Document:

Exhibit 10.2 Q2 2013

Exhibit 10.2

THIRD AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT 
This THIRD AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is entered into as of August 7, 2013, by and among MRC ENERGY COMPANY, a Texas corporation (the “Borrower”), the LENDERS party hereto and ROYAL BANK OF CANADA, as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”).  Unless otherwise expressly defined herein, capitalized terms used but not defined in this Amendment have the meanings assigned to such terms in the Credit Agreement (as defined below).
WITNESSETH:
WHEREAS, the Borrower, the Administrative Agent and the Lenders have entered into that certain Third Amended and Restated Credit Agreement, dated as of September 28, 2012 (as the same has been and may hereafter be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”); and
WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement in certain respects and the Administrative Agent and the Lenders have agreed to do so on the terms and conditions hereinafter set forth. 
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the Borrower, the Administrative Agent and the Lenders hereby agree as follows:
SECTION 1.Amendments to Credit Agreement.  Subject to the satisfaction or waiver in writing of each condition precedent set forth in Section 3 of this Amendment, and in reliance on the representations, warranties, covenants and agreements contained in this Amendment, the Credit Agreement shall be amended in the manner provided in this Section 1.
1.1    Cover Page.  The cover page to the Credit Agreement shall be and it hereby is amended and restated in its entirety and replaced with Annex A attached hereto.
1.2    Amended Definition.  The following definition in Section 1.1 of the Credit Agreement shall be and it hereby is amended and restated in its entirety to read as follows:
“Borrowing Base Equalization Date” means the earlier of (a) June 30, 2014, (b) the date after the Third Amendment Effective Date on which the Borrower receives Net Cash Proceeds from the issuance of senior unsecured  notes in either a registered public offering or in a private placement conducted pursuant to Rule 144A under the Securities Act of 1933 and Regulation S in an amount greater than or equal to $10,000,000 in accordance with the terms of this Agreement or (c) the date on which the Borrowing Base is equal to the Conforming Borrowing Base and Borrower 

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voluntarily informs the Administrative Agent in writing that the Conforming Borrowing Base and the Borrowing Base are and will be the same.
“Letter of Credit Maximum Amount” means Twenty Million Dollars ($20,000,000).

1.3    Additional Definition.  The following definition shall be and it hereby is added to Section 1.1 of the Credit Agreement in alphabetical order:
“Third Amendment Effective Date” means August 7, 2013.
1.4    Section 4.1.  Section 4.1 of the Credit Agreement shall be and it hereby is amended and restated in its entirety to read as follows:
4.1    Borrowing Base.  The term “Conforming Borrowing Base” means, as of the date of determination thereof prior to the Borrowing Base Equalization Date, the designated loan value as calculated by Lenders in their sole discretion assigned to the discounted present value of future net income accruing to the Borrowing Base Properties, based upon Lenders’ in-house evaluation of Borrowing Base Properties.  Before the Borrowing Base Equalization Date the term “Borrowing Base” has the meaning set forth below, and will be determined in relation to the Conforming Borrowing Base.  On and after the Borrowing Base Equalization Date, the term “Borrowing Base” means, as of the date of determination thereof, the designated loan value as calculated by Lenders in their sole discretion assigned to the discounted present value of future net income accruing to the Borrowing Base Properties, based upon Lenders’ in-house evaluation of Borrowing Base Properties.  The Lenders’ determination of the Conforming Borrowing Base and Borrowing Base will be made in accordance with then-current practices, economic and pricing parameters, methodology, assumptions, and customary procedures and standards established by each Lender from time to time for its petroleum industry customers including without limitation (a) an analysis of such reserves and production data with respect to the Hydrocarbon Interests of the Credit Parties in all of their Oil and Gas Properties, including the Mortgaged Properties, as is provided to Lenders in accordance herewith, (b) an analysis of the assets, liabilities, cash flow, business, properties, prospects, management and ownership of each Credit Party, and (c) such other credit factors as each Lender customarily considers in evaluating similar oil and gas credits.  Borrower acknowledges that the determination of the Borrowing Base contains an equity cushion (collateral value in excess of loan amount) which Borrower acknowledges to be essential for the adequate protection of Lenders.  As of the Third Amendment Effective Date, the Borrowing Base shall be $350,000,000 and the Conforming Borrowing Base shall be $275,000,000.  Until the Borrowing Base Equalization Date, the Borrowing Base shall exceed the Conforming Borrowing Base by $75,000,000, subject to adjustments as a result of dispositions permitted under Section 8.4(k).  Prior to the Borrowing Base Equalization Date, any increase 

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in the Conforming Borrowing Base as a result of the most recent redetermination thereof shall result in an equal increase in the Borrowing Base.  On and after the Borrowing Base Equalization Date,  the Borrowing Base shall equal the Conforming Borrowing Base then in effect and all references to Conforming Borrowing Base and Borrowing Base shall mean the Borrowing Base then in effect.
1.5    Section 7.9(b). Section 7.9(b) of the Credit Agreement shall be and it hereby is amended and restated in its entirety to read as follows:
(b)    Current Ratio.  Maintain as of the last day of each Fiscal Quarter, commencing with the Fiscal Quarter ending June 30, 2014, a Current Ratio of not less than 1.00 to 1.00.
1.6    Schedule 1.1. Schedule 1.1 to the Credit Agreement shall be and it hereby is amended and restated in its entirety and replaced with Schedule 1.1 attached hereto
1.7    Schedule 1.2.  Schedule 1.2 to the Credit Agreement shall be and it hereby is amended and restated in its entirety and replaced with Schedule 1.2 attached hereto.
SECTION 2.      Redetermined Borrowing Base and Conforming Borrowing Base.  This Amendment shall constitute notice of a redetermination of the Borrowing Base and the Conforming Borrowing Base pursuant to Section 4.2 of the Credit Agreement, and the Administrative Agent, the Lenders and the Borrower hereby acknowledge that effective as of the date hereof, the Borrowing Base shall be $350,000,000 and the Conforming Borrowing Base shall be $275,000,000 and such redetermined Borrowing Base and Conforming Borrowing Base shall remain in effect until the date the Borrowing Base and the Conforming Borrowing Base are otherwise adjusted pursuant to the terms of the Credit Agreement.  The redetermination of the Borrowing Base and the Conforming Borrowing Base contained herein shall constitute the Determination Date to occur on or about November 1, 2013.
SECTION 3.    Conditions.  The amendments to the Credit Agreement contained in Section 1 of this Amendment and the redetermination of the Borrowing Base and Conforming Borrowing Base contained in Section 2 of this Amendment shall be effective upon the satisfaction of each of the conditions set forth in this Section 3.
3.1    Execution and Delivery.  The Administrative Agent shall have received a duly executed counterpart of (a) this Amendment signed by the Borrower and the Lenders and (b) the Consent and Reaffirmation attached hereto signed by each Guarantor.
3.2    No Default.  No Default or Event of Default shall have occurred and be continuing or shall result from the effectiveness of this Amendment.
3.3    Fees.  The Borrower and the Administrative Agent shall have executed and delivered a fee letter in connection with this Amendment, and the Administrative Agent shall have received the fees separately agreed upon in such fee letter.

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3.4    Other Documents.  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, and all such documents shall be in form and substance reasonably satisfactory to the Administrative Agent.
SECTION 4.    Representations and Warranties.  To induce the Lenders to enter into this Amendment, the Borrower hereby represents and warrants to the Lenders as follows:
4.1    Reaffirmation of Representations and Warranties.  After giving effect to the amendments herein, each representation and warranty of the Borrower, the Parent and each other Credit Party contained in the Credit Agreement and in each of the other Loan Documents to which it is a party is true and correct in all material respects as of the date hereof (without duplication of any materiality qualifier contained therein), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such specified earlier date.
4.2    Corporate Authority; No Conflicts.  The execution, delivery and performance by the Borrower of this Amendment and all documents, instruments and agreements contemplated herein are within the Borrower’s corporate powers, have been duly authorized by necessary corporate action by the Borrower, require no action by or in respect of, or filing with, any court or agency of government (except for the recording and filing of Collateral Documents and financing statements) and (a) do not violate in any material respect any Requirement of Law,  (b) are not in contravention of the terms of any material Contractual Obligation, indenture, agreement or undertaking to which the Borrower is a party or by which it or its properties are bound where such violation could reasonably be expected to have a Material Adverse Effect,  and (c) do not result in the creation or imposition of any Lien upon any of the assets of the Borrower except for Liens permitted by Section 8.2 of the Credit Agreement and otherwise as permitted in the Credit Agreement.
4.3    Enforceability.  This Amendment constitutes the valid and binding obligation of the Borrower enforceable in accordance with its terms, except as (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditor’s rights generally, and (ii) the availability of equitable remedies may be limited by equitable principles of general application.
4.4    No Default.  As of the date hereof, both before and immediately after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing.
SECTION 5.    Miscellaneous.
5.1    Reaffirmation of Loan Documents and Liens.  Any and all of the terms and provisions of the Credit Agreement and the Loan Documents shall, except as amended and modified hereby, remain in full force and effect and are hereby in all respects ratified and confirmed by the Borrower.  The Borrower hereby agrees that the amendments and modifications herein contained shall in no manner affect or impair the liabilities, duties and obligations of the Borrower, the Parent 

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or any other Credit Party under the Credit Agreement and the other Loan Documents or the Liens securing the payment and performance thereof, except as amended and modified hereby.
5.2    Parties in Interest.  All of the terms and provisions of this Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.
5.3    Further Assurances.  The Borrower covenants and agrees from time to time, as and when reasonably requested by the Administrative Agent or the Lenders, to execute and deliver or cause to be executed or delivered, all such documents, instruments and agreements and to take or cause to be taken such further or other action as the Administrative Agent or the Lenders may reasonably deem necessary or desirable in order to carry out the intent and purposes of this Amendment.
5.4    Legal Expenses.  The Borrower hereby agrees to pay all reasonable and documented out-of-pocket fees and expenses of special counsel to the Administrative Agent incurred by the Administrative Agent in connection with the preparation, negotiation and execution of this Amendment and all related documents.
5.5    Counterparts.  This Amendment may be executed in one or more counterparts and by different parties hereto in separate counterparts each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.  Delivery of photocopies of the signature pages to this Amendment by facsimile or electronic mail shall be effective as delivery of manually executed counterparts of this Amendment.
5.6    Complete Agreement.  THIS AMENDMENT, THE CREDIT AGREEMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
5.7    Headings.  The headings, captions and arrangements used in this Amendment are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of this Amendment, nor affect the meaning thereof.
5.8    Governing Law.  This Amendment shall be construed in accordance with and governed by the laws of the State of Texas.
5.9    Severability.  Any provision of this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
5.10    Reference to and Effect on the Loan Documents.

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(a)    This Amendment shall be deemed to constitute a Loan Document for all purposes and in all respects.  Each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import, and each reference in the Credit Agreement or in any other Loan Document, or other agreements, documents or other instruments executed and delivered pursuant to the Credit Agreement to the “Credit Agreement”, shall mean and be a reference to the Credit Agreement as amended by this Amendment.  
(b)    The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents. 
[Signature pages follow.]

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

	
				
	BORROWER:
	 

	 
	 
	 
	 

	MRC ENERGY COMPANY,
	 

	as Borrower 
	 

	 
	 
	 
	 

	By:
	 
	/s/ David E. Lancaster    
	 

	Name:
	 
	David E. Lancaster
	 

	Title:
	 
	Executive Vice President
	 

PAGE 7

	
				
	ROYAL BANK OF CANADA, 
	 

	as Administrative Agent
	 

	 
	 
	 
	 

	By:
	 
	/s/ Rodica Dutka
	 

	Name:
	 
	Rodica Dutka
	 

	Title:
	 
	Manager, Agency
	 

	
				
	ROYAL BANK OF CANADA,
	 

	as a Lender and as an Issuing Lender
	 

	 
	 
	 
	 

	By:
	 
	/s/ Don J. McKinnerney    
	 

	Name:
	 
	Don J. McKinnerney
	 

	Title:
	 
	Authorized Signatory
	 

PAGE 8

	
				
	CITIBANK, N.A., 
	 

	as a Lender
	 

	 
	 
	 
	 

	By:
	 
	/s/ Ryan Watson
	 

	Name:
	 
	Ryan Watson
	 

	Title:
	 
	Senior Vice President
	 

PAGE 9

	
				
	COMERICA BANK,
	 

	as a Lender and as an Issuing Lender
	 

	 
	 
	 
	 

	By:
	 
	/s/ Brandon M. White    
	 

	Name:
	 
	Brandon M. White
	 

	Title:
	 
	Assistant Vice President
	 

PAGE 10

	
				
	SUNTRUST BANK,
	 

	as a Lender
	 

	 
	 
	 
	 

	By:
	 
	/s/ Shannon Juhan         
	 

	Name:
	 
	Shannon Juhan
	 

	Title:
	 
	Vice President
	 

PAGE 11

	
				
	THE BANK OF NOVA SCOTIA,
	 

	as a Lender
	 

	 
	 
	 
	 

	By:
	 
	/s/ Terry Donovan
	 

	Name:
	 
	Terry Donovan
	 

	Title:
	 
	Managing Director
	 

PAGE 12

	
				
	BMO Harris Financing, Inc.,
	 

	as a Lender
	 

	 
	 
	 
	 

	By:
	 
	/s/ James V. Ducote
	 

	Name:
	 
	James V. Ducote
	 

	Title:
	 
	Director
	 

PAGE 13

	
				
	CAPITAL ONE, N.A.,
	 

	as a Lender
	 

	 
	 
	 
	 

	By:
	 
	/s/ Matthew Molero
	 

	Name:
	 
	Matthew Molero
	 

	Title:
	 
	Vice President
	 

PAGE 14

	
				
	IBERIABANK,
	 

	as a Lender
	 

	 
	 
	 
	 

	By:
	 
	/s/ W. Bryan Chapman           
	 

	Name:
	 
	W. Bryan Chapman
	 

	Title:
	 
	EVP & Energy Lending Manager
	 

PAGE 15

Annex A
Cover Page

Third Amended and Restated Credit Agreement
Dated as of September 28, 2012
MRC ENERGY COMPANY,
as Borrower,
The Lending Entities From Time to Time Parties Hereto,
as Lenders,
and
Royal Bank of Canada,
as Administrative Agent

RBC Capital Markets, 
as Joint Lead Arranger and Sole Bookrunner
and
Comerica Bank, 
as Joint Lead Arranger and Syndication Agent

The Bank of Nova Scotia,
SunTrust Bank and 
Citibank, N.A.,
as Co-Documentation Agents

PAGE 16

Schedule 1.1 
 
Applicable Margin Grid 
Revolving Credit Facility 
(basis points per annum)

	
								
	Basis for Pricing
	Level I
	Level II
	Level III
	Level IV
	Level V
	Level VI
	Level VII

	Borrowing Base Utilization*
	< 25%
	≥ 25% but
< 50%
	≥ 50% but
< 75%
	≥ 75% but
< 90%
	≥ 90% but
< 100%

	> 100% but < 110% 

	> 110%

	Revolving Credit Eurodollar Margin
	175
	200
	225
	250
	275
	325
	400

	Revolving Credit Base Rate Margin
	75
	100
	125
	150
	175
	225
	300

	Commitment Fees
	37.5
	37.5
	50
	50
	50
	50
	50

	Letter of Credit Fees (exclusive of fronting fees)
	175
	200
	225
	250
	275
	325
	400

		
	*
	Definitions as set forth in the Credit Agreement.

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Schedule 1.2 
 
Percentages and Allocations
Revolving Credit
	
			
	LENDERS
	REVOLVING CREDIT
ALLOCATIONS
	REVOLVING CREDIT
PERCENTAGE

	Royal Bank of Canada
	$60,882,353.19
	17.3949580500%

	Comerica Bank
	$50,000,000.00
	14.2857142900%

	SunTrust Bank
	$50,000,000.00
	14.2857142900%

	Citibank, N.A.
	$50,000,000.00
	14.2857142900%

	The Bank of Nova Scotia
	$50,000,000.00
	14.2857142900%

	BMO Harris Financing, Inc.
	$50,000,000.00
	14.2857142900%

	Capital One, N.A.
	$21,960,784.31
	6.2745098000%

	IBERIABANK
	$17,156,862.50
	4.9019607100%

	TOTALS
	$350,000,000.00
	100.00%

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CONSENT AND REAFFIRMATION
Each of the undersigned (each a “Guarantor”) hereby (i) acknowledges receipt of a copy of the foregoing Third Amendment to Third Amended and Restated Credit Agreement (the “Third Amendment”); (ii) consents to the Borrower’s execution and delivery thereof; (iii) consents to the terms of the Third Amendment; (iv) affirms that nothing contained therein shall modify in any respect whatsoever its guaranty of the Indebtedness pursuant to the terms of the Guaranty or the Liens granted by it pursuant to the terms of the other Loan Documents to which it is a party securing payment and performance of the Indebtedness, (v) reaffirms that the Guaranty and the other Loan Documents to which it is a party and such Liens are and shall continue to remain in full force and effect and are hereby ratified and confirmed in all respects and (vi) represents and warrants to the Administrative Agent and the Lenders that, as of the date hereof, (x) all of the representations and warranties made by it in each of the Loan Documents to which it is a party are true and correct in all material respects (without duplication of any materiality qualifier contained therein), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such specified earlier date, and (y) no Default or Event of Default has occurred and is continuing.  Although each Guarantor has been informed of the matters set forth herein and has acknowledged and agreed to same, each Guarantor understands that neither the Administrative Agent nor any of the Lenders have any obligation to inform any Guarantor of such matters in the future or to seek any Guarantor’s acknowledgment or agreement to future amendments or waivers for the Guaranty and other Loan Documents to which it is a party to remain in full force and effect, and nothing herein shall create such duty or obligation.
 [SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the undersigned has executed this Consent and Reaffirmation on and as of the date of the Third Amendment.

	
				
	GUARANTORS:
	 

	 
	 
	 
	 

	MRC PERMIAN COMPANY
	 

	 
	 

	 
	 
	 
	 

	By:
	 
	

	 

	Name:
	 
	David E. Lancaster
	 

	Title:
	 
	Executive Vice President
	 

	
				
	MRC ROCKIES COMPANY
	 

	 
	 

	 
	 
	 
	 

	By:
	 
	

	 

	Name:
	 
	David E. Lancaster
	 

	Title:
	 
	Executive Vice President
	 

	
				
	MATADOR PRODUCTION COMPANY
	 

	 
	 

	 
	 
	 
	 

	By:
	 
	

	 

	Name:
	 
	David E. Lancaster
	 

	Title:
	 
	Executive Vice President
	 

	
				
	LONGWOOD GATHERING AND
	 

	DISPOSAL SYSTEMS GP, INC.
	 

	 
	 
	 
	 

	By:
	 
	

	 

	Name:
	 
	David E. Lancaster
	 

	Title:
	 
	Executive Vice President
	 

PAGE 20

	
				
	LONGWOOD GATHERING AND
	 

	DISPOSAL SYSTEMS, LP
	 

	 
	 
	 

	By:
	 
	Longwood Gathering and Disposal 
	 

	 
	 
	Systems GP, Inc., its General Partner
	 

	 
	 
	 
	 

	By:
	 
	

	 

	Name:
	 
	David E. Lancaster
	 

	Title:
	 
	Executive Vice President
	 

	
				
	MATADOR RESOURCES COMPANY
	 

	 
	 

	 
	 
	 

	By:
	 
	

	 

	Name:
	 
	David E. Lancaster
	 

	Title:
	 
	Executive Vice President
	 

PAGE 21Exhibit 10.3 Q2 2013

Exhibit 10.3

THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS IN THIS DOCUMENT.  ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “*****”.

FIRST AMENDMENT TO 
PURCHASE SALE AND PARTICIPATION AGREEMENT

This First Amendment to Purchase Sale and Participation Agreement (the "Amendment") is entered into this 12th day of June, 2013 (the “Effective Date”) by and between MRC Energy Company, a Texas corporation f/k/a Matador Resources Company (“Matador”), and Orca/ICI Development, a Texas general partnership (“Orca”).

WHEREAS, Matador and Orca entered into that certain Purchase Sale and Participation Agreement dated May 16, 2011 (the "PSPA") with respect to the sale of certain oil and gas leases in DeWitt, Karnes, Wilson and Gonzales Counties, and

WHEREAS, an Exhibit to the PSPA is a form of Joint Operating Agreement, entered into between the parties (the “JOA”); and

WHEREAS, Matador and Orca desire to amend the terms of the PSPA as set forth below.

NOW, THEREFORE, in consideration of the covenants and agreements set forth herein and in the PSPA and the JOA, and for Ten Dollars in hand delivered, other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the parties agree as follows:

1.     Cowey 3H and Cowey 4H Wells.  Matador has drilled and completed the Matador Cowey Orca #3H well, with API No. 123-33001, and Texas Railroad Commission Permit No. 753436 (the “Cowey 3H Well”), and the Matador Cowey Orca #4H, with API No. 123-32930, and Texas Railroad Commission Permit No. 749992 (the “Cowey 4H Well”).  While the Cowey 3H Well and Cowey 4H Well are “Subsequent DeWitt Wells” as such term is defined in Section 7.b of the PSPA, Matador, on behalf of Orca, shall bear and pay One Hundred Percent (100%) of Orca’s working interest share of the drilling and completion costs incurred through the tanks, for each of the Cowey 3H Well and Cowey 4H Well.  Matador will be entitled to receive one hundred percent (100%) of the production attributable to each of the Cowey 3H Well and Cowey 4H Well until such time as such wells have reached Payout (as such term is defined in Section 7.b of the PSPA, but excluding Matador’s lease acquisition costs).  Once each of the Cowey 3H Well and Cowey 4H Well has reached Payout, Orca will be deemed to back-in for a twenty-five percent (25%) working interest in the Cowey 3H Well and a twenty-five percent (25%) working interest in the Cowey 4H Well on a well-by-well basis for no additional consideration, and any subsequent operations shall continue to be governed by the PSPA and the JOA.  Evidence of this Amendment shall be affected by a form of assignment to be mutually agreed upon by the parties.  No later than twenty (20) days after reaching Payout on either the Cowey 3H or Cowey 4H, Matador shall give written notice thereof to Orca.  Measurement of production from the Cowey 3H Well and the Cowey 4H Well shall be in accordance with that certain letter agreement between Matador and Orca dated as of May 30, 2013.  

THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS IN THIS DOCUMENT.  ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “*****”.

2.    Return of Funds.  Within three (3) days after the full execution of this Amendment, Orca instructs Matador to tender to *****, (without interest) by check all funds previously delivered to Matador by or on behalf of Orca with respect to the Cowey 3H Well and Cowey 4H Well.

3.    Settlement of Pending Litigation and Arbitration.  

a.By letter agreement dated May 6, 2013, Matador and Orca resolved certain of the disputes between the parties that were the subject of the Pending Proceedings.  The terms of the May 6, 2013 letter agreement are hereby re-confirmed and ratified, except (i) the first sentence of paragraph No. 6 thereof is amended and restated in its entirety to read “Matador will review with Orca the charges associated with the sale, transportation and marketing of natural gas produced and marketed from the wells subject to the PSPA and the JOA in which Orca has an interest; provided, however, that the parties agree that if the amount charged by Matador’s affiliate to transport natural gas from the wellhead to the downstream market pipeline through the period ended May 31, 2013 exceeds *****, Matador or its affiliates shall credit Orca’s account for such difference.” and (ii)  paragraph No. 9 thereof is hereby terminated.  In addition, Matador and Orca agree to amend Exhibit D to the JOA to provide that the insurance policies contemplated by Exhibit D (except under Worker’s Compensation) shall name Orca and, to the extent ***** and its successors and assigns and Orca are parties to a ***** relating to oil and gas interests owned by Orca in the Contract Area (as defined in the JOA), ***** as their interests may appear.

b.Orca and Matador are currently parties to (i) a pending arbitration proceeding before the American Arbitration Association, with Cause No. 70-198-271-13; and (ii) pending litigation in the 57th District Court in Bexar County, Texas, Cause No. 2013-CI-05455 (collectively, the “Pending Proceedings”).  Concurrently with the full execution hereof, the parties agree to direct their respective counsel to immediately dismiss with prejudice the Pending Proceedings.  

c.Matador’s Covenants, Representations and Warranties.  Matador covenants, warrants and represents to Orca that (i) it has the power to enter into this Amendment and perform its respective obligations hereunder; (ii) Matador has been fully informed and has full knowledge of the terms, conditions and effects of this Amendment; (iii) Matador has been represented by independent legal counsel of its choice throughout all negotiations preceding its execution of this Amendment and has received the advice of its attorneys in entering into this Amendment; (iv) that Matador, either itself or through its counsel, has fully investigated to its satisfaction all facts surrounding the various claims, controversies and disputes presented in the Pending Proceedings, and is fully satisfied with the terms and effects of this Amendment; (v) no promise or inducement has been offered or made except as expressly stated in this Amendment; (vi) this Amendment is executed without reliance on any statement or representation by any third party; (vii) Matador is the sole owner of the claims and causes of action released in this Section 3 and has not previously assigned or transferred or purported to assign or transfer any interest in such claims to any person or entity; (viii) Matador is not in a disparate bargaining position with respect to the negotiation of this Amendment, and (ix) this Amendment constitutes the legal, valid and binding obligation of Matador enforceable against Matador in accordance with the terms and provisions hereof.

d.Orca’s Covenants, Representations and Warranties.  Orca covenants, warrants and represents to Matador that (i) it has the power to enter into this Amendment and perform its respective obligations hereunder; (ii) Orca has been fully informed and has full knowledge 

THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS IN THIS DOCUMENT.  ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “*****”.

of the terms, conditions and effects of this Amendment; (iii) Orca has been represented by independent legal counsel of its choice throughout all negotiations preceding its execution of this Amendment and has received the advice of its attorneys in entering into this Amendment; (iv) that Orca, either itself or through its counsel, has fully investigated to its satisfaction all facts surrounding the various claims, controversies and disputes presented in the Pending Proceedings, and is fully satisfied with the terms and effects of this Amendment; (v) no promise or inducement has been offered or made except as expressly stated in this Amendment; (vi) this Amendment is executed without reliance on any statement or representation by any third party; (vii) Orca is the sole owner of the claims and causes of action released in this Section 3 and has not previously assigned or transferred or purported to assign or transfer any interest in such claims to any person or entity; (viii) Orca is not in a disparate bargaining position with respect to the negotiation of this Amendment, (ix) *****, and (x) this Amendment constitutes the legal, valid and binding obligation of Orca enforceable against Orca in accordance with the terms and provisions hereof.

e.Orca acknowledges that Matador has entered into this Amendment based upon the covenants, representations and warranties set forth in paragraph 3(d) and specifically subparagraph (ix) of paragraph 3(d).  *****.

f.Release by Matador Parties.  Matador and its agents, employees, independent contractors, attorneys, heirs, successors, officers, directors, members, managers, partners, assigns, affiliates, and anyone whomsoever claiming by, through or under them (hereinafter collectively, “the Matador Parties and their Related Parties”), hereby release, acquit and forever discharge Orca, and their respective members, managers, officers, partners, agents, employees, independent contractors, attorneys, directors, shareholders, accountants, heirs, successors, assigns, and affiliates (collectively referred to in this Section 3.f as the “Orca Released Parties”), from and against any and all claims, demands, debts, liabilities, liens, expenses, costs, damages and causes of action of whatever nature which the Matador Parties and their Related Parties may have, whether known or unknown, liquidated or unliquidated, past, future or present, contingent or fixed, whether based in tort or in contract or otherwise, and whether heretofore or hereafter accruing, for or because of any controversy and/or any alleged occurrence, matter or thing done and/or omitted to be done by any of them prior to date hereof, in any way relating directly or indirectly out of the issues raised or which could have been raised in the Pending Proceedings.  Notwithstanding the foregoing, such release by Matador shall not apply to, and shall not affect the right of Matador to enforce its rights under the PSPA and JOA from and after the Effective Date with respect to matters first arising or claims first accruing after the Effective Date.

g.Release by Orca Parties.  Orca and its agents, employees, independent contractors, attorneys, heirs, successors, officers, directors, members, managers, partners, assigns, affiliates, and anyone whomsoever claiming by, through or under them (hereinafter collectively, “the Orca Parties and their Related Parties”), hereby release, acquit and forever discharge Matador, and their respective members, managers, officers, partners, agents, employees, independent contractors, attorneys, directors, shareholders, accountants, heirs, successors, assigns, and affiliates (collectively referred to in this Section 3.g as the “Matador Released Parties”), from and against any and all claims, demands, debts, liabilities, liens, expenses, costs, damages and causes of action of whatever nature which the Orca Parties and their Related Parties may have, whether known or unknown, liquidated or unliquidated, past, future or present, contingent or fixed, whether based in tort or in contract or otherwise, and whether heretofore or hereafter accruing, for or because of any controversy and/or any alleged occurrence, matter or thing done and/or omitted to be done by any of them prior to date hereof, in any way relating directly or indirectly out of the issues raised or which could 

THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS IN THIS DOCUMENT.  ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “*****”.

have been raised in the Pending Proceedings.  Notwithstanding the foregoing, such release by Orca shall not apply to, and shall not affect the right of Orca to enforce its rights under the PSPA and JOA from and after the Effective Date with respect to matters first arising or claims first accruing after the Effective Date.  Further, the foregoing release shall not operate to prevent, impair, terminate or otherwise frustrate the planned or pending audit initiated by Orca pursuant to the JOA.  Any claims, adjustments, settlements, or other matters resulting from such audit are not released hereby.

h.No Admission of Liability.  Nothing stated in or done with respect to this Section 3 of the Amendment is or shall be interpreted as an admission of liability by any party as to any matters that were or could have been asserted by any party as a part of the actual and/or potential disputes between the parties hereto, which (except as expressly limited herein) are all hereby compromised and settled as between the parties.

4.    Indemnity.  Orca hereby agrees to defend, indemnify, and hold harmless Matador and Matador’s officers, directors, employees, agents, attorneys, predecessors, successors, parents, subsidiaries, and affiliated companies against all claims, demands, and causes of action, *****.  This indemnity agreement also holds Matador harmless from any attorneys fees and costs incurred in defending against any indemnified claims.  In the event of any such claim, Orca will be primarily responsible for the defense of the claims or actions, and shall engage counsel reasonably acceptable to Matador to represent all indemnified parties in such action, unless and until counsel for Matador determines that such common representation presents a conflict.

5.    Miscellaneous.  Terms which are defined in the PSPA shall have the same meanings when used herein. 

THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS IN THIS DOCUMENT.  ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “*****”.

IN WITNESS WHEREOF, Matador and Orca have executed this Amendment as of the date first appearing above.

Orca:

ORCA/ICI DEVELOPMENT, a Texas general partnership

By:     ORCA ASSETS G.P., LLC, a Texas limited liability company, its Managing Partner

By:    _/s/ Allen Lawrence Berry________
Allen Lawrence Berry, President

Matador:

MRC ENERGY COMPANY, a Texas corporation

By:    _/s/ Joseph Wm. Foran___________
Joseph Wm. Foran
Chairman, President & CEO

THE COMPANY HAS REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS IN THIS DOCUMENT.  ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.  OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “*****”.

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