EXHIBIT 10.4
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment") is made and entered into effective as of November 6, 2003, 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, ("Bank One"); and UNION BANK OF
CALIFORNIA, N.A., a national banking association, ("UBOC").
RECITALS:
WHEREAS, Borrower, Guarantor, Bank One and UBOC entered into an Amended
and Restated Credit Agreement dated May 14, 2003 (which as the same may 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, Borrower, Guarantor, Bank One and UBOC 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.
(a) Definitions. Article I of the Credit Agreement is hereby
amended by adding the following new defined terms and their definitions
in proper alphabetical sequence as follows:
"Aggregate Outstanding Debt" means the sum of all (i)
Aggregate Outstanding Credit Exposure; and (ii) the amount of
loans and advances made to Borrower under the Subordinated
Credit Agreement, all of which is part of the Subordinated
Indebtedness."
"Subordinated Credit Agreement" means that certain
$20,000,000 Senior Second Lien Secured Credit Agreement dated
November 6, 2003 among the Borrower and Subordinated Lenders,
as the same may be amended from time to time.
"Subordinated Lenders" means Macquarie Americas Corp.
a Delaware corporation, individually and as agent, and the
other financial institutions who are or become lenders under
the Subordinated Credit Agreement.
"Subordinated Indebtedness" means the obligation to
repay the Subordinated Lenders pursuant to the terms of the
Subordinated Credit Agreement.
"Subordination Agreement" means the Subordination and
Intercreditor Agreement dated November 6, 2003 executed among
Borrower, Guarantor, Agent, and Subordinated Lenders in favor
of the Agent for the ratable benefit of the Lenders, as
amended, supplemented, restated or otherwise modified from
time to time.
"Tax Adjusted Gross Margin" means Borrower's total
revenue from any source minus an amount equal to the sum of
Borrower's total lease operating expenses, production taxes,
state and federal taxes paid in cash and hedge settlements.
"Unutilized Availability" means an amount equal to
one hundred thirty percent of the Borrowing Base in effect
from time to time; minus the Aggregate Outstanding Debt.
(b) Definitions. The following defined terms set forth in
Article I of the Credit Agreement are hereby amended as follows:
"Consolidated Current Assets shall mean the total of
the consolidated current assets of Borrower and Guarantor,
plus Unutilized Availability; provided, however, in
determining consolidated current assets, such determination
shall not include non-cash gains, losses or charges required
(a) under SFAS 133 or (b) under SFAS 143."
"Obligations" means all unpaid principal of and
accrued and unpaid interest on the Loans, the Rate Management
Obligations, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the
Borrower to the Lenders or to any Lender, the Agent, the LC
Issuer or any indemnified party arising under the Loan
Documents.
"Security Agreement" means that certain Security
Agreement (Accounts) now or hereafter executed by the
Guarantor, the Borrower or any of their Subsidiaries in favor
of the Agent, for the ratable benefit of the Lenders, as they
may be amended or modified and in effect from time to time.
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:
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(a) Section 2.21.1 Issuance, of the Credit Agreement is hereby
amended by deleting the section in its entirety and substituting the
following:
2.21.1 Issuance. Except as provided below, the LC
Issuer hereby agrees, on the terms and conditions set forth in
this Agreement, to issue standby and commercial letters of
credit (each, a "Facility LC") and to renew, extend, increase,
decrease or otherwise modify each Facility LC ("Modify," and
each such action a "Modification"), from time to time from and
including the date of this Agreement and prior to the Facility
Termination Date upon the request of the Borrower; provided
that an LC Issuer shall not be obligated to issue a Facility
LC in favor of any Subordinated Lender; and immediately after
each such Facility LC is issued or Modified, (i) the aggregate
amount of the outstanding LC Obligations shall not exceed
$5,000,000 and (ii) the Aggregate Outstanding Credit Exposure
shall not exceed the lesser of (a) the Aggregate Commitment
and (b) the Borrowing Base. No Facility LC shall have an
expiry date later than the earlier of (x) the fifth Business
Day prior to the Facility Termination Date and (y) one year
after its issuance; provided, however, that any Facility LC
with a one-year tenor may provide for the renewal thereof for
additional one-year periods (which shall in no event extend
beyond the fifth Business Day prior to the Facility
Termination Date) unless the LC Issuer provides prior notice
of non-renewal to the beneficiary of such Facility LC.
(b) A new Section 5.28 Subordinated Indebtedness is hereby
added to the Credit Agreement as follows:
"5.28. Subordinated Indebtedness, The Obligations
constitute senior indebtedness of the Borrower and Guarantor
and are entitled to the benefits of the subordination
provisions of all outstanding Subordinated Indebtedness."
(c) Section 6.2 Use of Proceeds, of the Credit Agreement is
hereby amended by deleting the section in its entirety and substituting
the following:
"6.2. Use of Proceeds. The Borrower will, and will
cause the Guarantor and each of their Subsidiaries to, use the
proceeds of the Credit Extensions (x) for the acquisition,
development and exploration of Oil & Gas Properties; (y) for
working capital requirements; and (z) Letters of Credit. The
Borrower will not, and will cause the Guarantor and each of
their Subsidiaries not to, use any of the proceeds of the
Credit Extensions: (a) to purchase or carry any "margin stock"
(as defined in Regulation U) or extend credit to others for
the purpose of purchasing or repurchasing or carrying margin
stock; and (b) except as permitted hereby, to cancel or make a
payment in connection with any obligation arising from the
Subordinated Credit Agreement including, without limiting the
generality of the foregoing, the repayment of the Subordinated
Indebtedness."
(d) Section 6.3. Notice of Default, of the Credit Agreement is
hereby amended by deleting the section in its entirety and substituting
the following:
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"6.3. Notice of Default. The Borrower will, and will
cause each Subsidiary to, give prompt notice in writing to the
Lenders of the occurrence of any Default or Unmatured Default
and of any other development, financial or otherwise, which
could reasonably be expected to have a Material Adverse
Effect. Furthermore the Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of
the occurrence of any "Event of Default" as defined in the
Subordinated Credit Agreement."
(e) Section 6.11 Indebtedness, of the Credit Agreement is
hereby amended by deleting the section in its entirety and substituting
the following:
"6.11. Indebtedness. The Guarantor and the Borrower
will not, nor will it permit any Subsidiary to, create, incur
or suffer to exist any Indebtedness, except:
(i) the Credit Extensions;
(ii) Indebtedness existing on the date
hereof and described in Schedule 6.11;
(iii) Indebtedness arising under Rate
Management Transactions permitted under Section 6.25;
(iv) Indebtedness among the Guarantor, the
Borrower or any of their Subsidiaries;
(v) Indebtedness associated with bonds or
surety obligations required by any governmental or
regulatory authority or prior owner in connection
with owning or operating its Oil and Gas Properties
in the ordinary course of business;
(vi) unsecured accounts payable incurred in
the ordinary course of Business which remain unpaid
after the expiration of ninety (90) days beyond
invoice date or are being contested in good faith and
as to which such reserve as is required by Agreement
Accounting Principles has been made;
(vii) Indebtedness not to exceed at any one
time $500,000 related to purchase money financing;
(viii) Indebtedness relating to Capitalized
Lease Obligations not to exceed at any one time
$500,000;
(ix) Indebtedness relating to net production
imbalances not to exceed at any one time $1,000,000;
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(x) Indebtedness relating to overriding
royalties and other interests carved out of
production incurred in the ordinary course of oil and
gas exploration and development projects;
(xi) Indebtedness associated with the
financing of premiums for business insurance of the
Guarantor, the Borrower and their Subsidiaries;
(xii) Contingent Obligations of the
Guarantor in connection with guarantees of the
obligations of the Borrower and its Subsidiaries in
connection with owning and operating Oil and Gas
Properties in the ordinary course of business.
(xiii) Non-Recourse Indebtedness not to
exceed $25,000,000; and
(xiv) the Subordinated Indebtedness."
(f) Section 6.15 Liens, of the Credit Agreement is hereby
amended by deleting the section in its entirety and substituting the
following:
"6.15. Liens. The Borrower will not, nor will it
permit any Subsidiary to, create, incur, or suffer to exist
any Lien in, of or on the Property of the Borrower or any of
its Subsidiaries, except:
(i) Liens for taxes, assessments or
governmental charges or levies on its Property if the
same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being
contested in good faith and by appropriate
proceedings and for which adequate reserves in
accordance with Agreement Accounting Principles shall
have been set aside on its books;
(ii) Liens imposed by Law, such as
carriers', warehousemen's and mechanics' liens and
other similar liens arising in the ordinary course of
business which secure payment of obligations not more
than ninety (90) days past due, or are being
contested in good faith and by appropriate
proceedings and for which adequate reserves in
accordance with Agreement Accounting Principles shall
have been set aside on its books;
(iii) Liens arising out of pledges or
deposits under worker's compensation Laws,
unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar
legislation;
(iv) utility easements, building
restrictions and such other encumbrances or charges
against real property as are of a nature generally
existing with respect to properties of a similar
character and which do not in any material way affect
the marketability of the same or interfere with the
use thereof in the business of the Borrower or its
Subsidiaries;
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(v) Liens existing on the date hereof in
favor of the Minerals Management Service;
(vi) Liens in favor of the Agent, for the
benefit of the Lenders, granted pursuant to any
Collateral Document and other Liens expressly
permitted under the Collateral Documents;
(vii) Liens in favor of operators and
non-operators under joint operating agreements or
similar contractual arrangements arising in the
ordinary course of the business of the Borrower or
its Subsidiaries to secure amounts owing, which
amounts are not more than ninety (90) days past due
or are being contested in good faith by appropriate
proceedings, if such reserve as may be required by
Agreement Accounting Principles shall have been made
therefor;
(viii) Liens under production sales
agreements, division orders, operating agreements,
and other agreements customary in the oil and gas
business for processing, producing, and selling
Hydrocarbons securing obligations not constituting
Indebtedness and provided that such Liens do not
secure obligations to deliver Hydrocarbons at some
future date without receiving full payment therefor
within ninety (90) days of delivery.
(ix) Liens in favor of any of the Lenders in
connection with Rate Management Transactions; and
(x) Liens in favor of the Subordinated
Lenders securing the Subordinated Indebtedness, which
are inferior in right and time to the Liens in favor
of the Lenders."
(g) 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) four million five hundred thousand dollars ($4,500,000) in
the aggregate for the last six calendar months of 2003; or
for each calendar quarter beginning January 1, 2004,
the lesser of (i) two million five hundred thousand
($2,500,000) 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
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breach of clause (ii) of this Section 6.24(b) 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(b) to the
contrary, the Consolidated G&A of Borrower shall not exceed
35% of the Tax Adjusted Gross Margin. "
(h) Section 6.25 Rate Management Transactions, of the Credit
Agreement is hereby amended by deleting the section in its entirety and
substituting the following:
"6.25. Rate Management Transactions. Neither the
Borrower nor any Subsidiary will be a party to or in any
manner be liable on any Rate Management Transactions except:
(i) contracts entered into with the purpose
of fixing prices on oil or gas expected to be
produced by the Borrower or its Subsidiaries,
provided that at all times: (a) no such contract
fixes a price for a term of more than twenty-four
(24) months for any such contract to which any Lender
or any Affiliate thereof is a counter-party and
thirty-six (36) months for any such contract for
which any Subordinated Lender or any Affiliate
thereof is a counter-party; or (b) the aggregate
monthly production covered by all such contracts
(determined, in the case of contracts that are not
settled on a monthly basis, by a monthly pro-ration
acceptable to the Agent) for any single month does
not in the aggregate exceed seventy-five percent
(75%) of the aggregate Projected Oil and Gas
Production of Borrower and its Subsidiaries
anticipated to be sold in the ordinary course of such
Person's business for such month; (c) each such
contract is with a counterparty or has a guarantor of
the obligation of the counterparty who (unless such
counterparty is a Lender, a Subordinated Lender, or
one of their respective Affiliates) at the time the
agreement is made has (or whose holding company has)
long-term obligations rated AA or AA2 or better,
respectively, by either S&P or Xxxxx'x or is an
investment grade-rated industry participant. As used
in this subsection, the term "Projected Oil and Gas
Production" means the projected production of oil or
gas from the "proved, developed, and producing"
category set forth in the most recent Reserve Report
(measured by volume unit or BTU equivalent, not sales
price) for the term of the contracts or a particular
month, as applicable, from Oil and Gas Properties and
interests owned by the Guarantor, the Borrower and
their Subsidiaries which are located in or offshore
of the United States of America and which have
attributable to them proved oil or gas reserves, as
such production is projected in the most recent
report delivered pursuant to Section 6.1, after
deducting projected production from any properties or
interests sold or under contract for sale that had
been included in such report and after adding
projected production from any properties or interests
that had not been reflected in such report but that
are reflected in a separate or supplemental
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reports meeting the requirements of Section 6.1 above
and otherwise are satisfactory to the Agent;
(ii) contracts entered into by the Borrower
or any Subsidiary with the purpose and effect of
fixing interest rates on a principal amount of
indebtedness of such Person that is accruing interest
at a variable rate, provided that (a) the aggregate
notional amount of such contracts never exceeds
seventy-five percent (75%) of the anticipated
outstanding principal balance of the indebtedness to
be hedged by such contracts or an average of such
principal balances calculated using a generally
accepted method of matching interest swap contracts
to declining principal balances, (b) the floating
rate index of each such contract generally matches
the index used to determine the floating rates of
interest on the corresponding indebtedness to be
hedged by such contract, and (c) each such contract
is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such
counterparty is a Lender, a Subordinated Lender, or
one of their Affiliates) at the time the contract is
made has (or whose company has) long-term obligations
rated AA or AA2 or better, respectively, by either
S&P or Xxxxx'x or is an investment grade-rated
industry participant.
(iii) Existing Rate Management Transactions
with Credit Lyonnais Xxxxx Derivatives and
Entergy-Xxxx Trading LP as more particularly
described on Schedule 6.25; and
(iv) contracts entered into pursuant to
Section 6.17 of the Subordinated Credit Agreement
with the purpose of fixing prices on oil or gas
expected to be produced by the Borrower or its
Subsidiaries.
Within ninety (90) days of the date hereof, the
Borrower shall establish and shall at all times
thereafter maintain Rate Management Transactions
consisting of contracts entered into with the purpose
of fixing prices on oil or gas expected to be
produced by the Guarantor, the Borrower and their
Subsidiaries, covering at least fifty percent (50%)
of the aggregate volumes of Hydrocarbons listed in
the "proved, developed, and producing" category set
forth in the most recent Reserve Report, determined
on a rolling twelve month basis."
(i) A new Section 6.31.4 to the Credit Agreement is hereby
added as follows:
"6.31.4. Limitation on Aggregate Outstanding Debt.
The Borrower shall not permit Aggregate Outstanding Debt to be
greater than one hundred and thirty percent (130%) of the
Borrowing Base in effect from time to time."
(j) A new Section 6.32 to the Credit Agreement is hereby added
as follows:
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"6.32. Subordinated Indebtedness. The Borrower will
promptly provide the Agent with copies of all documentation,
notices and reports provided by or on behalf of the Borrower,
Guarantor or any Subsidiary to the Subordinated Lenders. On or
before the tenth (10th) day of each calendar month, the
Borrower shall deliver to the Agent a certificate, executed by
an Authorized Officer of the Borrower, setting forth the
outstanding balance of the Subordinated Indebtedness as of the
last day of the preceding month. The Borrower will not, and
will not permit the Guarantor or any Subsidiary to, make any
(i) payments on the principal amount of any Subordinated
Indebtedness; (ii) payments of interest on the Subordinated
Indebtedness if (a) the Aggregate Outstanding Credit Exposure
of the Borrower exceeds eighty percent (80%) of the Borrowing
Base in effect from time to time or (b) after the occurrence
of a Unmatured Default or a Default; (iii) amendment or
modification to the Subordinated Credit Agreement or any other
agreement evidencing or governing any Subordinated
Indebtedness without the prior written consent of the Agent;
or (iv) directly or indirectly voluntarily prepay, defease or
in substance defease, purchase, redeem, retire or otherwise
acquire, any portion of the Subordinated Indebtedness without
the prior written consent of the Agent."
(k) A new Section 6.33 to the Credit Agreement is hereby added
as follows:
"Section 6.33 Change of Operators. If pursuant to the terms of
the Subordinated Credit Agreement, the Subordinated Lenders
request that the Borrower or any Subsidiary replace or vote to
replace the operator of any of the Oil & Gas Properties, the
Borrower will not and will not permit any Subsidiary to do so
without the prior written consent of Lenders, which consent
will not be unreasonably withheld."
(l) Section 7.3 of the Credit Agreement is hereby amended by
deleting the section in its entirety and substituting the following:
"7.3. The material breach by the Borrower of any of the
terms or provisions of Article VI Sections 6.2, 6.10, 6.11,
6.12, 6.13, 6.14, 6.15, 6.16, 6.17, 6.18, 6.19, 6.20, 6.24,
6.25, 6.26, 6.27, 6.28, 6.29, 6.30, 6.31 or 6.32 and/or the
occurrence of an "Event of Default" under the Subordinated
Credit Agreement provided, however, any amendment,
modification or waiver by the Subordinated Lenders of any such
"Event of Default" shall not constitute an amendment,
modification or waiver hereunder."
(m) A new Section 7.20 to the Credit Agreement is hereby added
as follows:
"7.20 The Borrower shall fail to timely pay any of its
obligations to the Subordinated Lender under the Subordinated
Credit Agreement or any other default shall occur thereunder."
(n) Section 8.1 Acceleration, of the Credit Agreement is
hereby amended by deleting the section in its entirety and substituting
the following:
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"(i) If any Default described in Section 7.6, 7.7 or
7.20 occurs with respect to the Borrower or any of its
Subsidiaries, the obligations of the Lenders to make Loans
hereunder and the obligation and power of the LC Issuer to
issue Facility LCs shall automatically terminate and the
Obligations shall immediately become due and payable without
any election or action on the part of the Agent, the LC Issuer
or any Lender and the Borrower will be and become thereby
unconditionally obligated, without any further notice, act or
demand, to pay to the Agent an amount in immediately available
funds, which funds shall be held in the Facility LC Collateral
Account, equal to the excess of (x) the amount of LC
Obligations at such time, over (y) the amount on deposit in
the Facility LC Collateral Account at such time which is free
and clear of all rights and claims of third parties and has
not been applied against the Obligations (such difference, the
"Collateral Shortfall Amount"). If any other Default occurs,
the Required Lenders (or the Agent with the consent of the
Required Lenders) may (a) terminate or suspend the obligations
of the Lenders to make Loans hereunder and the obligation and
power of the LC Issuer to issue Facility LCs, or declare the
Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without
presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or notice of any kind, all of which the
Borrower hereby expressly waives, and (b) upon notice to the
Borrower and in addition to the continuing right to demand
payment of all amounts payable under this Agreement, make
demand on the Borrower to pay, and the Borrower will,
forthwith upon such demand and without any further notice or
act, pay to the Agent the Collateral Shortfall Amount, which
funds shall be deposited in the Facility LC Collateral
Account.
(ii) If at any time while any Default is continuing,
the Agent determines that the Collateral Shortfall Amount is
greater than zero, the Agent may make demand on the Borrower
to pay, and the Borrower will, forthwith upon such demand and
without any further notice or act, pay to the Agent the
Collateral Shortfall Amount, which funds shall be deposited in
the Facility LC Collateral Account.
(iii) The Agent may at any time or from time to time
after funds are deposited in the Facility LC Collateral
Account, apply such funds to the payment of the Obligations or
any other amounts as shall from time to time have become due
and payable by the Borrower to the Lenders or the LC Issuer
under the Loan Documents.
(iv) At any time while any Default is continuing,
neither the Borrower nor any Person claiming on behalf of or
through the Borrower shall have any right to withdraw any of
the funds held in the Facility LC Collateral Account. After
all of the Obligations have been indefeasibly paid in full and
the Aggregate Commitment has been terminated, any funds
remaining in the Facility LC Collateral Account shall be
returned by the Agent to the Borrower or paid to whomever may
be legally entitled thereto at such time.
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(v) If, within ten (10) days after acceleration of
the maturity of the Obligations or termination of the
obligations of the Lenders to make Loans and the obligation
and power of the LC Issuer to issue Facility LCs hereunder as
a result of any Default (other than any Default as described
in Section 7.6 or 7.7 with respect to the Borrower) and before
any judgment or decree for the payment of the Obligations due
shall have been obtained or entered, the Required Lenders (in
their sole discretion) shall so direct, the Agent shall, by
notice to the Borrower, rescind and annul such acceleration
and/or termination."
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 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) Copies of all documentation executed by Borrower and
Guarantor in connection with the Subordinated Credit Agreement and the
Subordinated Indebtedness, certified by an Authorized Officer of
Borrower that such documents are true, correct and complete:
(e) The Subordination Agreement, duly executed by Borrower,
Guarantor and the Subordinated Lenders;
(f) 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;
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(g) 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;
(h) The legal opinion of counsel to Borrower and Guarantor, in
form and substance satisfactory to the Agent and its counsel;
(i) The Security Agreement, executed by Borrower and
Guarantor, in a form satisfactory to the Agent, the Lenders and their
counsel with respect to the accounts therein described, which are a
part of the Collateral; and
(j) 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 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; and
(c) After giving affect to this Amendment, no event has
occurred and is continuing which constitutes a Default or Unmatured
Default.
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.
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(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 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
omission 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.
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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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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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
------------------------------------------------
Xxxxxxx X. Xxxxxxxx, Chief Financial Officer
"GUARANTOR"
PETROQUEST ENERGY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------------
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
-------------------------------------
Xxxxxxx Xxxxxxxxx-Xxxxx
Director
-00-
XXXXX XXXX XX XXXXXXXXXX, N.A.
As a Lender
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxx
-------------------------------
Title: Senior Vice President
------------------------------
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