EXHIBIT 10.2
UNCONDITIONAL GUARANTY AGREEMENT
THIS UNCONDITIONAL GUARANTY AGREEMENT ("Guaranty") dated November 6,
2003, is executed and delivered by PETROQUEST ENERGY, INC., a Delaware
corporation ("Guarantor"), to MACQUARIE AMERICAS CORP., a Delaware corporation,
as administrative agent ("Administrative Agent") for the benefit of the Lenders
under the Credit Agreement (defined below). Capitalized terms used but not
defined in this Guaranty have the meanings given them in the Credit Agreement
(defined herein).
BACKGROUND
A. Guarantor is the parent of PetroQuest Energy, L.L.C., a
Louisiana limited liability company ("Borrower"), a party to that certain
$20,000,000 Senior Second Lien Secured Credit Agreement dated November 6, 2003
(as may be amended from time to time, the "Credit Agreement") among Borrower,
Administrative Agent and the Lenders party thereto from time to time
("Lenders"). The Obligations of Borrower under the Credit Agreement are secured
by the Security Documents and the liens, security interests and collateral
assignment arising under and evidenced by those documents.
B. As a condition to the making of an Advance to Borrower under
the Credit Agreement, the Lenders require that Guarantor unconditionally
guarantee to Administrative Agent, for the ratable benefit of the Lenders, the
full and final payment and performance of the Obligations of Borrower.
C. Guarantor will benefit, directly or indirectly, from the
making of the Term Loan to Borrower by the Lenders under the terms and
conditions of the Credit Agreement and the other Loan Documents.
AGREEMENTS
For and in consideration of the financial accommodations made and to be
made to Borrower by the Lenders under the Credit Agreement or otherwise and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged by each of the parties, Guarantor and Administrative Agent agree as
follows:
ARTICLE I
PAYMENT AND PERFORMANCE
Section 1.1 Guaranty of Payment. Guarantor unconditionally guarantees
to Administrative Agent, for the ratable benefit of the Lenders, the payment of
the Obligations when due (whether at the stated maturity, by acceleration or
otherwise) in accordance with the terms of the Loan Documents. This Guaranty is
irrevocable, unconditional and absolute, and if for any reason any portion of
the Obligations is not paid promptly when due, Guarantor will immediately pay
the full amount owed to Administrative Agent and/or the other Persons to whom
such amount is owed, regardless of any defense, right of set-off or counterclaim
Borrower may have or assert, and regardless of whether Administrative Agent or
any other Person has taken any steps to enforce any rights against Borrower or
any other Person to collect such sum, and regardless of any other condition or
contingency. This Guaranty will also cover interest on the Obligations (as
provided for
in the Loan Documents) and all reasonable expenses (including attorneys' fees)
incurred by Administrative Agent or the Lenders in enforcing the payment of the
Obligations as provided for in the Loan Documents and the performance of this
Guaranty.
Section 1.2 Guaranty of Performance. Guarantor unconditionally
guarantees to Administrative Agent, for the ratable benefit of the Lenders, that
Borrower will perform and observe each agreement, covenant, warranty, term and
condition in the Loan Documents including any indemnity provisions to be
performed or observed by Borrower, and, upon Borrower's failure to do so,
Guarantor will promptly perform and observe, or will cause to be promptly
performed and observed, each such agreement, covenant, warranty, term or
condition.
Section 1.3 Guaranty Not Affected by Actions Under Loan Documents. The
obligations, covenants, agreements and duties of Guarantor under this Guaranty
will in no way be affected or impaired by the occurrence from time to time of
any of the following with respect to the Loan Documents, without the necessity
of any notice to, or further consent of, Guarantor:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by Borrower or any
co-guarantor, surety, endorser or other obligor (collectively, an
"Obligor") of any express or implied agreement, covenant, term or
condition in any of the Loan Documents to be performed or observed by
such party;
(b) the extension of the time for the payment of all or
any portion of the Obligations or any other sums payable under the Loan
Documents or the extension of time for the performance of any other
obligation under, arising out of, or in connection with any of the Loan
Documents;
(c) the supplementation, modification or amendment
(whether material or otherwise) of any of the Loan Documents or any of
the Obligations of Borrower or the obligations of Guarantor or any
other Obligor under, arising out of or in connection with any of the
Loan Documents;
(d) any failure, omission, delay or lack of diligence on
the part of Administrative Agent, or any other Person to enforce,
assert or exercise any right, privilege, power or remedy conferred on
Administrative Agent or any other Person in any of the Loan Documents,
or any action on the part of Administrative Agent or such other Person
granting indulgence or extension of any kind;
(e) the release of any Collateral under any Mortgage, any
other Security Document or any of the other Loan Documents, or the
release, modification, waiver or failure to enforce any pledge,
security device, insurance agreement, bond or other guaranty, surety or
indemnity agreement whatsoever;
(f) the release, modification, waiver or failure to
enforce any right, benefit, privilege or interest under any contract or
agreement, under which the rights of Borrower or any other Obligor have
been collaterally or absolutely assigned, or in which a security
interest has been granted, to Administrative Agent as direct or
indirect security for payment or performance of any Obligations;
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(g) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, marshaling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting,
Borrower, or any other Obligor or any of the assets of Borrower or of
any other Obligor or any allegation or contest of the validity of this
Guaranty in any such proceeding;
(h) any invalidity of or defect or deficiency in any of
the Loan Documents or failure to acquire, perfect or maintain
perfection of any lien on or security interest in any collateral
securing payment or performance of all or any portion of (i) the
Obligations, (ii) any other Person's obligations under any of the Loan
Documents or (iii) the obligations of Guarantor under this Guaranty;
(i) the settlement or compromise of any obligation
guaranteed by or incurred in connection with this Guaranty;
(j) the failure to give notice to Guarantor of the
occurrence of an event of default under the Loan Documents;
(k) any defense based upon any legal disability of
Borrower or, to the extent permitted by law, any release, discharge,
reduction or limitation of or with respect to any sums owing by
Borrower or any other liability of Borrower to Administrative Agent or
any Lender or their Affiliates;
(l) to the extent permitted by law, the release or
discharge by operation of law of Guarantor from the performance or
observance of any obligation, covenant or agreement contained in this
Guaranty;
(m) the default or failure of Guarantor fully to perform
any of its obligations set forth in this Guaranty; or
(n) any change in the corporate structure, existence or
ownership of Guarantor or Borrower.
Section 1.4 Waiver of Certain Rights. Guarantor hereby waives
marshaling of assets and liabilities, sale in inverse order of alienation,
notice of acceptance of this Guaranty and of any liability to which it applies
or may apply, presentment, demand for payment, protest, notice of nonpayment,
notice of dishonor, notice of acceleration, notice of intent to accelerate and
all other notices and demands, collection suit and the taking of any other
action by Administrative Agent.
Section 1.5 Obligations of Guarantor are Severable. This is a guaranty
of payment and not of collection, and Guarantor waives any right to require that
any action be brought against Borrower or any other Person. If Administrative
Agent seeks to enforce the obligations of Guarantor under this Guaranty by
action in any court, Guarantor waives any necessity, substantive or procedural,
that a judgment be previously rendered against Borrower or any other Person or
that Borrower or any other Person be joined in that cause or that a separate
action be brought against Borrower or any other Person. The obligations of
Guarantor under this Guaranty are several from the Obligations of Borrower or
the obligations of any other Person, including any other Obligor, and
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are primary obligations of Guarantor and on which it is the principal obligor.
All waivers in this Section 1.5 are and will be without prejudice to
Administrative Agent to proceed, at its option, against Borrower or any other
Person, whether by separate action or by joinder. Guarantor agrees that this
Guaranty cannot be discharged except by (a) the full and final payment of the
Obligations, (b) the termination of all obligations, if any, of Administrative
Agent or any other Lender to make any Advance or extend any other accommodation
(financial or otherwise) to or on behalf of Borrower and (c) the complete
performance of all obligations of Guarantor arising under or in connection with
this Guaranty.
Section 1.6 No Right of Subrogation Until Guaranty Terminates.
Notwithstanding any payment or payments made by Guarantor under this Guaranty or
any set-off or application of any funds of Guarantor by Administrative Agent,
Guarantor will not be entitled to be subrogated to any of the rights of
Administrative Agent or any Lender against Borrower or any collateral, security
rights or rights of offset held by Administrative Agent or any Lender for the
payment of the Obligations until all amounts owing to Lenders by Borrower for or
on account of the Obligations are paid in full and this Guaranty has terminated.
Section 1.7 All Credit Granted in Reliance On Guaranty. All Advances,
extensions of credit and other financial accommodations made or to be made to
Borrower by Administrative Agent or any of the other Lenders under the Credit
Agreement or any of the other Loan Documents will be conclusively presumed to
have been made in acceptance of and in reliance on this Guaranty.
Section 1.8 Information. Guarantor assumes responsibility for being and
remaining informed of the financial condition of Borrower, and of all other
circumstances bearing upon the risk of nonpayment of amounts owing under the
Loan Documents, and agrees that neither Borrower nor the Lenders shall have any
duty to advise Guarantor of information known to it regarding such condition or
any such circumstances.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Guarantor warrants and represents that:
Section 2.1 Organization; Good Standing. Guarantor is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has the power and authority to carry on its business as
presently conducted and to enter into and perform its obligations under this
Guaranty and each instrument given to secure this Guaranty. The execution,
delivery and performance by Guarantor of this Guaranty and each instrument given
to secure this Guaranty have each been duly authorized by all necessary company
action.
Section 2.2 Binding Obligations. This Guaranty and each instrument
given to secure this Guaranty have each been duly and validly executed, issued
and delivered by Guarantor, and each constitutes the valid and legally binding
obligations of Guarantor, enforceable in accordance with its terms except as the
enforceability thereof may be limited or affected by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and by general equitable principles.
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Section 2.3 No Violation. The execution, delivery and performance of
this Guaranty and of each instrument given to secure this Guaranty do not and
will not (1) violate any applicable law; (2) conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any agreement or instrument to which Guarantor is now a party or by which
Guarantor or any of its properties may be bound; (3) result in the creation of
any lien, charge or encumbrance upon any of Guarantor's property or assets; (4)
violate Guarantor's Charter Documents; or (5) except as required by any
applicable law, require (a) any consent of any other Person or (b) any consent,
license, permit, authorization or other approval of, any giving of notice to,
any exemption by, any registration, declaration or filing with, or any taking of
any other action in respect of, any court, arbitrator, administrative agency or
other Governmental Authority.
Section 2.4 Litigation. Except as disclosed in the Credit Agreement and
the schedules thereto, there is no action, suit or proceeding pending or, to the
best of Guarantor's knowledge, threatened against or affecting Guarantor, at law
or in equity, or before or by any Governmental Authority, which might result in
any material adverse change in Guarantor's business or financial position or in
Guarantor's interest in any of its properties.
Section 2.5 Accuracy of Information. All information supplied and
statements made to Administrative Agent or the Lenders by or on behalf of
Guarantor prior to, contemporaneously with or subsequent to the execution of
this Guaranty are and shall be true, correct, complete, valid and genuine.
Section 2.6 No Defaults. To its knowledge, Guarantor is not in default
with respect to any applicable law or in the payment of any indebtedness for
borrowed money or under the terms or provisions of any agreement or instrument
evidencing or securing any such indebtedness.
Section 2.7 Benefits. The execution and delivery of this Guaranty to
Administrative Agent will benefit, directly or indirectly, Guarantor.
Section 2.8 Accuracy of Representations of Guarantor. No representation
or warranty contained in this Guaranty and no statement contained in any
certificate, schedule, list, financial statement or other instrument furnished
by or on behalf of Guarantor to Administrative Agent or the Lenders contains (or
will contain) any untrue statement of material fact, or omits (or will omit) to
state a material fact necessary to make the statements contained herein or
therein not misleading.
Section 2.9 No Unusual Agreements. Guarantor is not a party to any
contract or agreement which materially and adversely affects its business,
property, assets or financial condition.
Section 2.10 Solvency. Guarantor is solvent and will continue to be
solvent after giving effect to the transactions hereunder.
Section 2.11 Intercreditor Agreement. The rights and remedies that the
Administrative Agent and the Lenders may have under this Guaranty shall be
subject to the terms and conditions of the Subordination and Intercreditor
Agreement, dated November 6, 2003, among Administrative Agent, Guarantor and
Bank One, NA.
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Section 2.12 Subordination of All Guarantor Claims. As used herein, the
term "Guarantor Claims" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by any Guarantor. The Guarantor Claims shall include without
limitation all rights and claims of Guarantor against Borrower arising as a
result of subrogation or otherwise as a result of Guarantor's payment of all or
a portion of the Obligations. Until the Obligations shall be paid and satisfied
in full, Guarantors shall not receive or collect, directly or indirectly, from
Borrower or any other party any amount upon the Guarantor Claims.
ARTICLE III
COVENANTS OF GUARANTY
Guarantor covenants and agrees that, until termination of this
Guaranty, it will and, if necessary, will enable Borrower to, fully comply with
those covenants and agreements set forth in the Credit Agreement.
ARTICLE IV
TERMINATION
This Guaranty shall terminate and be of no further force and effect
upon (a) the full and final payment of the Obligations, (b) the termination of
all obligations, if any, of Administrative Agent or any Lender to make any
Advance or extend any other accommodation (financial or otherwise) to or on
behalf of Borrower and (c) the complete performance of all obligations of
Guarantor arising under or in connection with this Guaranty. If any monies paid
to Administrative Agent or any Lender by or on behalf of Borrower are recovered
from Administrative Agent or such Lender for any reason, Guarantor shall pay all
such sums to Administrative Agent or such Lender on demand, together with
interest thereon from date of recovery until paid at the same rate provided in
the Term Note for interest on past due principal.
ARTICLE V
MISCELLANEOUS
Section 5.1 Subsidiaries of Guarantor.
(a) Subsidiaries as Guarantors. Except as provided in
Section 5.1(b) below, Guarantor shall, upon the request of
Administrative Agent, cause any current or future subsidiary of
Guarantor or Borrower to execute and deliver to Administrative Agent a
guaranty substantially in the form of this Guaranty.
(b) POG Not a Guarantor; Etc. Notwithstanding Section
5.1(a) above, PetroQuest Oil & Gas, L.L.C., a Louisiana limited
liability company ("POG"), will not be required to become a guarantor
of the Obligations. Guarantor represents and warrants to Administrative
Agent that (i) Guarantor is the sole member of POG and (ii) the assets
of POG are comprised solely of legal title to oil, gas and other
mineral interests owned
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exclusively for the benefit of Persons other than Guarantor, Borrower
and their respective affiliates. Guarantor shall not allow any other
Person to become a member of POG. Guarantor shall not, and shall not
cause or permit Borrower or any Person who becomes a guarantor of the
Obligations under Section 5.1(a) above to, transfer any assets to or
assume or discharge any of the liabilities of POG. Guarantor shall, at
the request of Administrative Agent, promptly take any other action or
enter into any other agreement necessary, in the sole and absolute
discretion of Administrative Agent, to segregate the assets and
liabilities of POG from those of Guarantor, Borrower and any other
Person who becomes a guarantor of the Obligations under Section 5.1(a)
above.
Section 5.2 Assignment. All guarantees, warranties, representations,
covenants and agreements contained in this Guaranty shall bind the successors,
assigns, receivers, trustees and representatives of Guarantor and shall inure to
the benefit of Administrative Agent, its successors and assigns, and any holder
of the Obligations or any part thereof. Guarantor shall not assign its
obligations hereunder without the prior written consent of Administrative Agent.
Section 5.3 Waiver of Certain Rights. By its execution hereof, to the
extent such laws and rules could be deemed to be applicable to this Guaranty,
Guarantor expressly waives each and every right to which it may be entitled by
virtue of the suretyship law of the State of Texas, including, without
limitation, any rights it may have pursuant to Rule 31, Texas Rules of Civil
Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code and
Chapter 34 of the Texas Business and Commerce Code.
Section 5.4 Amendment. This Guaranty will be amended, waived (in whole
or in part) or otherwise modified only by an agreement in writing signed by all
the parties to this Guaranty.
Section 5.5 Notices. Any notice, demand or document which either party
is required or may desire to give hereunder shall be in writing and, except to
the extent provided in the other provisions of this Agreement, given by
messenger, telecopy or other electronic transmission, or United States
registered or certified mail, postage prepaid, return receipt requested,
addressed to such party at its address and telecopy number shown below, or at
such other address as either party shall have furnished to the other by notice
given in accordance with this provision:
If to Guarantor:
PetroQuest Energy, L.L.C.
000 X. Xxxxxxx Xxxxxx Xx., Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
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PetroQuest Energy, L.L.C.
000 X. Xxxxxxx Xxxxxx Xx., Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Administrative Agent, as Administrative Agent:
Two Xxxxx Center, Suite 1140
1200 Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone:(000) 000-0000
Telecopy:(000) 000-0000
with a copy to:
Two Xxxxx Center, Suite 1140
0000 Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx
Telephone:(000) 000-0000
Telecopy:(000) 000-0000
Any notice delivered or made by messenger, telecopy, or United States mail shall
be deemed to be given on the date of actual delivery as shown by messenger
receipt, the addressor's telecopy machine confirmation or other verifiable
electronic receipt, or the registry or certification receipt. Administrative
Agent need not delay action on notice transmitted orally by an authorized
officer of Guarantor to Administrative Agent until receipt of written
confirmation of such notice. In the event that a discrepancy exists between the
notice received by Administrative Agent orally and the written confirmation, or
in the absence of a written confirmation, the oral notice, as understood by
Administrative Agent will be deemed the controlling and proper notice.
Section 5.6 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
Section 5.7 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT NOT PROHIBITED
BY LAW, GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THE TERM
NOTE, THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY TRANSACTION
CONTEMPLATED THEREBY, BEFORE OR AFTER MATURITY.
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Section 5.8 No Usurious Interest. It is the intention of the parties
hereto to comply strictly to usury laws applicable to Administrative Agent.
Interest on the Obligations is expressly limited so that in no contingency or
event whatsoever, whether by acceleration of the maturity of the Term Note or
otherwise, shall the interest taken, reserved, contracted for, charged or
received by Administrative Agent exceed the maximum amount permissible under
applicable law. If, from any circumstances whatsoever, fulfillment of any
provisions of this Guaranty, the Term Note or the other Security Documents or of
any other document evidencing, securing or pertaining to the indebtedness
evidenced by the Term Note, at the time performance of such provision shall be
due, would be usurious under applicable law, then, ipso facto, the obligation to
be fulfilled shall be reduced to the limit of such validity so that the
aggregate consideration which constitutes interest that is contracted for,
taken, reserved, charged for, or received shall not exceed the maximum amount
allowed by applicable law and such amount that would otherwise be excessive
interest shall be applied to the reduction of the principal amount owing under
the Term Note or on account of any other indebtedness of the Borrower or
Guarantor to Administrative Agent, or if principal of the Term Note and such
other indebtedness has been paid in full, refunded to the Borrower or Guarantor,
as applicable. In determining whether or not the interest paid or agreed to be
paid for the use, forbearance, or detention of sums hereunder exceeds the
highest lawful rate, the Borrower and Administrative Agent shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal payment
as an expense, fee or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, (c) amortize, prorate, allocate and spread
the total amount of interest throughout the full term of such indebtedness so
that the actual rate of interest on account of such indebtedness does not exceed
the highest lawful rate, and/or (d) allocate interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a rate
greater than that permitted by applicable law.
Section 5.9 FINAL AGREEMENT. THIS GUARANTY AND THE SECURITY DOCUMENTS
TO WHICH GUARANTOR IS A PARTY REPRESENT THE FINAL AGREEMENT BETWEEN GUARANTY AND
ADMINISTRATIVE AGENT 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.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be
duly executed and delivered as of the date first above written.
GUARANTOR:
PETROQUEST ENERGY, INC.,
a Delaware corporation
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------
Xxxxxxx X. Xxxxxxxx
Treasurer
THIS IS A SIGNATURE PAGE TO THE GUARANTY
ADMINISTRATIVE AGENT:
MACQUARIE AMERICAS CORP.,
a Delaware corporation, as
Administrative Agent
By: /s/ XXXXX X. XXXXXX
-------------------------
Xxxxx X. Xxxxxx
Division Director
By: /s/ XXXXXXX XXXXX
-------------------------
Xxxxxxx Xxxxx
Division Director, Legal
THIS IS A SIGNATURE PAGE TO THE GUARANTY
