Document:

cwei8k22515_no_2

Exhibit 10.1

Execution Version
AMENDMENT NO. 2 TO 
THIRD AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDMENT NO. 2 TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (“Amendment”) entered into on February 25, 2015 (the “Amendment Effective Date”) is by and among Clayton Williams Energy, Inc., a Delaware corporation (the “Borrower”), the subsidiaries of the Borrower party hereto (together with the Borrower, the “Guarantors”), the Lenders party hereto (as defined below), and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”) and as issuing bank (in such capacity, the “Issuing Bank”).
RECITALS

A.The Borrower is party to that certain Third Amended and Restated Credit Agreement dated as of April 23, 2014 among the Borrower, the financial institutions party thereto from time to time, as lenders (the “Lenders”), the Administrative Agent and the Issuing Bank (as amended by that certain Amendment No. 1 to Third Amended and Restated Credit Agreement entered into November 12, 2014, and as the same may be further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).

B.Subject to the terms and conditions set forth herein, the parties hereto wish to amend the Credit Agreement as provided herein.

NOW THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1.Defined Terms.  As used in this Amendment, each of the terms defined in the opening paragraph and the Recitals above shall have the meanings assigned to such terms therein.  Each term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless expressly provided to the contrary.
Section 2.Other Definitional Provisions.  Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Amendment, unless otherwise specified.  The words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Amendment shall refer to this Amendment as a whole and not to any particular provision of this Amendment.  The term “including” means “including, without limitation,”.  Paragraph headings have been inserted in this Amendment as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Amendment and shall not be used in the interpretation of any provision of this Amendment.
Section 3.Decrease of Borrowing Base.  Effective as of the Amendment Effective Date, the Borrowing Base is hereby decreased from $600,000,000 to $500,000,000.  Once effective, the new Borrowing Base amount shall remain in effect at that level until the Borrowing Base is redetermined or reduced in accordance with the Credit Agreement.  For the avoidance of doubt, the decrease in the Borrowing Base pursuant to this Section 3 is the Scheduled Redetermination scheduled to be made on or about May 1, 2015. 

Section 4.Temporary Amendments to Credit Agreement.  
(a)Section 1.01 of the Credit Agreement is hereby amended by amending and restating the definition of Permitted Refinancing in its entirety as follows:
“Permitted Refinancing” means any Indebtedness of the Borrower or any Restricted Subsidiary, and Indebtedness constituting Guarantees thereof by the Borrower or any Restricted Subsidiary, incurred or issued in exchange for, or renewing or extending, or the Net Cash Proceeds of which are used to extend, refinance, renew, replace, defease or refund, Existing Senior Notes, in whole or in part, from time to time; provided that (a) the principal amount of such Permitted Refinancing (or if such Permitted Refinancing is issued at a discount, the initial issuance price of such Permitted Refinancing) does not exceed the principal amount of the Indebtedness being so refinanced, (b) such Permitted Refinancing does not provide for any scheduled repayment, mandatory redemption or payment of a sinking fund obligation prior to the date that is six months after the fifth anniversary of the Effective Date (except for any offer to redeem such Indebtedness required as a result of asset sales or the occurrence of a “Change of Control” under and as defined in the Indenture), (c)  the covenant, default and remedy provisions of such Permitted Refinancing, taken as a whole, are not materially more restrictive to the Borrower and its Subsidiaries than those imposed by the Existing Senior Notes being refinanced, (d) the mandatory prepayment, repurchase and redemption provisions of such Permitted Refinancing, taken as a whole, are not materially more restrictive to the Borrower and its Subsidiaries than those imposed by the Existing Senior Notes being refinanced, (e) the non-default cash interest rate on the outstanding principal balance of such Permitted Refinancing does not exceed the greater of (i) the non-default cash interest rate of the Existing Senior Notes being refinanced and (ii) the prevailing market rate then in effect for similarly situated credits at the time such Permitted Refinancing is incurred, (f) such Permitted Refinancing is unsecured, (g) no Subsidiary of the Borrower is required to Guarantee such Permitted Refinancing unless such Subsidiary is (or concurrently with any such Guarantee becomes) a Guarantor hereunder, and (h) to the extent such Permitted Refinancing is or is intended to be expressly subordinate to the payment in full of all of the Obligations, the subordination provisions contained therein are either (x) on substantially the same terms or at least as favorable to the Secured Parties as the subordination provisions contained in the Existing Senior Notes being refinanced or (y) reasonably satisfactory to the Administrative Agent and the Majority Lenders.
(b)Section 1.01 of the Credit Agreement is hereby amended by amending and restating the definition of Senior Notes in its entirety as follows:
“Senior Notes” means (a) the Existing Senior Notes and (b) any other senior, senior subordinated or senior convertible notes issued by the Borrower pursuant to a Permitted Refinancing of the Existing Senior Notes; as the same may be amended, restated, supplemented, renewed or extended or otherwise modified from time to time to the extent permitted by Section 7.15.
(c)Section 2.11(d) of the Credit Agreement is hereby deleted in its entirety and replaced with “[Reserved.]”. 
(d)Section 3.05 of the Credit Agreement is hereby deleted in its entirety. 

(e)Section 7.01 of the Credit Agreement is hereby amended by amending and restating clause (g) thereof in its entirety to read as follows:
(g)    unsecured Indebtedness under the Senior Notes, including any Indebtedness constituting Guarantees thereof by the Borrower or any Restricted Subsidiary; provided that at the time of and immediately after giving effect to any Permitted Refinancing thereof, (i) no Default shall have occurred and be continuing and (ii) the Borrower shall be in pro forma compliance with Section 7.13;
(f)Section 7.04(i) of the Credit Agreement is hereby amended by replacing the reference to “10%” with a reference to “5%”. 
(g)Section 7.06 of the Credit Agreement is hereby amended by amending and restating clause (j) thereof in its entirety as follow: 
(j)    other Investments by the Borrower and the Restricted Subsidiaries; provided that, on the date any such Investment is made, the amount of such Investment, together with all other Investments made pursuant to this clause (j) of Section 7.06 (in each case determined based on the cost of such Investment) since the Effective Date, does not exceed in the aggregate $20,000,000 plus the amount of dividends, distributions and returns of capital, in each case, consisting of cash and cash equivalents, received by the Borrower or the applicable Restricted Subsidiary from Investments made under this Section 7.06(j); and
(h)Section 7.08 of the Credit Agreement is hereby amended by adding the word “and” before clause (c) thereof and by deleting clause (d) thereof in its entirety.
(i)Section 7.15 of the Credit Agreement is hereby amended by amending and restating the first sentence thereof in its entirety as follows:
The Borrower will not, nor will it permit any Restricted Subsidiary to, except for regularly scheduled payments of interest required under the Senior Notes, directly or indirectly, retire, redeem, defease, repurchase, pay or prepay any part of the principal of, or interest on, the Senior Notes.  
Notwithstanding anything to the contrary contained in this Amendment, the amendments to the Credit Agreement made pursuant to this Section 4 shall cease to be effective on the date when the financial statements and compliance certificate required under Section 6.01 of the Credit Agreement for the fiscal quarter ending September 30, 2016 have been delivered to the Administrative Agent and the Lenders (such date, the “Amendment Termination Date”) so long as (a) no Default or Event of Default exists as of such date, (b) on such date, the Aggregate Commitment does not exceed the lesser of (i) the Borrowing Base then in effect and (ii) the Maximum Facility Amount, and (c) the Borrower is in compliance with the financial covenants set forth in Section 7.13 of the Credit Agreement for the fiscal quarter ending September 30, 2016.  Subject to the requirements in the preceding sentence, on the Amendment Termination Date, each section of the Credit Agreement amended pursuant to this Section 4 shall revert to read as such section read immediately prior to the Amendment Effective Date subject, however, to any amendments made pursuant to Section 5 of this Amendment and any other amendment that may hereafter be entered into pursuant to Section 7.12 of the Credit Agreement.
Section 5.Amendments to Credit Agreement.

(a)Section 1.01 of the Credit Agreement is hereby amended by inserting the following new defined terms in appropriate alphabetical order:
“Consolidated Senior Debt” means, as of any date, without duplication, Indebtedness of the Borrower and its Restricted Subsidiaries owed to the Administrative Agent, the Issuing Bank, the Lenders or any of them under any Loan Document, whether for principal, interest (including post-petition interest), reimbursement of amounts drawn under any Letter of Credit, funding indemnification amounts, fees, expenses, indemnification or otherwise. 
“Consolidated Senior Debt Leverage Ratio” means, with respect to any fiscal quarter, the ratio of (a) Consolidated Senior Debt as of the end of such fiscal quarter, to (b) Consolidated EBITDAX for the trailing four fiscal quarter period ending on the last day of such fiscal quarter.
“Interest Coverage Ratio” means, with respect to any fiscal quarter, the ratio of (a) Consolidated EBITDAX for the trailing four fiscal quarter period ending on the last day of such fiscal quarter, to (b) Consolidated Net Interest Expense for the trailing four fiscal quarter period ending on the last day of such fiscal quarter.
(b)Section 1.01 of the Credit Agreement is hereby amended by amending and restating the definition of Applicable Rate in its entirety as follows:
“Applicable Rate” means, with respect to any ABR Loan or Eurodollar Loan, or with respect to the Unused Commitment Fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “ABR Spread”, “Eurodollar Spread” or “Unused Commitment Fee Rate”, as the case may be, based upon the Borrowing Base Usage applicable on such date:
	
				
	Borrowing Base Usage:
	ABR
Spread
	Eurodollar
Spread
	Unused Commitment Fee Rate

	Equal to or greater than 90%
	1.750%
	2.750%
	0.500%

	Equal to or greater than 75% and less than 90%
	1.500%
	2.500%
	0.500%

	Equal to or greater than 50% and less than 75%
	1.250%
	2.250%
	0.500%

	Equal to or greater than 25% and less than 50%
	1.000%
	2.000%
	0.375%

	Less than 25%
	0.750%
	1.750%
	0.375%

Each change in the Applicable Rate 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 change.

(c)Section 1.01 of the Credit Agreement is hereby amended by amending and restating the definition of Consolidated EBITDAX in its entirety as follows:
“Consolidated EBITDAX” means, with respect to the Borrower and its Restricted Subsidiaries for any period, Consolidated Net Income for such period plus, without duplication and to the extent deducted in the calculation of Consolidated Net Income for such period, the 

sum of (a) income or franchise Taxes paid or accrued; (b) Consolidated Net Interest Expense; (c) amortization, depletion and depreciation expense; (d) any non-cash losses or charges on any Swap Agreement resulting from the application of FASB ASC 815 for that period; (e) oil and gas exploration expenses (including all drilling, completion, geological and geophysical costs) for such period; (f) losses from Dispositions of assets outside of the ordinary course of business and other extraordinary or non-recurring losses; (g)  restructuring costs that have been incurred or expensed in an amount not to exceed $10,000,000 in the aggregate over the Availability Period, which costs shall be itemized on the most recently delivered compliance certificate delivered pursuant to Section 6.01 and are otherwise reasonably acceptable to the Administrative Agent, and (h) all other non-cash charges, expenses or losses (excluding non-cash charges that constitute accruals for future cash charges); minus, to the extent included in the calculation of Consolidated Net Income, (i) the sum of (i) any non-cash gains on any Swap Agreements resulting from the application of FASB ASC 815 for that period; (ii) extraordinary or non-recurring gains; (iii) gains from Dispositions of assets outside of the ordinary course of business; and (iv) all other non-cash gains; provided that, with respect to the determination of Borrower’s compliance with the Consolidated Leverage Ratio set forth in Section 7.13(b) for any period, Consolidated EBITDAX shall be adjusted to give effect, on a pro forma basis and consistent with GAAP, to any Acquisitions or Dispositions made during such period as if such Acquisition or Disposition, as the case may be, was made at the beginning of such period.
(d)Section 6.09 of the Credit Agreement is hereby amended by replacing the reference to “eighty percent (80%)” in the first sentence thereof with a reference to “eighty percent (80%) or such higher percentage as the Administrative Agent may require at any time an Event of Default is continuing”
(e)Section 7.13 of the Credit Agreement is hereby amended by amending and restating clause (b) in its entirety as follows:
(b)    Leverage Ratio.  The Borrower will not permit (i) the Consolidated Senior Debt Leverage Ratio as of the last day of any fiscal quarter ending on and after March 31, 2015 through and including June 30, 2016 to be greater than 2.50 to 1.00, and (ii) the Consolidated Leverage Ratio as of the last day of any fiscal quarter ending on or after September 30, 2016 to be greater than 4.00 to 1.00.
(f)Section 7.13 of the Credit Agreement is hereby further amended by inserting the following new clause (c):
(c)    Interest Coverage Ratio.  The Borrower will not permit the Interest Coverage Ratio as of the last day of any fiscal quarter ending on or after March 31, 2015 through and including June 30, 2016 to be less than 1.50 to 1.00.
Section 6.Representations and Warranties.  The Borrower and each Guarantor hereby represents and warrants that: (a) after giving effect to this Amendment, the representations and warranties contained in the Credit Agreement, as amended hereby, and the representations and warranties contained in the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representation or warranty that already is qualified or modified by materiality in the text thereof) on and as of the date hereof as if made on as and as of such date except to the extent that any such representation or warranty expressly relates solely to an earlier date, in which case such representation or warranty is true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representation or warranty 

that already is qualified or modified by materiality in the text thereof) as of such earlier date; (b) after giving effect to this Amendment, no Default has occurred and is continuing; (c) the execution, delivery and performance of this Amendment are within the limited liability company, limited partnership, or corporate power and authority of the Borrower and each Guarantor and have been duly authorized by appropriate limited liability company, limited partnership or corporate action and proceedings; (d) this Amendment constitutes the legal, valid, and binding obligation of the Borrower and each Guarantor enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there are no governmental or other third party consents, licenses and approvals required in connection with the execution, delivery, performance, validity and enforceability of this Amendment; and (f) the Liens under the Security Instruments are valid and subsisting and secure the Obligations, as amended hereby.
Section 7.Conditions to Effectiveness.  This Amendment shall become effective as of the Amendment Effective Date and enforceable against the parties hereto upon the occurrence of the following conditions precedent:
(a)The Administrative Agent shall have received multiple original counterparts, as requested by the Administrative Agent, of this Amendment, duly and validly executed and delivered by duly authorized officers of the Borrower, the Guarantors, the Administrative Agent, and the Required Lenders.
(b)The Administrative Agent, for the ratable benefit of the Lenders, shall have received, to the extent invoiced, reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrower under the Loan Documents, including all reasonable fees, expenses and disbursements of counsel for the Administrative Agent. 
(c)The Administrative Agent shall have received such other instruments and documents incidental and appropriate to the transactions provided for herein as the Administrative Agent or its special counsel may reasonably request prior to the Amendment Effective Date, and all such documents shall be in form and substance satisfactory to the Administrative Agent.
(d)The representations and warranties in this Amendment shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date hereof except to the extent that any such representation or warranty expressly relates solely to an earlier date, in which case it shall have been true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date, and no Default shall have occurred and be continuing. 
Section 8.Acknowledgments and Agreements.  
(a)The Borrower acknowledges that on the date hereof all outstanding Obligations are payable in accordance with their terms and the Borrower waives any defense, offset, counterclaim or recoupment with respect thereto.
(b)The Administrative Agent, the Issuing Bank, and the Lenders hereby expressly reserve all of their rights, remedies, and claims under the Loan Documents, as amended hereby.  Except as expressly set forth herein, this Amendment shall not constitute a waiver or relinquishment of (i) any Default or Event of Default under any of the Loan Documents, as amended hereby, (ii) any of the agreements, terms or conditions contained in any of the Loan Documents, as amended hereby, (iii) any rights or remedies of the Administrative 

Agent, the Issuing Bank, or any Lender with respect to the Loan Documents, as amended hereby, or (iv) the rights of the Administrative Agent, the Issuing Bank, or any Lender to collect the full amounts owing to them under the Loan Documents, as amended hereby.
(c)The Borrower, each Guarantor, Administrative Agent, the Issuing Bank and each Lender do hereby adopt, ratify, and confirm the Credit Agreement, as amended hereby, and acknowledge and agree that the Credit Agreement, as amended hereby, is and remains in full force and effect, and the Borrower and each Guarantor acknowledge and agree that their respective liabilities and obligations under the Credit Agreement, as amended hereby, and the other Loan Documents, are not impaired in any respect by this Amendment.
(d)From and after the date hereof, all references to the Credit Agreement and the Loan Documents shall mean such Credit Agreement and such Loan Documents as amended by this Amendment and the other documents executed pursuant hereto.  This Amendment is a Loan Document for the purposes of the provisions of the other Loan Documents.  Without limiting the foregoing, any breach of representations, warranties, and covenants under this Amendment shall be a Default or Event of Default, as applicable, under the Credit Agreement.
(e)From and after the Amendment Effective Date, the Borrower shall indemnify the Administrative Agent, and hold it harmless from, any and all losses, claims, damages, liabilities and related expenses, including Taxes and the fees, charges and disbursements of any counsel for any of the foregoing, arising in connection with the Administrative Agent’s treating, for purposes of determining withholding Taxes imposed under FATCA, the Credit Agreement as qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).  
(f)The Borrower hereby agrees that, on or before April 25, 2015, or such later date as the Administrative Agent shall determine in its sole discretion, (i) the Borrower shall deliver to the Administrative Agent title information in form and substance reasonably acceptable to the Administrative Agent with respect to that portion of the Oil and Gas Interests evaluated by the most recently delivered Reserve Report as the Administrative Agent shall deem reasonably necessary or appropriate to verify (A) the title of the Credit Parties to not less than seventy percent (70%) of the Engineered Value of the Borrowing Base Properties that are required to be subject to a Mortgage pursuant to Section 6.09 of the Credit Agreement, and (B) the validity, perfection and priority of the Liens created by such Mortgages and such other matters regarding such Mortgages as Administrative Agent shall reasonably request, and (ii) Mortgages or supplements to Mortgages necessary or appropriate to grant, evidence and perfect and maintain Liens in Oil and Gas Interests having an Engineered Value equal to or greater than eighty percent (80%) of the Engineered Value of the Oil and Gas Interests included in the Borrowing Base Properties.
Section 9.Reaffirmation of the Guaranty.  Each Guarantor hereby ratifies, confirms, acknowledges and agrees that its obligations under Article VIII of the Credit Agreement 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, all of the Guaranteed Liabilities, as such Guaranteed Liabilities may have been amended by this Amendment, and its execution and delivery of this Amendment does not indicate or establish an approval or consent requirement by such Guarantor under the Credit Agreement in connection with the execution and delivery of amendments, consents or waivers to the Credit Agreement or any of the other Loan Documents.
Section 10.Counterparts.  This Amendment may be signed in any number of counterparts, each of which shall be an original and all of which, taken together, constitute a single instrument.  This Amendment may be executed by facsimile or other electronic signature and all such signatures shall be effective as originals.

Section 11.Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement.
Section 12.Invalidity.  In the event that any one or more of the provisions contained in this Amendment shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Amendment.
Section 13.Governing Law.  This Amendment shall be construed in accordance with and governed by the law of the State of New York.
Section 14.Entire Agreement. THIS Amendment, THE CREDIT AGREEMENT, AS AMENDED HEREBY, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[SIGNATURES BEGIN ON NEXT PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written.
BORROWER:                CLAYTON WILLIAMS ENERGY, INC.

By: /s/ Michael L. Pollard    
Michael L. Pollard, Senior Vice President

		
	GUARANTORS:
	SOUTHWEST ROYALTIES, INC.

WARRIOR GAS CO.
CWEI ACQUISITIONS, INC.
ROMERE PASS ACQUISITION L.L.C.
CWEI ROMERE PASS ACQUISITION CORP.
BLUE HEEL COMPANY
TEX-HAL PARTNERS, INC.
DESTA DRILLING GP, LLC
WEST COAST ENERGY PROPERTIES GP, LLC
CLAJON INDUSTRIAL GAS, INC.
CLAYTON WILLIAMS PIPELINE CORPORATION

By: /s/ Michael L. Pollard    
Michael L. Pollard, Senior Vice President
of each of the Guarantors listed above

DESTA DRILLING, L.P.

By:    Desta Drilling GP, LLC, its general partner

By: /s/ Michael L. Pollard    
Michael L. Pollard, Senior Vice President

SWR VPP, LLC

By:    Southwest Royalties, Inc., its sole member 

By: /s/ Michael L. Pollard    
Michael L. Pollard, Senior Vice President

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

ADMINISTRATIVE AGENT/
ISSUING BANK/LENDER:        JPMORGAN CHASE BANK, N.A.,
as Administrative Agent, Issuing Bank and a Lender

By: /s/ Darren Vanek        
Name: Darren Vanek
Title: Executive Director

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    WELLS FARGO BANK, N.A.

By: /s/ Edward Pak        
Name: Edward Pak
Title: Director

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

		
	LENDER:
	MUFG UNION BANK, N.A. f/k/a UNION BANK, N.A.

By: /s/ Brian Hawk        
Name: Brian Hawk 
Title: Vice President

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    COMPASS BANK

By: /s/ Kathleen J. Bowen        
Name: Kathleen J. Bowen 
Title: Senior Vice President

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    FROST BANK

By: /s/ Alex Zemkoski        
Name: Alex Zemkoski
Title: Senior Vice President

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    THE ROYAL BANK OF SCOTLAND PLC

By: /s/ James L. Moyes        
Name: James L. Moyes
Title: Managing Director

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    KEYBANK NATIONAL ASSOCIATION

By: /s/ George E. McKean        
Name: George E. McKean
Title: Senior Vice President

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    NATIXIS, NEW YORK BRANCH

By: /s/ Justin Bellamy        
Name: Justin Bellamy 
Title: Director

By: /s/ Stuart Murray        
Name: Stuart Murray
Title: Managing Director

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    UBS AG, STAMFORD BRANCH

By: /s/ Houssem Daly        
Name: Houssem Daly
Title: Associate Director

By: /s/ Darlene Arias        
Name: Darlene Arias
Title: Director

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    FIFTH THIRD BANK

By: /s/ Richard Butler         
Name: Richard Butler
Title: Senior Vice President

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    U.S. BANK NATIONAL ASSOCIATION

By: /s/ Tara McLean        
Name: Tara McLean
Title: Vice President
    

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    WHITNEY BANK

By: /s/ Parker U. Mears        
Name: Parker U. Mears
Title: Vice President

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    BANK OF AMERICA, N.A.

By:  /s/ Joseph Scott        
Name: Joseph Scott
Title: Managing Director

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    BRANCH BANKING AND TRUST COMPANY

By: /s/ James Giordano        
Name: James Giordano
Title: Vice President

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    CAPITAL ONE, NATIONAL ASSOCIATION

By: /s/ Nancy Mak        
Name: Nancy Mak
Title: Senior Vice President

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)

LENDER:                    PNC BANK, NATIONAL ASSOCIATION

By: /s/ Sandra Aultman        
Name: Sandra Aultman
Title: Managing Director

Signature Page to
Amendment No. 2 to Third Amended and Restated Credit Agreement
(Clayton Williams Energy, Inc.)XYL 12.31.2014 EX 10.1

EXHIBIT 10.1

XYLEM 
2011 OMNIBUS INCENTIVE PLAN

[YEAR] NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
THIS AGREEMENT (the “Agreement”), effective as of [Month] [day], [year], by and between Xylem Inc. (the “Company”) and [name] (the “Optionee”), WITNESSETH:
WHEREAS, the Optionee is now employed by the Company or an Affiliate (as defined in the Company’s 2011 Omnibus Incentive Plan (the “Plan”)) as an employee, and in recognition of the Optionee’s valued services, the Company, through the Leadership Development and Compensation Committee of its Board of Directors (the “Committee”), desires to provide an opportunity for the Optionee to acquire or enlarge stock ownership in the Company, pursuant to the provisions of the Plan.
NOW, THEREFORE, in consideration of the terms and conditions set forth in this Agreement and the provisions of the Plan, a copy of which is attached hereto and incorporated herein as part of this Agreement, and any administrative rules and regulations related to the Plan as may be adopted by the Committee, the parties hereto hereby agree as follows:
		
	1.
	Grant of Options.  In accordance with, and subject to, the terms and conditions of the Plan and this Agreement, the Company hereby confirms the grant on [Month][day], [year], (the “Grant Date”) to the Optionee of the option to purchase from the Company all or any part of an aggregate of [#,###] shares (the “Options”), at the purchase price of $[##.##] per share (the “Exercise Price”).  All Options shall be Nonqualified Stock Options.

		
	2.
	Terms and Conditions.  It is understood and agreed that the Options are subject to the following terms and conditions:

		
	(a)
	Expiration Date.  The Options shall expire on [Month] [day], [year + 10], or, if the Optionee’s employment terminates before that date, on the date specified in subsection 2(e) below.

		
	(b)
	Exercise of Options.  The Options may not be exercised until it has become vested.

		
	(c)
	Vesting.  Subject to subsections 2(a), 2(d), and 2(e), the Options shall vest in three installments as follows:

		
	(i)
	1/3 of the Options shall vest on [Month] [day], [year + 1],

		
	(ii)
	1/3 of the Options shall vest on [Month] [day], [year + 2], and

		
	(iii)
	1/3 of the Options shall vest on [Month] [day], [year + 3].

For the avoidance of doubt, active employment of an Optionee by the Company or an Affiliate, for the purposes of vesting in the Options granted hereunder, shall include employment with the Company for so long as the Grantee continues working at such entity. Active employment does not include any potential severance period.
Subject to subsections 2(a) and 2(d), to the extent not earlier vested pursuant to paragraphs (i), (ii), and (iii) of this subsection, the Options shall vest in full upon an Acceleration Event (as defined in the Plan).
		
	(d)
	Effect of Acceleration Event.  Subject to subsections 2(a) and 2(e), any unvested Options shall vest in full upon Acceleration Event.

		
	(e)
	Effect of Termination of Employment.  Options may only vest while the Grantee is actively employed by the Company or an Affiliate.  If the Optionee’s employment terminates before [Month] [day], [year + 10], the following would apply to any outstanding Options:

		
	(i)
	Termination due to Death or Disability (as defined below). Any unvested Options shall immediately become 100% vested upon the Optionee’s termination of employment. Any vested Options shall expire on the earlier of [Month] [day], [year + 10], or the date three years after the Optionee’s termination of active employment.

		
	(i)
	Termination due to Retirement (as defined below).  A prorated portion (as defined below), of any unvested Options shall immediately vest upon the Optionee’s termination of employment.  Any vested Options shall expire on the earlier of [Month] [day], [year + 10], or the date three years after the Optionee’s termination of employment.  

		
	(ii)
	Termination other than Death, Disability and Retirement.  Any unvested Options shall automatically expire on the date of the Optionee’s termination of employment.   Any vested portion of the Options shall expire on the earlier of [Month] [day], [year + 10], or the date three months after the Optionee’s termination of employment.

		
	(iii)
	Notwithstanding the foregoing, if an Optionee’s employment is terminated on or within two years after an Acceleration Event (A) by the Company (or an Affiliate, as the case may be) for other than Cause (as determined by the Committee), and not because of the Optionee’s death, Disability, or Retirement, or (B) by the Optionee because the Optionee in good faith believed that as a result of such Acceleration Event he or she was unable effectively to discharge his or her present duties or the duties of the position the Optionee occupied just prior to the occurrence of such Acceleration Event, any unvested Options shall immediately become 100% vested upon the Optionee’s termination of employment and vested Options shall expire on the earlier of [Month] [day], [year + 10],  or the date seven months after the Optionee’s termination of employment.  

Disability.  For purposes of this Agreement, the term “Disability” shall mean the complete and permanent inability of the Optionee to perform all duties under the terms of his or her employment, as determined by the Committee upon the basis of such evidence, including independent medical reports and data, as the Committee deems appropriate or necessary.
Retirement. For purposes of this Agreement, the term “Retirement” shall mean the termination of the Optionee's employment, if, at the time of such termination, the Optionee is at least age 55 and has completed 10 years of service with the Company or the Optionee is age 65 or older.
Prorated Vesting Upon Retirement.  The prorated portion of the Options that vests upon the Optionee’s termination of employment due to the Optionee's Retirement shall be determined by multiplying the total number of unvested Options at the time of the Optionee’s termination of employment by a fraction, of which the numerator is the number of full months the Optionee has been continually employed since the Grant Date and the denominator is 36.  For this purpose, full months of employment shall be based on monthly anniversaries of the Grant Date, not calendar months.
		
	(f)
	Payment of Exercise Price.  Permissible methods for payment of the Exercise Price upon exercise of the Options are described in Section 6.6 of the Plan, or, if the Plan is amended, successor provisions.  In addition to the methods of exercise permitted by Section 6.6 of the Plan, the Optionee may exercise all or part of the Options by way of (i) broker-assisted cashless exercise in a manner consistent with the Federal Reserve Board's Regulation T, unless the Committee determines that such exercise method is prohibited by law, or (ii) net-settlement, whereby the Optionee directs the Company to withhold shares that otherwise would be issued upon exercise of the Options having an aggregate Fair Market Value on the date of the exercise 

equal to the Exercise Price, or the portion thereof being exercised by way of net-settlement (rounding up to the nearest whole share).
		
	(g)
	Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Optionee to remit to the Company, all applicable federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to the exercise of the Options.  The Optionee may elect to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares that otherwise would be issued upon exercise of the Options, with the number of shares withheld having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction (rounding up to the nearest whole share).  Any such election shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

		
	(h)
	Automatic Exercise in Certain Circumstances. Subject to subsection 2(i) of this Agreement, to the extent any portion of the Options held by active participants are otherwise exercisable but remain unexercised at the close of business on [Month] [day], [year + 10], and if on such date the Fair Market Value of the shares subject to such exercisable but unexercised portion of these Options exceeds the aggregate consideration that would have been required to be paid to purchase such shares had such portion of the Options been exercised, the Optionee will automatically be paid, in cancellation of such portion of the Options, an amount of Company shares having a Fair Market Value equal to such excess (rounding up to the nearest whole share), if any; provided, however, that such an exercise shall not occur to the extent the Optionee (and, if applicable, the Optionee’s authorized legal representative) may waive in writing the applicability of this subsection 2(h).

The Optionee hereby acknowledges that tax and other legal requirements must be met prior to any settlement of Options under this subsection and herby consents to any tax or other consequences that may arise in connection with this subparagraph
		
	(i)
	Compliance with Laws and Regulations.  Notwithstanding anything to the contrary herein, the Company shall not be obligated to issue any shares pursuant to this Agreement, at any time, if the offering of the shares covered by this Agreement, or the exercise of the Options by the Optionee, violates or is not in compliance with any laws, rules or regulations of the United States or any state or country. The Optionee understands that, to the extent applicable, the laws of the country in which the Optionee is working at the time of grant, vesting, and/or exercise of the Options (including any rules or regulations governing securities, foreign exchange, tax, labor or other matters) may restrict or prevent exercise of the Options or may subject the Optionee to additional procedural or regulatory requirements for which the Optionee is solely responsible and that the Optionee will have to independently fulfill. The Company reserves the right to impose other requirements on the Optionee’s participation in the Plan, awards thereunder, and any shares acquired under the Plan, to the extent the Company determines it is necessary or advisable to comply with applicable law or facilitate the administration of the Plan.

		
	(j)
	Optionee Bound by Plan and Rules.  The Optionee hereby acknowledges receipt of a copy of the Plan and this Agreement and agrees to be bound by the terms and provisions thereof as amended from time to time.  The Optionee agrees to be bound by any rules and regulations for administering the Plan as may be adopted by the Committee during the life of the Options.  Terms used herein and not otherwise defined shall be as defined in the Plan.

		
	(k)
	Governing Law.  This Agreement is issued, and the Options evidenced hereby are granted, in White Plains, New York and shall be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

By signing a copy of this Agreement, the Optionee acknowledges that s/he has received a copy of the Plan and that s/he has read and understands the Plan and this Agreement and agrees to the terms and conditions thereof.  The Optionee further acknowledges that the Options awarded pursuant to this Agreement must be exercised prior to its expiration as set forth herein, that it is the Optionee's responsibility to exercise the Options within such time period, and that the Company has no further responsibility to notify the Optionee of the expiration of the exercise period of the Options.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its Chief Executive Officer and President, or a Vice President, as of [Month] [day], [year]. 

Agreed to:                             XYLEM INC.

                                
_____________________________            
Optionee 
(Online acceptance constitutes agreement)

Dated: _________________                    Dated:  [Month] [day], [year]
Enclosures

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