Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

This SUBSCRIPTION AGREEMENT is entered into this 4th day of May, 2017 (this
“Subscription Agreement”), by and between Centennial Resource Development, Inc.,
a Delaware corporation (the “Company”), and the undersigned subscriber(s) (each
individually, or if not more than one, as used herein, “Subscriber”).  Each
Subscriber is acting severally and not jointly with any other Subscriber,
including, without limitation, the obligation to purchase the Acquired Shares
(defined below) hereunder and the representations and warranties of Subscriber
hereunder (which are made by Subscriber as to itself only).

 

WHEREAS, Centennial Resource Production, LLC, a Delaware limited liability
company and controlled subsidiary of the Company (“CRP”) has entered into that
certain Purchase and Sale Agreement, dated as of April 28, 2017 (the “Purchase
Agreement”), pursuant to which CRP will acquire certain assets (the “Transferred
Property”) from GMT Exploration Company, LLC, a Delaware limited liability
company (“GMT”), on the terms and subject to the conditions set forth therein
(the “Transaction”);

 

WHEREAS, to finance a portion of the Transaction, Subscriber desires to
subscribe for and purchase from the Company that number of shares of the
Company’s Class A Common Stock, par value $0.0001 per share (the “Class A Common
Stock”), set forth on its signature page hereto (the “Acquired Shares”), for a
purchase price of $14.50 per share, or the aggregate amount set forth on such
signature page hereto (the “Purchase Price”), and the Company desires to issue
and sell to Subscriber the Acquired Shares in consideration of the payment of
the Purchase Price by or on behalf of Subscriber to the Company on or prior to
the Closing Date (as defined below); and

 

WHEREAS, to finance a portion of the Transaction, certain other “accredited
investors” (as such term is defined in Rule 501 under the Securities Act of
1933, as amended (the “Securities Act”)), have entered into subscription
agreements with the Company substantially similar to this Subscription
Agreement, pursuant to which such investors have agreed to purchase on the
Closing Date, in the aggregate, that number of shares of Class A Common Stock
that, together with the Acquired Shares, equals an aggregate purchase price of
approximately $341 million, at a purchase price of $14.50 per share
(collectively, the “Other Subscription Agreements”).

 

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants, and subject to the conditions, herein
contained, and intending to be legally bound hereby, the parties hereto hereby
agree as follows:

 

1.                                      Subscription.  Subject to the terms and
conditions hereof, Subscriber hereby agrees to subscribe for and purchase, and
the Company hereby agrees to issue and sell to Subscriber, upon the payment of
the Purchase Price, the Acquired Shares (such subscription and issuance, the
“Subscription”).

 

2.                                      Closing.

 

a.                                      The closing of the Subscription
contemplated hereby (the “Closing”) is contingent upon the substantially
concurrent consummation of the Transaction and shall occur

 

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immediately prior thereto.  The Closing and the closing of the Transaction shall
occur on June 8, 2017, subject to extension upon five (5) business days’ prior
written notice to Subscriber (such date, including as so extended, the “Closing
Date”).  At least three (3) business days prior to the Closing Date, Subscriber
shall deliver the Purchase Price for the Acquired Shares to the Company by wire
transfer of U.S. dollars in immediately available funds to the account specified
by the Company in a written notice delivered to Subscriber at least five
(5) business days’ prior to the Closing Date, which account, from the date of
this Subscription Agreement through the Closing Date, shall solely contain the
Purchase Price and the purchase price received by the Company pursuant to the
Other Subscription Agreements.  Immediately prior to the closing of the
Transaction on the Closing Date, (a) the Purchase Price shall be retained by the
Company without further action by the Company or Subscriber, and (b) the Company
shall deliver to Subscriber (i) the Acquired Shares in book entry form, free and
clear of any liens or other restrictions whatsoever (other than those arising
under state or federal securities laws), in the name of Subscriber (or its
nominee in accordance with its delivery instructions) or to a custodian
designated by Subscriber, as applicable, and (ii) written notice from the
Company or its transfer agent evidencing the issuance to Subscriber of the
Acquired Shares on and as of the Closing Date.  In the event the Closing does
not occur on the Closing Date, the Company shall promptly (but not later than
one (1) business day thereafter) return the Purchase Price to Subscriber by wire
transfer of U.S. dollars in immediately available funds to the account specified
by Subscriber on the signature page hereto.

 

b.                                      The Closing shall be subject to the
conditions that, on the Closing Date:

 

(i)                                     no suspension of the qualification of
the Acquired Shares for offering or sale or trading in any jurisdiction, or
initiation or threatening of any proceedings for any of such purposes, shall
have occurred;

 

(ii)                                  all representations and warranties of the
Company and Subscriber contained in this Subscription Agreement shall be true
and correct in all material respects (other than representations and warranties
that are qualified as to materiality or Material Adverse Effect (as defined
herein), which representations and warranties shall be true in all respects) at
and as of the Closing Date (except that representations and warranties that are
made as of a specified date need to be true in all material respects (except for
those representations and warranties that are qualified by materiality or
Material Adverse Effect, which shall be true in all respects) as of such date),
and consummation of the Closing shall constitute a reaffirmation by each of the
Company and Subscriber of each of the representations, warranties and agreements
of each such party contained in this Subscription Agreement as of the Closing
Date, but in each case without giving effect to consummation of the Transaction;

 

(iii)                               the Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Subscription Agreement to be performed, satisfied or
complied with by it at or prior to the Closing;

 

(iv)                              the Company shall have obtained approval of
The NASDAQ Capital Market (“NASDAQ”) to list the Acquired Shares, subject to
official notice of issuance;

 

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(v)                                 no governmental authority shall have
enacted, issued, promulgated, enforced or entered any judgment, order, law,
rule or regulation (whether temporary, preliminary or permanent) which is then
in effect and has the effect of making consummation of the transactions
contemplated hereby illegal or otherwise restraining or prohibiting consummation
of the transactions contemplated hereby, and no governmental authority shall
have instituted or threatened in writing a proceeding seeking to impose any such
restraint or prohibition;

 

(vi)                              the Company shall have received proceeds from
debt or equity financings on terms satisfactory to the Company that, together
with the proceeds from the sale of the Acquired Shares hereunder, will be
sufficient for the Company to pay the purchase price for the Transaction, net of
the deposit previously funded, pursuant to the Purchase Agreement on the Closing
Date; and

 

(vii)                           the Transaction shall be consummated
substantially concurrently with the Closing in accordance with the terms of the
Purchase Agreement.

 

c.                                       At the Closing, the parties hereto
shall execute and deliver such additional documents and take such additional
actions as the parties reasonably may deem to be practical and necessary in
order to consummate the Subscription as contemplated by this Subscription
Agreement.

 

3.                                      Company Representations and Warranties. 
The Company represents and warrants that:

 

a.                                      Each of the Company and its subsidiaries
has been duly incorporated and is validly existing as a corporation or limited
liability company in good standing under the laws of the State of Delaware, with
corporate or limited liability company power and authority, as applicable, to
(i) own, lease and operate its properties and conduct its business as presently
conducted and (ii) with respect to the Company, to enter into, deliver and
perform its obligations under this Subscription Agreement.  The Company and each
of its subsidiaries is duly qualified and in good standing to do business in
each jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification necessary,
other than where the failure to be duly incorporated, validly existing, or to so
qualify or be in good standing has not had and would not be reasonably likely to
have, individually or in the aggregate, a material adverse effect on the
business, properties, financial condition, stockholders’ equity or results of
operations of the Company and its subsidiaries, taken as a whole (a “Material
Adverse Effect”).

 

b.                                      The Acquired Shares have been duly
authorized and, when issued and delivered to Subscriber against full payment
therefor in accordance with the terms of this Subscription Agreement, the
Acquired Shares will be validly issued, fully paid and non-assessable and will
not have been issued in violation of or subject to any preemptive or similar
rights created under the Company’s second amended and restated certificate of
incorporation or under the Delaware General Corporation Law.

 

c.                                       There are no securities or instruments
issued by or to which the Company is a party containing anti-dilution or similar
provisions that will be triggered by the issuance of

 

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(i) the Acquired Shares, or (ii) the shares to be issued pursuant to any Other
Subscription Agreement.

 

d.                                      This Subscription Agreement has been
duly authorized, executed and delivered by the Company and is enforceable
against it in accordance with its terms, except as may be limited or otherwise
affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other laws relating to or affecting the rights of creditors
generally, and (ii) principles of equity, whether considered at law or equity.

 

e.                                       The execution and delivery of this
Subscription Agreement, the issuance and sale of the Acquired Shares and the
compliance by the Company with all of the provisions of this Subscription
Agreement and the consummation of the transactions contemplated herein will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or assets
of the Company pursuant to the terms of (i) any indenture, mortgage, deed of
trust, loan agreement, lease, license or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject; (ii) the organizational documents
of the Company or any of its subsidiaries; or (iii) any statute or any judgment,
order, rule or regulation of any court or governmental agency or body, domestic
or foreign, having jurisdiction over the Company, any of its subsidiaries or any
of their respective properties that, in the case of clauses (i) and (iii), would
reasonably be expected to have a Material Adverse Effect or materially affect
the validity of the Acquired Shares or the legal authority of the Company to
comply in all material respects with this Subscription Agreement.

 

f.                                        The Company is not in default or
violation (and no event has occurred which, with notice or the lapse of time or
both, would constitute a default or violation) of any term, condition or
provision of (i) the organizational documents of the Company or any of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, permit, franchise or license to which the
Company or any of its subsidiaries is now a party or by which the Company’s or
any of its subsidiaries’ properties or assets are bound or (iii) any statute or
any judgment, order, rule or regulation of any court or governmental agency or
body, domestic or foreign, having jurisdiction over the Company, any of its
subsidiaries or any of their respective properties, except, in the case of
clauses (ii) and (iii), for defaults or violations that have not had and would
not be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect.

 

g.                                       The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority, self-regulatory organization (including NASDAQ) or other
person in connection with the execution, delivery and performance by the Company
of this Subscription Agreement (including, without limitation, the issuance of
the Acquired Shares), other than (i) the filing with the Securities and Exchange
Commission (the “Commission”) of the Registration Statement (as defined below),
(ii) filings required by applicable state securities laws, (iii) if applicable,
the filing of a Notice of Exempt Offering of Securities on Form D with the
Commission under Regulation D of the Securities Act, (iv) the filings required
in accordance

 

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with Section 7(m) of this Subscription Agreement, (v) those required by NASDAQ
and (vi) the failure of which to obtain would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.

 

h.                                      The authorized capital stock of the
Company consists of 620,000,000 shares of common stock of the Company, par value
$0.0001 per share (“Common Stock”), including (x) 600,000,000 shares of Class A
Common Stock and (y) 20,000,000 shares of Class C Common Stock (“Class C Common
Stock”), and 1,000,000 shares of preferred stock of the Company, par value
$0.0001 per share (“Preferred Stock”).  As of May 3, 2017: (i) 207,635,163
shares of Class A Common Stock, 19,155,921 shares of Class C Common Stock, one
share of Series A Preferred Stock, par value $0.0001 per share, and 104,400
shares of Series B Preferred Stock, par value $0.0001 per share (“Series B
Preferred Stock”), were issued and outstanding; (ii) 8,000,000 warrants, each
entitling the holder thereof to purchase one share of Class A Common Stock at an
exercise price of $11.50 per share of Class A Common Stock (“Warrants”) were
issued and outstanding; (iii) 26,100,000 shares of Class A Common Stock were
issuable upon the conversion of 104,400 shares of Series B Preferred Stock;
(iv) 16,500,000 shares of Class A Common Stock were available for issuance under
the Centennial Resource Development, Inc. 2016 Long Term Incentive Plan, of
which awards with respect to 4,743,324 shares of Class A Common Stock were
outstanding; and (v) no indebtedness of the Company having the right to vote (or
convertible into equity having the right to vote) on any matters on which the
equityholders of the Company may vote was issued and outstanding.  All
(i) issued and outstanding shares of Common Stock and Preferred Stock have been
duly authorized and validly issued, are fully paid and are non-assessable and
are not subject to preemptive rights and (ii) outstanding Warrants have been
duly authorized and validly issued, are fully paid and are not subject to
preemptive rights. Except as set forth above and pursuant to the Other
Subscription Agreements, there are no outstanding options, warrants or other
rights to subscribe for, purchase or acquire from the Company any Common Stock
or other equity interests in the Company (collectively, “Equity Interests”) or
securities convertible into or exchangeable or exercisable for Equity Interests.

 

i.                                          The Company has made available to
Subscriber (including via the Commission’s EDGAR system) a copy of each form,
report, statement, schedule, prospectus, proxy, registration statement and other
document filed by the Company with the Commission since its initial registration
of the Class A Common Stock (the “SEC Documents”).  None of the SEC Documents
filed under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), contained, when filed or, if amended, as of the date of such amendment
with respect to those disclosures that are amended, any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that the Company makes no such
representation or warranty with respect to any information relating to GMT or
any of its affiliates included in any SEC Document or filed as an exhibit
thereto.  The Company has timely filed each report, statement, schedule,
prospectus, and registration statement that the Company was required to file
with the Commission since its inception.  There are no material outstanding or
unresolved comments in comment letters from the Commission Staff with respect to
any of the SEC Documents.

 

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j.                                         The financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with Regulation S-X of the Commission, were prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Rule 10-01
of Regulation S-X of the Commission) and fairly present in all material respects
in accordance with applicable requirements of GAAP (subject, in the case of the
unaudited statements, to normal year-end audit adjustments) the financial
position of the Company as of their respective dates and the results of
operations and the cash flows of the Company for the periods presented therein.

 

k.                                      The Company has not received any written
communication since December 31, 2016 from a governmental entity that alleges
that the Company or any of its subsidiaries is not in compliance with or is in
default or violation of any applicable law, except where such non-compliance,
default or violation would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.

 

l.                                          Except for such matters as have not
had and would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect, there is no (i) proceeding pending, or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries or (ii) judgment, decree, injunction, ruling or order of any
governmental entity or arbitrator outstanding against the Company or any of its
subsidiaries.

 

m.                                  The lists of exhibits contained in the SEC
Documents set forth a true and complete list, as of the date of this
Subscription Agreement, of each agreement to which the Company or any of its
subsidiaries is a party (other than this Subscription Agreement and the Other
Subscription Agreements) that is of a type that would be required to be included
as an exhibit to a Registration Statement on Form S-3 pursuant to Items
601(b)(2), (4), (9) or (10) of Regulation S-K of the Commission if such a
registration statement were filed by the Company on the date of this
Subscription Agreement.

 

n.                                      The issued and outstanding shares of
Class A Common Stock are registered pursuant to Section 12(b) of the Exchange
Act and are listed for trading on NASDAQ under the symbol “CDEV.” There is no
suit, action, proceeding or investigation pending or, to the knowledge of the
Company, threatened against the Company by NASDAQ or the Commission with respect
to any intention by such entity to deregister the Class A Common Stock or
prohibit or terminate the listing of the Class A Common Stock on NASDAQ. The
Company has taken no action that is designed to terminate the registration of
the Class A Common Stock under the Exchange Act.

 

o.                                      All material Tax Returns (as defined in
the Purchase Agreement) required to be filed by or with respect to the Company
and its subsidiaries have been duly and timely filed (taking into account
extension of time for filing) with the appropriate governmental entity, and all
such Tax Returns were true, correct and complete in all material respects. The
Company and its subsidiaries have paid all Taxes (as defined in the Purchase
Agreement) and other assessments due, whether or not disputed.  The Company and
its subsidiaries do not have any liabilities for Taxes of any other person or
entity by contract, as a transferee or successor, under

 

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U.S. Treasury Regulation Section 1.1502-6 or analogous state, county, local or
foreign provision or otherwise.

 

p.                                      The Company is not, and immediately
after receipt of payment for the Acquired Shares will not be, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.

 

q.                                      Assuming the accuracy of Subscriber’s
representations and warranties set forth in Section 4 of this Subscription
Agreement, no registration under the Securities Act is required for the offer
and sale of the Acquired Shares by the Company to Subscriber.

 

r.                                         Neither the Company nor any person
acting on its behalf has engaged or will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Acquired Shares.

 

s.                                        The Company has not entered into any
other agreements (including, without limitation, side letters) with any
subscriber to the Other Subscription Agreements or any other investor to
purchase shares of Class A Common Stock on economic terms more favorable to such
subscriber or investor than as set forth in this Subscription Agreement.

 

4.                                      Subscriber Representations and
Warranties.  Subscriber represents and warrants that:

 

a.                                      Subscriber has been duly formed or
incorporated and is validly existing in good standing under the laws of its
jurisdiction of incorporation or formation, with power and authority to enter
into, deliver and perform its obligations under this Subscription Agreement.

 

b.                                      This Subscription Agreement has been
duly authorized, executed and delivered by Subscriber.  This Subscription
Agreement is enforceable against Subscriber in accordance with its terms, except
as may be limited or otherwise affected by (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other laws relating to or
affecting the rights of creditors generally, and (ii) principles of equity,
whether considered at law or equity.

 

c.                                       The execution, delivery and performance
by Subscriber of this Subscription Agreement and the consummation of the
transactions contemplated herein will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any of the property or assets of Subscriber pursuant to the terms of (i) any
indenture, mortgage, deed of trust, loan agreement, lease, license or other
agreement or instrument to which Subscriber is a party or by which Subscriber is
bound or to which any of the property or assets of Subscriber is subject;
(ii) the organizational documents of Subscriber; or (iii) any statute or any
judgment, order, rule or regulation of any court or governmental agency or body,
domestic or foreign, having jurisdiction over Subscriber or any of its
properties that, in the case of clauses (i) and (iii), would reasonably be
expected to have a material adverse effect on the business, properties,
financial condition, stockholders’ equity or results of operations of Subscriber
(a “Subscriber Material Adverse Effect”) or materially affect the legal
authority of Subscriber to comply in all material respects with the terms of
this Subscription Agreement.

 

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d.                                      Subscriber (i) is a “qualified
institutional buyer” (as defined in Rule 144A under the Securities Act) or an
institutional “accredited investor” (within the meaning of Rule 501(a) under the
Securities Act) satisfying the applicable requirements set forth on Schedule A,
(ii) is acquiring the Acquired Shares only for its own account and not for the
account of others, or if Subscriber is subscribing for the Acquired Shares as a
fiduciary or agent for one or more investor accounts, each owner of such account
is a qualified institutional buyer and Subscriber has full investment discretion
with respect to each such account, and the full power and authority to make the
acknowledgements, representations and agreements herein on behalf of each owner
of each such account, and (iii) is not acquiring the Acquired Shares with a view
to, or for offer or sale in connection with, any distribution thereof in
violation of the Securities Act (and shall provide the requested information on
Schedule A following the signature page hereto).  Subscriber is not an entity
formed for the specific purpose of acquiring the Acquired Shares.

 

e.                                       Subscriber understands that the
Acquired Shares are being offered in a transaction not involving any public
offering within the meaning of the Securities Act and that the Acquired Shares
have not been registered under the Securities Act.  Subscriber understands that
the Acquired Shares may not be resold, transferred, pledged or otherwise
disposed of by Subscriber absent an effective registration statement under the
Securities Act, except (i) to the Company or a subsidiary thereof, (ii) to
non-U.S. persons pursuant to offers and sales that occur outside the United
States within the meaning of Regulation S under the Securities Act or
(iii) pursuant to another applicable exemption from the registration
requirements of the Securities Act, and, in each of cases (i) and (iii), in
accordance with any applicable securities laws of the states and other
jurisdictions of the United States, and that any certificates representing the
Acquired Shares shall contain a legend to such effect.  Subscriber acknowledges
that the Acquired Shares will not be eligible for resale pursuant to Rule 144A
promulgated under the Securities Act.  Subscriber understands and agrees that
the Acquired Shares will be subject to transfer restrictions and, as a result of
these transfer restrictions, Subscriber may not be able to readily resell the
Acquired Shares and may be required to bear the financial risk of an investment
in the Acquired Shares for an indefinite period of time.  Subscriber understands
that it has been advised to consult legal counsel prior to making any offer,
resale, pledge or transfer of any of the Acquired Shares.

 

f.                                        Subscriber understands and agrees that
Subscriber is purchasing the Acquired Shares directly from the Company. 
Subscriber further acknowledges that there have been no representations,
warranties, covenants and agreements made to Subscriber by the Company, GMT or
any of their respective officers or directors, expressly or by implication,
other than those representations, warranties, covenants and agreements of the
Company included in this Subscription Agreement.

 

g.                                       Subscriber represents and warrants that
its acquisition and holding of the Acquired Shares will not constitute or result
in a non-exempt prohibited transaction under Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, Section 4975 of the Internal
Revenue Code of 1986, as amended, or any applicable similar law.

 

h.                                      In making its decision to purchase the
Acquired Shares, Subscriber represents that it has relied solely upon
independent investigation made by Subscriber.  Subscriber acknowledges and
agrees that Subscriber has received such information as Subscriber

 

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deems necessary in order to make an investment decision with respect to the
Acquired Shares, including with respect to the Company, GMT and the Transaction.
Subscriber represents and agrees that Subscriber and Subscriber’s professional
advisor(s), if any, have had the full opportunity to ask such questions, receive
such answers and obtain such information as Subscriber and such undersigned’s
professional advisor(s), if any, have deemed necessary to make an investment
decision with respect to the Acquired Shares.  Subscriber understands and
acknowledges that it has not relied on the Agent (as defined below) or any of
the Agent’s affiliates with respect to its decision to invest in the Acquired
Shares.

 

i.                                          Subscriber became aware of this
offering of the Acquired Shares solely by means of direct contact between
Subscriber and the Company or by means of contact from Credit Suisse Securities
(USA) LLC, acting as placement agent for the Company, or Barclays Capital Inc.,
acting as financial advisor for the Company (each an “Agent” and collectively,
the “Agents”), and the Acquired Shares were offered to Subscriber solely by
direct contact between Subscriber and the Company or by contact between
Subscriber and the Agents.  Subscriber did not become aware of this offering of
the Acquired Shares, nor were the Acquired Shares offered to Subscriber, by any
other means.  Subscriber acknowledges that the Company represents and warrants
that the Acquired Shares (i) were not offered by any form of general
solicitation or general advertising and (ii) are not being offered in a manner
involving a public offering under, or in a distribution in violation of, the
Securities Act, or any state securities laws.

 

j.                                         Subscriber acknowledges that it is
aware that there are substantial risks incident to the purchase and ownership of
the Acquired Shares.  Subscriber has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Acquired Shares, and Subscriber has sought such accounting,
legal and tax advice as Subscriber has considered necessary to make an informed
investment decision.

 

k.                                      Subscriber represents and acknowledges
that Subscriber has adequately analyzed and fully considered the risks of an
investment in the Acquired Shares and determined that the Acquired Shares are a
suitable investment for Subscriber and that Subscriber is able at this time and
in the foreseeable future to bear the economic risk of a total loss of
Subscriber’s investment in the Company.  Subscriber acknowledges specifically
that a possibility of total loss exists.

 

l.                                          Subscriber understands and agrees
that no federal or state agency has passed upon or endorsed the merits of the
offering of the Acquired Shares or made any findings or determination as to the
fairness of this investment.

 

m.                                  Subscriber represents and warrants that
Subscriber is not (i) a person or entity named on the List of Specially
Designated Nationals and Blocked Persons administered by the U.S. Treasury
Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order
issued by the President of the United States and administered by OFAC (“OFAC
List”), or a person or entity prohibited by any OFAC sanctions program, (ii) a
Designated National as defined in the Cuban Assets Control Regulations, 31
C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services
indirectly to a non-U.S. shell bank (collectively, a “Prohibited Investor”). 
Subscriber agrees to provide law enforcement agencies, if requested thereby,
such records as required by applicable law, provided that Subscriber is
permitted to do

 

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so under applicable law.  Subscriber represents that if it is a financial
institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.)
(the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and
its implementing regulations (collectively, the “BSA/PATRIOT Act”), that
Subscriber maintains policies and procedures reasonably designed to comply with
applicable obligations under the BSA/PATRIOT Act.  Subscriber also represents
that, to the extent required, it maintains policies and procedures reasonably
designed for the screening of its investors against the OFAC sanctions programs,
including the OFAC List.  Subscriber further represents and warrants that, to
the extent required, it maintains policies and procedures reasonably designed to
ensure that the funds held by Subscriber and used to purchase the Acquired
Shares were legally derived.

 

n.                                      Subscriber agrees that, notwithstanding
Section 7(g), the Agents may rely upon the representations and warranties made
by Subscriber to the Company in this Subscription Agreement.

 

5.                                      Registration Rights.

 

a.                                      The Company agrees that, within
seventy-five (75) calendar days after the Closing, the Company will file with
the Commission (at the Company’s sole cost and expense) a registration statement
registering the resale of the Acquired Shares (the “Registration Statement”),
and the Company shall use its commercially reasonable efforts to have the
Registration Statement declared effective as soon as practicable after the
filing thereof, but no later than the earlier of (i) the 90th calendar day
following the filing thereof, (ii) the 165th calendar day following the Closing
and (iii) the 10th business day after the date the Company is notified (orally
or in writing, whichever is earlier) by the Commission that the Registration
Statement will not be “reviewed” or will not be subject to further review (such
earlier date, the “Effectiveness Deadline”); provided, however, that the
Company’s obligations to include the Acquired Shares in the Registration
Statement are contingent upon Subscriber furnishing in writing to the Company
such information regarding Subscriber, the securities of the Company held by
Subscriber and the intended method of disposition of the Acquired Shares as
shall be reasonably requested by the Company to effect the registration of the
Acquired Shares, and Subscriber shall execute such documents in connection with
such registration as the Company may reasonably request that are customary of a
selling stockholder in similar situations.

 

b.                                      If the Registration Statement required
by Section 5(a) is not declared effective by the Commission on or before the
Effectiveness Deadline, then Subscriber shall be entitled to a payment (with
respect to the Acquired Shares), as liquidated damages and not as a penalty, of
0.25% of the Liquidated Damages Multiplier (as defined below) per 30-day period,
that shall accrue daily, for the first 30 days following the Effectiveness
Deadline, increasing by an additional 0.25% of the Liquidated Damages Multiplier
per 30-day period, that shall accrue daily, for each subsequent 30 days, up to a
maximum of 1.00% of the Liquidated Damages Multiplier per 30-day period (i.e.,
0.5% for 31-60 calendar days following the Effectiveness Deadline, 0.75% for
61-90 calendar days following the Effectiveness Deadline, and 1.0% thereafter)
(the “Liquidated Damages”). The Liquidated Damages payable pursuant to the
immediately preceding sentence shall be payable within ten (10) business days
after the end of each such 30-day period.  The “Liquidated Damages Multiplier”
means the product of (i) $14.50 multiplied by (ii) the number of Acquired Shares
purchased by Subscriber that may not be

 

10

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disposed of without restriction and without the need for current public
information pursuant to any section of Rule 144 (or any successor or similar
provision adopted by the Commission then in effect) under the Securities Act. 
Any Liquidated Damages shall be paid to Subscriber in immediately available
funds; provided, however, if the Company certifies that it is unable to pay
Liquidated Damages in cash because such payment would result in a breach of or
default under a credit facility or other debt instrument, then the Company shall
pay such Liquidated Damages using as much cash as is permitted without causing a
breach of or default under such credit facility or other debt instrument and
shall pay the balance of any such Liquidated Damages (the “In-Kind LD Amount”)
in kind in the form of the issuance of additional shares of Class A Common
Stock. Upon any issuance of shares of Class A Common Stock as Liquidated
Damages, the Company shall promptly (i) prepare and file an amendment to the
Registration Statement prior to its effectiveness providing for the registration
of such shares of Class A Common Stock under such Registration Statement and
(ii) obtain the approval of the NASDAQ (or such other national securities
exchange on which the shares of Class A Common Stock are then listed and traded)
to list such additional shares of Class A Common Stock. The number of shares of
Class A Common Stock to be issued as Liquidated Damages shall be equal to the
quotient of (i) the dollar amount of the In-Kind LD Amount divided by (ii) the
volume-weighted average closing price of the shares of Class A Common Stock (as
reported on the NASDAQ or the principal national securities exchange on which
the shares of Class A Common Stock are then traded) for the consecutive ten
(10) trading day period ending on the close of trading on the trading day
immediately preceding the date on which the Liquidated Damages payment is due.
The payment of Liquidated Damages to Subscriber shall cease at the earlier of
(i) the Registration Statement becoming effective or (ii) when Subscriber no
longer holds shares of Class A Common Stock registered under the Registration
Statement, assuming that Subscriber is not an affiliate of the Company. Any
payment of Liquidated Damages shall be prorated for any period of less than 30
days in which the payment of Liquidated Damages ceases. If the Company is unable
to cause a Registration Statement to go effective by the Effectiveness Deadline
as a result of an acquisition, merger, reorganization, disposition or other
similar transaction, then the Company may request a waiver of the Liquidated
Damages, and Subscriber may grant or withhold its consent to such request in its
discretion.

 

c.             The Company shall, notwithstanding any termination of this
Subscription Agreement, indemnify, defend and hold harmless Subscriber (to the
extent a seller under the Registration Statement), the officers, directors,
agents, partners, members, managers, stockholders, affiliates, employees and
investment advisers of each of them, each person who controls Subscriber (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, partners, members, managers, stockholders,
agents, affiliates, employees and investment advisers of each such controlling
person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and investigation and reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as incurred, that arise
out of or are based upon (i) any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any prospectus included
in the Registration Statement or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were

 

11

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made) not misleading, or (ii) any violation or alleged violation by the Company
of the Securities Act, Exchange Act or any state securities law or any rule or
regulation thereunder, in connection with the performance of its obligations
under this Section 5, except to the extent, but only to the extent, that such
untrue statements, alleged untrue statements, omissions or alleged omissions are
based solely upon information regarding Subscriber furnished in writing to the
Company by Subscriber expressly for use therein.  The Company shall notify
Subscriber promptly of the institution, threat or assertion of any proceeding
arising from or in connection with the transactions contemplated by this
Section 5 of which the Company is aware.  Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of an
indemnified party and shall survive the transfer of the Acquired Shares by
Subscriber.

 

d.             Subscriber shall, severally and not jointly with any other
subscriber, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or are based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
prospectus included in the Registration Statement, or any form of prospectus, or
in any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
(in the case of any prospectus, or any form of prospectus or supplement thereto,
in light of the circumstances under which they were made) not misleading to the
extent, but only to the extent, that such untrue statements or omissions are
based solely upon information regarding Subscriber furnished in writing to the
Company by Subscriber expressly for use therein.  In no event shall the
liability of Subscriber be greater in amount than the dollar amount of the net
proceeds received by Subscriber upon the sale of the Acquired Shares giving rise
to such indemnification obligation.

 

6.             Termination.  This Subscription Agreement shall terminate and be
void and of no further force and effect, and all rights and obligations of the
parties hereunder shall terminate without any further liability on the part of
any party in respect thereof, upon the earlier to occur of (a) such date and
time as the Purchase Agreement is terminated in accordance with its terms,
(b) upon the mutual written agreement of each of the parties hereto to terminate
this Subscription Agreement, (c) if any of the conditions to Closing set forth
in Section 2 of this Subscription Agreement are not satisfied on or prior to the
Closing and, as a result thereof, the transactions contemplated by this
Subscription Agreement are not consummated at the Closing or (d) June 30, 2017,
if the Closing has not occurred by such date (subject to extension to a date no
later than July 15, 2017 if the Purchase Agreement “Outside Termination Date”
(as defined therein) is correspondingly extended and the Company provides
Subscriber notice of such extension or anticipated extension at least two
(2) business days prior to June 30, 2017); provided, that nothing herein will
relieve any party from liability for any willful breach hereof prior to the time
of termination, and each party will be entitled to any remedies at law or in
equity to recover losses, liabilities or damages arising from such breach. The
Company shall notify Subscriber of the termination of the Purchase Agreement
promptly after the termination of such agreement.

 

12

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7.             Miscellaneous.

 

a.             Subscriber acknowledges that the Company and others will rely on
the acknowledgments, understandings, agreements, representations and warranties
contained in this Subscription Agreement.  Prior to the Closing, Subscriber
agrees to promptly notify the Company if any of the acknowledgments,
understandings, agreements, representations and warranties of Subscriber set
forth herein are no longer accurate in all material respects.  The Company
acknowledges that Subscriber and others will rely on the acknowledgments,
understandings, agreements, representations and warranties contained in this
Subscription Agreement.  Prior to the Closing, the Company agrees to promptly
notify Subscriber if any of the acknowledgments, understandings, agreements,
representations and warranties of the Company set forth herein are no longer
accurate in all material respects.

 

b.             Each of the Company and Subscriber is entitled to rely upon this
Subscription Agreement and is irrevocably authorized to produce this
Subscription Agreement or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

 

c.             Neither this Subscription Agreement nor any rights that may
accrue to Subscriber hereunder (other than the Acquired Shares acquired
hereunder, if any) may be transferred or assigned.  Neither this Subscription
Agreement nor any rights that may accrue to the Company hereunder may be
transferred or assigned.

 

d.             All the agreements, representations and warranties made by each
party hereto in this Subscription Agreement shall survive the Closing.

 

e.             The Company may request from Subscriber such additional
information as the Company may deem necessary to evaluate the eligibility of
Subscriber to acquire the Acquired Shares, and Subscriber shall provide such
information as may be reasonably requested, to the extent readily available and
to the extent consistent with its internal policies and procedures.

 

f.             This Subscription Agreement may not be modified, waived or
terminated except by an instrument in writing, signed by the party against whom
enforcement of such modification, waiver, or termination is sought.

 

g.             This Subscription Agreement constitutes the entire agreement, and
supersedes all other prior agreements, understandings, representations and
warranties, both written and oral, among the parties, with respect to the
subject matter hereof.  This Subscription Agreement shall not confer any rights
or remedies upon any person other than (i) the parties hereto and their
respective successor and assigns and (ii) the persons entitled to
indemnification under Section 5.

 

h.             Except as otherwise provided herein, this Subscription Agreement
shall be binding upon, and inure to the benefit of the parties hereto and their
heirs, executors, administrators, successors, legal representatives, and
permitted assigns, and the agreements, representations, warranties, covenants
and acknowledgments contained herein shall be deemed to be made by, and be
binding upon, such heirs, executors, administrators, successors, legal
representatives and permitted assigns.

 

13

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i.              If any provision of this Subscription Agreement shall be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remaining provisions of this Subscription Agreement shall not in any way be
affected or impaired thereby and shall continue in full force and effect.

 

j.              This Subscription Agreement may be executed in one or more
counterparts (including by facsimile or electronic mail or in .pdf) and by
different parties in separate counterparts, with the same effect as if all
parties hereto had signed the same document.  All counterparts so executed and
delivered shall be construed together and shall constitute one and the same
agreement.

 

k.             The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Subscription Agreement were not
performed in accordance with their specific terms or were otherwise breached. 
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Subscription Agreement and to enforce
specifically the terms and provisions of this Subscription Agreement, this being
in addition to any other remedy to which such party is entitled at law, in
equity, in contract, in tort or otherwise.

 

l.              THIS SUBSCRIPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF
THE LAW OF ANY OTHER STATE.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW
YORK, SEATED IN NEW YORK COUNTY AND ANY FEDERAL COURT SITTING IN THE SOUTHERN
DISTRICT OF NEW YORK (AND ANY APPLICABLE COURTS OF APPEAL THERETO) OVER ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO HEREBY
WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO
THIS SUBSCRIPTION AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

 

m.           The Company shall, by 9:00 a.m., New York City time, on the first
(1st) business day immediately following the date of this Subscription
Agreement, issue one or more press releases or file with the Commission a
Current Report on Form 8-K (collectively, the “Disclosure Document”) disclosing,
to the extent not previously publicly disclosed, all material terms of the
transactions contemplated hereby (and by the Other Subscription Agreements), the
Transaction and any other material, nonpublic information that the Company has
provided to Subscriber at any time prior to the filing of the Disclosure
Document.  From and after the issuance of the Disclosure Document, to the
Company’s knowledge, Subscriber shall not be in possession of any material,
non-public information received from the Company or any of its officers,
directors, employees or the Agents.

 

14

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IN WITNESS WHEREOF, each of the Company and Subscriber has executed or caused
this Subscription Agreement to be executed by its duly authorized representative
as of the date set forth below.

 

 

 

CENTENNIAL RESOURCE DEVELOPMENT, INC.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Date:    May 4, 2017

 

15

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SUBSCRIBER:

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

Date: May 4, 2017

 

 

 

 

 

 

 

 

 

 

Number of Acquired Shares subscribed for:

Name in which shares are to be registered

 

 

(if different):

 

 

 

 

 

 

 

Price Per Acquired Share: $14.50

 

 

 

 

 

Aggregate Purchase Price: $

 

 

 

Email Address:

 

 

 

 

 

Business Address-Street:

 

Mailing Address-Street (if different):

 

 

 

 

 

 

City, State, Zip:

 

City, State, Zip:

 

 

 

Attn:

 

Attn:

 

 

 

Telephone No.:

 

Telephone No.:

 

 

 

Facsimile No.:

 

Facsimile No.:

 

You must pay the Purchase Price by wire transfer of U.S. dollars in immediately
available funds to the account specified by the Company.

 

If Closing does not occur on the Closing Date, the Company must return the
Purchase Price to Subscriber by wire transfer of U.S. dollars in immediately
available funds to the following account:

 

Name of Bank:

 

City/State of Bank:

 

 

16

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ABA Number of Bank:

 

Name of Account:

 

Account Number at Bank:

 

 

17

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SCHEDULE A
ELIGIBILITY REPRESENTATIONS OF SUBSCRIBER

 

A.            QUALIFIED INSTITUTIONAL BUYER STATUS
(Please check the applicable subparagraphs):

 

1.             o    We are a “qualified institutional buyer” (as defined in
Rule 144A under the Securities Act (a “QIB”)).

 

2.             o    We are subscribing for the Acquired Shares as a fiduciary or
agent for one or more investor accounts, and each owner of such account is a
QIB.

 

B.            INSTITUTIONAL ACCREDITED INVESTOR STATUS
(Please check the applicable subparagraphs):

 

1.             o    We are an “accredited investor” (within the meaning of
Rule 501(a) under the Securities Act or an entity in which all of the equity
holders are accredited investors within the meaning of Rule 501(a) under the
Securities Act, and have marked and initialed the appropriate box on the
following page indicating the provision under which we qualify as an “accredited
investor.”

 

2.             o    We are not a natural person.

 

C.            AFFILIATE STATUS
(Please check the applicable box)

 

SUBSCRIBER:

 

o            is:

 

o            is not:

 

an “affiliate” (as defined in Rule 144 under the Securities Act) of the Company
or acting on behalf of an affiliate of the Company.

 

This page should be completed by Subscriber
and constitutes a part of the Subscription Agreement.

 

Schedule A-1

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Rule 501(a), in relevant part, states that an “accredited investor” shall mean
any person who comes within any of the below listed categories, or who the
issuer reasonably believes comes within any of the below listed categories, at
the time of the sale of the securities to that person.  Subscriber has
indicated, by marking and initialing the appropriate box below, the
provision(s) below which apply to Subscriber and under which Subscriber
accordingly qualifies as an “accredited investor.”

 

¨  Any bank, registered broker or dealer, insurance company, registered
investment company, business development company, or small business investment
company;

 

¨  Any plan established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political subdivisions for
the benefit of its employees, if such plan has total assets in excess of
$5,000,000;

 

¨  Any employee benefit plan, within the meaning of the Employee Retirement
Income Security Act of 1974, if a bank, insurance company, or registered
investment adviser makes the investment decisions, or if the plan has total
assets in excess of $5,000,000;

 

¨  Any organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation, similar business trust, or partnership, not formed for the specific
purpose of acquiring the securities offered, with total assets in excess of
$5,000,000;

 

¨  Any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or general
partner of a general partner of that issuer;

 

¨  Any natural person whose individual net worth, or joint net worth with that
person’s spouse, at the time of his purchase exceeds $1,000,000.  For purposes
of calculating a natural person’s net worth: (a) the person’s primary residence
must not be included as an asset; (b) indebtedness secured by the person’s
primary residence up to the estimated fair market value of the primary residence
must not be included as a liability (except that if the amount of such
indebtedness outstanding at the time of calculation exceeds the amount
outstanding 60 days before such time, other than as a result of the acquisition
of the primary residence, the amount of such excess must be included as a
liability); and (c) indebtedness that is secured by the person’s primary
residence in excess of the estimated fair market value of the residence must be
included as a liability;

 

¨  Any natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person’s spouse in excess
of $300,000 in each of those years and has a reasonable expectation of reaching
the same income level in the current year;

 

¨  Any trust with assets in excess of $5,000,000, not formed to acquire the
securities offered, whose purchase is directed by a sophisticated person; or

 

¨  Any entity in which all of the equity owners are accredited investors meeting
one or more of the above tests.

 

Schedule A-2

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