amendedsub.htm


    

      AMENDMENT NO.
3

      (Subordinated
Credit Agreement)

      


      This Amendment No. 3 ("Agreement") dated as
of May 7, 2009 ("Effective Date") is
among Abraxas Energy Partners, L.P., a Delaware limited partnership ("Borrower"), the
lenders party to the Credit Agreement described below from time to time as
Lenders, and Société Générale, as Administrative Agent (in such capacity, the
"Administrative
Agent").

      


      RECITALS

      


      A.                      The
Borrower, the Lenders and the Administrative Agent are parties to the
Subordinated Credit Agreement dated as of January 31, 2008, as amended by that
certain Amendment No. 1 dated as of January 16, 2009 and Amendment No. 2 dated
as of April 30, 2009 (as so amended and as the same may be further
amended, restated, supplemented or otherwise modified from time to time, the
"Credit
Agreement"; each capitalized term defined in the Credit Agreement and
used herein without definition shall have the meaning assigned to such term in
the Credit Agreement, unless expressly provided to the contrary).

      


      B.                      Contemporaneously
herewith, the Borrower, the Senior Agent and the Senior Lenders (each as defined
in the Credit Agreement) propose to make certain amendments to the Senior Credit
Agreement (as defined in the Credit Agreement) pursuant to that certain
Amendment No. 3 dated as of May 7, 2009 (the "Senior Credit Agreement
Amendment") among the Borrower, the Senior Agent and the Senior
Lenders.

      


      C.                      The
Borrower has requested that the Lenders (a) to the extent required to make such
agreements effective, consent to (i) the Senior Credit Agreement Amendment and
(ii) the terms of that certain Amendment No. 2 to Intercreditor and
Subordination Agreement dated as of May 7, 2009 (the "Intercreditor
Amendment") among the Administrative Agent, the Subordinated Agent, the
Borrower and the Guarantors, and (b) make certain amendments to the Credit
Agreement as provided herein.

      


      D.                      The
Borrower, the Administrative Agent and the Lenders wish to, subject to the terms
and conditions of this Agreement, make certain amendments to the Credit
Agreement as provided herein.

      


      THEREFORE, the Borrower, the
Administrative Agent and the Lenders hereby agree as follows:

      


      ARTICLE
I.

       

      DEFINITIONS

       

      Section
1.01        Terms
Defined Above.  As used in this Agreement, each of the terms
defined in the opening paragraph and the Recitals above shall have the meanings
assigned to such terms therein.

       

      Section
1.02                         Other
Definitional Provisions.
The words "hereby", "herein", "hereinafter", "hereof", "hereto" and
"hereunder" when used in this Agreement shall refer to this Agreement as a whole
and not to any particular Article, Section, subsection or provision of
this

       


      
        
          
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      Agreement.  Article,
Section, subsection and Exhibit references herein are to such Articles,
Sections, subsections and Exhibits of this Agreement unless otherwise specified.
All titles or headings to Articles, Sections, subsections or other divisions of
this Agreement or the exhibits hereto, if any, are only for the convenience of
the parties and shall not be construed to have any effect or meaning with
respect to the other content of such Articles, Sections, subsections, other
divisions or exhibits, such other content being controlling as the agreement
among the parties hereto.  Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the
singular.  Words denoting gender shall be construed to include the
masculine, feminine and neuter, when such construction is appropriate; and
specific enumeration shall not exclude the general but shall be construed as
cumulative.  Definitions of terms defined in the singular or plural
shall be equally applicable to the plural or singular, as the case may be,
unless otherwise indicated.

       

      ARTICLE
II.

       

      CONSENT

       

      Section
2.01        Consent;
Acknowledgment; Agreement.  Subject to the terms of this
Agreement and to the extent required to make such agreements effective, the
Administrative Agent and the Lenders hereby consent to (a) the execution and
delivery of the Senior Credit Agreement Amendment and the terms and conditions
thereof and (b) the execution and delivery of the Intercreditor Amendment and
the terms and conditions thereof.  The consents by the Lenders and by
the Administrative Agent described in this Section 2.01 are collectively
referred to herein as the "Consents."  The Consents are contingent
upon the satisfaction of the conditions precedent described in Article VI
below.  Such Consents are strictly limited to the extent described
herein.  Nothing contained herein shall be construed to be a consent
to or a permanent waiver of the Sections covered by the Consents provided for
herein or any other terms, provisions, covenants, warranties or agreements
contained in the Credit Agreement or any other Loan Document.  The
Lenders reserve the right to exercise any rights and remedies available to them
in connection with any other present or future defaults with respect to any
provision of the Credit Agreement or any other Loan Document.  The
descriptions herein of the Consents are based upon the information provided to
the Lenders on or prior to the date hereof, and, to the extent that material
information is incorrect or omitted with respect to any activity, event or
circumstance that could result in a Default or Event of Default, such Consent
shall not be deemed to apply to such activity, event or
circumstance.  The failure of the Lenders to give notice to the
Borrower of any such Defaults or Events of Default is not intended to be nor
shall be a waiver thereof.  The Borrower hereby agrees and
acknowledges that the Lenders require and will require strict performance by the
Borrower of all of its obligations, agreements and covenants contained in the
Credit Agreement and the other Loan Documents pursuant to the terms thereof, and
no inaction or action regarding any Default or Event of Default is intended to
be or shall be a waiver thereof.

       

      ARTICLE
III.

       

      AMENDMENTS

       

      Section
3.01        Section 1.01
of the Credit Agreement is hereby amended as
follows:

       


      
        
          
             

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      (a)                      Each
of the defined term "Applicable Margin" is deleted in its entirety and replaced
with the following:

       

      "Applicable Margin"
means, with respect to any Advance, (a) during such times as any Event of
Default exists, 3% per annum plus the rate per annum set forth below for the
relevant Type of such Advance based on the applicable date, and (b) at all other
times:

       

      (i)           on
any day prior to July 2, 2009, the rate per annum set forth below for the
relevant Type of such Advance; and

       

      
        	
                Eurodollar
      Rate Advances

              	
                Reference
      Rate Advances

              
	
                10.00%

              	
                9.00%

              


      

      


      (ii)           at
any other time, the rate per annum set forth below for the relevant Type of such
Advance.

       

      
        	
                Eurodollar
      Rate Advances

              	
                Reference
      Rate Advances

              
	
                13.00%

              	
                12.00%

              


      

      


      The
Applicable Margin for any Advance shall change when and as any such Event of
Default commences or terminates.

       

      (b)           The
defined term "May 14, 2009 Payment Amount" is hereby deleted in its
entirety.

       

      (c)           The
following new defined terms are added in alphabetical order:

       

      "Amendment No. 3"
means that certain Amendment No. 3 dated as of May 7, 2009 entered into by the
parties hereto which amends this Agreement.

       

      "Warrants" means
warrants exercisable at an exercise price equal to $0.01 per unit that represent
2.5% of the Equity Interests of the Borrower outstanding as of the date of
issuance.

       

      Section
3.02        Section 2.06 of the
Credit Agreement is hereby deleted in its entirety and replaced with the
following:

       

      Section
2.06                                Repayment of
Advances.  The Borrower shall repay to the Administrative Agent
for the ratable benefit of the Lenders the outstanding principal amount of each
Advance, together with any accrued interest thereon, on the Maturity Date or
such earlier date pursuant to Section 7.02 or Section 7.03.

       

      Section
3.03Section 2.09 of the Credit Agreement is hereby amended by adding a
new subsection (e) to the end thereof as follows:

       

      (e)           PIK
Interest.  Notwithstanding anything herein to the contrary,
with respect to any interest payment due on or after July 2, 2009, 3% per
annum

       


      
        
          
             

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      of
the accrued interest payable shall be capitalized and added to the aggregate
outstanding principal of the Loans, and such additional principal shall accrue
interest compounded quarterly in accordance with Section 2.09.

       

      Section
3.04        Section 5.06 of the
Credit Agreement is hereby amended by (1) deleting "and" at the end of clause
(p), (2) changing clause (q) to clause (r), and (3) inserting the following new
clause (q) in appropriate order:

       

      (q)           Asset Sale
Report.  On or before June 8, 2009, the Borrower shall deliver
to the Administrative Agent a confidential written report in form and detail
reasonably satisfactory to the Administrative Agent identifying assets of the
Borrower that if sold would reasonably be expected by the Borrower to result in
the receipt of proceeds sufficient to (a) cure any Borrowing Base Deficiency
under the First Lien Credit Agreement resulting from such sale and (b) repay the
Obligations in full.

       

      Section
3.05Article V of the Credit Agreement is hereby amended by adding a new
Section 5.15 to the end thereof as follows:

       

      Section
5.15.  Amendment to Registration
Statement.  On or prior to May 22, 2009, the Borrower
shall file an eleventh amendment to the Registration Statement on Form S-1 filed
by the Borrower with the Securities and Exchange Commission on July 13, 2007
with respect to the initial public offerings of its common units, which
amendment shall be in form and substance satisfactory to the Administrative
Agent in its sole reasonable discretion.

       

      Section
3.06Section 7.01(c)(i) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:

       

      (i)
perform or observe any covenant contained in Section 5.02(a), Section 5.06(e) or
(q), Section 5.12, Section 5.13, Section 5.15 or Article VI of this Agreement or
Section 4.01 of Amendment No. 3 or

       

      Section
3.07Section 7.01 of the Credit Agreement is hereby amended by (1)
deleting the semicolon at the end of subsection (n) and replacing it with "; or"
and (2) deleting subsections (o) and (p) in their entirety and replacing
them with the following:

       

      (o)           Equity
Issuance Proceeds. The
Borrower fails to receive Equity Issuance Proceeds in immediately available
funds in an amount equal to at least $20,000,000 on or before June 30, 2009;
or

       

      (p)           Consent to Issue
Warrants.  The Borrower fails to receive by
June 8, 2009 any consent or approval necessary to issue to the Lenders
the Warrants in the event the Obligations have not been repaid in full on or
before the Maturity Date.

       


      
        
          
             

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      ARTICLE
IV.

       

      AGREEMENT

       

      Section
4.01        Warrants.  The
Borrower hereby agrees that on or before July 2, 2009, it will issue to the
Lenders on a pro rata basis warrants exercisable at an exercise price equal to
$0.01 per unit, which warrants shall (a) represent 2.5% of the Equity Interests
of the Borrower outstanding as of the date of issuance and (b) be in form and on
terms satisfactory to the Administrative Agent in its sole discretion; provided that the
Borrower shall not be required to issue such warrants if the Obligations are
repaid in full on or before the Maturity Date.

       

      Section
4.02        Consent
Fee.  In connection with this Agreement, the Borrower agrees to
pay to the Administrative Agent for the account of each Lender having a
Commitment a consent fee in an amount equal to $200,000 (the "Consent
Fee").  The Consent Fee shall be due and payable on the earlier
of the following dates: (a) July 1, 2009 or (b) the date on which the
Obligations are repaid in full in accordance with the terms of the Intercreditor
Agreement.  Notwithstanding the foregoing, if the Borrower fails to
repay the Obligations in full on or before July 1, 2009, the Consent Fee shall
be waived and the Borrower shall not be required to pay such fee.

       

      ARTICLE
V.

       

      REPRESENTATIONS
AND WARRANTIES

       

      Section
5.01        Representations
and Warranties.  The Borrower represents and warrants that: (a)
its representations and warranties contained in Article IV of the Credit
Agreement and its representations and warranties contained in the Security
Instruments, the Guaranties, and each of the other Loan Documents to which it is
a party are true and correct in all material respects on and as of the Effective
Date, as though made on and as of such date, except those representations and
warranties that speak of a certain date, which representations and warranties
were true and correct as of such date; (b) no Default has occurred and is
continuing; (c) the execution, delivery and performance of this Agreement are
within the corporate power and authority of  the Borrower and have
been duly authorized by appropriate corporate action and proceedings; (d) this
Agreement constitutes the legal, valid, and binding obligation of the Borrower
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the rights of creditors generally and general principles of equity; (e) there
are no governmental or other third party consents, licenses and approvals
required in connection with the execution, delivery, performance, validity and
enforceability of this Agreement; and (f) the Liens under the Security
Instruments are valid and subsisting and secure the Borrower's obligations under
the Loan Documents.

       

      ARTICLE
VI.

       

      CONDITIONS

       

      This
Agreement shall become effective and enforceable against the parties hereto upon
the occurrence of the following conditions precedent:

      


      Section
6.01        Documentation.  The
Administrative Agent shall have received multiple original counterparts, as
requested by the Administrative Agent, of (a) this Agreement duly
and

       


      
        
          
             

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      validly
executed and delivered by duly authorized officers of the Borrower, the
Administrative Agent, the Issuing Lender and the Lenders and (b) the
Intercreditor Amendment.

       

      Section
6.02        Senior
Credit Agreement Amendment.  The Administrative Agent shall
have received true and correct copies of the fully-executed Senior Credit
Agreement Amendment and such agreement shall have become effective.

       

      Section
6.03        No
Default.  No Default shall have occurred and be continuing as
of the Effective Date.

              

      Section
6.04        Representations
and Warranties.  The representations and warranties in this
Agreement shall be true and correct in all material respects.

       

      Section
6.05        Fees and
Expenses.  The Borrower shall have paid all fees and expenses
of the Administrative Agent's outside legal counsel and other consultants
pursuant to all invoices presented for payment on or prior to the Effective
Date.

       

      ARTICLE
VII.

       

      MISCELLANEOUS

       

      Section
7.01        Effect on
Loan Documents;
Acknowledgments.

       

      (a)           The
Borrower acknowledges that on the date hereof all Obligations are payable
without defense, offset, counterclaim or recoupment.

       

      (b)           The
Administrative Agent and the Lenders hereby expressly reserve all of their
rights, remedies, and claims under the Loan Documents.  Nothing in
this Agreement shall constitute a waiver or relinquishment of (i) any Default or
Event of Default under any of the Loan Documents, (ii) any of the agreements,
terms or conditions contained in any of the Loan Documents, (iii) any rights or
remedies of the Administrative Agent or any Lender with respect to the Loan
Documents, or (iv) the rights of the Administrative Agent or any Lender to
collect the full amounts owing to them under the Loan Documents.

       

      (c)           Each
of the Borrower, the Administrative Agent and the Lenders does hereby adopt,
ratify, and confirm the Credit Agreement, and acknowledges and agrees that the
Credit Agreement and all other Loan Documents are and remain in full force and
effect, and the Borrower acknowledges and agrees that its liabilities under the
Credit Agreement and the other Loan Documents are not impaired in any respect by
this Agreement or the consent and amendment granted hereunder.

       

      (d)           This
Agreement is a Loan Document for the purposes of the provisions of the other
Loan Documents.  Without limiting the foregoing, any breach of
representations, warranties, and covenants under this Agreement shall be a
Default or Event of Default, as applicable, under the Credit
Agreement.

       

      Section
7.02        Counterparts.  This
Agreement may be signed in any number of counterparts, each of which shall be an
original and all of which, taken together, constitute a single
instrument.  This Agreement may be executed by facsimile signature and
all such signatures shall be effective as originals.

       


      
        
          
             

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      Section
7.03        Successors
and Assigns.  This Agreement shall be binding upon and inure to
the benefit of the Lenders, the Borrower, the Administrative Agent and their
respective successors and assigns permitted pursuant to the Credit
Agreement.

       

      Section
7.04        Invalidity.  In
the event that any one or more of the provisions contained in this Agreement
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement.

       

      Section
7.05         Governing
Law.  This Agreement
shall be deemed to be a contract made under and shall be governed by and
construed in accordance with the laws of the State of New York.

       

      Section 7.06        RELEASE.  THE
BORROWER ACKNOWLEDGES THAT ON THE DATE HEREOF ALL OBLIGATIONS ARE PAYABLE
WITHOUT DEFENSE, OFFSET, COUNTERCLAIM OR RECOUPMENT.  IN ADDITION,
EACH OF THE BORROWER AND ITS SUBSIDIARIES (FOR THEMSELVES AND THEIR RESPECTIVE
SUCCESSORS, AGENTS, ASSIGNS, TRANSFEREES, OFFICERS, DIRECTORS, EMPLOYEES,
SHAREHOLDERS, ATTORNEYS AND AGENTS) HEREBY RELEASES ANY AND ALL CLAIMS, CAUSES
OF ACTION OR OTHER DISPUTES IT MAY HAVE AGAINST THE ADMINISTRATIVE AGENT, ANY OF
THE LENDERS, LEGAL COUNSEL TO THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS,
CONSULTANTS HIRED BY ANY OF THE FOREGOING, OR ANY OF THEIR RESPECTIVE
AFFILIATES, SUBSIDIARIES, SHAREHOLDERS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, SUCCESSORS OR ASSIGNS OF ANY KIND OR NATURE ARISING OUT OF,
RELATED TO, OR IN ANY WAY CONNECTED WITH, THE CREDIT AGREEMENT OR THE LOAN
DOCUMENTS, IN EACH CASE WHICH MAY HAVE ARISEN ON OR BEFORE THE DATE OF THIS
AGREEMENT.  EACH OF THE BORROWER AND ITS SUBSIDIARIES HEREBY
ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT AND HAS CONFERRED WITH ITS COUNSEL
AND ADVISORS REGARDING ITS CONTENT, INCLUDING THIS SECTION 7.06, AND IS FREELY
AND VOLUNTARILY ENTERING INTO THIS AGREEMENT, AND HEREBY AGREES TO WAIVE ANY
CLAIM THAT THE TERMS OF THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, THE
RELEASES CONTAINED HEREIN) ARE INVALID OR OTHERWISE UNENFORCEABLE.

       

      Section 7.07        Entire
Agreement.
THIS AGREEMENT, THE
CREDIT AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.

       

      THERE
ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

       

      


      


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