Exhibit 10.1
 
 
 

Fourth Amendment

to

Credit Agreement

Among

Legacy Reserves LP
as Borrower,

BNP Paribas,
as Administrative Agent,

and

The Lenders Signatory Hereto

Effective as of April 24, 2008

 
 

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Fourth Amendment to Credit Agreement

This Fourth Amendment to Credit Agreement (this “Fourth Amendment”) executed
effective as of April 24, 2008 (the “Fourth Amendment Effective Date”) is among
Legacy Reserves LP, a limited partnership formed under the laws of the State of
Delaware (the “Borrower”); each of the undersigned guarantors (the “Guarantors”,
and together with the Borrower, the “Obligors”); each of the Lenders that is a
signatory hereto; and BNP Paribas, as administrative agent for the Lenders (in
such capacity, together with its successors, the “Administrative Agent”).

Recitals

A.           The Borrower, the Administrative Agent and the Lenders are parties
to that certain Credit Agreement dated as of March 15, 2006 (as amended to date,
the “Credit Agreement”), pursuant to which the Lenders have made certain credit
available to and on behalf of the Borrower.

B.           The Borrower has requested and the Administrative Agent and the
Lenders have agreed to amend certain provisions of the Credit Agreement.

C.           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
Fourth Amendment, shall have the meaning ascribed to such term in the Credit
Agreement.  Unless otherwise indicated, all section references in this Fourth
Amendment refer to the Credit Agreement.

Section 2.                      Amendments to Credit Agreement.

2.1           Definitions.  Section 1.02 is hereby amended by amending and
restating the following definitions as follows:

“ ‘Agreement’ means this Credit Agreement, as amended by that certain First
Amendment to Credit Agreement, dated as of July 7, 2006, the Second Amendment to
Credit Agreement, dated as of May 3, 2007, the Third Amendment to Credit
Agreement, dated as of October 24, 2007, and the Fourth Amendment to Credit
Agreement, dated as of April 24, 2008, and as the same may from time to time be
further amended, modified, supplemented or restated.”

“ ‘Applicable Margin’ means, for any day, with respect to any ABR Loan or
Eurodollar Loan, as the case may be, the rate per annum set forth in the
Borrowing Base Utilization Grid below based upon the Borrowing Base Utilization
Percentage then in effect:
 
 
Fourth Amendment 2

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Borrowing Base Utilization Percentage
Eurodollar Loans
ABR Loans
Level 1
less than 33%
1.250%
0.000%
Level 2
greater than or equal to 33%, but less than 66%
1.500%
0.000%
Level 3
greater than or equal to 66%, but less than 85%
1.750%
0.125%
Level 4
greater than or equal to 85%
1.875%
0.250%

 
Each change in the Applicable Margin 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, however, that if at any
time the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a),
then the “Applicable Margin” means the rate per annum set forth on the grid when
the Borrowing Base Utilization Percentage is at its highest level.”
 
2.2           Annex I.  Annex I is hereby amended and restated in its entirety
with the Annex I attached hereto.

Section 3.                      Assignment; Borrowing Base.

3.1           Assignment.  For an agreed consideration, each of BNP Paribas,
Bank of America, N.A., Comerica Bank, KeyBank, National Association and Wachovia
Bank, National Association (collectively, the “Assignor Lenders”) hereby
irrevocably sells and assigns to Fortis Capital Corp., The Bank of Nova Scotia
and Compass Bank (the “Assignee Lenders”), and each of the Assignee Lenders, by
its signature hereto, hereby irrevocably purchases and assumes from the Assignor
Lenders, subject to and in accordance with the Credit Agreement, as of the
Fourth Amendment Effective Date (i) such Assignor Lenders’ rights and
obligations in their capacities as Lenders under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified on the attached Annex I, of
such outstanding rights and obligations of the Assignor Lenders under the Credit
Agreement and (ii) to the extent permitted to be assigned under applicable law,
all claims, suits, causes of action and any other right of the Assignor Lenders
against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or
related to any of the foregoing, including contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above.
 
 
Fourth Amendment 3

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3.2           Borrowing Base.

(a)           For the period from and including the Fourth Amendment Effective
Date to but excluding the next Redetermination Date, the amount of the Borrowing
Base shall be equal to $272,000,000.  Notwithstanding the foregoing, the
Borrowing Base may be subject to further adjustments from time to time pursuant
to Section 8.13(c) or Section 9.12(d).

(b)           The Borrowing Base shall automatically increase to $320,000,000
upon the completion of the following conditions:

(i)           The Administrative Agent shall have received a certificate of a
Responsible Officer certifying that the Borrower is concurrently consummating
that certain acquisition for approximately $82,000,000 (in cash and Equity
Interests) of Oil and Gas Properties in the Permian Basin (the “Acquisition
Properties”) which is currently scheduled to close April 30, 2008 (the
“Acquisition”).

(ii)           The Administrative Agent shall have received, or be receiving
concurrently with the closing of the Acquisition, original assignments conveying
the Acquisition Properties to the Borrower, for the Administrative Agent to file
for record in the respective counties.

(iii)           The Administrative Agent shall have received from each party
thereto duly executed counterparts (in such number as may be requested by the
Administrative Agent) of security instruments with respect to the Acquisition
Properties, including mortgages and deeds of trust in form satisfactory to the
Administrative Agent.  In connection with the execution and delivery of such
security instruments, the Administrative Agent shall be reasonably satisfied
that the security instruments create 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 80% of the total value of the Acquisition Properties.

(iv)           The Administrative Agent shall have received title information as
the Administrative Agent may reasonably require satisfactory to the
Administrative Agent setting forth the status of title to at least 80% of the
total value of the Acquisition Properties.

(v)           The Administrative Agent shall have received payment of all fees
and other amounts due and payable, including, for the account of each Lender
then party to the Credit Agreement, ratably in accordance with its Applicable
Percentage, a Borrowing Base increase fee equal to 25 bps on the amount of any
increase of each Lender’s Commitment over such Lender’s highest Commitment
previously in effect, payable on the consummation of the Acquisition.

Section 4.                      Conditions Precedent.  The effectiveness of this
Fourth Amendment is subject to the receipt by the Administrative Agent of the
following documents and satisfaction of the other conditions provided in this
Section 4, each of which shall be reasonably satisfactory to the Administrative
Agent in form and substance:
 
 
Fourth Amendment 4

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4.1           Fourth Amendment.  The Administrative Agent shall have received
multiple counterparts as requested of this Fourth Amendment from each Lender and
the Borrower.

4.2           Notes.  The Administrative Agent shall have received a Note
payable to the order of each Lender in the amount of such Lender’s Commitment
after giving effect to the assignment and increase in commitments pursuant to
this Fourth Amendment, duly executed and delivered by Borrower, to be dated as
of the Fourth Amendment Effective Date.
 
4.3           Security Instruments.  The Administrative Agent shall have
received from each party thereto duly executed counterparts (in such number as
may be requested by the Administrative Agent) of Security Instruments in form
and substance satisfactory to the Administrative Agent, such that the Borrower
remains in compliance with Section 8.14 of the Credit Agreement.
 
4.4           Borrowing Base Increase Fee.  The Administrative Agent shall have
received payment of all fees and other amounts due and payable, including, for
the account of each Lender party to this Amendment, ratably in accordance with
its Applicable Percentage, a Borrowing Base increase fee equal to 25 bps on the
amount of any increase of each Lender’s Commitment over such Lender’s highest
Commitment previously in effect, payable on the First Amendment Effective Date.
 
4.5           No Default.  No Default or Event of Default shall have occurred
and be continuing as of the Fourth Amendment Effective Date.

Section 5.                      Representations and Warranties; Etc.  Each
Obligor hereby affirms:  (a) that as of the date of execution and delivery of
this Fourth Amendment, all of the representations and warranties contained in
each Loan Document to which such Obligor is a party are true and correct in all
material respects as though made on and as of the Fourth Amendment Effective
Date (unless made as of a specific earlier date, in which case, was true as of
such date); and (b) that after giving effect to this Fourth Amendment and to the
transactions contemplated hereby, no Defaults exist under the Loan Documents or
will exist under the Loan Documents.

Section 6.                      Miscellaneous.

6.1           Confirmation.  The provisions of the Credit Agreement (as amended
by this Fourth Amendment) shall remain in full force and effect in accordance
with its terms following the effectiveness of this Fourth Amendment.

6.2           Ratification and Affirmation of Obligors.  Each of the Obligors
hereby expressly (i) acknowledges the terms of this Fourth Amendment, (ii)
ratifies and affirms its obligations under the Guaranty Agreement and the other
Security Instruments to which it is a party, (iii) acknowledges, renews and
extends its continued liability under the Guaranty Agreement and the other
Security Instruments to which it is a party and (iv) agrees that its guarantee
under the Guaranty Agreement and the other Security Instruments to which it is a
party remains in full force and effect with respect to the Indebtedness as
amended hereby.
 
 
Fourth Amendment 5

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6.3           Counterparts.  This Fourth Amendment may be executed by one or
more of the parties hereto in any number of separate counterparts, and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.

6.4           No Oral Agreement.  This written Fourth Amendment, 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 between the parties.

6.5           Governing Law.  This Fourth Amendment (including, but not limited
to, the validity and enforceability hereof) shall be governed by, and construed
in accordance with, the laws of the State of Texas.
 
Fourth Amendment 6

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

BORROWER: LEGACY RESERVES LP    
 
By: 
 
 
Legacy Reserves GP, LLC,
its general partner
 
 
By:
/s/ Steven H. Pruett       Steven H. Pruett        President, Chief Financial
Officer and Secretary          

GUARANTORS: LEGACY RESERVES OPERATING LP    
 
By:
 
 
Legacy Reserves Operating GP, LLC,
its general partner
 
 
By:
/s/ Steven H. Pruett       Steven H. Pruett       President, Chief Financial
Officer and Secretary          

  LEGACY RESERVES OPERATING GP, LLC          
 
By:
/s/ Steven H. Pruett       Steven H. Pruett       President, Chief Financial
Officer and Secretary          

  LEGACY RESERVES SERVICES, INC.          
 
By:
/s/ Steven H. Pruett       Steven H. Pruett       President, Chief Financial
Officer and Secretary          

 
Fourth Amendment 7

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ADMINISTRATIVE AGENT:
BNP PARIBAS
as Administrative Agent and Lender
         
 
By:
/s/ Russell Otts       Russell Otts       Director           

 
By:
/s/ Brian M. Malone       Brian M. Malone       Managing Director          

 
 
 
Fourth Amendment 8

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LENDERS: BANK OF AMERICA N.A.          
 
By:
/s/ Charles W. Patterson       Charles W. Patterson       Managing Director    
     

  COMERICA BANK          
 
By:
/s/ Peter L. Sefzik       Peter L. Sefzik        Vice President          

  KEY BANK N.A.          
 
By:
/s/ Thomas Rajan       Thomas Rajan       Managing Director          

 
 
 
Fourth Amendment 9

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  WACHOVIA BANK NATIONAL ASSOCIATION          
 
By:
/s/ LS Phillips       Leanne S. Phillips       Director          

  FORTIS CAPITAL CORP.          
 
By:
/s/ Michele Jones       Michele Jones       Director          

 
By:
/s/ Ilene Fowler       Ilene Fowler       Director          

  COMPASS BANK          
 
By:
/s/ Kathleen J. Bowen       Kathleen J. Bowen       Senior Vice President      
   

 
 
 
Fourth Amendment 10

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  THE BANK OF NOVIA SCOTIA          
 
By:
/s/ David G. Mills       David G. Mills       Director          

 
 
 
Fourth Amendment 11

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