Amendment

Fifth Amendment



FIFTH AMENDMENT

TO

CREDIT AGREEMENT


DATED AS OF MARCH 10, 2014


AMONG


AS BORROWER,


BANK OF MONTREAL,
AS ADMINISTRATIVE AGENT,


ASSOCIATED BANK, N.A.,
AS SYNDICATION AGENT,


AND


THE LENDERS PARTY HERETO







FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Fifth Amendment”) dated as of March 10, 2014, is among NEW SOURCE ENERGY PARTNERS L.P., a Delaware limited partnership, (the “Borrower”); each of the lenders party to the Credit Agreement referred to below (collectively, the “Lenders”); and BANK OF MONTREAL, as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent”).
R E C I T A L S
A.    WHEREAS, the Borrower, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of February 13, 2013 (as amended by the First Amendment to Credit Agreement dated February 28, 2013, the Second Amendment to Credit Agreement dated June 25, 2013, the Third Amendment to Credit Agreement dated as of October 29, 2013, and the Fourth Amendment to Credit Agreement dated as of November 12, 2013, 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, to induce the Administrative Agent and the Lenders to enter into this Fifth Amendment and 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 used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement. Unless otherwise indicated, all section and exhibit references in this Fifth Amendment refer to sections or exhibits of the Credit Agreement.
Section 2.    Amendment to the Credit Agreement.
2.1    Amendments to Section 1.02.
(a)    The following new definition is hereby added where alphabetically appropriate to read as follows:
Kos” means Kristian Kos, his parents, spouse and descendants (whether natural or adopted) and any trust, family limited partnership, or other Person which is Controlled by Kristian Kos and is solely for the benefit of Kristian Kos, his parents, his siblings, spouse or such descendants.

(b)    The following definitions are hereby amended and restated in their entirety to read as follows:


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Agreement” means this Credit Agreement, as amended by the First Amendment to Credit Agreement dated as of February 28, 2013, the Second Amendment to Credit Agreement dated as of June 25, 2013, the Third Amendment to Credit Agreement dated as of October 29, 2013, the Fourth Amendment to Credit Agreement dated as of November 12, 2013, and the Fifth Amendment to Credit Agreement dated as of March 10, 2014, as the same may from time to time be amended, modified, supplemented or restated.
Permitted Holders” means (a) Chernicky; and (b) Kos.
(c)    The definition of “Change in Control” is hereby amended and restated in its entirety to read as follows:
Change in Control” means at any time:
(a)    Kos does not own, directly or indirectly, beneficially or of record, Equity Interests representing 100% of (i) the aggregate issued and outstanding Equity Interests of the General Partner, (ii) the economic interest of the General Partner and (iii) the voting power of all Equity Interests of the General Partner entitled (without regard to the occurrence of any contingency) to vote for the election of members of the board of directors (or equivalent governing body) of the General Partner; or
(b)    Chernicky does not own, directly or indirectly, beneficially or of record, either (i) securities representing limited partnership interests of the Borrower representing at least 15% of the combined aggregate issued and outstanding securities representing limited partnership interests of the Borrower or (ii) securities representing limited partnership interests of the Borrower having an aggregate fair market value on such date of at least $50,000,000, as determined by VWAP NYSE, provided that for purposes of this clause (b)(ii), the value of one subordinated unit of the Borrower is deemed to be equal to one common unit of the Borrower; or
(c)    during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the General Partner ceases to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; or

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(d)    the General Partner does not directly own 100% of the issued and outstanding general partner interests in the Borrower, or the General Partner shall cease to Control the Borrower.
Section 3.    Borrowing Base Increase. For the period from and including the Fifth Amendment Effective Date (as defined below) to but excluding the next Redetermination Date, the amount of the Borrowing Base shall be equal to $102,500,000. Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.07(e), Section 8.13(c) or Section 9.12(d). For this avoidance of doubt, this Borrowing Base increase shall constitute the April 1, 2014 Scheduled Redetermination.
Section 4.    Conditions Precedent. This Fifth Amendment shall become effective on the date when each of the following conditions is satisfied (or waived in accordance with Section 12.02 of the Credit Agreement) (the “Fifth Amendment Effective Date”):
4.1    The Administrative Agent shall have received from the Lenders and the Borrower counterparts (in such number as may be requested by the Administrative Agent) of this Fifth Amendment signed on behalf of such Person.
4.2    The Administrative Agent shall have received (a) a nonrefundable amendment fee in an amount equal to $87,500 and (b) a nonrefundable Borrowing Base increase fee in an amount equal to $75,000, each payable to the Administrative Agent in immediately available funds for the account of each Lender, ratably in accordance with such Lender’s Maximum Credit Amount, after giving effect to this Fifth Amendment.
4.3    No Default shall have occurred and be continuing as of the Fifth Amendment Effective Date.
4.4    The Administrative Agent shall have received such other documents as the Administrative Agent or its special counsel may reasonably require.
4.5    The Administrative Agent is hereby authorized and directed to declare this Fifth Amendment to be effective (and the Fifth Amendment Effective Date shall occur) when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 4 or the waiver of such conditions as permitted hereby. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.
Section 5.    Affirmative Covenant Related to Mortgage and Title Coverage. On or before 30 days following the Fifth Amendment Effective Date (or such longer period of time as the Administrative Agent shall agree):
5.1    The Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent satisfactory title information on at least 80% of the total value of the proved Oil and Gas Properties of the Borrower and the Subsidiaries evaluated in the most recently delivered Reserve Report (and on at least 80% of the total value of the proved,

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developed and producing Oil and Gas Properties of the Borrower and the Subsidiaries evaluated in the most recently delivered Reserve Report).
5.2    The Administrative Agent shall have received duly executed and notarized deeds of trust/mortgages or supplements to existing deeds of trust/mortgages in form satisfactory to the Administrative Agent, to the extent necessary so that the Mortgaged Properties represent at least 80% of the total value of the proved Oil and Gas Properties of the Borrower and the Subsidiaries evaluated in the most recently delivered Reserve Report (and at least 90% of the total value of the proved, developed and producing Oil and Gas Properties of the Borrower and the Subsidiaries evaluated in the most recently delivered Reserve Report).
The Borrower’s failure to comply with this Section 5 shall constitute an Event of Default.

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 following the effectiveness of this Fifth Amendment.
6.2    Ratification and Affirmation; Representations and Warranties. The Borrower hereby (a) acknowledges the terms of this Fifth Amendment; (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; (c) agrees that from and after the Fifth Amendment Effective Date each reference to the Credit Agreement in the other Loan Documents shall be deemed to be a reference to the Credit Agreement, as amended by this Fifth Amendment; and (d) represents and warrants to the Lenders that as of the date hereof, after giving effect to the terms of this Fifth Amendment: (i) all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects, 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 in all material respects as of such specified earlier date, (ii) no Default or Event of Default has occurred and is continuing and (iii) no event, development or circumstance has occurred which individually or in the aggregate has resulted in, or could reasonably be expected to have, a Material Adverse Effect.
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. Delivery of this Fifth Amendment by telecopy, facsimile or email transmission shall be effective as delivery of a manually executed counterpart hereof.
6.4    No Oral Agreement. This 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.

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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    Payment of Expenses. In accordance with Section 12.03 of the Credit Agreement, the Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and reasonable expenses incurred in connection with this Fifth Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.
6.7    Severability. Any provision of this Fifth Amendment 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.
6.8    Successors and Assigns. This Fifth Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
[SIGNATURES BEGIN NEXT PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be duly executed as of the date first written above.

BORROWER:                NEW SOURCE ENERGY PARTNERS L.P.
By: New Source Energy GP, LLC, its general        partner


By: /s/ Kristian B. Kos            
Kristian B. Kos
President and Chief Executive Officer


ADMINISTRATIVE AGENT:
BANK OF MONTREAL, as Administrative Agent and Issuing Bank


By: /s/ Gumaro Tijerina                
Name: Gumaro Tijerina
Title: Managing Director





LENDERS:                    BMO HARRIS FINANCING, INC., as a Lender


By: /s/ Gumaro Tijerina                
Name: Gumaro Tijerina
Title: Managing Director



ASSOCIATED BANK, N.A., as a Lender


By: /s/ Timothy Brendel                
Name: Timothy Brendel
Title: Senior Vice President



COMMONWEALTH BANK OF AUSTRALIA,
as a Lender


By:     /s/ Damien Podagiel                
Name: Damien Podagiel
Title: Senior Associate



SOCIETE GENERALE, as a Lender


By:     /s/ Graeme Bullen                
Name: Graeme Bullen
Title: Managing Director



CIT FINANCE LLC, as a Lender


By:     /s/ John Feeley                
Name: John Feeley
Title: Director


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