Execution Version

FIFTH AMENDMENT TO CREDIT AGREEMENT

THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of
September 23, 2013, effective as of August 6, 2013, is made by and among QRE
OPERATING, LLC, a Delaware limited liability company (“Borrower”); QR ENERGY,
LP, a Delaware limited partnership (“QRE MLP”); QRE GP, LLC, a Delaware limited
liability company (“General Partner”); WELLS FARGO BANK, NATIONAL ASSOCIATION
(in its individual capacity, “Wells Fargo”) as administrative agent (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”) for the financial institutions (collectively the “Lenders”) party to the
hereinafter-defined Credit Agreement; and the undersigned Lenders.

W I T N E S S E T H:

 

WHEREAS, Borrower, QRE MLP, General Partner, the Administrative Agent and the
Lenders entered into a Credit Agreement dated as of December 17, 2010, as
amended by that certain First Amendment to Credit Agreement, dated as of October
3, 2011, that certain Second Amendment to Credit Agreement, dated as of March
16, 2012, that certain Third Amendment to Credit Agreement, dated as of April
11, 2012, and that certain Fourth Amendment to Credit Agreement, dated as of
December 20, 2012 (as so amended, and as the same may be further amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”);

NOW, THEREFORE, in consideration of the premises and the mutual agreements,
representations and warranties herein set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Borrower,
the Administrative Agent and the undersigned Lenders do hereby agree as follows:

1. Amendments to Credit Agreement.

(a) Section 1.02 of the Credit Agreement is hereby amended as follows:

(i) The definition of “Agreement” is amended and restated in its entirety as
follows:

“Agreement” means this Credit Agreement, as the same may from time to time be
amended, modified, supplemented or restated, including, without limitation, by
the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment and the Fifth Amendment.

(ii) The definition of “Subsidiary” is amended and restated in its entirety as
follows:

 

 “Subsidiary” means: (a) any Person of which at least a majority of the
outstanding Equity Interests having by the terms thereof ordinary voting power
to elect a majority of the board of directors, manager or other governing body
of such Person (irrespective of

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whether or not at the time Equity Interests of any other class or classes of
such Person shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
QRE MLP and/or one or more of its Subsidiaries and (b) any partnership of which
QRE MLP or any of its Subsidiaries is a general partner; provided,  however,
that ETSWDC shall not be a Subsidiary of the Borrower, QRE MLP or any of the
Borrower’s Subsidiaries. Unless otherwise indicated herein, each reference to
the term “Subsidiary” shall mean a Subsidiary of QRE MLP.

(iii) By adding the following defined terms in appropriate alphabetical order:

“ETSWDC” means East Texas Salt Water Disposal Company, a Texas corporation.

“Fifth Amendment” means that certain Fifth Amendment to Credit Agreement dated
as of September 23, 2013, effective as of August 6, 2013, by and among Borrower,
QRE MLP, General Partner, the Administrative Agent and the Lenders.

“Fifth Amendment Effective Date” means August 6, 2013, subject to the conditions
specified in Section 2 of the Fifth Amendment having been satisfied (or waived
by each Lender in accordance with Section 12.02).

(b) Section 7.06 is hereby amended in its entirety as follows:

“Environmental Matters.  Except for such matters that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect:

(a)no Property of ETSWDC or QRE MLP or any of its Subsidiaries nor the
operations conducted thereon violate any order or requirement of any court or
Governmental Authority or any Environmental Laws.

(b)no Property of ETSWDC or QRE MLP or any of its Subsidiaries nor the
operations currently conducted thereon or, to the knowledge of the General
Partner, QRE MLP or the Borrower, by any prior owner or operator of such
Property or operation, are in violation of or subject to any existing, pending
or threatened action, suit, investigation, inquiry or proceeding by or before
any court or Governmental Authority or to any remedial obligations under
Environmental Laws.

(c)all notices, permits, licenses, exemptions, approvals or similar
authorizations, if any, required to be obtained or filed in connection with the
operation or use of any and all Property of ETSWDC and QRE MLP and each of its
Subsidiaries, including, without limitation, past or present treatment, storage,
disposal or release of a hazardous substance, oil and gas waste or solid waste
into

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the environment, have been duly obtained or filed, and ETSWDC and QRE MLP and
each of its Subsidiaries are in compliance with the terms and conditions of all
such notices, permits, licenses and similar authorizations.

(d)all hazardous substances, solid waste and oil and gas waste, if any,
generated at any and all Property of ETSWDC or QRE MLP or any of its
Subsidiaries have in the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and, to
the knowledge of the General Partner, QRE MLP or the Borrower, all such
transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Authority in connection
with any Environmental Laws.

(e)each of QRE MLP and the Borrower has taken reasonable steps to determine and
has determined that no oil, hazardous substances, solid waste or oil and gas
waste, have been disposed of or otherwise released and there has been no
threatened release of any oil, hazardous substances, solid waste or oil and gas
waste on or to any Property of ETSWDC or QRE MLP or any of its Subsidiaries
except in compliance with Environmental Laws and so as not to pose an imminent
and substantial endangerment to public health or welfare or the environment.

(f)to the extent applicable, all Property of ETSWDC and QRE MLP and each of its
Subsidiaries currently satisfies all design, operation, and equipment
requirements imposed by the OPA, and none of the General Partner, QRE MLP and
the Borrower has any reason to believe that such Property, to the extent subject
to the OPA, will not be able to maintain compliance with the OPA requirements
during the term of this Agreement.

(g)none of ETSWDC nor QRE MLP nor any of its Subsidiaries has any known
contingent liability or Remedial Work in connection with any release or
threatened release of any oil, hazardous substance, solid waste or oil and gas
waste into the environment.”

(c) Section 8.01(a) of the Credit Agreement is hereby amended in its entirety as
follows:

“(a) Annual Financial Statements. As soon as available, but in any event in
accordance with then applicable law and not later than 90 days after the end of
each fiscal year of QRE MLP (provided, if QRE MLP is granted an extension
pursuant to SEC Rule 12b-25 regarding the filing a Form 10-K following the end
of given fiscal year, such annual consolidated financial statements shall be
provided within 105 days after the end of such fiscal year) its audited
consolidated balance sheet and related statements of operations, partners’
equity

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and cash flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
PricewaterhouseCoopers or other independent public accountants of recognized
national standing (without a “going concern” or like qualification or exception
and without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of QRE MLP,
on a consolidated basis in accordance with GAAP.”

(d) Section 8.10 is hereby amended in its entirety as follows:

“Environmental Matters.  

(a)QRE MLP shall, as to its self, at its own expense, and the Borrower shall at
its own expense, comply, and shall cause its Properties and operations and each
Subsidiary of the Borrower and ETSWDC and each of ETSWDC and such Subsidiary’s
Properties and operations to comply, with all applicable Environmental Laws,
where the failure to comply could be reasonably expected to have a Material
Adverse Effect; not dispose of or otherwise release, and shall cause each such
Subsidiary not to dispose of or otherwise release, any oil, oil and gas waste,
hazardous substance, or solid waste on, under, about or from any of ETSWDC’s,
QRE MLP’s, the Borrower’s or its Subsidiaries’ Properties or any other Property
to the extent caused by ETSWDC’s, QRE MLP’s, the Borrower’s or any of its
Subsidiaries’ operations except in compliance with applicable Environmental
Laws, the disposal or release of which could reasonably be expected to have a
Material Adverse Effect; timely obtain or file, and shall cause each Subsidiary
of the Borrower to timely obtain or file, all notices, permits, licenses,
exemptions, approvals, registrations or other authorizations, if any, required
under applicable Environmental Laws to be obtained or filed in connection with
the operation or use of ETSWDC’s, QRE MLP’s, the Borrower’s or its Subsidiaries’
Properties, which failure to obtain or file could reasonably be expected to have
a Material Adverse Effect; promptly commence and diligently prosecute to
completion, and shall cause each Subsidiary of the Borrower to promptly commence
and diligently prosecute to completion, any assessment, evaluation,
investigation, monitoring, containment, cleanup, removal, repair, restoration,
remediation or other remedial obligations (collectively, the “Remedial Work”) in
the event any Remedial Work is required under applicable Environmental Laws
because of or in connection with the actual or suspected past, present or future
disposal or other release of any oil, oil and gas waste, hazardous substance or
solid waste on, under, about or from any of ETSWDC’s, QRE MLP’s, the Borrower’s
or its Subsidiaries’ Properties, which failure to commence and diligently
prosecute to completion could reasonably be expected to have a Material Adverse
Effect; and establish and implement, and shall cause each Subsidiary of the
Borrower to establish and implement, such procedures as may be necessary to
determine and assure that ETSWDC’s, QRE MLP’s, the Borrower’s and its
Subsidiaries’ obligations under this Section 8.10(a) are timely

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and fully satisfied, which failure to establish and implement could reasonably
be expected to have a Material Adverse Effect.

(b)The General Partner will promptly, but in no event later than ten (10) days
after the General Partner’s knowledge of the occurrence of a triggering event,
notify the Administrative Agent and the Lenders in writing of any threatened
action, investigation or inquiry by any Governmental Authority or any threatened
demand or lawsuit by any landowner or other third party against ETSWDC, QRE MLP,
the Borrower or its Subsidiaries or their Properties in connection with any
Environmental Laws (excluding routine testing and corrective action) if the
General Partner reasonably anticipates that such action will result in liability
(whether individually or in the aggregate) in excess of $5,000,000, not fully
covered by insurance or other means of recovery or reimbursement acceptable to
the Lenders, subject to normal deductibles.

(c)QRE MLP and the Borrower will, and will cause each Subsidiary of the Borrower
and ETSWDC to, provide environmental audits and tests in accordance with
applicable American Society of Testing Materials standards upon request by the
Administrative Agent and the Lenders and no more than once per year in the
absence of any Event of Default (or as otherwise required to be obtained by the
Administrative Agent or the Lenders by any Governmental Authority), in
connection with any future acquisitions of Oil and Gas Properties or other
Properties.”

(e) Section 8.15(c) is hereby amended in its entirety as follows:

“(c)QRE MLP and the Borrower will at all times cause the other material tangible
and intangible assets (other than deposit accounts and any Equity Interests of
ETSWDC) of QRE MLP, the Borrower and each Subsidiary to be subject to a Lien
created by the Security Instruments.”

(f) Section 9.01(b) is hereby amended in its entirety as follows:

“(b)Current Ratio.  QRE MLP will not permit, as of the last day of any calendar
quarter, its ratio (the “Current Ratio”) of consolidated current assets
(including the unused amount of the total Commitments, but excluding non-cash
assets under FAS 133 and excluding any assets of ETSWDC) as of such date to
consolidated current liabilities (excluding non-cash obligations under FAS 133
and current maturities under this Agreement and excluding any obligations or
liabilities of ETSWDC) as of such date to be less than 1.0 to 1.0.”

(g) A new Section 9.05(m) is added to the Credit Agreement as follows:

“(m) Investments made by QRE MLP or any Subsidiary in ETSWDC not to exceed
$10,000,000 in the aggregate at any one time outstanding.”

 

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(h) Section  9.13 of the Credit Agreement is hereby amended in its entirety as
follows:

“Environmental Matters.  QRE MLP will not, and will not permit any of its
Subsidiaries or ETSWDC to, cause or permit any of its Property to be in
violation of, or do anything or permit anything to be done which will subject
any such Property to any Remedial Work under any Environmental Laws, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such
violations or remedial obligations could reasonably be expected to have a
Material Adverse Effect.”

2. Conditions Precedent.  This Amendment shall become effective as of the Fifth
Amendment Effective Date provided that each of the following conditions is
satisfied (or waived by each Lender in accordance with Section 12.02 of the
Credit Agreement):

(a) The Administrative Agent shall have received from each party hereto
counterparts (in such number as may be requested by the Administrative Agent) of
this Amendment signed on behalf of such party.

(b) The Administrative Agent shall have received all amounts due and payable on
or prior to the Fifth Amendment Effective Date, including, to the extent
invoiced, reimbursement or payment of all reasonable out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder (including, to the
extent invoiced on or prior to the Fifth Amendment Effective Date, the
reasonable fees and expenses of Sidley Austin LLP, counsel to the Administrative
Agent).

(c) The Administrative Agent shall have received such other documents as the
Administrative Agent or special counsel to the Administrative Agent may
reasonably request.

The Administrative Agent shall notify the Borrower and the Lenders of the Fifth
Amendment Effective Date, and such notice shall be conclusive and binding. 

3. Representations True; No Default.  Borrower represents and warrants that the
representations and warranties contained in the Loan Documents are true and
correct in all material respects (except that any such representations and
warranties that are qualified by materiality shall be true and correct in all
respects) on and as of the date hereof as though made on and as of such date,
except to the extent any such representation or warranty is expressly limited to
an earlier date, in which case, on and as of the date hereof, such
representation or warranty shall continue to be true and correct in all material
respects as of such specified earlier date.  Borrower hereby certifies that,
after giving effect to the amendments set forth in this Amendment, no Default or
Event of Default has occurred and is continuing.

4. Ratification.  Except as expressly amended hereby, the Loan Documents shall
remain in full force and effect.  The Credit Agreement, as hereby amended, and
all rights and powers created thereby or thereunder and under the other Loan
Documents are in all respects ratified and confirmed and remain in full force
and effect.

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5. Definitions and References.  Any term used in this Amendment that is defined
in the Credit Agreement shall have the meaning therein ascribed to it.  The
terms “Agreement” and “Credit Agreement” as used in the Loan Documents or any
other instrument, document or writing furnished to the Administrative Agent or
the Lenders by the Borrower and referring to the Credit Agreement shall mean the
Credit Agreement as hereby amended.

6. Miscellaneous.  This Amendment (a) shall be binding upon and inure to the
benefit of Borrower, the Administrative Agent and the Lenders and their
respective successors and assigns (provided,  however, no party may assign its
rights hereunder except in accordance with the Credit Agreement); (b) may be
modified or amended only in accordance with the Credit Agreement; (c) may be
executed in several counterparts, and by the parties hereto on separate
counterparts, and each counterpart, when so executed and delivered, shall
constitute an original agreement, and all such separate counterparts shall
constitute but one and the same agreement, and (d) together with the other Loan
Documents, embodies the entire agreement and understanding between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
consents and understandings relating to such subject matter.  Delivery of an
executed counterpart of a signature page to this Amendment by telecopy or as an
attachment to an email shall be effective as delivery of a manually executed
counterpart of this Amendment.

 

[Signature Pages Follow]

 

  (a)

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

 

BORROWER:QRE OPERATING, LLC

 

 

 

By:/s/Cedric W. Burgher

Cedric W. Burgher,  

Chief Financial Officer

Signature Page to Fifth Amendment to Credit Agreement

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QRE MLP:QR ENERGY, LP

 

By:QRE GP, LLC

its General Partner

 

 

By:/s/ Cedric W. Burgher

Cedric W. Burgher,  

Chief Financial Officer 

Signature Page to Fifth Amendment to Credit Agreement

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GENERAL PARTNER:QRE GP, LLC

 

 

By:/s/ Cedric W. Burgher

Cedric W. Burgher,

Chief Financial Officer

Signature Page to Fifth Amendment to Credit Agreement

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ADMINISTRATIVE AGENT

AND LENDER:WELLS FARGO BANK, NATIONAL ASSOCIATION

as Administrative Agent and a Lender

 

 

By:/s/ Todd Fogle

Name:Todd Fogle

Title:Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:JPMORGAN CHASE BANK, N.A.

as a Lender

 

 

By:/s/ Jo Linda Papadakis

Name:Jo Linda Papadakis

Title:Senior Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:ROYAL BANK OF CANADA

 

 

 

By:/s/ Kristan Spivey

Name:Kristan Spivey

Title:Authorized Signatory

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:THE ROYAL BANK OF SCOTLAND plc

 

 

 

By: /s/ Sanjay Remond

Name:Sanjay Remond

Title:Director

 

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:Toronto Dominion (New York) LLC

 

 

 

By:/s/ Marie Fernandes

Name:Marie Fernandes

Title:Authorized Signatory

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:BANK OF AMERICA, N.A.

 

 

 

By:/s/ Elizabeth Gallagher

Name:Elizabeth Gallagher

Title:Assistant Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:BANK OF MONTREAL

 

 

 

By:/s/ Kevin Utsey

Name:Kevin Utsey

Title:Director

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:CAPITAL ONE, N.A.

 

 

 

By:/s/ Matthew L. Molero

Name:Mathew L. Molero

Title:Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:CITIBANK, N.A.

 

 

 

By:/s/ Famon Baquz

Name:Famon Baquz

Title:Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:COMERICA BANK

 

 

 

By:/s/ William Robinson

Name:William Robinson

Title:Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:ING CAPITAL LLC

 

 

 

By:/s/ Juli Bieser

Name:Juli Bieser

Title:Director

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:UNION BANK, N.A.

 

 

By:/s/ Lauren Trussell

Name:Lauren Trussell

Title:Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:Scotiabanc Inc.

 

 

 

By:/s/ J. F. Todd

Name:J. F. Todd

Title:Managing Director

 

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:REGIONS BANK

 

 

By:/s/ Daniel G. Steele

Name:Daniel G. Steele

Title:Senior Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:COMPASS BANK

 

 

By:/s/ James Neblett

Name:James Neblett

Title:Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK

 

 

By:/s/ Sharada Manne

Name:Sharada Manne

Title:Managin Director

 

By:/s/ Mark Roche

Name:Mark Roche

Title:Managin Director

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:U.S. BANK NATIONAL ASSOCIATION

 

 

By:/s/ Jonathan H. Lee

Name:Jonathan H. Lee

Title:Vice President

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH

 

 

By:/s/ Vipul Dhadda

Name:Vipul Dhadda

Title:Authorized Signatory

 

 

 

By:/s/ Michael Spaight

Name:Michael Spaight

Title:Authorized Signatory

 

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY

 

 

By:/s/ Trudy Nelson

Name:Trudy Nelson

Title:Managing Director

 

 

 

By:/s/ Richard Antl

Name:Richard Antl

Title:Director

Signature Page to Fifth Amendment to Credit Agreement

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LENDER:BARCLAYS BANK PLC.

 

 

By:/s/ Sreedhar R. Kona

Name:Sreedhar R. Kona

Title:Vice President

 

 

 

Signature Page to Fifth Amendment to Credit Agreement

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