Document:

Exhibit 10.2

 

EXECUTION

 

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “First Amendment”), dated as of June 30, 2013, is entered into by and among SANCHEZ ENERGY CORPORATION, a Delaware corporation (“Sanchez”), SEP HOLDINGS III, LLC, a Delaware limited liability company (“SEP”), SN MARQUIS LLC, a Delaware limited liability company (“SN Marquis”), and SN COTULLA ASSETS, LLC, a Texas limited liability company (“SN Cotulla”; together with Sanchez, SEP and SN Marquis, collectively, the “Borrowers” and each, a “Borrower”), the Lenders party hereto, ROYAL BANK OF CANADA, as Administrative Agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”), and ROYAL BANK OF CANADA, as letter of credit issuing bank (in such capacity, together with its successors in such capacity, the “Issuing Bank”).

 

RECITALS

 

A.                                    The Borrowers, the Lenders, the Issuing Bank and the Administrative Agent previously entered into that certain Amended and Restated Credit Agreement dated as of May 31, 2013 (as amended, restated, supplemented or modified from time to time, the “Credit Agreement”) and certain other Loan Documents (as defined in the Credit Agreement) in connection therewith.

 

B.                                    The Borrowers have repaid the Second Lien Loan (as defined in the Credit Agreement) in full.

 

C.                                    The Borrowers have requested that the Administrative Agent, Issuing Bank and the Required Lenders amend the Credit Agreement and the Administrative Agent, Issuing Bank and the Lenders party hereto are willing to amend the Credit Agreement on the terms and conditions contained in this First Amendment.

 

AGREEMENT

 

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

 

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

 

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

 

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

 

First Amendment to Sanchez

Amended and Restated Credit Agreement

 

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“First Amendment” means that certain First Amendment to Amended and Restated Credit Agreement dated the First Amendment Effective Date among the Borrowers, the Required Lenders, the Issuing Bank and the Administrative Agent.

 

“First Amendment Effective Date” means June 30, 2013.

 

“Norstra” means Norstra Energy Inc., a Nevada corporation.

 

“Norstra Equity Interests” means (i) Equity Interests in Norstra received as consideration in the Norstra Transaction and (ii) any Equity Interests received in respect of such Equity Interests from Norstra or any successor thereto.

 

“Norstra Transaction” means the sale by SEP of Hydrocarbon Interests located in central Montana comprised of leases on approximately 105,000 gross (82,000 net) acres to Norstra in exchange for shares of Norstra common stock, which shares have not been registered under the Securities Act.

 

“Repayment Notice” means a notice of repayment of a Borrowing pursuant to Section 2.6 or Section 2.7, substantially in the form of Exhibit I or any other form approved by the Administrative Agent.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

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

 

“Agreement” means this Credit Agreement, as amended by the First Amendment, and as the same may from time to time be amended, modified, supplemented or restated.

 

(iii)                               Section 3.04(b) of the Credit Agreement is hereby amended by deleting the parenthetical in the first sentence thereof and substituting therefor the following:

 

“(confirmed by telecopy of a signed Repayment Notice)”

 

(iv)                              Section 9.05 of the Credit Agreement is hereby amended by deleting the word “and” at the end of subsection 9.05(l), adding the word “and” after the semi colon at the end of subsection 9.05(m) and inserting a new subsection 9.05(n) to read as follows:

 

“(n)  The Investment consisting of the Norstra Equity Interests; provided, that the Borrowers shall use commercially reasonable efforts, subject to applicable law, including any applicable minimum holding period and any

 

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applicable volume limitations on dispositions, to dispose of the Norstra Equity Interest as soon as reasonably practicable after the acquisition thereof;”

 

(v)                                 Section 9.11 of the Credit Agreement is amended by adding a new clause (ii) to the introductory clause of Section 9.11 and designating what had been clause (ii) as clause (iii):

 

“, (ii) the sale of Oil and Gas Properties contemplated by the Norstra Transaction and the sale of the Norstra Equity Interests in accordance with Section 9.05(n),”

 

3.                                      Amendment to Exhibits.  A new Exhibit I (Form of Repayment Notice) in the form of Exhibit I to this First Amendment is hereby added to the Credit Agreement.

 

4.                                      Borrowers’ Ratification.  Each of the Borrowers hereby ratifies all of its Obligations under the Credit Agreement and each of the Loan Documents to which it is a party, and agrees and acknowledges that the Credit Agreement and each of the Loan Documents to which it is a party are and shall continue to be in full force and effect. Nothing in this First Amendment extinguishes, novates or releases any right, claim, Lien, security interest or entitlement of any of the Lenders, the Issuing Bank or the Administrative Agent created by or contained in any of such documents nor is any Borrower released from any covenant, warranty or obligation created by or contained herein or therein.

 

5.                                      Guarantors’ Ratification.  Each Guarantor by its execution in the space provided below under “ACKNOWLEDGED for purposes of Section 5” hereby ratifies, confirms, acknowledges and agrees that its obligations under the Guaranty are in full force and effect and that such Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, of the Obligations, and its execution and delivery of this First Amendment does not indicate or establish an approval or consent requirement by any Guarantor under the Guaranty in connection with the execution and delivery of amendments to the Credit Agreement, the Notes or any of the other Loan Documents (other than the Guaranty or any other Loan Document to which a Guarantor is a party).

 

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

 

(i)                                     The Administrative Agent shall have executed, and shall have received from each of the Borrowers, the Issuing Bank and the Required Lenders duly executed signature pages to, this First Amendment, and shall have received a duly executed acknowledgement of Section 5 of this First Amendment from each Guarantor;

 

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(ii)                                  the Administrative Agent shall have executed, and shall have received from Sanchez Oil & Gas Corporation a duly executed counterparty of the Acknowledgement and Agreement Regarding Undertaking to Pay Directly in the form attached as Exhibit X to this First Amendment (the “Acknowledgement and Agreement”);

 

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

 

(iv)                              the Administrative Agent and the Lenders shall have received all fees and other amounts due and payable, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrowers hereunder.

 

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

 

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

 

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

 

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

 

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

 

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

 

13.                               Execution by Issuing Bank.  The Issuing Bank has executed this First Amendment merely for purposes of consistency since the Issuing Bank signed the Credit Agreement.  However, since neither the rights nor duties of the Issuing Bank are affected by this First Amendment, the execution of this First Amendment by the Issuing Bank was not necessary for this First Amendment to be effective.  For the avoidance of doubt, the parties agree and understand that, unless the rights or duties of the Issuing Bank are affected by any future amendment, it will not be necessary for the Issuing Bank to execute any such future amendment.

 

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

 

[Signature Pages Follow]

 

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

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    	
 
    
	
 
    	
SANCHEZ   ENERGY CORPORATION,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Name:
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SEP   HOLDINGS III, LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Name:
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SN   MARQUIS LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Name:
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SN   COTULLA ASSETS, LLC,
    
	
 
    	
a   Texas limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Name:
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Senior   Vice President — Chief Financial Officer
    

 

Signature Page 1 to First Amendment

 

	
 
    	
ACKNOWLEDGED   for the purposes stated in Section 5:
    
	
 
    	
 
    
	
 
    	
GUARANTOR:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SN   OPERATING, LLC,
    
	
 
    	
a   Texas limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Name:
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Senior   Vice President — Chief Financial Officer
    

 

Signature Page 2 to First Amendment

 

	
 
    	
ADMINISTRATIVE AGENT:
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ROYAL   BANK OF CANADA, as
    
	
 
    	
Administrative   Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ann Hurley
    
	
 
    	
Name:
    	
Ann   Hurley
    
	
 
    	
Title:
    	
Manager,   Agency
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LENDERS:
    
	
 
    	
 
    	
 
    
	
 
    	
ISSUING BANK AND LENDER:
    
	
 
    	
 
    
	
 
    	
ROYAL BANK OF CANADA
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jay Sartain
    
	
 
    	
Name:
    	
Jay   Sartain
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CAPITAL   ONE, NATIONAL ASSOCIATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael Higgins
    
	
 
    	
Name:
    	
Michael   Higgins
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael Spaight, /s/ Kevin Buddhdew
    
	
 
    	
Name:
    	
Michael   Spaight, Kevin Buddhdew
    
	
 
    	
Title:
    	
Authorized   Signatory, Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
COMPASS   BANK
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ian Payne
    
	
 
    	
Name:
    	
Ian   Payne
    
	
 
    	
Title:
    	
Vice   President
    

 

Signature Page 3 to First Amendment

 

	
 
    	
SUNTRUST BANK
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Yann Pirio
    
	
 
    	
Name:
    	
Yann   Pirio
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ING   CAPITAL LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles Hall
    
	
 
    	
Name:
    	
Charles   Hall
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
BRANCH BANKING AND TRUST COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Ryan K. Michael
    
	
 
    	
Name:
    	
Ryan   K. Michael
    
	
 
    	
Title:
    	
Senior   Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
IBERIABANK
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   W. Bryan Chapman
    
	
 
    	
Name:
    	
W.   Bryan Chapman
    
	
 
    	
Title:
    	
Executive   Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
UNION BANK, N.A.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Haylee Dallas
    
	
 
    	
Name:
    	
Haylee   Dallas
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SOCIÉTÉ   GENÉRALÉ
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Elena Robciuc
    
	
 
    	
Name:
    	
Elena   Robciuc
    
	
 
    	
Title:
    	
Managing   Director
    

 

Signature Page 4 to First Amendment

 

EXHIBIT I

 

FORM OF REPAYMENT NOTICE

 

[                            ], 201[    ]

 

Reference is made to that certain Amended and Restated Credit Agreement dated as of May 31, 2013 by and among SANCHEZ ENERGY CORPORATION, a Delaware corporation, SEP HOLDINGS III, LLC, a Delaware limited liability company, SN MARQUIS LLC, a Delaware limited liability company, and SN COTULLA ASSETS, LLC, a Texas limited liability company (collectively, the “Borrowers”), Royal Bank of Canada, as Administrative Agent and the lenders (the “Lenders”) which are or become parties thereto (unless otherwise defined herein, each capitalized term used herein is defined in the Credit Agreement) (together with all amendments, restatements, supplements or other modifications thereto, the “Credit Agreement”).

 

The Borrowers are repaying Borrowings as follows:

 

1.                                      Borrowings outstanding prior to the repayment referred to herein: $

 

2.                                      Amount of repayment: $

 

3.                                      Date of repayment:                               , 201_.

 

4.                                      Type of Borrowing and amount to which repayment applies:

 

(a)                                 ABR Borrowing for $

 

(b)                                 Eurodollar Borrowing(s) with Interest Period(s) ending on                         (1)

 

(i)                                     one month                                                                                                                                     $

 

(ii)                                  three months                                                                                                                         $

 

(iii)                               six months                                                                                                                                     $                    ]

 

(1)  If more than one Interest Period ends on a particular date, or if necessary to allocate repayment among Interest Periods, Borrower shall specify how such repayment is to be allocated.

 

[Exhibit I to First Amendment Page 1]

 

The repayment referred to herein is being made pursuant to and complies with [Section 3.04(a) — Optional Prepayments] OR [Section 3.04(c) — Mandatory Prepayments] of the Credit Agreement.

 

[Signature Page follows]

 

[Exhibit I to First Amendment Page 2]

 

IN WITNESS WHEREOF this instrument is executed as of                             , 201  .

 

	
 
    	
SANCHEZ   ENERGY CORPORATION,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Name:
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SEP   HOLDINGS III, LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Name:
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SN   MARQUIS LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Name:
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SN   COTULLA ASSETS, LLC,
    
	
 
    	
a   Texas limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Name:
    	
Michael   G. Long
    
	
 
    	
Title:
    	
Senior   Vice President — Chief Financial Officer
    

 

[Exhibit I to First Amendment Page 3]

 

EXHIBIT X

 

 

[Exhibit X to First Amendment Page 1]

 

 

[Exhibit X to First Amendment Page 2]

 

 

[Exhibit X to First Amendment Page 3]

 

 

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[Exhibit X to First Amendment Page 39]

 

 

[Exhibit X to First Amendment Page 40]

 

 

[Exhibit X to First Amendment Page 41]Exhibit 10.4

 

July 30, 2013

 

Sanchez Energy Corporation

SEP Holdings III, LLC

SN Marquis, LLC

SN Cotulla Assets, LLC

1111 Bagby Street, Suite 1800

Houston, Texas 77002

Attention: Alfredo Gutierrez

 

Re:                             Waiver and Amendment for Amended and Restated Credit Agreement dated as of May 31, 2013 (as amended, supplemented or otherwise modified to date, the “Credit Agreement”), among Sanchez Energy Corporation, SEP Holdings III, LLC, SN Marquis, LLC and SN Cotulla Assets, LLC (collectively, the “Borrowers”), each of the Lenders from time to time party thereto (the “Lenders”), and Royal Bank of Canada, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”)

 

Ladies and Gentlemen:

 

This letter (this “Letter”) relates to the Credit Agreement.  Each capitalized term not defined herein shall have the meaning assigned to such term in the Credit Agreement.  All references to sections in this Letter shall be to sections of the Credit Agreement unless otherwise indicated.

 

Waiver

 

The Borrowers have informed the Administrative Agent that the Borrowers recently entered into certain oil Swap Agreements which, when aggregated with existing oil Swap Agreements, bring total oil Swap Agreements for the six month period ending on June 30, 2014 to 5,750 barrels per day (the “Specified Swaps”).  This results in oil Swap Agreement volumes of 50.8% of total Proved Reserves based off of the 6/30/13 Reserve Report.  This exceeds the maximum allowed limit of 50% of total Proved Reserves specified in Section 9.17 of the Credit Agreement (the “Specified Event”).

 

The Borrowers have requested, and the Required Lenders hereby consent to, a waiver with regard to the Specified Event as it relates to the Specified Swaps.

 

Amendments

 

A.            The Credit Agreement currently defines “Unrestricted Cash” to include Investments described in Section 9.05(c) (accounts receivable arising in the ordinary course of business) and excludes Investments described in Section 9.05(g) (deposits in money market funds).  The definition of “Unrestricted Cash” in the Credit Agreement is hereby amended to read as follows:

 

 

“Unrestricted Cash” means Investments of the Borrowers and their Unrestricted Subsidiaries described in Section 9.05(d), Section 9.05(e), Section 9.05(f) and Section 9.05(g) which are subject to no Liens other than Liens in favor of the Lenders and Secured Swap Providers.”

 

B.            The Credit Agreement, in relevant part, currently limits commodity hedging through Swap Agreements to no more than the greater of (i) 90% of the value of proved developed producing reserves and (ii) 50% of total proved reserves during the first two years of the Agreement and to no more than the greater of (y) 85% of the value of proved developed producing reserves and (z) 50% of total proved reserves during the third and fourth years of the Agreement.  However, it is desired to have the 90% and 50% limits apply on a rolling 2-year basis from the testing date and the 85% and 50% limits apply on a rolling 2-year basis to the third and fourth years from the testing date.  It is also desired to make more explicit that certain types of Swap Agreements, specifically floor and put options, are permissible if entered into with an Approved Counterparty but are not subject to the percentage limits otherwise applicable to Swap Agreements.  Therefore, Section 9.17 of the Agreement is hereby amended to read in its entirety as follows:

 

“Section 9.17. Swap Agreements.  The Borrowers will not, and will not permit any Restricted Subsidiary to, enter into any Swap Agreements with any Person other than (a) Swap Agreements constituting floor or put options in respect of commodities with an Approved Counterparty, (b) Swap Agreements (other than floor or put options) in respect of commodities with an Approved Counterparty that are limited to notional quantities at any time no more than (i) during the first two years following such time the greater of (x) ninety percent (90%) of the value of proved developed producing reserves included in the then most recently delivered Reserve Report and (y) fifty percent (50%) of Borrowers’ total Proved Reserves (such amounts computed on a semi-annual basis and calculated on a product-by-product basis), (ii) during the third and fourth years following such time the greater of (x) eighty-five percent (85%) of the value of proved developed producing reserves included in the then most recently delivered Reserve Report and (y) fifty percent (50%) of Borrowers’ total Proved Reserves (such amounts computed on a semi-annual basis and calculated on a product-by-product basis), and (iii) after the fourth year following such time, zero (no commodity Swap Agreements other than floor or put options); provided that the aggregate amount of all such commodity Swap Agreements (other than floor or put options) shall not exceed the most recent month’s actual production, calculated separately on a product-by-product basis, in any given month, (c) Swap Agreements in respect of interest rates with an Approved Counterparty, as follows: (i) Swap Agreements effectively converting interest rates from fixed to floating, the notional amounts of which (when aggregated with all other Swap Agreements of the Borrowers and their Restricted Subsidiaries then in effect effectively converting interest rates from fixed to floating) do not exceed 75% of the then outstanding principal amount of the Borrowers’ Debt for borrowed money which bears interest at a fixed rate and (ii) Swap Agreements effectively converting interest rates from floating to fixed, the notional amounts of which

 

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(when aggregated with all other Swap Agreements of the Borrowers and their respective Restricted Subsidiaries then in effect effectively converting interest rates from floating to fixed) do not exceed 75% of the then outstanding principal amount of the Borrowers’ Debt for borrowed money which bears interest at a floating rate and (d) those certain Swap Agreements existing on the date hereof and described on Schedule 9.17 between SEP and Shell Energy North America (US), L.P. and between SEP and Macquarie Bank Limited. The Borrowers will not, and will not permit any other Loan Party to, Liquidate any Swap Agreement in respect of commodities unless (x) if such Swap Liquidation would result in an automatic redetermination of the Borrowing Base pursuant to Section 2.07(b)(iv), the Borrowers deliver reasonable prior written notice thereof to the Administrative Agent, and (y) if a Borrowing Base Deficiency would result from such Swap Liquidation as a result of an automatic redetermination of the Borrowing Base pursuant to Section 2.07(b)(iv), the Borrowers prepay Borrowings, prior to or contemporaneously with the consummation of such Swap Liquidation to the extent that such prepayment would have been required under Section 3.04(c)(i) after giving effect to such automatic redetermination of the Borrowing Base.”

 

Agreements and Acknowledgements

 

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

 

3

 

Neither the execution by the Administrative Agent or the Lenders of this Letter, nor any other act or omission by the Administrative Agent or the Lenders or their officers in connection herewith, shall be deemed a waiver by the Administrative Agent or the Lenders of any other defaults which may exist or which may occur in the future under the Credit Agreement and/or the other Loan Documents, or any future defaults of the same provision waived hereunder (collectively “Other Violations”).  Similarly, nothing contained in this Letter shall directly or indirectly in any way whatsoever either: (i) impair, prejudice or otherwise adversely affect the Administrative Agent’s or the Lenders’ right at any time to exercise any right, privilege or remedy in connection with the Loan Documents with respect to any Other Violations, (ii) except for the Amendment herein provided, amend or alter any provision of the Credit Agreement, the other Loan Documents, or any other contract or instrument, or (iii) constitute any course of dealing or other basis for altering any obligation of the Borrowers and/or the Guarantors or any right, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, or any other contract or instrument.  Nothing in this Letter shall be construed to be a consent by the Administrative Agent or the Lenders to any Other Violations.

 

This Letter shall be governed by, and construed in accordance with, the laws of the State of New York without regard to any choice of law provisions that would require the application of the law of another jurisdiction.

 

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

 

THIS LETTER, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES.

 

Guarantor’s Acknowledgment

 

Each Guarantor by its execution in the space provided below under “ACKNOWLEDGED for purposes of ‘Guarantor’s Acknowledgment’” hereby ratifies, confirms, acknowledges and agrees that its obligations under the Guaranty are in full force and effect and that such Guarantor continues to unconditionally and irrevocably guarantee the full

 

4

 

and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, of the Obligations, and its execution and delivery of this Letter does not indicate or establish an approval or consent requirement by any Guarantor under the Guaranty in connection with the execution and delivery of amendments to the Credit Agreement, the Notes or any of the other Loan Documents (other than the Guaranty or any other Loan Document to which a Guarantor is a party).

 

[Signature Pages Follow]

 

5

 

If the foregoing correctly states your understanding with respect to the matters stated in this Letter, please acknowledge by signing in the space provided below.

 

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

 

	
 
    	
 
    	
Very   truly yours,
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
ROYAL   BANK OF CANADA,
    
	
 
    	
 
    	
as   Administrative Agent
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Ann Hurley
    
	
 
    	
 
    	
Name:
    	
Ann   Hurley
    
	
 
    	
 
    	
Title
    	
Manager,   Agency
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
ROYAL   BANK OF CANADA,
    
	
 
    	
 
    	
as   a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Mark Lumpkin, Jr.
    
	
 
    	
 
    	
Name:
    	
Mark   Lumpkin, Jr.
    
	
 
    	
 
    	
Title
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
cc:
    	
Akin   Gump Strauss Hauer & Feld LLP
    	
 
    	
 
    	
 
    
	
 
    	
1111   Louisiana Street, 44th Floor
    	
 
    	
 
    	
 
    
	
 
    	
Houston,   Texas 77002
    	
 
    	
 
    	
 
    
	
 
    	
Attn:   David Elder
    	
 
    	
 
    	
 
    

 

Signature Page 1 to Sanchez Energy, et al

 

	
 
    	
 
    	
CAPITAL   ONE, NATIONAL ASSOCIATION,
    
	
 
    	
 
    	
as   a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Michael Higgins
    
	
 
    	
 
    	
Name:
    	
Michael   Higgins
    
	
 
    	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Michael Spaight
    	
/s/   Kevin Buddhdew
    
	
 
    	
 
    	
Name:
    	
Michael   Spaight
    	
Kevin   Buddhdew
    
	
 
    	
 
    	
Title:
    	
Authorized   Signatory
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
COMPASS   BANK,
    
	
 
    	
 
    	
as   a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Dorothy Marchand
    
	
 
    	
 
    	
Name:
    	
Dorothy   Marchand
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
SUNTRUST BANK,
    
	
 
    	
 
    	
as   a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Shannon Inhan
    
	
 
    	
 
    	
Name:
    	
Shannon   Inhan
    
	
 
    	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
ING   CAPITAL LLC,
    
	
 
    	
 
    	
as   a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Charles Hall
    
	
 
    	
 
    	
Name:
    	
Charles   Hall
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    

 

Signature Page 2 to Sanchez Energy, et al

 

	
 
    	
 
    	
BRANCH BANKING AND TRUST COMPANY, as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Ryan K. Michael
    
	
 
    	
 
    	
Name:
    	
Ryan   K. Michael
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
IBERIABANK,   as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   W. Bryan Chapman
    
	
 
    	
 
    	
Name:
    	
W.   Bryan Chapman
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
UNION BANK, N.A., as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Haylee Dallas
    
	
 
    	
 
    	
Name:
    	
Haylee   Dallas
    
	
 
    	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
SOCIÉTÉ   GENÉRALÉ, as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Graeme Bullen
    
	
 
    	
 
    	
Name:
    	
Graeme   Bullen
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    

 

Signature Page 3 to Sanchez Energy, et al

 

Accepted and Agreed to as of the date first written above by:

 

 

	
BORROWERS:
    	
SANCHEZ   ENERGY CORPORATION,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Michael   G. Long
    
	
 
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SEP   HOLDINGS III, LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Michael   G. Long
    
	
 
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SN   MARQUIS LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Michael   G. Long
    
	
 
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SN   COTULLA ASSETS, LLC,
    
	
 
    	
a   Texas limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Michael   G. Long
    
	
 
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    

 

Signature Page 4 to Sanchez Energy, et al

 

	
Acknowledged   for Purposes of Guarantor’s Acknowledgment
    	
 
    
	
 
    	
 
    
	
GUARANTOR:
    	
SN   OPERATING, LLC, a Texas limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael G. Long
    
	
 
    	
Michael   G. Long
    
	
 
    	
Senior   Vice President — Chief Financial Officer
    

 

Signature Page 5 to Sanchez Energy, et al

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