Exhibit 10.1
Second Amendment to Credit Agreement
     This Second Amendment to Credit Agreement (this “Second Amendment”), dated
as of March 8, 2010, is by and among Eagle Rock Energy Partners, L.P., a
Delaware limited partnership (the “Borrower”), the Lenders party hereto, and
Wachovia Bank, National Association, as administrative agent for the lenders
(together with its successors in such capacity, the “Administrative Agent”), and
the Guarantors party hereto.
     WHEREAS, the Borrower, the Lenders and agents party thereto, and the
Administrative Agent are party to that certain Credit Agreement, dated as of
December 13, 2007, as amended by First Amendment to Credit Agreement dated
November 25, 2008 (as such agreement may be amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”). Unless otherwise defined
herein, capitalized terms used herein shall have the respective meanings
assigned to them in the Credit Agreement.
     WHEREAS, the Borrower has requested that the Administrative Agent and the
Majority Lenders agree (a) to amend the Credit Agreement to revise the
definition of Change in Control, (b) to amend the Senior Secured Leverage Ratio
financial covenant and (c) to make the other changes described herein.
     WHEREAS, the Lenders and the Administrative Agent agree to amend the Credit
Agreement as described herein upon the satisfaction of the conditions set forth
herein.
     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
     1. Amendment to Definition of Change in Control. The definition of “Change
in Control” in Section 1.01 of the Credit Agreement is hereby amended in its
entirety as follows:
     ““Change in Control” means:
     (a) prior to the Borrower’s exercise of the GP Option and consummation
thereof:
     (i) the Sponsor and the members of the executive management team of the
Ultimate General Partner shall cease to beneficially own and control, directly
or indirectly, at least fifty percent (50%) on a fully diluted basis of the
economic and voting interests in the Equity Interests of the General Partner,
     (ii) the General Partner shall cease to beneficially own and control,
directly or indirectly, all of the general partner interests of the Borrower,
     (iii) the majority of the seats (other than vacant seats) on the board of
directors (or similar governing body) of the Ultimate General Partner shall
cease to be occupied by Persons who either (A) were members of the board of
directors of the Ultimate General Partner as of the Second Amendment Effective
Date or (B) were nominated for election by the board of directors of the
Ultimate General

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Partner, a majority of whom were directors as of the Second Amendment Effective
Date, or whose election or nomination for election was previously approved by a
majority of such directors; and
     (b) upon and following Borrower’s exercise of the GP Option and
consummation thereof:
     (i) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan), other than the Sponsor, becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an
“option right”)), directly or indirectly, of 40% or more of the equity
securities of the Borrower entitled to vote or direct the voting for members of
the board of directors or equivalent governing body of the Borrower on a
fully-diluted basis (including both common stock and any preferred stock and
taking into account all such securities that such person or group has the right
to acquire pursuant to any option right); or
     (ii) the majority of the seats (other than vacant seats) on the board of
directors (or similar governing body) of the Ultimate General Partner or other
equivalent governing body of the Borrower shall cease to be occupied by Persons
who (A) were members of the board of directors of the Ultimate General Partner
or equivalent governing body as of the date on which the GP Option is
consummated after giving effect thereto, including the two additional members to
be appointed by the independent members of the board in connection therewith,
(B) is the chief executive officer of the Borrower (or his/her designee),
(C) were appointed by the Sponsor, or (D) were nominated for election by the
board of directors of the Ultimate General Partner or equivalent governing body
(or an authorized committee or subgroup thereof), a majority of whom are
directors described in clauses (A), (B) or (C) above, or whose election or
nomination for election was previously approved by a majority of such directors;
provided, however, in no event shall the exercise by the Borrower of the GP
Option, or the consummation thereof, constitute a Change in Control.”
     2. Amendment to Definition of Consolidated EBITDA. The definition of
“Consolidated EBITDA” in Section 1.01 of the Credit Agreement is hereby amended
in its entirety as follows:

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          ““Consolidated EBITDA” means, for any period, (a) the sum of
(i) Consolidated Net Income for such period (excluding, to the extent included
in the calculation of Consolidated Net Income in such period, gains or losses
attributable to discontinued operations or asset dispositions not in the
ordinary course of business) plus (ii) the following expenses or charges to the
extent deducted from Consolidated Net Income in such period: Consolidated
Interest Expense, income taxes, depreciation, depletion, amortization, and other
similar non-cash charges (excluding any such non-cash charge to the extent that
it represents an accrual or reserve for potential cash charges in any future
period or amortization of a prepaid cash charge that was paid in a prior
period), minus (b) all non-cash income added to Consolidated Net Income
(excluding any such non-cash income to the extent it represents the reversal of
an accrual or reserve for potential cash charge in any prior period).”
     3. Amendment to Add Definition of GP Option. The definition of “GP Option”
is hereby added to Section 1.01 of the Credit Agreement as follows:
     ““GP Option” means the option of the Borrower to purchase all of the
membership interests in the Ultimate General Partner and all limited partnership
interests in the General Partner from the Sponsor for a purchase price of one
million newly-issued common units of Borrower, substantially on the terms set
forth in the Amended and Restated Securities Purchase and Global Transaction
Agreement dated January 12, 2010, attached as an exhibit to the Borrower’s
preliminary proxy statement filed February 25, 2010 with the SEC.”
     4. Amendment to Senior Secured Leverage Ratio Financial Covenant.
Section 9.01(c) of the Credit Agreement is hereby amended in its entirety as
follows:
     “(c) Senior Secured Leverage Ratio. If the Borrower has Indebtedness of the
type described in Section 9.02(h), then the Borrower will not permit the Senior
Secured Leverage Ratio to exceed 3.75 to 1.00; provided, that during a Specified
Acquisition Period, the Senior Secured Leverage Ratio shall not exceed 4.25 to
1.00.”
     5. Proceeds of Minerals Business Sale. Borrower hereby agrees that in the
event Borrower shall consummate the proposed sale of its minerals business as
contemplated in that certain Purchase and Sale Agreement, dated as of
December 21, 2009, to BSAP II GP, L.L.C., a subsidiary of Black Stone Minerals
Company, L.P., Borrower shall, pursuant to Section 3.04(c)(ii) of the Credit
Agreement, within one Business Day following receipt by Borrower of the proceeds
of such sale, make a mandatory prepayment in an amount not less than
$100,000,000, and pursuant to Section 2.07(a)(ii) of the Credit Agreement, the
total Commitments shall automatically reduce by the amount of such prepayment;
provided:
     (i) Borrower may use any and all Net Cash Proceeds from such sale in excess
of $100,000,000 to purchase Property (other than inventory and working capital)
used or to be used in Borrower’s and Restricted Subsidiaries’ businesses in the
270-day period following the receipt thereof as permitted by such
Section 3.04(c)(ii); provided that any such excess that is not used to make such
purchases with the 270-day period shall be applied as a mandatory prepayment on
the last day of such period in accordance with

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Section 3.04(c)(ii) and the total Commitments shall automatically reduce by the
amount of such prepayment in accordance with Section 2.07(a)(ii); and
     (ii) Administrative Agent and Lenders acknowledge and agree that (A) prior
to the expiration of such 270-day period, such remaining Net Cash Proceeds are
not required to be applied as a mandatory prepayment pursuant to such
Section 3.04(c)(ii), (B) no mandatory automatic Commitment reduction shall occur
or be required to occur pursuant to such Section 2.07(a)(ii) with respect to
such remaining Net Cash Proceeds prior to the expiration of such 270-day period,
and (C) in no event shall any optional prepayment on or following the
consummation of such sale and prior to the expiration of such 270-day period,
(1) constitute, or be deemed to constitute, a mandatory prepayment pursuant to
such Section 3.04(c)(ii), or (2) automatically reduce, or be deemed to
automatically reduce, the Commitments pursuant to such Section 2.07(a)(ii),
except as expressly specified by Borrower in writing in connection with such
prepayment.
     6. Conditions to Effectiveness. This Second Amendment shall become
effective on the date (the “Second Amendment Effective Date”), on or before
July 31, 2010, on which the Administrative Agent shall have received
(a) counterparts of this Second Amendment signed on behalf of the Majority
Lenders, the Borrower and the Guarantors (which may be facsimiles or other
electronic transmissions of signed signature pages of this Second Amendment) and
(b) notice from the Borrower that the Borrower has received the requisite
unitholder approval with respect to the transaction generally described in the
Borrower’s preliminary proxy statement filed February 25, 2010 with the SEC, as
finally set forth in the definitive proxy statement and any amendment or
supplement thereto, substantially in accordance with and pursuant to the terms
thereof.
     The Administrative Agent shall notify the Borrower in writing of the
effectiveness of this Second Amendment, and such notice shall be conclusive and
binding.
     7. Representations and Warranties
     Each Loan Party hereby represents and warrants to each Lender that:
     (a) each of the representations and warranties of such Loan Party set forth
in the Credit Agreement and in the other Loan Documents is true and correct in
all material respects on and as of the Second Amendment Effective Date as if
made on and as of the Second Amendment Effective Date, except to the extent any
such representations and warranties are expressly limited to an earlier date, in
which case, such representations and warranties are true and correct in all
material respects as of such specified earlier date;
     (b) no Default or Event of Default has occurred and is continuing;
     (c) the execution, delivery and performance by such Loan Party of this
Second Amendment are within its powers and have been duly authorized by all
necessary corporate or other action;
     (d) this Second Amendment constitutes the legal, valid and binding
obligation of such Loan Party, enforceable against such Loan Party in accordance
with its terms;

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     (e) the execution, delivery and performance by such Loan Party of this
Second Amendment (i) does not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority or any other
third Person (including shareholders or any class of directors, whether
interested or disinterested, of the Loan Parties or any other Person), nor is
any such consent, approval, registration, filing or other action necessary for
the validity or enforceability of this Second Amendment or any other Loan
Document or the consummation of the transactions contemplated thereby, except
such as have been obtained or made and are in full force and effect other than
those third party approvals or consents which, if not made or obtained, would
not cause a Default hereunder, could not reasonably be expected to have a
Material Adverse Effect or do not have an adverse effect on the enforceability
of this Second Amendment or the other Loan Documents, (ii) will not violate any
applicable law or regulation or any Organization Document of such Loan Party or
any order of any Governmental Authority, (iii) will not violate or result in a
default under any indenture, agreement or other instrument binding upon such
Loan Party or its Properties, or give rise to a right thereunder to require any
payment to be made by such Loan Party and (iv) will not result in the creation
or imposition of any Lien on any Property of such Loan Party (other than the
Liens created by the Loan Documents).
     8. Miscellaneous
          (a) Payment of Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent and the Lenders for all of their reasonable out-of-pocket
expenses incurred in connection with this Second Amendment, any other documents
prepared in connection herewith and the transactions contemplated hereby,
including, without limitation, the reasonable fees and disbursements of counsel
to the Lenders, pursuant to Section 12.03(a) of the Credit Agreement. The
agreement set forth in this Section 7(a) shall survive the termination of this
Second Amendment and the Credit Agreement.
          (b) No Other Amendments; Confirmation. Except as expressly amended,
modified and supplemented hereby, the provisions of the Credit Agreement and the
other Loan Documents are and shall remain in full force and effect and are
hereby ratified and confirmed as so amended. Except as expressly set forth
herein, this Second Amendment shall not be deemed to be a waiver, amendment or
modification of any provisions of the Credit Agreement or any other Loan
Document or any right, power or remedy of the Administrative Agent or the
Lenders, or constitute a waiver of any provision of the Credit Agreement or any
other Loan Document, or any other document, instrument and/or agreement executed
or delivered in connection therewith, or of any Default or Event of Default
under any of the foregoing, in each case whether arising before or after the
date hereof or as a result of performance hereunder or thereunder. This Second
Amendment also shall not preclude the future exercise of any right, remedy,
power, or privilege available to the Administrative Agent and/or the Lenders
whether under the Credit Agreement, the other Loan Documents, at law or
otherwise. All references to the Credit Agreement shall be deemed to mean the
Credit Agreement as modified hereby. The parties hereto agree to be bound by the
terms and conditions of the Credit Agreement and Loan Documents as amended by
this Second Amendment, as though such terms and conditions were set forth
herein. Each reference in the Credit Agreement to “this Agreement,” “hereunder,”
“hereof,” “herein” or words of similar import shall mean and be a reference to
the Credit Agreement as amended by this Second Amendment, and each reference
herein or in any other Loan Documents to the “Credit

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Agreement” shall mean and be a reference to the Credit Agreement as amended and
modified by this Second Amendment.
          (c) Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
          (d) Headings. Article and Section headings used herein are for
convenience of reference only, are not part of this Second Amendment and shall
not affect the construction of, or be taken into consideration in interpreting,
this Second Amendment.
          (e) Entire Agreement. This Second Amendment and the documents referred
to herein constitute the entire contract among the parties relating to the
subject matter hereof and thereof and supersede any and all previous agreements
and understandings, oral or written, relating to the subject matter hereof and
thereof. This Second Amendment is a Loan Document executed under the Credit
Agreement.
          (f) Counterparts. This Second 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 Second Amendment by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Second Amendment.
          (g) Successors. The execution and delivery of this Second Amendment by
any Lender shall be binding upon each of its successors and assigns.
[SIGNATURE PAGES FOLLOW]

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          IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed and delivered by their respective officers or
other duly authorized representatives as of the date first above written.

          BORROWER: 
EAGLE ROCK ENERGY PARTNERS, L.P.        By:   Eagle Rock Energy GP, L.P.,
General Partner                     By:   Eagle Rock Energy G&P, LLC,
General Partner                   By:   /s/ Jeffrey P. Wood         Name:      
    Title:        

Signature Page to
Second Amendment to Credit Agreement

 

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ADMINISTRATIVE AGENT
AND LENDER

            WACHOVIA BANK, NATIONAL
ASSOCIATION, as Administrative Agent and
Lender
      By:   /s/ Leanne S. Phillips         Name:   Leanne S. Phillips       
Title:   Director     

Signature Page to
Second Amendment to Credit Agreement

 

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SYNDICATION AGENT
AND LENDER:

            BANK OF AMERICA, N.A. ,
as Syndication Agent and Lender
      By:   /s/ Christopher Renyi         Name:   Christopher Renyi       
Title:   Vice President     

Signature Page to
Second Amendment to Credit Agreement

 

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CO-DOCUMENTATION AGENT
AND LENDER:

            BNP PARIBAS,
as Co-Documentation Agent and Lender
      By:   /s/ Mark Cox         Name:   Mark Cox        Title:   Managing
Director              By:   /s/ Larry Robinson         Name:   Larry Robinson   
    Title:   Director     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            BANK OF NOVA SCOTIA
      By:   /s/ Marc Graham         Name:   Marc Graham        Title:  
Director     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            BARCLAYS BANK PLC
      By:   /s/ Sam Yoo         Name:   Sam Yoo        Title:   Assistant Vice
President     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            Comerica Bank
      By:   /s/ Greg Smith         Name:   Greg Smith        Title:   Senior
Vice President     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            COMPASS BANK
As Lender
      By:   /s/ Greg Determann         Name:   Greg Determann        Title:  
Senior Vice President     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            COMPASS BANK, as successor in interest to Guaranty
Bank, FSB
as Lender
      By:   /s/ Greg Determann         Name:   Greg Determann        Title:  
Senior Vice President     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            CREDIT AGRICOLE f/k/a Calyon (NEW YORK BRANCH)
      By:   /s/ Tom Byangeon         Name:   Tom Byangeon        Title:  
Managing Director              By:   /s/ Sharada Manne         Name:   Sharada
Manne        Title:   Director     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            Credit Suisse AG, Cayman Islands Branch (f/k/a Credit
Suisse, Cayman Islands Branch)
      By:   /s/ Doreen Barr         Name:   Doreen Barr        Title:  
Director              By:   /s/ Lynne-Marie Paquette         Name:   Lynne-Marie
Pacquette        Title:   Associate     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            GOLDMAN SACHS CREDIT PARTNERS LP
      By:   /s/ Andrew Caditz         Name:   Andrew Caditz        Title:  
Authorized Signatory     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            UBS LOAN FINANCE LLC
      By:   /s/ Mary E. Evans         Name:   Mary E. Evans        Title:  
Associate Director              By:   /s/ Irja R. Otsa         Name:   Irja R.
Otsa        Title:   Associate Director     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            Union Bank, N.A.
      By:   /s/ Scott Gildea         Name:   Scott Gildea        Title:   Vice
President     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

            U.S. Bank National Association
      By:   /s/ Justin M. Alexander         Name:   Justin M. Alexander       
Title:   Vice President     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

           
Wells Fargo Bank, N.A.
      By:   /s/ Leanne S. Phillips         Name:   Leanne S. Phillips       
Title:   Sr. Portfolio Manager     

Signature Page to
Second Amendment to Credit Agreement

 

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LENDER:

           
Woodlands Commercial Bank F/K/A Lehman Brothers
Commercial Bank
      By:   /s/ Brian Halbeisen         Name:   Brian Halbeisen        Title:  
Vice President     

Signature Page to
Second Amendment to Credit Agreement

 

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RATIFICATION
     Each of the undersigned (each, a “Guarantor”) hereby agrees that its
liabilities under the Guaranty and Collateral Agreement dated as of December 13,
2007 (the “Guaranty and Collateral Agreement”) including, without limitation,
guaranteeing the indebtedness, obligations and liabilities of Eagle Rock Energy
Partners, L.P. under that certain Credit Agreement dated as of December 13, 2007
as amended (the “Credit Agreement”) and under the other Loan Documents (as
defined in the Credit Agreement) to which it is a party, shall remain
enforceable against such Guarantor in accordance with the terms of the Guaranty
and Collateral Agreement and the other Loan Documents and shall not be reduced,
altered, limited, lessened or in any way affected by the execution and delivery
of the Second Amendment to Credit Amendment to which this Ratification is
attached. Each Guarantor hereby confirms and ratifies its liabilities under the
Guaranty and Collateral Agreement and the other Loan Documents to which it is a
party in all respects. Each Guarantor acknowledges and agrees that this
Ratification constitutes a part of the Second Amendment to Credit Agreement to
which it is attached.
GUARANTORS:

            EROC MIDSTREAM ENERGY, L.P.
EROC QUITMAN GATHERING COMPANY, LP
EROC GATHERING COMPANY, LP
EAGLE ROCK PRODUCTION, L.P.
MIDSTREAM GAS SERVICES, L.P.
EAGLE ROCK OPERATING, L.P.
EAGLE ROCK FIELD SERVICES, L.P.
EAGLE ROCK ENERGY SERVICES, L.P.
EAGLE ROCK PIPELINE, L.P.
EAGLE ROCK GAS GATHERING &
PROCESSING, LTD.
EAGLE ROCK UPSTREAM DEVELOPMENT II, L.P.
EAGLE ROCK GOM, L.P.
EAGLE ROCK MIDSTREAM, L.P.
EAGLE ROCK DESOTO PIPELINE, L.P.
      By:   Eagle Rock Pipeline GP, LLC, its general partner                    
  By:   /s/ Jeffrey P. Wood         Name:           Title:        

Signature Page to Ratification under
Second Amendment to Credit Agreement

 

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            HESCO GATHERING COMPANY, LLC
HESCO PIPELINE COMPANY, L.L.C.
EROC PRODUCTION, LLC
EAGLE ROCK DEVELOPMENT COMPANY, L.L.C.
EAGLE ROCK PIPELINE GP, LLC
EAGLE ROCK ENERGY ACQUISITION CO., INC.
EAGLE ROCK UPSTREAM DEVELOPMENT
COMPANY, INC.
ESCAMBIA ASSET CO. LLC
ESCAMBIA OPERATING CO. LLC
EAGLE ROCK ENERGY ACQUISITION CO., INC.
EAGLE ROCK ENERGY ACQUISITION CO. II, INC.
EAGLE ROCK UPSTREAM DEVELOPMENT
COMPANY II, INC.
GALVESTON BAY GATHERING, LLC
CMA PIPELINE PARTNERSHIP, LLC
SUPERIOR GAS COMPRESSION, LLC

      By:   /s/ Jeffrey P. Wood         Name:           Title:           EAGLE
ROCK ACQUISITION PARTNERSHIP, L.P.

      By:   Eagle Rock Upstream Development Company, Inc.,         its general
partner                    By:   /s/ Jeffrey P. Wood         Name:          
Title:           EAGLE ROCK ACQUISITION PARTNERSHIP II, L.P.

      By:   Eagle Rock Upstream Development Company II, Inc.,         its
general partner                    By:   /s/ Jeffrey P. Wood         Name:      
    Title:        

Signature Page to Ratification under
Second Amendment to Credit Agreement