Execution Version 1 FORBEARANCE AGREEMENT FORBEARANCE AGREEMENT, dated as of September 1, 2016 (this “Agreement”), with respect to that certain Credit Agreement dated as of October 2, 2008, among PETROQUEST ENERGY, INC., a Delaware corporation, as the...
![Page 1](https://www.sec.gov/Archives/edgar/data/872248/000087224816000171/exhibit101petroquestforb001.jpg)
Execution Version
1
FORBEARANCE AGREEMENT
FORBEARANCE AGREEMENT, dated as of September 1, 2016 (this “Agreement”),
with respect to that certain Credit Agreement dated as of October 2, 2008, among
PETROQUEST ENERGY, INC., a Delaware corporation, as the Parent (the “Parent”),
PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company, as the Borrower (the
“Borrower”), TDC ENERGY LLC, a Louisiana limited liability company, as Guarantor (the
“Guarantor”), each of the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A.
as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”) and each
of the other agents and parties from time to time party thereto (as amended, amended and
restated, supplemented or otherwise modified from time to time prior to the date hereof, the
“Credit Agreement”).
A. Reference is made to the Indenture dated August 19, 2010 (the “Base
Indenture”), as supplemented by the First Supplemental Indenture dated August 19, 2010 (the
“First Supplemental Indenture”), the Second Supplemental Indenture dated July 3, 2013 (the
“Second Supplemental Indenture”), the Third Supplemental Indenture dated October 23, 2013
(the “Third Supplemental Indenture”) and the Fourth Supplemental Indenture dated February 1,
2016 (together with the Base Indenture, the First Supplemental Indenture, the Second
Supplemental Indenture and the Third Supplemental Indenture, collectively, the “2017
Indenture”), by and among the Parent, the Subsidiary Guarantors party thereto and U.S. Bank
National Association, as successor trustee to The Bank of New York Mellon Trust Company,
N.A. thereunder.
B. In accordance with Section 8.02 of the Credit Agreement, the Borrower has
notified the Administrative Agent and the Lender that the following Events of Default (the
“Specified Defaults”) have occurred:
(i) an Event of Default under Section 10.01(f) of the Credit Agreement occurring
solely as a result of the non-payment by the Parent, the Borrower or any
Subsidiary of interest under the 2017 Indenture when due and payable; and
(ii) an Event of Default under Section 10.01(g) of the Credit Agreement occurring
solely as a result of the non-payment by the Parent, the Borrower or any
Subsidiary of interest under the 2017 Indenture when due and payable.
C. As a result of the Specified Defaults, the Administrative Agent and the Lender
have the right to exercise certain rights and remedies under the Credit Agreement and the other
Loan Documents.
D. The Borrower has requested that the Administrative Agent and the Lender agree
to forbear from exercising their rights and remedies arising from the Specified Defaults during
the period (the “Forbearance Period”) from the Forbearance Agreement Effective Date (as
defined below) until the earlier to occur of (i) October 1, 2016 or (ii) the occurrence of any
Forbearance Default (as defined below) (such earlier date, the “Forbearance Termination
Date”).
US 4595581v.7
![Page 3](https://www.sec.gov/Archives/edgar/data/872248/000087224816000171/exhibit101petroquestforb003.jpg)
3
(d) Tolling of Statute of Limitations. Each of the Parent, the Borrower, and the
Guarantor acknowledges and agrees that the running of any statutes of limitation or
doctrine of laches applicable to any claims or causes of action that the Administrative
Agent or the Lender may be entitled to take or bring in order to enforce their rights and
remedies against the Parent, the Borrower or the Guarantor (or any of their respective
assets) is, to the fullest extent permitted by law, tolled and suspended during the
Forbearance Period.
SECTION 2. Forbearance Default. Nothing set forth herein or contemplated hereby (a)
is intended to or shall be construed as a waiver of or acquiescence to any Specified Default,
which shall continue in existence subject only to the terms of the forbearance expressly provided
for in Section 1(a) hereof, or (b) shall constitute an agreement by the Administrative Agent and
the Lender to forbear the exercise of any of the rights and remedies available to the
Administrative Agent and the Lender under the Credit Agreement or the other Loan Documents,
as the case may be, and/or applicable law (all of which rights and remedies are hereby expressly
reserved by the Administrative Agent and the Lender) upon and after the occurrence of a
Forbearance Default. For purposes hereof, the term “Forbearance Default” shall mean the
occurrence of any or all of the following: (i) any Event of Default under the Credit Agreement
other than the Specified Defaults, (ii) a breach by any of the Parent, the Borrower or the
Guarantor of any term of this Agreement, (iii) any failure by the Parent, the Borrower or the
Guarantor to pay interest under the 2017 Indenture upon the expiration of the grace period
applicable to such payment of interest thereunder, or (iv) any breach or inaccuracy of any
representation or warranty made by any of the Parent, the Borrower or the Guarantor in Section 3
hereof.
SECTION 3. Representations and Warranties. To induce the other parties hereto to
enter into this Agreement, each of the Parent, the Borrower and the Guarantor represents and
warrants to the Administrative Agent and the Lender that, as of the Forbearance Agreement
Effective Date:
(a) This Agreement has been duly authorized, executed and delivered by each of the
Parent, the Borrower and the Guarantor, and constitutes a legal, valid and binding obligation of
such Person in accordance with its terms.
(b) No consent, approval, authorization or order of, or filing, registration or
qualification with, any court or Governmental Authority or third party is required in connection
with the execution, delivery or performance of this Agreement by the Parent, the Borrower, or
the Guarantor.
(c) Other than as they relate to the Specified Defaults, the representations and
warranties set forth in Article VII of the Credit Agreement are true and correct on and as of the
Forbearance Agreement Effective Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and warranties were true
and correct as of such earlier date).
(d) Other than the Specified Defaults, no Default or Event of Default has occurred
and is continuing.
![Page 4](https://www.sec.gov/Archives/edgar/data/872248/000087224816000171/exhibit101petroquestforb004.jpg)
4
(e) None of the Parent, the Borrower or the Guarantor has any defense to payment,
counterclaims or rights of setoff with respect to any Loans or any other Indebtedness.
(f) As of the Forbearance Agreement Effective Date, none of the Parent, the Borrower
or the Guarantor has any outstanding Swap Agreements with counterparties that are Secured
Swap Providers, other than one outstanding Swap Agreement between Borrower and The Bank
of Nova Scotia covering certain production through the end of fiscal year 2016.
SECTION 4. Effectiveness. This Agreement shall become effective as of the date set
forth above on the date (the “Forbearance Agreement Effective Date”) on which each of the
following conditions have been satisfied:
(a) the Administrative Agent (or its counsel) shall have received counterparts of this
Agreement that, when taken together, bear the signatures of Parent, the Borrower, the Guarantor,
the Administrative Agent and the Lender;
(b) other than as they relate to the Specified Defaults, all representations and
warranties of the Parent, the Borrower and the Guarantor contained herein shall be true and
correct as of the Forbearance Agreement Effective Date; and
(c) The Borrower shall have paid to Administrative Agent any and all fees and
expenses payable to Administrative Agent or the Lender pursuant to or in connection with this
Agreement.
SECTION 5. Effect of Agreement. Except as expressly set forth herein, this Agreement
shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise (a) affect
the rights and remedies of the Lender or the Administrative Agent under the Credit Agreement or
any other Loan Document or (b) alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements of the Parent, the Borrower or the Guarantor
contained in the Credit Agreement or any other Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect. Nothing herein shall entitle, or
be deemed to entitle any of the Parent, the Borrower or the Guarantor to a consent to, or a
waiver, amendment, modification or other change of, any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement or any other Loan Document in
similar or different circumstances. This Agreement shall apply and be effective only with
respect to the provisions of the Credit Agreement, as specifically referred to herein. After the
date hereof, any reference to the Credit Agreement shall mean the Credit Agreement as modified
hereby. This Agreement shall constitute a “Loan Document” for all purposes of the Credit
Agreement and the other Loan Documents.
SECTION 6. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same contract. Delivery of an executed counterpart of a signature
page of this Agreement by facsimile transmission or via .pdf shall be as effective as delivery of a
manually executed counterpart hereof.
![Page 5](https://www.sec.gov/Archives/edgar/data/872248/000087224816000171/exhibit101petroquestforb005.jpg)
5
SECTION 7. NO ORAL AGREEMENT. THIS AGREEMENT, THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY SEPARATE LETTER
AGREEMENTS WITH RESPECT TO FEES PAYABLE TO ADMINISTRATIVE AGENT
CONSTITUTE THE ENTIRE CONTRACT AMONG THE PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY AND ALL
PREVIOUS AGREEMENTS AND UNDERSTANDINGS, ORAL OR WRITTEN, RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS AGREEMENT, THE
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
SECTION 8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
SECTION 9. Headings. The headings of this Agreement are for purposes of reference
only and shall not limit or otherwise affect the meaning hereof.
SECTION 10. FATCA. From and after the Forbearance Agreement Effective Date, the
Borrower shall indemnify the Administrative Agent, and hold it harmless from, any and all
losses, claims, damages, liabilities and related expenses, including Taxes and the fees, charges
and disbursements of any counsel for any of the foregoing, arising in connection with the
Administrative Agent’s treating, for purposes of determining withholding Taxes imposed under
FATCA, the Agreement as qualifying as a “grandfathered obligation” within the meaning of
Treasury Regulation Section 1.1471-2(b)(2)(i).
SECTION 11. RELEASE. EACH OF THE PARENT AND ITS SUBSIDIARIES
(IN ITS OWN RIGHT AND ON BEHALF OF ITS PREDECESSORS, SUCCESSORS,
LEGAL REPRESENTATIVES AND ASSIGNS) HEREBY EXPRESSLY AND
UNCONDITIONALLY ACKNOWLEDGES AND AGREES THAT IT HAS NO
SETOFFS, COUNTERCLAIMS, ADJUSTMENTS, RECOUPMENTS, DEFENSES,
CLAIMS, CAUSES OF ACTION, ACTIONS OR DAMAGES OF ANY CHARACTER
OR NATURE, WHETHER CONTINGENT, NONCONTINGENT, LIQUIDATED,
UNLIQUIDATED, FIXED, MATURED, UNMATURED, DISPUTED, UNDISPUTED,
LEGAL, EQUITABLE, SECURED OR UNSECURED, KNOWN OR UNKNOWN,
ACTUAL OR PUNITIVE, FORESEEN OR UNFORESEEN, DIRECT, OR INDIRECT,
AGAINST THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR THE LENDER
(COLLECTIVELY, THE “CREDIT PARTIES”), ANY OF ANY CREDIT PARTY’S
AFFILIATES OR ANY OF ITS OFFICERS, DIRECTORS, AGENTS, EMPLOYEES,
ATTORNEYS OR REPRESENTATIVES OR ANY OF THEIR RESPECTIVE
PREDECESSORS, SUCCESSORS OR ASSIGNS (COLLECTIVELY, THE “LENDER-
RELATED PARTIES”) OR ANY GROUNDS OR CAUSE FOR REDUCTION,
MODIFICATION, SET ASIDE OR SUBORDINATION OF THE SECURED
OBLIGATIONS OR ANY LIENS OR SECURITY INTERESTS OF THE CREDIT
PARTIES. IN PARTIAL CONSIDERATION FOR THE AGREEMENT OF
ADMINISTRATIVE AGENT AND LENDER TO ENTER INTO THIS AGREEMENT,
![Page 7](https://www.sec.gov/Archives/edgar/data/872248/000087224816000171/exhibit101petroquestforb007.jpg)
Signature Page to Forbearance Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized officers, all as of the date and year first above written.
BORROWER: PETROQUEST ENERGY, L.L.C.
/s/ X. Xxxx Xxxxxxx
X. Xxxx Xxxxxxx
Executive Vice President, Chief Financial Officer
and Treasurer
PARENT: PETROQUEST ENERGY, INC.
/s/ X. Xxxx Xxxxxxx
X. Xxxx Xxxxxxx
Executive Vice President, Chief Financial Officer
and Treasurer
GUARANTOR: TDC ENERGY LLC
/s/ X. Xxxx Xxxxxxx
X. Xxxx Xxxxxxx
Executive Vice President, Chief Financial Officer
and Treasurer
![Page 8](https://www.sec.gov/Archives/edgar/data/872248/000087224816000171/exhibit101petroquestforb008.jpg)
Signature Page to Forbearance Agreement
ADMINISTRATIVE AGENT: JPMORGAN CHASE BANK, N.A.
AND SOLE LENDER individually, as a Lender, as Administrative Agent
and as Issuing Bank
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx
Title: Executive Director