ex_10-1.htm


    Exhibit
10.1

     

     

     

    
      FIFTH
AMENDMENT

       

      TO

       

      CREDIT
AGREEMENT

       

      Among

       

      LEGACY
RESERVES LP

      as
Borrower,

       

      BNP
PARIBAS,

      as
Administrative Agent,

       

      and

       

      The
Lenders Signatory Hereto

       

      


       

      Effective
as of October 6, 2008

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      FIFTH
AMENDMENT TO CREDIT AGREEMENT

       

      This
FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Fifth Amendment”)
executed effective as of October 6, 2008 (the “Fifth 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 Fifth Amendment, shall have the
meaning ascribed to such term in the Credit Agreement.  Unless
otherwise indicated, all section references in this Fifth Amendment refer to the
Credit Agreement.

       

      Section 2. 
Amendments to
Credit Agreement.

       

      2.1           Definitions.  Section
1.02 is hereby amended by:

       

      
        	
                 
      

              	
                (a)

              	
                amending
      and restating the following definitions as
  follows:

              


      

       

      “‘Agreement’ means this
Credit Agreement, as amended by that certain First Amendment to Credit
Agreement, dated as of July 7, 2006, the Second Amendment to Credit Agreement,
dated as of May 3, 2007, the Third Amendment to Credit Agreement, dated as of
October 24, 2007, the Fourth Amendment to Credit Agreement, dated as of April
24, 2008, and the Fifth Amendment to Credit Agreement, dated as of October 6,
2008, and as the same may from time to time be further amended, modified,
supplemented or restated.”

       

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

       

      
        
          
          

        

        
          Fifth
Amendment - 1

          
            

          

        

        
          
          

        

      

       

      
        	 
      	
                Borrowing
      Base Utilization Percentage

              	
                Eurodollar
      Loans

              	
                ABR
      Loans

              
	
                Level
      1

              	
                less
      than 33%

              	
                1.500%

              	
                0.000%

              
	
                Level
      2

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

              	
                1.750%

              	
                0.250%

              
	
                Level
      3

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

              	
                2.000%

              	
                0.375%

              
	
                Level
      4

              	
                greater
      than or equal to 85%

              	
                2.125%

              	
                0.500%

              


      

      


       

      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.”

       

      
        	
                 
      

              	
                (b)

              	
                Adding
      the following new term in the appropriate alphabetical
    order:

              


      

       

      “‘Total Debt’ means, at
any date, all Debt of the Borrower and the Consolidated Subsidiaries on a
consolidated basis, excluding (i) non-cash obligations under FAS 133 and (ii)
accounts payable and other accrued liabilities (for the deferred purchase price
of Property or services) from time to time incurred in the ordinary course of
business which are not greater than ninety (90) days past the date of invoice or
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with
GAAP.  The term ‘Total Debt’ specifically excludes any obligations of
the Borrower under any Swap Agreements.”

       

      2.2           Section
9.01.                                Section
9.01 is hereby amended by adding a new subsection (c) as follows:

       

      “(c)           Ratio of Total Debt to
EBITDA.  The Borrower will not, on the last day of any fiscal
quarter, permit its ratio of Total Debt as of such time to EBITDA for the four
fiscal quarters ending on the last day of the fiscal quarter immediately
preceding the date of determination for which financial statements are available
to be greater than 3.75 to 1.00.”

       

      
        
          
          

        

        
          Fifth
Amendment - 2

          
            

          

        

        
          
          

        

      

       

      Section 3. 
Assignment;
Borrowing Base.

       

      3.1           Assignments, New Lenders and
Reallocation of Commitments and Loans.  The Lenders have agreed
among themselves, in consultation with the Borrower, to reallocate their
respective Maximum Credit Amounts and Commitments and to, among other things,
allow each of Royal Bank of Canada and Wells Fargo Bank, N.A. to become a party
to the Credit Agreement as a Lender, (each a “New Lender”) by
acquiring an interest in the total Maximum Credit Amounts and Commitments and to
increase the Maximum Credit Amounts and Commitment of Compass Bank and The Bank
of Nova Scotia (each an “Increasing Lender”)
and to decrease completely the Maximum Credit Amount and Commitment of Comerica
Bank (the “Exiting
Lender”).  The Administrative Agent and the Borrower hereby
consent to such reallocation and each New Lender’s and Increasing Lender’s
acquisition of an interest in the Maximum Credit Amounts and Commitments and the
Exiting Lender’s and other Lenders’ assignments of their
Commitments.  On the Fifth Amendment Effective Date and after giving
effect to such reallocations, the Maximum Credit Amounts and Commitment of each
Lender shall be as set forth on Annex I of this Fifth
Amendment which Annex I supersedes and replaces the Annex I to the Credit
Agreement.  With respect to such reallocation, each New Lender and
Increasing Lender shall be deemed to have acquired the Maximum Credit Amounts
and Commitment allocated to it from each of the other Lenders pursuant to the
terms of the Assignment and Assumption Agreement attached as Exhibit D to the
Credit Agreement as if such New Lender, such Increasing Lender, such Exiting
Lender and the other Lenders had executed an Assignment and Assumption Agreement
with respect to such allocation.

       

      3.2           Borrowing
Base.  For the period from and including the Fifth Amendment
Effective Date to but excluding the next Redetermination Date, the amount of the
Borrowing Base shall be equal to $383,760,000.  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 Fifth 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           Fifth
Amendment.  The Administrative Agent shall have received
multiple counterparts as requested of this Fifth Amendment from each Lender and
the Borrower.

       

      4.2           Notes.  The
Administrative Agent shall have received a Note payable to the order of each
Lender in the amount of such Lender’s Commitment after giving effect to the
assignment and increase in commitments pursuant to this Fifth Amendment, duly
executed and delivered by Borrower, to be dated as of the Fifth Amendment
Effective Date.

       

      4.3           Borrowing Base Increase
Fee.  The Administrative Agent shall have received payment of
all fees and other amounts due and payable, including, for the account of each
Lender party to this Amendment, a Borrowing Base increase fee equal to the
product of (a) 1 bp per $1,000,000 of such Lender’s approved credit amount and
(b) the difference between such Lender’s Commitment and such Lender’s highest
Commitment previously in effect, payable on the Fifth Amendment Effective
Date.

       

      
        
          
          

        

        
          Fifth
Amendment - 3

          
            

          

        

        
          
          

        

      

       

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

       

      6.2           Ratification and Affirmation
of Obligors.  Each of the Obligors hereby expressly (a)
acknowledges the terms of this Fifth Amendment, (b) ratifies and affirms its
obligations under the Guaranty Agreement and the other Security Instruments to
which it is a party, (c) acknowledges, renews and extends its continued
liability under the Guaranty Agreement and the other Security Instruments to
which it is a party and (d) 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
Fifth 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 FIFTH 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 FIFTH 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.

       

      6.6           Notes.  Within
a reasonable time after the Fifth Amendment Effective Date, each Lender that
receives a new Note pursuant to the assignments herein shall return its existing
Note to the Borrower.

       

      
        
          
          

        

        
          Fifth
Amendment - 4

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the parties hereto have caused this Fifth 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	 
	 	 	 	 


        

         

      

      
        
           

        

        
          
            Fifth
Amendment 

            Signature Page - 1

          

          
            

          

        

        
           

        

      

    

     

    
      
        	ADMINISTRATIVE
      AGENT:	
                BNP
      PARIBAS,

                as Administrative
      Agent and Lender

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Russell
      Otts	 
	 	 	Russell
      Otts	 
	 	 	Director	 
	 	 	 	 


      

    

    
      	
               

            	
              By:
      

            	/s/ Betsy
      Jocher	 
	 	 	Betsy
      Jocher 	 
	 	 	Director	 
	 	 	 	 


    

     

    
      
        	LENDERS: 	BANK
      OF AMERICA N.A.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Charles
      W. Patterson	 
	 	 	Charles
      W. Patterson	 
	 	 	Managing
      Director	 
	 	 	 	 


      

    

     

    
      
        	 	COMERICA
      BANK	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Rebecca
      L. Wilson	 
	 	 	Rebecca
      L. Wilson	 
	 	 	Assistant
      Vice President	 
	 	 	 	 


      

    

     

    
      
        	 	KEYBANK
      N.A.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Todd
      Coker	 
	 	 	Todd
      Coker	 
	 	 	Assistant
      Vice President	 
	 	 	 	 


      

    

     

    
      
        	 	WACHOVIA
      BANK, N.A.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Jay
      Buckman	 
	 	 	Jay
      Buckman	 
	 	 	Vice
      President	 
	 	 	 	 


      

    

     

    
      
         

      

      
        
          Fifth
Amendment

          Signature Page - 2

        

        
          

        

      

      
         

      

    

     

    
      
        	 	FORTIS
      CAPITAL CORP.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Ilene
      Fowler	 
	 	 	Ilene
      Fowler	 
	 	 	Director	 
	 	 	 	 


      

    

    
      	
               

            	
              By:
      

            	/s/ Michele
      Jones	 
	 	 	Michele
      Jones	 
	 	 	Director	 
	 	 	 	 


    

     

    
      
        	 	COMPASS
      BANK	 
	 	 	 	 
	
                 

              	
                By:
      

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


      

    

     

    
      
        	 	THE
      BANK OF NOVA SCOTIA	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ David
      G. Mills	 
	 	 	David
      G. Mills	 
	 	 	Director	 
	 	 	 	 


      

    

     

    
      
        	 	ROYAL
      BANK OF CANADA	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Don
      J. McKinnerney	 
	 	 	Don
      J. McKinnerney	 
	 	 	Authorized
      Signatory	 
	 	 	 	 


      

    

     

    
      
        	 	WELLS
      FARGO BANK, N.A.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Charles
      D. Kirkham	 
	 	 	Charles
      D. Kirkham	 
	 	 	Senior
      Vice President	 
	 	 	 	 


      

    

     

     

    
      
         

      

      
        
          Fifth
Amendment

          Signature Page - 3