EX-10.1 2 d396944dex101.htm EX-10.1 Execution Version THIRD AMENDMENT TO CREDIT AGREEMENT

EX-10.1 2 d396944dex101.htm EX-10.1

Exhibit 10.1

Execution Version

This THIRD AMENDMENT TO CREDIT AGREEMENT (this “Third Amendment”), dated as of October 4, 2017 (the “Third Amendment Effective Date”), is among WildHorse Resource Development Corporation, a Delaware corporation (the “Borrower”); each of the Guarantors party hereto (the “Guarantors” and collectively with the Borrower, the “Credit Parties”); each of the Lenders party hereto; and ▇▇▇▇▇ Fargo Bank, National Association, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”).

R E C I T A L S:

A. The Borrower, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of December 19, 2016 (as amended or otherwise modified from time to time to date pursuant to the terms thereof, the “Credit Agreement”), pursuant to which the Lenders have, subject to the terms and conditions set forth therein, made certain credit available to and on behalf of the Borrower.

B. The Borrower has requested, among other things, to amend certain terms of the Credit Agreement as set forth herein, including to increase the Aggregate Maximum Credit Amount to $2,000,000,000, to be effective as of the Third Amendment Effective Date.

C. The Lenders have agreed to redetermine and increase the Borrowing Base to $875,000,000 effective as of the Third Amendment Effective Date.

D. The Borrower has requested that ABN AMRO Capital USA LLC and PNC Bank, National Association (each, a “New Lender” and, collectively, the “New Lenders”), become Lenders under the Credit Agreement with a Maximum Credit Amount and an Elected Commitment in the amount as shown on Annex I to the Credit Agreement (as amended hereby).

E. Subject to and upon the terms and conditions set forth herein, the undersigned Lenders have agreed to enter into this Third Amendment to amend certain provisions of the Credit Agreement as more specifically provided for herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Defined Terms. Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Third Amendment, shall have the meaning ascribed to such term in the Credit Agreement, as amended hereby. Unless otherwise indicated, all section references in this Third Amendment refer to the Credit Agreement, as amended hereby.

Section 2. Amendments to Credit Agreement. In reliance on the representations, warranties, covenants and agreements contained in this Third Amendment, and subject to the satisfaction of the conditions precedent set forth in Section 7 hereof, the Credit Agreement shall be amended effective as of the Third Amendment Effective Date in the manner provided in this

Section 2.

2.1

Amendments to Section 1.02.

(a)

The following definitions are hereby amended and restated as follows:

“Aggregate Maximum Credit Amount” at any time shall equal the sum of the Maximum Credit Amounts, as the same may be reduced or terminated pursuant to Section 2.06. As of the Third Amendment Effective Date (as defined in the Third Amendment), the Aggregate Maximum Credit Amount is $2,000,000,000.

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

“Applicable Margin” means, for any day, with respect to any ABR Loan, LIBOR Market Index Loan or Eurodollar Loan, or with respect to the Commitment Fee Rate, as the case may be, the rate per annum set forth in the Total Commitments Utilization Grid below based upon the Total Commitments Utilization Percentage then in effect:


Total Commitments Utilization Grid
Total Commitments Utilization Percentage	<25%	³25% <50%	³50% <75%	³75% <90%	³90%
Eurodollar Loans	2.000%	2.250%	2.500%	2.750%	3.000%
LIBOR Market Index Loans	2.000%	2.250%	2.500%	2.750%	3.000%
ABR Loans	1.000%	1.250%	1.500%	1.750%	2.000%
Commitment Fee Rate	0.375%	0.375%	0.500%	0.500%	0.500%

Each change in the Applicable Margin (whether as a result of a change in the Total Commitments Utilization Percentage, as a result of an amendment of the definition of Applicable Margin, or otherwise) shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change; provided that if at any time the Borrower fails to deliver a Reserve Report pursuant to Section 8.12 and such failure continues for more than 10 Business Days from the date when such Reserve Report is due, then the “Applicable Margin” means the rate per annum set forth on the grid when the Total Commitments Utilization Percentage is at its highest level until such Reserve Report is delivered.

“Consolidated EBITDAX” means, with respect to the Borrower and the Consolidated Restricted Subsidiaries, for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) interest expense (including realized and unrealized losses on interest rate derivative contracts); (b) income tax

Page 2

expense; (c) depreciation, depletion and amortization expense; (d) impairment of goodwill and long-lived assets (including Oil and Gas Properties); (e) accretion of asset retirement obligations; (f) unrealized losses on commodity derivative contracts; (g) realized losses upon the early termination or other monetization of commodity derivative contracts; (h) losses on sale of assets; (i) noncash unit-based compensation expenses; (j) exploration costs; (k) brokers’ or finders’ fees, and other fees, in connection with acquisitions of Oil and Gas Properties permitted hereunder, and (l) fees and expenses expensed and paid in cash in connection with the issuance of Debt and the issuance of Equity Interests, including fees and expenses expensed and paid in cash in connection with any registered offering of Equity Interests in the Borrower, including the Borrower IPO; minus, without duplication and to the extent included in the statement of such Consolidated Net Income for such period, the sum of interest income (including realized and unrealized gains on interest rate derivative contracts); income tax benefit; unrealized gains on commodity derivative contracts; realized gains upon the early termination or other monetization of commodity derivative contracts; and gains on sales of assets. For the purposes of calculating Consolidated EBITDAX for any Rolling Period in connection with any determination of the financial ratio contained in Section 9.01(a), if during such Rolling Period, the Borrower or any Consolidated Restricted Subsidiary shall have made a Material Disposition or Material Acquisition, the Consolidated EBITDAX for such Rolling Period shall be calculated after giving pro forma effect thereto as if such Material Disposition or Material Acquisition, as applicable, occurred on the first day of such Rolling Period. For purposes of Consolidated EBITDAX for the Rolling Periods ending September 30, 2017, December 31, 2017 and March 31, 2018 in connection with any determination of the financial ratio contained in Section 9.01(a), Consolidated EBITDAX shall be calculated as follows: (A) for the Rolling Period ending September 30, 2017, Consolidated EBITDAX shall be Consolidated EBITDAX for the Rolling Period ending on such date multiplied by 4; (B) for the Rolling Period ending December 31, 2017, Consolidated EBITDAX shall be Consolidated EBITDAX for the Rolling Period ending on such date multiplied by 2; and (C) for the Rolling Period ending March 31, 2018, Consolidated EBITDAX shall be Consolidated EBITDAX for the Rolling Period ending on such date multiplied by 4/3.

“Rolling Period” means (a) for the fiscal quarters ending on September 30, 2017, December 31, 2017 and March 31, 2018, the period commencing on July 1, 2017 and ending on the last day of such applicable fiscal quarter and (b) for the fiscal quarter ending on June 30, 2018, and for each fiscal quarter thereafter, the period of four (4) consecutive fiscal quarters ending on the last day of such applicable fiscal quarter.

(c)

The following definitions are hereby added where alphabetically appropriate to read as follows:

“Applicable Letter of Credit Term” means (a) one year, in the case of a Letter of Credit other than an RRC Letter of Credit, or (b) 18 months, in the case of an RRC Letter of Credit.

“RRC Letter of Credit” means a Letter of Credit in respect of which the Railroad Commission of Texas is the beneficiary.

Page 3

“Third Amendment” means that certain Third Amendment to Credit Agreement, dated as of October 4, 2017, among the Borrower, the Guarantors, the Administrative Agent and the Lenders party thereto.

“Third Amendment Effective Date” means October 4, 2017.

2.2

Amendment to Section 2.08(c). Section 2.08(c) is hereby amended and restated in its entirety to read as follows:

(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date that is the Applicable Letter of Credit Term after the date of the issuance of such Letter of Credit (or, in the case of any renewal, which renewal may be provided for in the initial Letter of Credit, or extension thereof, the Applicable Letter of Credit Term after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date.

2.3

Replacement of Annex I.

(a) Annex I to the Credit Agreement is hereby replaced in its entirety with Annex I attached hereto and Annex I attached hereto shall be deemed to be attached as Annex I to the Credit Agreement. After giving effect to this Third Amendment and any Borrowings made on the Third Amendment Effective Date, (i) each Lender (including each New Lender) who holds Loans in an aggregate amount less than its Applicable Percentage (after giving effect to this Third Amendment) of all Loans shall advance new Loans which shall be disbursed to the Administrative Agent and used to repay Loans outstanding to each Lender who holds Loans in an aggregate amount greater than its Applicable Percentage of all Loans, (ii) each Lender’s participation in each Letter of Credit, if any, shall be automatically adjusted to equal its Applicable Percentage (after giving effect to this Third Amendment) and (iii) such other adjustments shall be made as the Administrative Agent shall specify so that the Revolving Credit Exposure applicable to each Lender equals its Applicable Percentage (after giving effect to this Third Amendment) of the aggregate Revolving Credit Exposure of all Lenders.

(b) The Administrative Agent, the Issuing Banks and the Borrower hereby consent to the reallocations and payments pursuant to this Section 2.3 and waive the delivery of an Assignment and Assumption and any other condition (other than the delivery by each New Lender of an Administrative Questionnaire) to the effectiveness of the foregoing reallocations and payments. The Administrative Agent hereby consents to a one-time waiver of the $3,500 processing and recordation fee that would otherwise be payable pursuant to Section 12.04(b)(ii)(C) if the reallocations and payments provided for herein were structured as assignments by Lenders receiving such payments to Lenders (including New Lenders) making such payments. Each existing Lender waives any break-funding payments otherwise payable under Section 5.02 in connection with the repayment of any Loans in accordance with this Section 2.3.

Section 3. Omnibus Amendment to Loan Documents. All references in the Loan Documents to “U.S. Bank” that are not followed by the words “National Association” have been

Page 4

at all times intended to refer to, and are hereby amended to read, “U.S. Bank National Association”.

Section 4. Aggregate Elected Commitment Amounts. Pursuant to Section 2.06(c), the Aggregate Elected Commitment Amounts shall be increased to $875,000,000, effective as of the Third Amendment Effective Date, and the Borrower and the Lenders agree and acknowledge that the Elected Commitment of each Lender shall be as more particularly set forth on Annex I attached hereto and that each New Lender shall be deemed to have executed and delivered Exhibit H attached to the Credit Agreement pursuant to the terms thereof.

Section 5. Borrowing Base Redetermination. Pursuant to Section 2.07, the Administrative Agent and the Lenders agree that for the period from and including the Third Amendment Effective Date to but excluding the next Redetermination Date, the amount of the Borrowing Base shall be equal to $875,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.07(e), Section 2.07(f) or Section 8.12(c). For the avoidance of doubt, the redetermination herein shall constitute the October 1, 2017 Scheduled Redetermination and the next Scheduled Redetermination shall be the April 1, 2018 Scheduled Redetermination.

Section 6. New Lenders. Each New Lender hereby joins in, becomes a party to, and agrees to comply with and be bound by the terms and conditions of the Credit Agreement as amended hereby as a Lender thereunder and under each and every other Loan Document to which any Lender is required to be bound by the Credit Agreement as amended hereby, to the same extent as if such New Lender were an original signatory thereto. Each New Lender hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as amended hereby as are delegated to the Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto. Each New Lender represents and warrants that (a) it has full power and authority, and has taken all action necessary, to execute and deliver this Third Amendment, to consummate the transactions contemplated hereby and to become a party to, and a Lender under, the Credit Agreement as amended hereby, (b) it has received a copy of the Credit Agreement and copies of the most recent financial statements delivered pursuant to Section 8.01, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Third Amendment and to become a Lender on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (c) from and after the Third Amendment Effective Date, it shall be a party to and be bound by the provisions of the Credit Agreement as amended hereby and the other Loan Documents and have the rights and obligations of a Lender thereunder.

Section 7. Conditions Precedent. The effectiveness of this Third Amendment is subject to the following:

7.1 The Administrative Agent shall have received counterparts (in such number as may be requested by the Administrative Agent) of this Third Amendment from the Borrower, each Guarantor and each Lender (including each New Lender).

7.2 The Administrative Agent shall have received an Administrative Questionnaire

Page 5

from each New Lender.

7.3 The Administrative Agent shall have received from the relevant Loan Parties duly executed and notarized mortgages and/or mortgage supplements or amendments in form and substance reasonably satisfactory to the Administrative Agent so that, after giving effect to the recording of such mortgages, mortgage supplements and/or amendments, the Administrative Agent shall be reasonably satisfied that it has first priority, perfected Liens (subject only to Excepted Liens identified in clauses (a) to (d) and (f) of the definition thereof, but subject to the provisos at the end of such definition) on at least 85% of the total value (as determined by the Administrative Agent based on the present value of the Proved Reserves attributable thereto using a 9% discount rate) of the Oil and Gas Properties evaluated in the Reserve Report most recently delivered pursuant to Section 8.12(a), including any amendments necessary to reflect the Aggregate Maximum Credit Amount (as amended by this Third Amendment).

7.4 The Administrative Agent shall have received from the Borrower title information setting forth the status of title to at least 85% of the total value (as determined by the Administrative Agent based on the present value of the Proved Reserves attributable thereto using a 9% discount rate) of the Oil and Gas Properties evaluated in the Reserve Report most recently delivered pursuant to Section 8.12(a).

7.5 No Default or Borrowing Base Deficiency shall have occurred and be continuing as of the date hereof after giving effect to the terms of this Third Amendment.

7.6 The Administrative Agent shall have received all fees and other amounts due and payable to the Administrative Agent or any Lenders in connection with this Third Amendment.

7.7 The Administrative Agent shall have received duly executed Notes payable to each Lender requesting a Note in a principal amount equal to its Maximum Credit Amount (as amended by this Third Amendment) dated as of the date hereof.

7.8 The Administrative Agent shall have received such other documents as the Administrative Agent or its special counsel may reasonably require.

The Administrative Agent is hereby authorized and directed to declare this Third Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 7 or the waiver of such conditions as permitted hereby. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.

Section 8. Return of Promissory Notes. Promptly upon receipt of any replacement Note under Section 7.7 hereof, each Lender shall return to the Administrative Agent (for delivery to the Borrower for cancellation) any other Note in such Lender’s possession that was previously delivered to such Lender under the Credit Agreement.

Section 9. Miscellaneous.

9.1 Confirmation and Effect. The provisions of the Credit Agreement (as amended by this Third Amendment) shall remain in full force and effect in accordance with its terms

Page 6

following the Third Amendment Effective Date, and this Third Amendment shall not constitute a waiver of any provision of the Credit Agreement or any other Loan Document, except as expressly provided for herein. Each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof’, “herein”, or words of like import shall mean and be a reference to the Credit Agreement as amended hereby, and each reference to the Credit Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Credit Agreement shall mean and be a reference to the Credit Agreement as amended hereby.

9.2 No Waiver. Neither the execution by the Administrative Agent or the Lenders of this Third Amendment, 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 Defaults or Events of Default which may exist, which may have occurred prior to the date of the effectiveness of this Third Amendment or which may occur in the future under the Credit Agreement and/or the other Loan Documents. Similarly, nothing contained in this Third Amendment shall directly or indirectly in any way whatsoever either: (a) 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 Default or Event of Default, (b) except as expressly provided herein, amend or alter any provision of the Credit Agreement, the other Loan Documents, or any other contract or instrument, or (c) constitute any course of dealing or other basis for altering any obligation of the Borrower 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.

9.3 Ratification and Affirmation of Credit Parties. Each Credit Party hereby expressly (i) acknowledges the terms of this Third Amendment, (ii) ratifies and affirms its obligations under the Guaranty Agreement, the Security Agreement and the other Loan Documents to which it is a party, (iii) acknowledges, renews and extends its continued liability under the Guaranty Agreement, the Security Agreement and the other Loan Documents to which it is a party, (iv) agrees that its guarantee under the Guaranty Agreement and its pledge of collateral under the Security Agreement and any of its obligations under the other Loan Documents to which it is a party remain in full force and effect with respect to the Indebtedness as amended hereby, (v) represents and warrants to the Lenders and the Administrative Agent that each representation and warranty of such Person contained in the Credit Agreement (as amended by this Third Amendment) and the other Loan Documents to which it is a party is true and correct in all material respects as of the date hereof and after giving effect to this Third Amendment except (A) 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 as of such specified earlier date, and (B) to the extent that any such representation and warranty is expressly qualified by reference to materiality, a Material Adverse Effect or similar qualification, in which case such representations and warranties shall be true and correct in all respects, (vi) represents and warrants to the Lenders and the Administrative Agent that the execution, delivery and performance by such Person of this Third Amendment are within such Person’s corporate, limited partnership or limited liability company powers (as applicable), have been duly authorized by all necessary action and that this Third Amendment constitutes the valid and binding obligation of such Person enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of

Page 7

whether considered in a proceeding in equity or at law, and (vii) represents and warrants to the Lenders and the Administrative Agent that, after giving effect to this Third Amendment, no Default or Event of Default exists.

9.4 Counterparts. This Third Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Third Amendment by facsimile or other electronic transmission (e.g., .pdf) shall be effective as delivery of a manually executed counterpart of this Third Amendment.

9.5 No Oral Agreement. THIS WRITTEN THIRD AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

9.6 Governing Law. THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

9.7 Payment of Expenses. The Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable and documented out-of-pocket costs and expenses incurred in connection with this Third Amendment in accordance with Section 12.03.

9.8 Severability. Any provision of this Third Amendment or any other Loan Document 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 or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

9.9 Successors and Assigns. This Third Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns (in each case, as permitted by Section 12.04).

9.10 Loan Document. This Third Amendment shall constitute a “Loan Document” under and as defined in Section 1.02.

[Signature Pages Follow]

Page 8

The parties hereto have caused this Third Amendment to be duly executed as of the day and year first above written.

BORROWER:


WILDHORSE RESOURCE DEVELOPMENT CORPORATION, a Delaware corporation

By:		/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name:		▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:		Executive Vice President and Chief
		Financial Officer