EXHIBIT 10.1
FIRST AMENDMENT TO SECOND LIEN SECURED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND LIEN SECURED CREDIT AGREEMENT (this
"Amendment") is entered into as of December 23, 2003, among PetroQuest Energy,
L.L.C., a Louisiana limited liability company ("Borrower"); PetroQuest Energy,
Inc., a Delaware corporation ("Guarantor"); each of the Lenders from time to
time party hereto; and Macquarie Americas Corp., a Delaware corporation, (in its
individual capacity, "MAC"), as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Administrative
Agent"). Capitalized terms used but not defined in this Amendment have the
meaning given them in the Credit Agreement (defined below). Except as noted in
this Amendment, all references to sections, exhibits and schedules refer to
sections in and exhibits and schedules to the Credit Agreement.
BACKGROUND
A. Borrower and the Lenders have previously entered into a Second
Lien Secured Credit Agreement dated November 6, 2003 (the "Credit Agreement")
for the purpose of making available to Borrower a second lien, secured term loan
on a non-revolving basis.
B. The Borrower has requested that the Lenders amend the Credit
Agreement pursuant to the terms and conditions of this Amendment to make certain
modifications to the Credit Agreement in connection with Borrower's acquisition
of the Carthage Field Property (defined below).
AGREEMENTS
In consideration of the mutual covenants of Borrower and the Lenders
set forth in this Amendment and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged by each of the parties,
Borrower and the Lenders agree as follows:
1. Amendments to Credit Agreement.
(a) Additional Definitions. The Credit Agreement is
amended to include each of the following additional definitions in
alphabetical order:
"Carthage Field Property" means the Leases and all
other Real Property described on Exhibit A to the First
Amendment.
"Carthage Field Purchase Agreement" means the
Purchase and Sale Agreement dated December 22, 2003 between
Borrower, as buyer, and Carthage, LLC, as seller, together
with all documents executed and delivered in connection with
the transaction contemplated by that Agreement.
"First Amendment" means the First Amendment to Credit
Agreement dated December 23, 2003 among Borrower, Guarantor,
Administrative Agent and the Lenders party to the Credit
Agreement."
(b) Modifications to Existing Definitions. The following
definitions in the Credit Agreement are deleted in their entirety and
replaced with the following:
"Property" or "Properties" means, collectively, all
real property of Borrower and each of its Subsidiaries,
including but not limited to Hydrocarbon Leases, Royalty
Interests, overriding royalty interests, production payments
or similar interests in real property, in each case whether
now owned or later acquired.
(c) Additional Modifications to Credit Agreement.
(i) Modification Fee. The following new Section
2.11(d) is added to the Credit Agreement:
(d) Modification Fee. On or before the
date on which the First Amendment becomes effective,
Borrower shall pay to the Lenders a non-refundable
fee the (the "Modification Fee") equal to two hundred
thousand dollars ($200,000). The Modification Fee is
for the amendments and other accommodations made in
connection with the First Amendment and is fully
earned on the date paid.
(ii) Bonds. The following new sentence is
appended to the existing Section 6.19 of the Credit Agreement:
Schedule 6.19 identifies each of the qualifications,
bonds and approvals Borrower is required to obtain
and maintain in connection with its ownership and
operation of the Properties.
(iii) Outstanding Debt. Section 7.11 of the Credit
Agreement is deleted in its entirety and replaced with the following:
Section 7.11 Debt Threshold. Permit the
total Outstanding Debt to exceed forty-five million
dollars ($45,000,000).
(iii) Senior Credit Facility. Section 7.12 of the
Credit Agreement is deleted in its entirety.
2. Exhibits; Schedules.
(a) Modifications to Existing Exhibits and Schedules. The
following exhibits and schedules to the Credit Agreement are amended
and restated in their entirety as reflected on the respective exhibits
and schedules attached to this Amendment:
(i) Schedule 4.34(c) - Insurance
(ii) Schedule 4.38 - Hedging Agreements
2
(iii) Schedule 4.39 - Marketing Agreements
(iv) Schedule 5.12 - Annual Operating Budget
(v) Schedule 7.1(x) - Bonds
(vi) Schedule 7.13 - Quarterly Production Levels
and Net Operating Cash Flows
(b) New Exhibits and Schedules. The following new exhibit
attached to this Amendment is made a part of the Credit Agreement for
all purposes:
(i) Exhibit A-1 - Carthage Field Property
3. Conditions to Effectiveness. This Amendment will become
effective upon the satisfaction of each of the following conditions:
(a) Borrower and Guarantor, as applicable, will execute
and deliver to the Administrative Agent the following documents:
(i) this Amendment;
(ii) a Mortgage covering the Carthage Field
Property;
(iii) a replacement Warrant acceptable to the
Lenders; and
(iv) all other agreements, instruments,
certificates, financing statements and other documents necessary or
convenient, in the sole and absolute discretion of the Lenders, to give
effect to the transaction contemplated by this Amendment;
(b) Lenders have obtained a report prepared by a
consultant acceptable to Lenders confirming (i) Borrower's and
Operator's compliance, in all material respects, with all applicable
Laws and regulatory requirements and (ii) that Borrower or Operator
have all necessary material permits and licenses;
(c) an environmental consultant satisfactory to Lenders
will investigate Borrower's compliance with all Environmental Laws, the
results of which shall be satisfactory to Lenders in their sole
discretion;
(d) Borrower will deliver to Lenders title opinions or
other evidence of title relating to the Properties showing Defensible
Title to the Properties vested in Borrower subject only to the
Permitted Encumbrances and otherwise satisfactory in form and substance
to Lenders, together with a letter from the issuer or issuers of such
opinions, if the opinions are not addressed to the Lenders, to the
effect that Lenders are authorized to rely on the title opinions;
3
(e) Borrower will deliver to Lenders copies of the Basic
Documents and all other documents and instruments as Lenders may
reasonably request, all of which will be satisfactory, in form and
substance, to Lenders;
(f) Borrower will deliver to Lenders a certificate of
insurance evidencing the coverages required under this Agreement and
the Administrative Agent and the Lenders have been named as additional
insureds in respect of such liability insurance policies and the
Administrative Agent has been named as loss payee with respect to
property loss insurance;
(g) no Material Adverse Effect has occurred;
(h) except for the obligations listed (or, with the
consent of Lenders, summarized) on Schedule 9.2(n), there are no unpaid
bills for improvements or services to the Properties that could give
rise to mechanic's or materialmen's liens or any other similar
encumbrance arising by operation of applicable law;
(i) the representations in each of the Loan Documents of
Borrower and each other Person are true, complete and correct in all
material respects;
(j) Lenders are satisfied, in their sole discretion, with
the results of its due diligence examination of Borrower, and the
Properties, including, Borrower's proposed development of the
Properties, satisfactory information regarding existing Hydrocarbon
sales, and all aspects of Borrower's existing and contemplated
Hydrocarbon marketing activities;
(k) no suit or other proceeding is pending or threatened
before any court or governmental agency seeking to restrain, enjoin or
prohibit or declare illegal, or seeking damages from Borrower in
connection with the transactions contemplated in this Agreement (or the
operations contemplated as part of those transactions) or alleging the
breach of any material contract;
(l) Borrower has reimbursed Lenders for all Related Costs
for which invoices have been presented;
(m) each of the Operating Agreements affecting the
Properties will be satisfactory in form and substance to Lenders in
their sole and absolute discretion;
(n) each of the documents executed and delivered by
Borrower or Guarantor in connection with the Senior Credit Facility
will be satisfactory in form and substance to Lenders in their sole and
absolute discretion;
(o) the Senior Lender will have executed and delivered to
Lenders an amendment to the Intercreditor Agreement satisfactory in
form and substance to Lenders in their sole and absolute discretion;
(p) Borrower shall have prepared and submitted to Lenders
an eighteen (18) month Annual Operating Budget for the further
development of the Properties, and the
4
budget is satisfactory in form and substance to Lenders in their sole
and absolute discretion;
(q) Lenders will be satisfied in their sole and absolute
discretion with Borrower's Hydrocarbon hedging program;
(r) the Modification Fee will have been paid to
Administrative Agent for the ratable benefit of the Lenders; and
4. Conditions Precedent to Making of Advances. In addition to the
conditions set forth in Section 3 above, the making of any additional Advance
under the Term Loan shall be subject to the following conditions:
(a) no Material Adverse Change has occurred and is
continuing;
(b) the Senior Credit Facility with a borrowing base of
at least twenty million two hundred thousand dollars ($20,200,000)
shall have closed prior to or contemporaneously with the funding of the
Term Loan;
(c) all representations and warranties of Borrower and
Guarantor set forth in this Agreement and the other Loan Documents
shall be true and correct in all material respects as of the date of
the Advance except to the extent such representations and warranties
are expressly limited to an earlier date, in which case the
representations and warranties shall be true and correct as of such
specified earlier date;
(d) Borrower shall have delivered an Advance Request to
the Administrative Agent in accordance with Section 2.2. Such Advance
Request must be accompanied by copies of all approved AFEs included in
the Annual Operating Budget as well as other supporting documentation
satisfactory to Lenders evidencing the amount to be Advanced. Each AFE
previously approved by Lenders in writing or other project description
from the Annual Operating Budget delivered to Lender in conjunction
with an Advance Request will detail all amounts Advanced to date by
Lenders under that AFE or project description and the amount requested
under the Advance Request. Notwithstanding anything to the contrary
herein, Lenders shall not Advance any amount with respect to any
specific activity included in the Annual Operating Budget that exceeds
the amount included for such Well or project in the Annual Operating
Budget inclusive of any amount included in the "Cost-Overrun" line-item
of that Annual Operating Budget.
(e) the hedging requirements required by Section 6.17
shall be in full force and effect;
(f) no Event of Default has occurred or is continuing and
no circumstance exists which but for the lapse of time or notice from
the Lenders or both would become an Event of Default; and
(g) the Carthage Field Purchase Agreement will be in form
and substance satisfactory to Lenders in their sole and absolute
discretion, and the transactions contemplated by that agreement will
have closed (conditioned only on the payment of the
5
purchase price specified in that agreement) on terms satisfactory to
Lenders in their sole and absolute discretion.
5. Return of Original Warrant. Contemporaneous with the delivery
of the replacement Warrant described in Section 3(a)(iii) by PQUE to the
Lenders, the Lenders will return (or make arrangements satisfactory to PQUE for
the return of) the original Warrant issued to Lenders in connection with the
Closing of the Credit Agreement.
6. Reaffirmation of Representations and Warranties. To induce the
Lenders to enter into this Amendment, Borrower and Guarantor each hereby
reaffirms, as of the date hereof, its respective representations and warranties
contained in Article IV of the Credit Agreement and in all other documents
executed pursuant thereto, and additionally represents and warrants as follows:
(a) the execution and delivery of this Amendment and the
performance by Borrower and Guarantor of their respective obligations
under this Amendment are within such company's power, have been duly
authorized by all necessary company action, have received all necessary
governmental approval (if any shall be required), and do not and will
not contravene or conflict with any provision of law or of the Charter
Documents of Borrower or Guarantor or of any agreement binding upon
either of them; and
(b) this Amendment represents the legal, valid and
binding obligations of each of Borrower and Guarantor enforceable
against each of them in accordance with its terms and subject only to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally.
7. Ratification of Liens and Security Interests. Borrower hereby
acknowledges and ratifies the existence and priority of the Liens granted by
Borrower in favor of any of the Lenders or the Administrative Agent for the
benefit of the Lenders in and to the Collateral and represents, warrants and
covenants that such liens and security interests are valid, existing and in full
force and effect.
8. Miscellaneous. This Amendment supersedes all prior agreements
(written or oral) between Borrower and the Lenders with regard to the subject
matters hereof. This Amendment is a Loan Document. Except as affected by this
Amendment, the Loan Documents are unchanged and continue in full force and
effect. However, in the event of any inconsistency between the terms of the
Credit Agreement as amended by this Agreement and any other Loan Document, the
terms of the Credit Agreement will control and the other document will be deemed
to be amended to conform to the terms of the Credit Agreement. All references to
the Credit Agreement will refer to the Credit Agreement as amended by this
Amendment. All references to the Collateral will include, without limitation,
the Collateral acquired or to be acquired pursuant to the Carthage Field
Purchase Agreement. Borrower agrees that all Loan Documents to which it is a
party (whether as an original signatory or by assumption of the Obligations)
remain in full force and effect and continue to evidence its legal, valid and
binding obligations enforceable in accordance with their terms (as the same are
affected by this Amendment or are amended in connection with this Amendment).
Borrower releases Administrative Agent and each of the Lenders from any
liability for actions or failures to act in
6
connection with the Loan Documents prior to the date of this Amendment. Any
course of dealing among Borrower, Administrative Agent, any of the Lenders or
any other Person will not be deemed to have altered or amended the Credit
Agreement or affected either Borrower's or the Lenders' right to enforce the
Credit Agreement as written. This Amendment will be binding upon and inure to
the benefit of each of the undersigned and their respective successors and
permitted assigns.
9. Form. Each agreement, document, instrument or other writing to
be furnished to Administrative Agent or the Lenders under any provision of this
Amendment must be in form and substance satisfactory to the Lenders and their
respective counsel.
10. Multiple Counterparts. This Amendment may be executed in more
than one counterpart, each of which shall be deemed an original, and all of
which constitute, collectively, one instrument; but, in making proof of this
instrument, it shall not be necessary to produce or account for more than one
such counterpart. It shall not be necessary for each of the parties to execute
the same counterpart of this Amendment so long as each of them executes a
counterpart of this Amendment.
11. Governing Law. This Amendment and all transactions provided
for in this Amendment will be governed by, interpreted and construed under and
enforced pursuant to the laws of the State of Texas, without regard to its
conflicts of laws provisions.
12. Final Agreement. THE LOAN DOCUMENTS, AS AMENDED BY OR IN
CONNECTION WITH THIS AMENDMENT, REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN
THE PARTIES.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
7
This Amendment is executed as of the date set forth in the preamble to
this Amendment.
BORROWER:
PETROQUEST ENERGY, L.L.C.,
a Louisiana limited liability company
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx
Treasurer
GUARANTOR:
PETROQUEST ENERGY, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx
Treasurer
LENDERS:
MACQUARIE AMERICAS CORP.,
a Delaware corporation,
an Administrative Agent and a Lender
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxxx
Division Director
By: /s/ Xxxxx Xxxxxxxxx
----------------------------------------
Xxxxx Xxxxxxxxx
Lawyer
