulla, TMS and Operating the “Guarantors”, and each
individually, “Guarantor”; the Guarantors party hereto together with the
Borrower, each a “Debtor” and collectively, the “Debtors”), and Royal Bank of
Canada, as Administrative Agent under the Credit Agreement (as herein defined),
not in its individual capacity, but solely as collateral agent for the Lenders
and other Secured Parties (as such terms are defined herein) (in such capacity,
together with its successors in such capacity, the “Administrative Agent”).

 

RECITALS:

 

A.            Pursuant to the Second Amended and Restated Credit Agreement,
dated as of June 30, 2014 (as amended, supplemented, and otherwise modified from
time to time, the “Credit Agreement”), among the Borrower, the lenders from time
to time party thereto (the “Lenders”) and the Administrative Agent, the Lenders
agreed to make loans to and other extensions of credit on behalf of the
Borrower.

 

B.            The Debtors entered into that certain Amended and Restated
Security and Pledge Agreement dated as of June 30, 2014 in favor of the
Administrative Agent as collateral agent for the benefit of the Lenders and
other Secured Parties (the “Security Agreement”) pursuant to which the Debtors
granted a security interest in the Collateral (as defined in the Security
Agreement) to secure the Secured Obligations (as defined in the Security
Agreement, the “Secured Obligations”).

 

First Amendment to Pledge

and Security Agreement

 

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

 

C.                                    The Borrower has requested certain
amendments to the Credit Agreement.

 

D.            The Debtors and Administrative Agent are entering into this First
Security Agreement Amendment to amend the Security Agreement as set forth
herein.

 

E.            The Debtors have duly authorized the execution, delivery and
performance of this First Security Agreement Amendment.

 

F.             This First Security Agreement Amendment is integral to the
transactions contemplated by the Credit Agreement, and the execution and
delivery of this First Security Agreement Amendment is a condition precedent to
the Lenders’ obligations to extend credit under the Credit Agreement.

 

ACCORDINGLY, for valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Debtors and Administrative Agent hereby agree as follows:

 

1.             REFERENCE TO CREDIT AGREEMENT. The terms, conditions, and
provisions of the Credit Agreement are incorporated herein by reference, the
same as if set forth herein verbatim, which terms, conditions, and provisions
shall continue to be in full force and effect hereunder so long as the Lenders
are obligated to lend under the Credit Agreement and thereafter until the
Secured Obligations are paid and performed in full.  Capitalized terms used but
not defined in this First Security Agreement Amendment have the meanings given
such terms in the Credit Agreement.

 

2.                                      AMENDMENTS TO SECURITY AGREEMENT.

 

a.             Section 1.01 of the Security Agreement is hereby amended to add
the following definitions in alphabetical order therein:

 

“Commodity Accounts” means, collectively, with respect to each Debtor, (i) all
“commodity accounts” as such term is defined in the UCC and (ii) all cash and
“commodity contracts” as such term is defined in the UCC therein.

 

“Commodity Account Control Agreement” means a commodity account control
agreement in a form reasonably satisfactory to the Administrative Agent.

 

“Securities Accounts” means, collectively, with respect to each Debtor, (i) all
“securities accounts” as such term is defined in the UCC and (ii) all cash and
“financial assets” as such term is defined in the UCC therein.

 

2

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

 

“Securities Account Control Agreement” means a securities account control
agreement in a form reasonably satisfactory to the Administrative Agent.

 

b.             Section 3.01 of the Security Agreement is hereby amended by
deleting the words “other than any Deposit Account maintained by the
Administrative Agent” therefrom.

 

c.             Section 3.02(e) of the Security Agreement is hereby deleted and
the following is substituted therefor:

 

“(e)         as and when required in accordance with Section 8.17 of the Credit
Agreement, deliver to the Administrative Agent a Deposit Account Control
Agreement with respect to any Deposit Account of such Debtor, executed by such
Debtor and the Lender maintaining such Deposit Account;”.

 

d.             Section 3.02(f) of the Security Agreement is hereby deleted and
the following is substituted therefor:

 

“(f)          as and when required in accordance with Section 8.17 of the Credit
Agreement, deliver to the Administrative Agent a Securities Account Control
Agreement with respect to any Securities Account of such Debtor, executed by
such Debtor and the Lender or Lender Affiliate maintaining such Securities
Account; and”.

 

e.             A new Section 3.02(g) is hereby added to the Security Agreement
to read as follows:

 

“(g)         as and when required in accordance with Section 8.17 of the Credit
Agreement, deliver to the Administrative Agent a Commodities Account Control
Agreement with respect to any Commodities Account of such Debtor, executed by
such Debtor and the Lender or Lender Affiliate maintaining such Commodities
Account.”

 

f.             A new Section 3.03 is hereby added to the Security Agreement to
read as follows:

 

“3.03      Deposit, Securities and Commodity Accounts.

 

(a)           Each Debtor shall (i) close any Deposit Account maintained by such
Debtor with a Person not a Lender within 30 days after the Seventh Amendment
Effective Date in accordance with Section

 

3

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

 

8.17 of the Credit Agreement, (ii) on and after the Seventh Amendment Effective
Date, not open any Deposit Account with any Person not a Lender, (iii) from and
after the date on which any Deposit Account with a Person not a Lender has been
closed, not maintain a Deposit Account with a Person not a Lender, and
(iv) deliver Deposit Account Control Agreements to the Administrative Agent by
the time specified in Section 8.17 of the Credit Agreement.

 

(b) Each Debtor shall (i) close any Securities Account or Commodity Account
maintained by such Debtor with a Person not a Lender or an Affiliate of a
Lender, within 10 Business Days after the Seventh Amendment Effective Date in
accordance with Section 8.17 of the Credit Agreement, (ii) on and after the
Seventh Amendment Effective Date, not open any Securities Account or Commodity
Account with any Person not a Lender or an Affiliate of a Lender, (iii) from and
after the date on which any Securities Account or Commodity Account with a
Person Not a Lender or an Affiliate of a Lender has been closed, not maintain a
Securities Account or Commodity Account with a Person Not a Lender or an
Affiliate of a Lender, and (iv) deliver Securities Account Control Agreements
and Commodity Account Control Agreements to the Administrative Agent by the
times specified in Section 8.17 of the Credit Agreement.”

 

g.             The first sentence of Section 4.11 of the Security Agreement is
hereby deleted and the following is substituted therefor:

 

“As of the Seventh Amendment Effective Date, no Debtor maintains any Deposit
Accounts other than the Deposit Accounts listed in Annex 10.”

 

h.             Section 4.12 of the Security Agreement is hereby deleted and the
following is substituted therefor:

 

“4.12 Investment Property.  As of the Seventh Amendment Effective Date, (i) no
Debtor maintains any Securities Accounts or Commodity Accounts other than the
Securities Accounts and Commodity Accounts listed in Annex 11, and the
Administrative Agent has a perfected first priority security interest in such
securities accounts and commodity accounts as a result of filing the applicable
UCC financing statements, in each case subject to Excepted Liens, and (ii) does
not hold, own or have any interest in any Investment Property other than
Investment Property maintained in securities accounts or commodity accounts
listed in Annex 11.  The Securities Accounts and Commodity Accounts listed in
Annex 11 shall be closed by the Borrower within 10 Business Days after the
Seventh

 

4

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

 

Amendment Effective Date in accordance with Section 8.17 of the Credit
Agreement.”

 

i.              Section 5.12(b) is hereby deleted and the following is
substituted therefor:

 

“(b)         Commodity Accounts.  From and after the Seventh Amendment Effective
Date, no Debtor shall establish and maintain any Commodity Account unless
(i) the applicable Debtor shall have given the Administrative Agent 5 days’
prior written notice of its intention to establish such new Commodity Account,
(ii) such new Commodity Account is to be established and maintained with a
Lender or an Affiliate of a Lender, and (iii) contemporaneously with opening any
Commodity Account, such Lender or Lender Affiliate and such Debtor shall have
duly executed and delivered to the Administrative Agent a Commodity Account
Control Agreement with respect to such Commodity Account.  No Debtor shall grant
Control of any commodity contracts carried in a Commodity Account to any Person
other than the Administrative Agent.

 

j.              Section 5.12(c) of the Security Agreement is hereby deleted and
the following is substituted therefor:

 

“(c)         Deposit Accounts, From and after the Seventh Amendment Effective
Date, no Debtor shall establish and maintain any Deposit Account unless (i) the
applicable Debtor shall have given the Administrative Agent 5 days’ prior
written notice of its intention to establish such new Deposit Account, (ii) such
new Deposit Account is to be established and maintained with a Lender, and
(iii) such Lender and such Debtor shall have duly executed and delivered to the
Administrative Agent a Deposit Account Control Agreement with respect to such
Deposit Account.  No Debtor shall grant Control of any Deposit Account to any
person other than the Administrative Agent.”

 

k.             A new Section 5.12(f)(iv) is hereby added to the Security
Agreement to read as follows:

 

“(iv)        From and after the Seventh Amendment Effective Date, no Debtor
shall establish and maintain any Securities Account unless (i) the applicable
Debtor shall have given the Administrative Agent 5 days’ prior written notice of
its intention to establish such new Securities Account, (ii) such new Securities
Account is to be established and maintained with a Lender or an Affiliate of a
Lender, and (iii) contemporaneously with opening any Securities Account, such
Lender or Lender Affiliate and such Debtor shall have duly executed and
delivered to the Administrative Agent

 

5

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a Securities Account Control Agreement with respect to such Securities Account. 
No Debtor shall grant Control of any security entitlement carried in a
Securities Account to any Person other than the Administrative Agent.”

 

l.              Annexes 3, 5, 6, 7, 8, 9, 10 and 11  attached to the Security
Agreement are hereby replaced and Annexes 3, 5, 6, 7, 8, 9, 10 and 11 attached
hereto are substituted therefor.

 

3.                                      MISCELLANEOUS

 

a.             THIS FIRST SECURITY AGREEMENT AMENDMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN 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 BETWEEN THE
PARTIES.

 

b.             THIS FIRST SECURITY AGREEMENT AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO ANY CHOICE-OF-LAW PROVISIONS THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF
ANOTHER JURISDICTION.

 

[Remainder of Page Intentionally Blank]

 

6

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IN WITNESS WHEREOF, the each Debtor has caused this First Security Agreement
Amendment to be duly executed and delivered by an officer duly authorized as of
the date first above written.

 

 

SANCHEZ ENERGY CORPORATION,

 

 

 

 

 

a Delaware corporation

 

SN PALMETTO, LLC,

 

f/k/a SEP Holdings III, LLC

 

a Delaware limited liability company

 

SN MARQUIS LLC,

 

a Delaware limited liability company

 

SN COTULLA ASSETS, LLC,

 

a Texas limited liability company

 

SN OPERATING, LLC,

 

a Texas limited liability company

 

SN TMS, LLC,

 

a Delaware limited liability company

 

SN CATARINA, LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

Garrick A. Hill

 

 

Interim Co — Chief Financial Officer

 

First Amendment to Pledge

and Security Agreement

 

Signature Page 1

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

 

IN WITNESS WHEREOF, the Administrative Agent has executed this First Security
Agreement Amendment to agree to and acknowledge same as of the date first above
written.

 

 

ROYAL BANK OF CANADA,

 

as Administrative Agent

 

 

 

By:

 

 

Name:

 

Title:

 

First Amendment to Pledge

and Security Agreement

 

Signature Page 2

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ANNEX 3

 

SECURITIES COLLATERAL

 

Debtor

 

Issuer

 

Tax ID of
Issuer

 

Ownership

 

Certificate

Sanchez Energy Corporation

 

SN Palmetto, LLC

 

45-3193696

 

100% of the Membership Interests

 

No

Sanchez Energy Corporation

 

SN Marquis LLC

 

45-3090102(1)

 

100% of the Membership Interests

 

No

Sanchez Energy Corporation

 

SN Cotulla Assets, LLC

 

45-3090102(2)

 

100% of the Membership Interests

 

No

Sanchez Energy Corporation

 

SN Operating, LLC

 

38-3902143

 

100% of the Membership Interests

 

No

Sanchez Energy Corporation

 

SN TMS, LLC

 

45-3090102(3)

 

100% of the Membership Interests

 

No

Sanchez Energy Corporation

 

SN Catarina, LLC

 

45-3090102(4)

 

100% of the Membership Interests

 

No

 

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(1)  SN Marquis LLC is a disregarded entity for tax purposes and files under the
Tax ID of Sanchez Energy Corporation.

 

(2)  SN Cotulla Assets, LLC is a disregarded entity for tax purposes and files
under the Tax ID of Sanchez Energy Corporation.

 

(3)  SN TMS, LLC is a disregarded entity for tax purposes and files under the
Tax ID  of Sanchez Energy Corporation

 

(4)  SN Catarina, LLC is a disregarded entity for tax purposes and files under
the Tax ID of Sanchez Energy Corporation.

 

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

 

ANNEX 5

 

FILING OFFICES

 

UCC FILINGS

 

Entity

 

Type of Filing

 

Filing Offices

SN Palmetto, LLC

 

UCC-1 (Standard)

 

Delaware Secretary of State

SN Marquis LLC

 

UCC-1 (Standard)

 

Delaware Secretary of State

Sanchez Energy Corporation

 

UCC-1 (Standard)

 

Delaware Secretary of State

SN Cotulla Assets, LLC

 

UCC-1 (Standard)

 

Texas Secretary of State

SN Operating, LLC

 

UCC-1 (Standard)

 

Texas Secretary of State

SN TMS, LLC

 

UCC-1 (Standard)

 

Delaware Secretary of State

SN Catarina, LLC

 

UCC-1 (Standard)

 

Delaware Secretary of State

 

REAL PROPERTY FILINGS

 

Entity

 

Type of Filing

 

Filing Offices

SN Palmetto, LLC

 

Deed of Trust / Mortgage / Financing Statement

 

Natchitoches Parish, LA
Cascade County, MT
Lewis and Clark County, MT Meagher County, MT
Frio County, TX
Gonzales County, TX*
Zavala County, TX*

SN Marquis LLC

 

Deed of Trust / Mortgage / Financing Statement

 

Atascosa County, TX*
DeWitt County, TX
Fayette County, TX*
Lavaca County, TX*
Webb County, TX

SN Cotulla Assets, LLC

 

Deed of Trust / Mortgage / Financing Statement

 

Dimmit County, TX
Frio County, TX
LaSalle County, TX
Zavala County, TX

SN Catarina, LLC

 

Deed of Trust / Mortgage / Financing Statement

 

Dimmit County, TX
Webb County, TX
LaSalle County, TX

 

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

*Only counties where filings are necessary to satisfy the 90% of Engineered
Value requirements of the Credit Agreement as of the Effective Date.

 

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

 

ANNEX 6

 

DEBTOR INFORMATION

 

Name/Address

 

Type/Jurisdiction

 

FEIN

 

Organization ID

SN Palmetto, LLC
(1000 Main Street, Suite 3000
Houston, Texas 77002)

 

Delaware LLC

 

45-3193696

 

5027789

SN Marquis LLC
(1000 Main Street, Suite 3000
Houston, Texas 77002)

 

Delaware LLC

 

45-3090102

 

5061848

Sanchez Energy Corporation
(1000 Main Street, Suite 3000
Houston, Texas 77002)

 

Delaware Corporation

 

45-3090102

 

5027889

SN Cotulla Assets, LLC
(1000 Main Street, Suite 3000
Houston, Texas 77002)

 

Texas LLC

 

45-3090102

 

801757040

SN Operating, LLC
(1000 Main Street, Suite 3000
Houston, Texas 77002)

 

Texas LLC

 

45-3090102

 

801757045

SN TMS, LLC
(1000 Main Street, Suite 3000
Houston, Texas 77002)

 

Delaware LLC

 

45-3090102

 

5383007

SN Catarina, LLC
(1000 Main Street, Suite 3000
Houston, Texas 77002)

 

Delaware LLC

 

45-3090102

 

5518394

 

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

 

ANNEX 7

 

PREVIOUS NAMES AND TRANSACTIONS

 

All Other Corporate or Fictitious Names Used Within Last Five Years:

 

1.                                      SEP Holdings III, LLC

 

All Merger or Consolidation Transactions Within Last Five Years:

 

1.                                      Sanchez Energy Corporation acquired SN
Marquis LLC from Ross Exploration, Inc. in December 2011.

 

2.                                      Sanchez Energy Corporation acquired SEP
Holdings III, LLC from Sanchez Energy Partners I, LP in December 2011.

 

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

 

ANNEX 8

 

OFFICES AND LOCATIONS OF RECORDS

 

Chief Executive Offices:

 

The chief executive office of each Debtor is:

 

1000 Main Street, Suite 3000
Houston, Texas 77002

 

Additional offices:

 

1920 Sandman

Laredo, TX 78044-2986

 

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

 

ANNEX 9

 

LOCATION OF INVENTORY AND EQUIPMENT

 

Additional Locations:

 

1000 Main Street, Suite 3000
Houston, Texas 77002

 

1920 Sandman

Laredo, TX 78044-2986

 

Additional lease and well equipment is on locations.

 

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

 

ANNEX 10

 

DEPOSIT ACCOUNTS

 

Entity

 

Institution

 

Account
Number

 

Type

 

Tax ID

 

State

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

ANNEX 11

 

SECURITIES ACCOUNTS

 

Entity

 

Institution

 

Account Number

 

Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMODITY ACCOUNTS

 

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