EXHIBIT 10.1
THIRD AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment") is made and entered into effective as of June 30, 2004, by and
among PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company
("Borrower"); PETROQUEST ENERGY, INC., a Delaware corporation ("Guarantor");
BANK ONE, NA, a national banking association, (individually as a lender and as
agent, "Bank One").
RECITALS:
WHEREAS, Borrower, Guarantor, Bank One and Union Bank of California
entered into an Amended and Restated Credit Agreement dated May 14, 2003 (which
as the same may have been and be amended from time to time is herein called the
"Credit Agreement"), pursuant to which Borrower amended and restated a
previously existing credit facility dated May 11, 2001; and
WHEREAS, Union Bank of California has, by Assignment dated December 23,
2003, assigned and conveyed to Bank One all of its interest in the Credit
Agreement; and
WHEREAS, Borrower, Guarantor and Bank One desire to amend the Credit
Agreement as herein set forth.
NOW THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Except as otherwise provided below, unless the context
hereof indicates otherwise, all capitalized terms used herein shall have the
same meaning as such capitalized terms are defined in the Credit Agreement. The
following defined term set forth in Article I of the Credit Agreement is hereby
amended as follows:
"Borrowing Base Reduction Amount" means (a) for each month
commencing November 1, 2004 until the next semi-annual Borrowing Base
redetermination pursuant to Section 2.2.2, $1,500,000, and (b) for each
month thereafter, such amount as designated by 100% of the Lenders from
time to time in connection with each successive scheduled semi-annual
Borrowing Base redetermination pursuant to Section 2.2.2 or successive
unscheduled Borrowing Base redetermination pursuant to Section 2.2.3.;
provided however, if the Required Lenders fail to timely designate a
new Borrowing Base Reduction Amount, then the Borrowing Base Reduction
Amount most recently in effect will continue in effect until the
Required Lenders designate a new Borrowing Base Reduction Amount."
2. Amendments to the Credit Agreement. The Credit Agreement is,
effective the date hereof, and subject to the satisfaction of the conditions
precedent set forth in Section 3 hereof, hereby amended as follows:
(a) Section 2.2.1 Borrowing Base, of the Credit Agreement is
hereby amended by deleting the section in its entirety and substituting
the following:
"2.2.1 Effective June 30, 2004 to the date as of
which the Borrowing Base is next redetermined pursuant to
Section 2.2.2, the Borrowing Base shall be $25,000,000.00."
(b) Section 6.24 General and Administrative Expense Limitation
of the Credit Agreement is hereby amended by deleting the section in its
entirety and substituting the following:
"6.24. General and Administrative Expense Limitation.
Borrower will not permit the Consolidated G&A to exceed,
(a) for each calendar quarter beginning April 1,
2004, July 1, 2004 and October 1, 2004, the lesser of (i)
three million two hundred and fifty thousand dollars
($3,250,000); or (ii) thirty-one percent (31%) of the Tax
Adjusted Gross Margin; provided, however, if Borrower's
Consolidated G&A for any quarter exceed 31% of the Tax
Adjusted Gross Margin, the maximum allowable Consolidated G&A
for Borrower during the immediately succeeding quarter will be
18% of the Tax Adjusted Gross margin; and provided further
that a breach of clause (ii) of this Section 6.24 can only
form the basis of a Default if Borrower's Consolidated G&A
exceed (x) 31% of the Tax Adjusted Gross Margin during any
quarter and (y) 18% of the Tax Adjusted Gross Margin during
the immediately succeeding quarter; and provided further that,
notwithstanding anything in this Section 6.24 to the contrary,
the Consolidated G&A of Borrower shall not exceed 35% of the
Tax Adjusted Gross Margin ; and
(b) for each calendar quarter beginning January 1,
2005, the lesser of (i) three million dollars ($3,000,000); or
(ii) thirty-one percent (31%) of the Tax Adjusted Gross
Margin; provided, however, if Borrower's Consolidated G&A for
any quarter exceed 31% of the Tax Adjusted Gross Margin, the
maximum allowable Consolidated G&A for Borrower during the
immediately succeeding quarter will be 18% of the Tax Adjusted
Gross margin; and provided further that a breach of clause
(ii) of this Section 6.24 can only form the basis of a Default
if Borrower's Consolidated G&A exceed (x) 31% of the Tax
Adjusted Gross Margin during any quarter and (y) 18% of the
Tax Adjusted Gross Margin during the immediately succeeding
quarter; and provided further that, notwithstanding anything
in this Section 6.24 to the contrary, the Consolidated G&A of
Borrower shall not exceed 35% of the Tax Adjusted Gross
Margin."
3. Conditions Precedent to Effectiveness of Amendment. This Amendment
shall become effective when, and only when, the Agent and Lenders shall have
received counterparts of this Amendment executed by Borrower and Guarantor and
Section 2 hereof shall become effective
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when, and only when, the Agent and Lenders shall have additionally received all
of the following documents, each document (unless otherwise indicated) being
dated the date of receipt thereof by Lender (which date shall be the same for
all such documents), in form and substance satisfactory to the Lender:
(a) Counterparts of this Amendment duly executed by Borrower,
Guarantor and Lenders;
(b) A copy of the resolutions approving this Amendment, and
authorizing the transactions contemplated herein or therein duly
adopted by the Managers of Borrower, accompanied by a certificate of
the duly authorized Secretary of Borrower, that such copy is a true and
correct copy of the resolutions duly adopted by the Managers of
Borrower, and that such resolutions constitute all the resolutions
adopted with respect to such transactions, and have not been amended,
modified or revoked in any respect and are in full force and effect as
of the date hereof;
(c) A copy of the resolutions approving this Amendment, and
authorizing the transactions contemplated herein or therein duly
adopted by the Board of Directors of Guarantor, accompanied by a
certificate of the duly authorized Secretary of Guarantor, that such
copy is a true and correct copy of the resolutions duly adopted by the
Board of Directors of Guarantor, and that such resolutions constitute
all the resolutions adopted with respect to such transactions, and have
not been amended, modified or revoked in any respect and are in full
force and effect as of the date hereof;
(d) There shall not have been, in the sole judgment of
Lenders, any material adverse change in the financial condition,
business or operations of Borrower or Guarantor;
(e) Payment by Borrower of the fees and expenses of counsel to
Lenders in connection with the preparation and negotiation of this
Amendment and all documents and instruments contemplated hereby; and
(f) The execution and delivery of such additional documents
and instruments which the Agent and its counsel may deem necessary to
effectuate this Amendment or any document executed and delivered to
Lenders in connection herewith or therewith.
4. Representations and Warranties of Borrower. Borrower represents and
warrants as follows:
(a) Borrower and Guarantor are each duly authorized and
empowered to execute, deliver and perform this Amendment and all other
instruments referred to or mentioned herein to which it is a party, and
all action on its part requisite for the due execution, delivery and
the performance of this Amendment has been duly and effectively taken.
This Amendment, when executed and delivered, will constitute valid and
binding obligations of Borrower and Guarantor, as the case may be,
enforceable against such party in accordance
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with its terms. This Amendment does not violate any provisions of the
Articles of Organization or limited liability agreement of Borrower,
the Certificate of Incorporation or By-Laws of Guarantor, or any
contract, agreement, law or regulation to which either Borrower or
Guarantor is subject, and does not require the consent or approval of
any regulatory authority or governmental body of the United States or
any state;
(b) After giving affect to this Amendment, the representations
and warranties contained in the Credit Agreement, as amended hereby,
and any other Loan Documents executed in connection herewith or
therewith are true, correct and complete on and as of the date hereof
as though made on and as of the date hereof;
(c) After giving affect to this Amendment, no event has
occurred and is continuing which constitutes a Default or Unmatured
Default; and
(d) When duly executed and delivered, each of this Amendment
and the Credit Agreement will be legal and binding obligations of
Borrower, enforceable in accordance with their respective terms, except
as limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and by
equitable principles of general application.
5. Reference to and Effect on the Loan Documents.
(a) Upon the effectiveness of Section 2 hereof, on and after
the date hereof, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof", "herein" or words of like import,
and each reference in the Loan Documents shall mean and be a reference
to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement
and the Note(s), and all other instruments securing or guaranteeing
Borrower's obligations to Lenders, including the Collateral Documents,
as amended (collectively, the "Security Instruments") shall remain in
full force and effect and are hereby ratified and confirmed. Without
limiting the generality of the foregoing, the Security Instruments and
all collateral described therein do and shall continue to secure the
payment of all obligations of Borrower and Guarantor under the Credit
Agreement and the Note(s), as amended hereby, and under the other
Security Instruments.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of Lender under any of the
Security Instruments, nor constitute a waiver of any provision of any
of the Security Instruments.
6. Waiver. As additional consideration for the execution, delivery and
performance of this Amendment by the parties hereto and to induce Lenders to
enter into this Amendment, Borrower and Guarantor each warrants and represents
to Lenders that no facts, events, statuses or conditions
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exist or have existed which, either now or with the passage of time or giving of
notice, or both, constitute or will constitute a basis for any claim or cause of
action against Lenders or any defense to (i) the payment of any obligations and
indebtedness under the Note(s) and/or the Security Instruments, or (ii) the
performance of any of its obligations with respect to the Note(s) and/or the
Security Instruments, and in the event any such facts, events, statuses or
conditions exist or have existed, Borrower unconditionally and irrevocably
waives any and all claims and causes of action against Lenders and any defenses
to its payment and performance obligations in respect to the Note(s) and the
Security Instruments.
7. Costs and Expenses. Borrower agrees to pay on demand all costs and
expenses of Lenders in connection with the preparation, reproduction, execution
and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
counsel for Lenders. In addition, Borrower shall pay any and all fees payable or
determined to be payable in connection with the execution and delivery, filing
or recording of this Amendment and the other instruments and documents to be
delivered hereunder, and agrees to save Lenders harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omitting to pay such fees.
8. Execution in Counterparts. This Amendment 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 to be an original
and all of which taken together shall constitute but one and the same
instrument.
9. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Texas.
10. Final Agreement. THIS WRITTEN AMENDMENT REPRESENTS 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
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed in multiple counterparts, each of which is an original
instrument for all purposes, all as of the day and year first above written.
"BORROWER"
PETROQUEST ENERGY, L.L.C.
By: /s/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx, Chief Financial Officer
"GUARANTOR"
PETROQUEST ENERGY, INC.
By: /s/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx, Chief Financial Officer
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"LENDERS"
BANK ONE, NA,
As the Agent, a Lender and LC Issuer
By: /s/ XXXXXXX XXXXXXXXX-XXXXX
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Xxxxxxx Xxxxxxxxx-Xxxxx
Managing Director
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