ex_10-1.htm


    Exhibit
      10.1

    
 

    
      


      


      


      
        Third
          Amendment

        


        to

        


        Credit
          Agreement

        


        Among

        


        Legacy
          Reserves LP

        as
          Borrower,

        


        BNP
          Paribas,

        as
          Administrative Agent,

        


        and

        


        The
          Lenders Signatory Hereto

        


        


        Effective
          as of October 24, 2007



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        Third
          Amendment to Credit Agreement

      

      


      This
        Third Amendment to Credit Agreement (this “Third Amendment”) executed
        effective as of October 24, 2007 (the “Third 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 Third Amendment, shall have the
        meaning ascribed to such term in the Credit Agreement.  Unless
        otherwise indicated, all section references in this Third 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, and the Third Amendment to Credit
        Agreement, dated as of October 24, 2007, 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:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                Borrowing
                  Base Utilization Percentage

              	
                Eurodollar
                  Loans

              	
                ABR
                  Loans

              
	
                Level
                  1

              	
                less
                  than 33%

              	
                1.000%

              	
                0.000%

              
	
                Level
                  2

              	
                greater
                  than or equal to 33%, but less than 66%

              	
                1.250%

              	
                0.000%

              
	
                Level
                  3

              	
                greater
                  than or equal to 66%, but less than 85%

              	
                1.500%

              	
                0.125%

              
	
                Level
                  4

              	
                greater
                  than or equal to 85%

              	
                1.750%

              	
                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
        to New Lenders; Borrowing Base.

      


      3.1           New
        Lender.  For an agreed consideration, each of the Lenders party to
        the original Credit Agreement hereby irrevocably sells and assigns to Fortis
        Capital Corp. and Compass Bank (the “New Lenders”), and each of the New
        Lenders, by its signature hereto, hereby irrevocably purchases and assumes
        from
        the existing Lenders, subject to and in accordance with the Credit Agreement,
        as
        of the Third Amendment Effective Date (i) such 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 such 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 Administrative
        Agent and the other 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.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      3.2           Borrowing
        Base.  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 $225,000,000.  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).

      


      Section
        4.                      Conditions
        Precedent.  The effectiveness of this Third 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:

      


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

      


      4.2           Secretary’s
        Certificates.  The Administrative Agent shall have received a
        certificate of the Borrower and of each Guarantor (a) setting forth resolutions
        of the board of directors or other managing body with respect to the
        authorization of the Borrower or such Guarantor to execute and deliver the
        Loan
        Documents to which it is a party and to enter into the transactions contemplated
        in those documents, and (b) certifying that there has been no change to either
        (i) the individuals who are authorized to sign the Loan Documents to which
        the
        Borrower or such Guarantor is a party and (ii) the articles or certificate
        of
        incorporation or formation and bylaws, operating agreement or partnership
        agreement, as applicable, of the Borrower and each Guarantor, in each case,
        since the Effective Date.  The Administrative Agent and the Lenders
        may conclusively rely on such certificate until the Administrative Agent
        receives notice in writing from the Borrower to the contrary.

       

      4.3           Good
        Standing Certificates.  The Administrative Agent shall have
        received certificates of the appropriate State agencies with respect to the
        existence, qualification and good standing of the Borrower and each Guarantor,
        if any.

       

      4.4           Compliance
        Certificate.  The Administrative Agent shall have received a
        compliance certificate, which shall be substantially in the form of Exhibit
        B to
        the Credit Agreement, duly and properly executed by a Responsible Officer
        and
        dated as of the Third Amendment Effective Date.

       

      4.5           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 Third Amendment,
        duly
        executed and delivered by Borrower, to be dated as of the Third Amendment
        Effective Date.

       

      4.6           Amendments
        to Security Documents.  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 amendments to the Deed of
        Trust, Mortgage, Line of Credit Mortgage, Fixture Filing, Assignment of
        As-Extracted Collateral, Security Agreement and Financing Statement from
        Legacy
        Reserves Operating LP.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      4.7           Legal
        Opinion.  The Administrative Agent shall have received an opinion
        of Andrews & Kurth, L.L.P., special counsel to the Borrower, in form and
        substance satisfactory to the Administrative Agent, as to such matters incident
        to this Third Amendment as the Administrative Agent may reasonably
        request.

       

      4.8           No
        Default.  No Default or Event of Default shall have occurred and
        be continuing as of the Third 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 Third 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 Third 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 Third 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 Third Amendment) shall
        remain in full force and effect in accordance with its terms following the
        effectiveness of this Third Amendment.

      


      6.2           Ratification
        and Affirmation of Obligors.  Each of the Obligors hereby
        expressly (i) acknowledges the terms of this Third 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.

      


      6.3           Counterparts.  This
        Third 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 Third 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 Third 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.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        IN
          WITNESS WHEREOF, the parties hereto have caused this Third 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	 
	 	 	 	 


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 ADMINISTRATIVE
                AGENT:	
                BNP
                  PARIBAS

                as Administrative Agent and Lender

              	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ Russell
                Otts	 
	 	 	Russell
                Otts	 
	 	 	Vice
                President	 
	 	 	 	 


      

      
        	
                 

              	
                By:
                  

              	/s/ Robert
                Long	 
	 	 	Robert
                Long	 
	 	 	Vice
                President	 
	 	 	 	 


      

       

      
        	 LENDERS:	BANK
                OF AMERICA N.A.	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ Scott
                A. Mackey	 
	 	 	Scott
                A. Mackey	 
	 	 	Vice
                President	 
	 	 	 	 


      

      
        	 	COMERICA
                BANK 	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ Mark
                Fuqua	 
	 	 	Mark
                Fuqua	 
	 	 	Senior
                Vice President	 
	 	 	 	 


      

      
        	 	KEYBANK
                N.A.	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ Thomas
                Rajan	 
	 	 	Thomas
                Rajan	 
	 	 	Director	 
	 	 	 	 


      

      
        	 	WACHOVIA
                BANK, NATIONAL ASSOCIATION	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ Leanne
                S. Phillips	 
	 	 	Leanne
                S. Phillips	 
	 	 	Director	 
	 	 	 	 


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 NEW
                LENDER:	FORTIS
                CAPITAL CORP.	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ David
                Montgomery	 
	 	 	David
                Montgomery	 
	 	 	Director	 
	 	 	 	 


      

      
        	
                 

              	
                By:
                  

              	/s/ Darrell
                Holley	 
	 	 	Darrell
                Holley	 
	 	 	Managing
                Director	 
	 	 	 	 


      

       

      
        	 NEW
                LENDER:	COMPASS
                BANK	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ Kathleen
                J. Bowen	 
	 	 	Kathleen
                J. Bowen	 
	 	 	Senior
                Vice President