Execution Version

Second Amendment
 
to
 
Fifth Amended and Restated Credit Agreement
 
Dated as of May 10, 2012
 
Among
 
Linn Energy, LLC,
 
As Borrower,
 
The Guarantors,
 
Wells Fargo Bank, National Association,
 
As Administrative Agent,
 
Royal Bank of Canada,
 
As Syndication Agent,
 
The Royal Bank of Scotland plc, Credit Agricole Corporate and Investment Bank,
Citibank, NA and Barclays Bank PLC,
 
As Co-Documentation Agents
 
and
 
The Lenders Party Hereto
 
______________________________________________________________________________

Joint Book Runners and Joint Lead Arrangers
 
Wells Fargo Securities,
LLC                                                                                                                     RBC
Capital Markets
 

 

12933304.3
 
 

--------------------------------------------------------------------------------

 

Second Amendment to Fifth Amended and restated Credit Agreement
 
This Second Amendment to Fifth Amended and Restated Credit Agreement (this
“Second Amendment”) dated as of May 10, 2012, among Linn Energy, LLC, a Delaware
limited liability company, (the “Borrower”); the Guarantors signatory hereto,
each of the lenders party to the Credit Agreement referred to below
(collectively, the “Lenders”); and Wells Fargo Bank, National Association
(“Wells”), 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.           The Borrower, BNP Paribas as the initial administrative agent (the
“Initial Administrative Agent”), the Lenders and the other Agents party thereto
are parties to that certain Fifth Amended and Restated Credit Agreement dated as
of May 2, 2011 as amended by that certain First Amendment dated as of February
29, 2012 (the “Credit Agreement”), pursuant to which the Lenders have made
certain credit and other financial accommodations available to and on behalf of
the Borrower and its Subsidiaries.
 
B.           The Initial Administrative Agent, Wells, the Borrower and the
Lenders entered into that certain Resignation, Consent and Appointment Agreement
and Amendment Agreement dated as of April 20, 2012 pursuant to which, among
other things, the Initial Administrative Agent resigned as administrative agent
on behalf of the Lenders under the Credit Agreement and the other Loan Documents
and Wells accepted the appointment as administrative agent on behalf of the
Lenders under the Credit Agreement and the other Loan Documents.
 
C.           In connection with the assignment to Wells as Administrative Agent,
Wells Fargo Securities, LLC was appointed Joint Book Runner and Joint Lead
Arranger.
 
D.           The Borrower has requested and the Administrative Agent and the
Lenders have agreed to amend certain provisions of the Credit Agreement.
 
E.           NOW, THEREFORE, to induce the Administrative Agent and the Lenders
to enter into this Second 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, as amended by this Second
Amendment.  Unless otherwise indicated, all section references in this Second
Amendment refer to sections of the Credit Agreement.
 
Section 2. Amendments to Credit Agreement
 
 
2.1 Amendment to Section 1.02.
 
(a) Section 1.02 is hereby amended by deleting the defined terms “Agreement”,
“Applicable Margin”, “Maturity Date” and “Prime Rate” in their entirety and
replacing them with the following:
 
“‘Agreement’ means this Credit Agreement, as amended by that certain First
Amendment dated as of February 29, 2012 and that certain Second Amendment dated
as of May 10, 2012 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, or with respect to the Commitment Fee Rate, 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
Commitment Fee Rate
Less than or equal to 30%
1.500%
0.500%
0.375%
Greater than 30% and less than or equal to 60%
1.750%
0.750%
0.375%
Greater than 60% and less than or equal to 75%
2.000%
1.000%
0.500%
Greater than 75% and less than or equal to 90%
2.250%
1.250%
0.500%
Greater than 90%
2.500%
1.500%
0.500%

Each change in the Applicable Margin or the Commitment Fee Rate 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 8.11(a), then until such time as a Reserve Report is
delivered the “Applicable Margin” and “Commitment Fee Rate” means the rate per
annum set forth on the grid when the Borrowing Base Utilization Percentage is at
its highest level.
 
‘Maturity Date’ means April 6, 2017.
 
‘Prime Rate’ means the rate of interest per annum publicly announced from time
to time by Wells Fargo Bank, National Association as its prime rate in effect at
its principal office in Charlotte, North Carolina; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.  Such rate is set by Wells Fargo Bank, National Association
as a general reference rate of interest, taking into account such factors as
Wells Fargo Bank, National Association may deem appropriate; it being understood
that many of the commercial or other loans of Wells Fargo Bank, National
Association are priced in relation to such rate, that it is not necessarily the
lowest or best rate actually charged to any customer and that Wells Fargo Bank,
National Association may make various commercial or other loans at rates of
interest having no relationship to such rate.
 
(b) Section 1.02 is hereby amended by adding the following terms in the
appropriate alphabetical order:
 
“‘Collateral Coverage Ratio’ means the ratio of (a) the PV-10 of Proved Reserves
of the Mortgaged Properties, as evaluated in the Reserve Report most recently
delivered pursuant to Section 8.11(a) to (b) the lesser of (i) the Borrowing
Base then in effect (or if a Borrowing Base Deficiency shall then exist, the
outstanding principal amount of all Loans and LC Exposure outstanding at such
time) and (ii) the Aggregate Maximum Credit Amounts.

‘Commitment Fee Rate’ has the meaning assigned such term in the definition of
Applicable Margin.

‘Proved Reserves’ has the meaning assigned to such term in the Definitions for
Oil and Gas Reserves as promulgated by the Society of Petroleum Engineers (or
any generally recognized successor) as in effect at the time in question.

‘PV-10’ means, as of any date of determination, the present value of future cash
flows from Proved Reserves included in the Oil and Gas Properties, as set forth
in the most recent Reserve Report delivered pursuant to Section 8.11(a),
utilizing a 10% discount rate and based upon the economic assumptions consistent
with the Administrative Agent’s lending practices at the time of determination.”

2.2 Amendment to Section 3.05(a).  Section 3.05(a) is hereby amended by deleting
such Section in its entirety and replacing it with the following:
 
“(a)           Commitment Fees.  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender (subject to Section
4.04(c)(i)) a commitment fee, which shall accrue at the applicable Commitment
Fee Rate on the average daily amount of the unused amount of the Commitment of
such Lender during the period from and including the date of this Agreement to
but excluding the Termination Date.  Accrued commitment fees shall be payable in
arrears on the last day of March, June, September and December of each year and
on the Termination Date, commencing on the first such date to occur after the
date hereof.  All commitment fees shall be computed on the basis of a year of
360 days, unless such computation would cause interest on the Notes or on other
Indebtedness hereunder to exceed the Highest Lawful Rate, in which case such
commitment fees shall be computed on the basis of a year of 365 days (or 366
days in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).”

2.3 Amendment to Section 8.11(c)(vi).  Section 8.11(c)(vi) is hereby amended by
deleting such Section in its entirety and replacing it with the following:
 
“(vi) attached thereto is a schedule of the Oil and Gas Properties evaluated by
such Reserve Report that are Mortgaged Properties and demonstrating that either
(A) the Mortgaged Properties are equal to or greater than 80% of the total value
of the Oil and Gas Properties evaluated in such Reserve Report or (B) the
Collateral Coverage Ratio is equal to or greater than 2.5 to 1.0.”

2.4 Amendment to Section 8.13(a).  Section 8.13(a) is hereby amended by deleting
such Section in its entirety and replacing it with the following:
 
“(a)           In connection with each redetermination of the Borrowing Base,
the Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.11(c)(vi)) to ascertain whether either (i)
the Mortgaged Properties represent at least 80% of the total value of the Oil
and Gas Properties evaluated in the most recently completed Reserve Report or
(ii) as of the date of such redetermination, the Collateral Coverage Ratio is
equal to or greater than 2.5 to 1.0, in each case after giving effect to
exploration and production activities, acquisitions, dispositions and
production.  In the event that  both (X) the Mortgaged Properties represent less
than 80% of the total value of the Oil and Gas Properties evaluated in the most
recently completed Reserve Report and (Y) the Collateral Coverage Ratio is less
than 2.5 to 1.0, then the Borrower shall, and shall cause its Subsidiaries to,
grant, within ninety (90) days of the delivery of the certificate contemplated
by Section 8.11(c), to the Administrative Agent or its designee as security for
the Indebtedness a first-priority Lien interest (subject to Liens permitted by
Section 9.03 which may attach to Mortgaged Property) on additional Oil and Gas
Properties not already subject to a Lien of the Security Instruments such that
after giving effect thereto, either (i) the Mortgaged Properties are equal to or
greater than 80% of the total value of the Oil and Gas Properties evaluated in
such Reserve Report or (ii) the Collateral Coverage Ratio is equal to or greater
than 2.5 to 1.0.  All such Liens will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Administrative Agent or its designee and in
sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes.  In order to comply with the foregoing, if
any Subsidiary places a Lien on its Oil and Gas Properties and such Subsidiary
is not a Guarantor, then it shall become a Guarantor and comply with Section
8.13(b).”

2.5 Amendment to Section 12.02(b)(vii).  Section 12.02(b)(vii) is hereby amended
by deleting such Section in its entirety and replacing it with the following:
 
“(vii) release any Guarantor (except as set forth in the Guaranty Agreement),
release all or a substantial portion of the collateral (other than as provided
in Section 11.10), modify the definition of “Collateral Coverage Ratio”, reduce
the percentage set forth in Section 8.13(a) to less than 80% or reduce the
minimum Collateral Coverage Ratio requirement in Section 8.13(a) to less than
2.5 to 1.0, without the written consent of each Lender,”

2.6 Amendment to Section 12.14.  The last sentence of Section 12.14 is hereby
amended by deleting such sentence in its entirety and replacing it with the
following:
 
“Except as set forth in Sections 12.02(b)(viii) and (xi), no Secured Hedge
Provider shall have any voting rights under any Loan Document as a result of the
existence of obligations owed to it under any Secured Swap Agreement.”

Section 3. Borrowing Base.  For the period from and including the Second
Amendment Effective Date (as defined below) to but excluding the next
Redetermination Date, the amount of the Borrowing Base shall be
$3,500,000,000.  Notwithstanding the foregoing, the Borrowing Base may be
subject to further adjustments from time to time pursuant to Section 2.07(e),
Section 2.07(f), Section 8.12(c) or Section 9.11(d).
 
Section 4. Assignments and Reallocations of Commitments and Loans.  The Lenders
have agreed among themselves, in consultation with the Borrower, to reallocate
their respective Maximum Credit Amounts and to, among other things, allow BP
Energy Company and Canadian Imperial Bank of Commerce, New York Agency, to
become a party to the Credit Agreement as a Lender, (the “New Lenders”) by
acquiring an interest in the Aggregate Maximum Credit Amount.  The
Administrative Agent and the Borrower hereby consent to such reallocation and
the New Lenders’ acquisition of an interest in the Aggregate Maximum Credit
Amount and the other Lenders’ assignments of their Maximum Credit Amounts.  On
the Second Amendment Effective Date and after giving effect to such
reallocations, the Maximum Credit Amount of each Lender shall be as set forth on
Annex I of this Second Amendment which Annex I supersedes and replaces the Annex
I to the Credit Agreement.  With respect to such reallocation, the New Lenders
shall be deemed to have acquired the Maximum Credit Amount allocated to them
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 the New
Lenders and the other Lenders had executed an Assignment and Assumption
Agreement with respect to such allocation.
 
Section 5. Conditions Precedent
 
This Second Amendment shall become effective on the date, on or before May 10,
2012 (such date, the “Second Amendment Effective Date”), when each of the
following conditions is satisfied (or waived in accordance with Section 12.02 of
the Credit Agreement):
 
5.1 The Administrative Agent shall have received (a) all fees and other amounts
due and payable on or prior to the Second Amendment Effective Date including a
maturity extension fee payable to each Lender equal to the product of 0.10% and
the amount of such Lender’s Maximum Credit Amount and all other fees the
Borrower has agreed to pay in connection with this Second Amendment and (b) to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower under the Credit Agreement.
 
5.2 The Administrative Agent shall have received from each of the Lenders and
the Borrower, counterparts (in such number as may be requested by the
Administrative Agent) of this Second Amendment signed on behalf of such Person.
 
5.3 The Administrative Agent shall have received from each of the Borrower and
its Subsidiaries, as applicable, counterparts (in such number as may be
requested by the Administrative Agent) of the mortgage amendment extending the
Maturity Date signed on behalf of such Person.
 
5.4 To the extent requested by a New Lender or existing Lender with a change in
its Maximum Credit Amount, the Administrative Agent shall have received duly
executed Notes payable to each such Lender in a principal amount equal to its
Maximum Credit Amount dated as of the Second Amendment Effective Date.
 
5.5 No Default shall have occurred and be continuing as of the date hereof,
after giving effect to the terms of this Second Amendment.
 
The Administrative Agent is hereby authorized and directed to declare this
Second Amendment to be effective when it has received documents confirming or
certifying, to the satisfaction of the Administrative Agent, compliance with the
conditions set forth in this Section 5 or the waiver of such conditions as
permitted in Section 12.02 of the Credit Agreement. Such declaration shall be
final, conclusive and binding upon all parties to the Credit Agreement for all
purposes.
 
Section 6. Miscellaneous
 
 
6.1 Confirmation. The provisions of the Credit Agreement, as amended by this
Second Amendment, shall remain in full force and effect following the
effectiveness of this Second Amendment.
 
6.2 Ratification and Affirmation; Representations and Warranties.  Each of the
Borrower and the Guarantors hereby (a) acknowledges the terms of this Second
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 and (c) represents and warrants to the Lenders that
as of the date hereof, after giving effect to the terms of this Second
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 those
which have a materiality qualifier, which shall be true and correct as so
qualified), 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 has occurred and is continuing, and
 
(iii) no event or events have occurred which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect.
 
6.3 Loan Document.  This Second Amendment is a Loan Document.
 
6.4 Counterparts. This Second 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 Second Amendment by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
 
6.5 NO ORAL AGREEMENT. THIS SECOND 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.
 
6.6 GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
 
6.7 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 Second 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.
 
6.8 Severability.  Any provision of this Second 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.
 
6.9 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
 
[SIGNATURES BEGIN NEXT PAGE]
 

12933304.3
 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
duly executed as of the date first written above.
 
    BORROWER:                                                                           LINN
ENERGY, LLC
 
By:     /s/ KOLJA
ROCKOV                                                           
Name: Kolja Rockov
Title: Executive Vice President and Chef Financial Officer

 
 

--------------------------------------------------------------------------------

 

GUARANTORS:
LINN ENERGY HOLDINGS, LLC

 
LINN OPERATING, INC.

MID-CONTINENT HOLDINGS I, LLC

MID-CONTINENT HOLDINGS II, LLC

MID-CONTINENT I, LLC

MID-CONTINENT II, LLC

LINN GAS MARKETING, LLC

LINN EXPLORATION & PRODUCTION MICHIGAN LLC

LINN MIDWEST ENERGY LLC

By:     /s/ KOLJA
ROCKOV                                                           
Kolja Rockov
Executive Vice President and Chief Financial Officer

LINN EXPLORATION MIDCONTINENT, LLC

By: Mid-Continent Holdings II, LLC, its sole member, as Member/Manager

By:      /s/ KOLJA ROCKOV                                             
Name:           Kolja Rockov
 
Title:
Executive Vice President and Chief Financial Officer