SECOND FORBEARANCE TO TERM LOAN CREDIT AGREEMENT AMONG LEGACY RESERVES LP, as Borrower, THE GUARANTORS, CORTLAND CAPITAL MARKET SERVICES LLC, as Administrative Agent, and THE LENDERS SIGNATORY HERETO DATED AS OF June 7, 2019
Exhibit 10.2
SECOND FORBEARANCE
TO
AMONG
LEGACY RESERVES LP,
as Borrower,
THE GUARANTORS,
CORTLAND CAPITAL MARKET SERVICES LLC,
as Administrative Agent,
and
THE LENDERS SIGNATORY HERETO
DATED AS OF June 7, 2019
SECOND FORBEARANCE TO TERM LOAN CREDIT AGREEMENT
This SECOND FORBEARANCE TO TERM LOAN CREDIT AGREEMENT (this “Second Forbearance Agreement”) dated as of June 7, 2019, among LEGACY RESERVES LP, a limited partnership duly 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”); CORTLAND CAPITAL MARKET SERVICES LLC, as administrative agent for the
Lenders (in such capacity, together with its successors, the “Administrative Agent”); and the Lenders under the Term Loan Credit Agreement (collectively, the “Lenders”) signatory hereto.
Recitals
A. The Borrower, the Administrative Agent and the Lenders are parties to that certain Term Loan Credit Agreement dated as of October 25, 2016 (as amended by the First Amendment and Waiver
to the Term Loan Credit Agreement, dated July 31, 2017, as further amended by the Second Amendment to the Term Loan Credit Agreement, dated October 30, 2017, as further amended by the Third Amendment to the Term Loan Credit Agreement, dated
December 31, 2017, as further amended by the Fourth Amendment to the Term Loan Credit Agreement, dated as of March 23, 2018, as further amended by the Fifth Amendment to the Term Loan Credit Agreement, dated as of September 14, 2018, as further
amended by the Sixth Amendment to the Term Loan Credit Agreement, dated as of September 20, 2018 and as further amended by the Seventh Amendment to the Term Loan Credit Agreement, dated March 21, 2019 (as so amended prior to the date hereof, the “Term
Loan Credit Agreement”)), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.
B. The Guarantors are parties to that certain Term Loan Guaranty Agreement Third Amended and Restated Guaranty Agreement dated as of October 25, 2016 made by each of the Guarantors (as
defined therein) in favor of the Administrative Agent (as amended, supplemented or modified prior to the date hereof, the “Term Loan Guaranty Agreement”).
C. The Borrower has notified the Administrative Agent and the Lenders that (a) an Event of Default has occurred under Section 10.01(g) of the Term Loan Credit Agreement on account of a
missed payment under the RBL Facility as of the date hereof and (b) an Event of Default has occurred under Section 4.1 of that certain Seventh Amendment to Term Loan Credit Agreement, dated March 21, 2019 as a result of the Borrower’s failure to
deliver its audited consolidated balance sheet and related statements of operations, shareholders’ equity and cash flows for 2018 without a “going concern” or like qualification or exception and without any qualification or exception as to the
scope of such audit (collectively, the “Forbearance Defaults”).
D. Notwithstanding the occurrence of the Forbearance Defaults, the Borrower has requested that the Lenders hereto forbear, and the Lenders party hereto (constituting all of the Lenders
under the Term Loan Credit Agreement) are willing to forbear from taking any other remedial actions under the Term Loan Credit Agreement and the Loan Documents, but only on the terms and subject to the conditions provided herein.
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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.
1.1 As used in this Second Forbearance Agreement, each of the terms defined in the opening paragraph and the Recitals above shall have the meanings assigned to such terms therein. Each
term defined in the Term Loan Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Term Loan Credit Agreement unless expressly provided to the contrary. Article, Section, Schedule, and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to the Term Loan Credit Agreement, unless otherwise specified. The words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Second Forbearance
Agreement shall refer to this Second Forbearance Agreement as a whole and not to any particular provision of this Second Forbearance Agreement. The term “including” means “including, without limitation”. Paragraph headings have been inserted in
this Second Forbearance Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Second Forbearance Agreement and shall not be used in the interpretation of any provision of this
Second Forbearance Agreement.
1.2 The following terms shall have the following meanings:
“Forbearance Period” means the period beginning on the Second Forbearance Agreement Effective Date and ending on the earlier to occur of (i) 11:59 p.m. (New York time) on June 12, 2019, and
(ii) the Termination Date.
“Forbearance Termination Event” means any of the following: (i) the occurrence of a Default or Event of Default (in each case other than the Forbearance Defaults) under any Loan Document or (ii) any breach of
the Borrower or any Guarantor of any representation, warranty, term, covenant, or agreement set forth in this Second Forbearance Agreement.
“Termination Date” has the meaning assigned to such term in Section 3.2 hereof.
Section 2. Conditions Precedent. This Second Forbearance Agreement shall not become effective until the date on which the Administrative Agent shall have received (such date, the “Second
Forbearance Agreement Effective Date”): (i) from the Majority Lenders, the Borrower and the Guarantors, counterparts of this Second Forbearance Agreement signed on behalf of each such Person and (ii) the Administrative Agent and Lenders shall
have received a certificate of a Responsible Officer of the Borrower certifying that attached thereto is a true, correct and complete copy of a forbearance to the RBL Facility dated as of June 7, 2019, among the Obligors and Xxxxx Fargo Bank,
National Association, as administrative agent (the “RBL Forbearance”), which shall be in form and substance reasonably satisfactory to the Majority Lenders and the effectiveness of such forbearance agreement shall have occurred (or shall
occur substantially concurrently with the Second Forbearance Agreement Effective Date).
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This Second Forbearance Agreement shall be effective and the Second Forbearance Agreement Effective Date shall have occurred when the Administrative Agent and the Lenders signatory hereto
(constituting all Lenders under the Term Loan Credit Agreement) have received documents confirming or certifying, to the satisfaction of the Majority Lenders, compliance with the conditions set forth in this Section 2 or the waiver of such
conditions as permitted in Section 12.02 of the Term Loan Credit Agreement.
Section 3. Second Forbearance Agreement; Miscellaneous.
3.1 Second Forbearance Agreement. Subject to the terms and conditions hereof, the Administrative Agent and the Majority Lenders party hereto agree to forbear, during the Forbearance
Period, from the exercise of all rights or remedies under the Term Loan Credit Agreement and the other Loan Documents and applicable law (including, but not limited to, initiating any proceedings to collect the Indebtedness, initiating or
repossessing or commencing a foreclosure of any Collateral), solely as a result of the occurrence of the Forbearance Defaults. The Borrower acknowledges and agrees that, at the end of the Forbearance Period, the provisions of this Section 3
shall become of no force and effect and the Administrative Agent will be free, in accordance with the applicable Loan Documents and applicable law, to exercise any rights and remedies available to them at that time on account of any Forbearance
Defaults that have occurred (and, for the avoidance of doubt, and without prejudice to the reservation of rights in this Second Forbearance Agreement, any other Defaults or Events of Default under the Loan Documents, that have occurred), as if this
Second Forbearance Agreement had not been entered into on the date hereof.
3.2 Termination of Forbearance. Upon the occurrence of any Forbearance Termination Event, this Second Forbearance Agreement and the forbearance provided for herein shall
immediately and automatically terminate (such date of termination, the “Termination Date”), as if this Second Forbearance Agreement had not been entered into on the date hereof.
Section 4. Miscellaneous.
4.1 Acknowledgement of Indebtedness. The Administrative Agent and the Lenders hereby expressly reserve all rights, remedies, and claims under the Loan Documents. Except as expressly
provided herein with respect to the Forbearance Defaults, nothing in this Second Forbearance 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 any Secured Party with respect to the Loan Documents, or (iv) the rights of any Secured Party (as defined in the Security Agreement) to collect the full
amounts owing to them under the Loan Documents.
4.2 Strict Performance. Each Obligor hereby agrees and acknowledges that the Secured Parties (as defined in the Security Agreement) require and will require strict performance by
the Obligors of all of their respective obligations, agreements and covenants contained in the Term Loan Credit Agreement and the other Loan Documents (including any action or circumstance which is prohibited or limited during the existence of a
Default or Event of Default), and no inaction or action by any such Secured Party regarding any Default or Event of Default is intended to be or shall be a waiver thereof. Each Obligor hereby also agrees and acknowledges that no course of dealing
and no delay in exercising any right, power, or remedy conferred to any such Secured Party in the Term Loan Credit Agreement or in any other Loan Documents or now or hereafter existing at law, in equity, by statute, or otherwise shall operate as a
waiver of or otherwise prejudice any such right, power, or remedy.
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4.3 No Course of Dealings. Furthermore, each party hereto hereby agrees that, in no event and under no circumstance shall any past or future discussions with the Administrative
Agent or any other Secured Party (as defined in the Security Agreement), serve to (i) cause a modification of the Loan Documents, (ii) establish a custom or course of dealing with respect to any of the Loan Documents, (iii) operate as a waiver of
any existing or future Default or Event of Default under the Loan Documents, (iv) entitle any Obligor to any other or further notice or demand whatsoever beyond those required by the Loan Documents, as forborne hereby or (v) in any way modify,
change, impair, affect, diminish or release any Obligor’s obligations or liability under the Loan Documents, as forborne hereby, or any other liability any Obligor may have to any such Secured Party.
4.4 Confirmation. The provisions of the Term Loan Credit Agreement, as forborne by this Second Forbearance Agreement, shall remain in full force and effect following the Second
Forbearance Agreement Effective Date.
4.5 Ratification and Affirmation; Representations and Warranties. Each Obligor hereby (a) acknowledges the terms of this Second Forbearance Agreement; (b) ratifies and affirms its
obligations under, and acknowledges its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect as expressly amended hereby; and (c) represents
and warrants to the Lenders that as of the date hereof, after giving effect to the terms of this Second Forbearance Agreement: (i) all of the representations and warranties contained in each Loan Document to which it is a party are true and
correct, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct as of such specified earlier date, (ii) no
Default or Event of Default (other than the Forbearance Defaults) has occurred and is continuing, (iii) no event or events have occurred which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect and (iv)
it has not designated any Subsidiary as an E&P Subsidiary. Without limiting the foregoing, each Guarantor hereby ratifies, confirms, acknowledges and agrees that its obligations under the Term Loan Guaranty Agreement are in full force and
effect and that such Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, all of the Guarantor Obligations (as defined in the
Term Loan Guaranty Agreement) and its execution and delivery of this Second Forbearance Agreement does not indicate or establish an approval or consent requirement by such Guarantor under the Term Loan Guaranty Agreement, in connection with the
execution and delivery of amendments, consents or waivers to the Term Loan Credit Agreement or any of the other Loan Documents. Each of the Grantors have granted to the Administrative Agent, a valid, binding, perfected, enforceable, first priority
(subject to Excepted Liens) Liens in the Collateral and all Deed of Trust Property and all other assets described in the Security Instruments and such Liens are not subject to avoidance, subordination, recharacterization, recovery, attack, offset,
counterclaim, or defense of any kind.
4.6 Counterparts. This Second Forbearance Agreement 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. Delivery of this Second Forbearance Agreement by telecopy, facsimile, email or other electronic means shall be effective as delivery of a manually executed counterpart hereof.
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4.7 No Oral Agreement. This Second Forbearance Agreement, the Term Loan 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.
4.8 GOVERNING LAW. THE PROVISIONS OF SECTION 12.09 OF THE TERM LOAN CREDIT AGREEMENT ARE INCORPORATED HEREIN MUTATIS MUTANDIS.
4.9 Payment of Expenses. In accordance with Section 12.03 of the Term Loan Credit Agreement and without limiting the rights of any Lender under Section 12.03 of the Term Loan Credit
Agreement, the Borrower agrees to pay or reimburse the Administrative Agent and the Lenders for all of their reasonable out-of-pocket costs and reasonable expenses incurred, including, without limitation, the reasonable fees and disbursements of
counsel and financial advisor to the Administrative Agent, promptly upon receipt.
4.10 Severability. Any provision of this Second Forbearance Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.
4.11 Successors and Assigns. This Second Forbearance Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
4.12 Loan Document. This Second Forbearance Agreement is a “Loan Document” as defined and described in the Term Loan Credit Agreement, and all of the terms and provisions of the Term
Loan Credit Agreement relating to Loan Documents shall apply hereto. Without limiting the foregoing, any breach of representations, warranties, and covenants under Second Forbearance Agreement shall be a Default or Event of Default, as applicable,
under the Term Loan Credit Agreement.
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4.13 RELEASE. FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY
ACKNOWLEDGED, THE BORROWER AND EACH OTHER OBLIGOR HEREBY, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, FULLY AND WITHOUT RESERVE, RELEASES AND FOREVER DISCHARGES EACH LENDER, EACH AGENT, THE ARRANGER, THE ISSUING BANK, AND EACH OF THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS, OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, TRUSTEES, ATTORNEYS, AGENTS, ADVISORS (INCLUDING ATTORNEYS, ACCOUNTANTS AND EXPERTS) AND AFFILIATES (COLLECTIVELY THE “RELEASED
PARTIES” AND INDIVIDUALLY A “RELEASED PARTY”) FROM ANY AND ALL ACTIONS, CLAIMS, DEMANDS, CAUSES OF ACTION,
JUDGMENTS, EXECUTIONS, SUITS, DEBTS, LIABILITIES, COSTS, DAMAGES, EXPENSES OR OTHER OBLIGATIONS OF ANY KIND AND NATURE WHATSOEVER, KNOWN OR UNKNOWN, DIRECT AND/OR INDIRECT, AT LAW OR IN EQUITY, WHETHER NOW EXISTING OR HEREAFTER ASSERTED
(INCLUDING, WITHOUT LIMITATION, ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITH RESPECT TO THE NEGLIGENCE OF ANY RELEASED PARTY), FOR OR BECAUSE OF ANY MATTERS OR THINGS OCCURRING, EXISTING OR ACTIONS DONE, OMITTED TO BE DONE,
OR SUFFERED TO BE DONE BY ANY OF THE RELEASED PARTIES, IN EACH CASE, ON OR PRIOR TO THE DATE HEREOF AND ARE IN ANY WAY DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY CONNECTED TO ANY OF THIS SECOND FORBEARANCE AGREEMENT, THE TERM LOAN CREDIT
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (COLLECTIVELY, THE “RELEASED MATTERS”). THE BORROWER AND EACH
OTHER OBLIGOR, BY EXECUTION HEREOF, HEREBY ACKNOWLEDGES AND AGREES THAT THE AGREEMENTS IN THIS SECTION 4.13 ARE INTENDED TO COVER AND BE IN FULL SATISFACTION
FOR ALL OR ANY ALLEGED INJURIES OR DAMAGES ARISING IN CONNECTION WITH THE RELEASED MATTERS. THE BORROWER AND EACH OTHER OBLIGOR HEREBY FURTHER AGREES THAT IT WILL NOT XXX ANY RELEASED PARTY ON THE BASIS
OF ANY RELEASED MATTER RELEASED, REMISED AND DISCHARGED BY THE BORROWER AND THE OBLIGORS PURSUANT TO THIS SECTION 4.13. IN AGREEING TO THIS SECTION 4.13, THE BORROWER AND EACH GUARANTOR CONSULTED WITH, AND HAS BEEN REPRESENTED BY, LEGAL COUNSEL AND EXPRESSLY DISCLAIM ANY RELIANCE ON ANY REPRESENTATIONS, ACTS OR
OMISSIONS BY ANY OF THE RELEASED PARTIES AND HEREBY AGREES AND ACKNOWLEDGES THAT THE VALIDITY AND EFFECTIVENESS OF THE RELEASES SET FORTH HEREIN DO NOT DEPEND IN ANY WAY ON ANY SUCH REPRESENTATIONS, ACTS AND/OR OMISSIONS OR THE ACCURACY,
COMPLETENESS OR VALIDITY HEREOF. THE PROVISIONS OF THIS SECTION 4.13, SHALL SURVIVE THE TERMINATION OF THIS SECOND FORBEARANCE AGREEMENT, THE TERM LOAN
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS AND PAYMENT IN FULL OF THE INDEBTEDNESS.
4.14 Administrative Agent Direction. Each undersigned Lender (collectively constituting all Lenders party to the Term Loan Agreement) hereby directs the Administrative Agent to
execute and deliver this Second Forbearance Agreement.
[SIGNATURES BEGIN NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Forbearance Agreement to be duly executed as of the date first written above.
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BORROWER:
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LEGACY RESERVES LP
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By:
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Legacy Reserves GP, LLC, its general partner
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By:
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Legacy Reserves Inc., its sole member
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By:
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/s/ Xxxxx Xxxxxx Xxxxxxxx
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Xxxxx Xxxxxx Xxxxxxxx
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Chief Executive Officer
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GUARANTORS:
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LEGACY RESERVES OPERATING LP
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By:
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Legacy Reserves Operating GP LLC, its general partner
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By:
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Legacy Reserves LP, its sole member
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By:
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Legacy Reserves GP, LLC, its general partner
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By:
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Legacy Reserves Inc., its sole member
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By:
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/s/ Xxxxx Xxxxxx Xxxxxxxx
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Xxxxx Xxxxxx Xxxxxxxx
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Chief Executive Officer
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LEGACY RESERVES OPERATING GP LLC
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By:
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Legacy Reserves LP, its sole member
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By:
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Legacy Reserves GP, LLC, its general partner
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By:
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Legacy Reserves Inc., its sole member
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By:
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/s/ Xxxxx Xxxxxx Xxxxxxxx
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Xxxxx Xxxxxx Xxxxxxxx
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Chief Executive Officer
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Signature Page to
Second Forbearance Agreement to Term Loan Credit Agreement
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LEGACY RESERVES GP, LLC
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By:
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Legacy Reserves Inc., its sole member
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By:
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/s/ Xxxxx Xxxxxx Xxxxxxxx
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Xxxxx Xxxxxx Xxxxxxxx
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Chief Executive Officer
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LEGACY RESERVES SERVICES LLC
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DEW GATHERING LLC
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PINNACLE GAS TREATING LLC
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LEGACY RESERVES ENERGY SERVICES LLC
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LEGACY RESERVES MARKETING LLC
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By:
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/s/ Xxxxx Xxxxxx Xxxxxxxx
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Xxxxx Xxxxxx Xxxxxxxx
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Chief Executive Officer
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Signature Page to
Second Forbearance Agreement to Term Loan Credit Agreement
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CORTLAND CAPITAL MARKET
SERVICES LLC,
as Administrative Agent
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By:
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/s/ Xxxxxxx Xxxxxxx
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Name:
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Xxxxxxx Xxxxxxx
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Title:
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Associate Counsel
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Signature Page to
Second Forbearance Agreement to Term Loan Credit Agreement
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GSO ENERGY SELECT OPPORTUNITIES FUND LP
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By: GSO Energy Select Opportunities Associates LLC, its general partner
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By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Authorized Signatory
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GSO ENERGY PARTNERS-A LP
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By: GSO Energy Partners-A Associates LLC, its general partner
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By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Authorized Signatory
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GSO ENERGY PARTNERS-B LP
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By: GSO Energy Partners-B Associates LLC, its general partner
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By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Authorized Signatory
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GSO ENERGY PARTNERS-C LP
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By: GSO Energy Partners-C Associates LLC, its general partner
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By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Authorized Signatory
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GSO ENERGY PARTNERS-C II LP
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By: GSO Energy Partners-C Associates II LLC, its general partner
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By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Authorized Signatory
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Signature Page to
Second Forbearance Agreement to Term Loan Credit Agreement
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GSO ENERGY PARTNERS-D LP
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By: GSO Energy Partners-D Associates LLC, its general partner
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By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Authorized Signatory
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GSO PALMETTO OPPORTUNISTIC INVESTMENT PARTNERS LP
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By: GSO Palmetto Opportunistic Associates LLC, its general partner
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By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: Authorized Signatory
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Signature Page to
Second Forbearance Agreement to Term Loan Credit Agreement
