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EXHIBIT 10.7
SUBORDINATION AGREEMENT
This Subordination Agreement (this "Agreement") is entered into
effective as of December 21, 2000, by and among Hibernia National Bank, on
behalf of itself and each additional lender from time to time party to the
Hibernia Credit Agreement (as such term is defined below) (herein called
"Hibernia"), EnCap Energy Capital Fund III, L.P. on behalf of itself and its
affiliates (herein called "EnCap"), and PetroQuest Energy, Inc., a Louisiana
corporation, PetroQuest Energy One, L.L.C., a Louisiana limited liability
company, and PetroQuest Energy, Inc., a Delaware corporation (herein
collectively called "Debtors").
RECITALS:
1. Debtors and Hibernia are entering into a Credit Agreement of even
date herewith (herein, as from time to time amended, supplemented, or restated
in compliance herewith, called the "Hibernia Credit Agreement"). The promissory
note(s) given pursuant to the Hibernia Credit Agreement, together with all
promissory notes given in renewal and extension thereof, as each is from time to
time amended or supplemented in compliance herewith, are herein called the
"Hibernia Notes". True and correct copies of the Hibernia Credit Agreement and
the Hibernia Notes are being delivered to EnCap concurrently herewith.
2. Debtors are also entering into a Credit Agreement of even date
herewith (herein, as from time to time amended, supplemented, or restated in
compliance herewith, called the "EnCap Credit Agreement") with EnCap. The
promissory note(s) given pursuant to the EnCap Credit Agreement, together with
all promissory notes given in renewal and extension thereof, as each is from
time to time amended or supplemented in compliance herewith, are herein called
the "EnCap Notes". True and correct copies of the EnCap Credit Agreement and the
EnCap Notes are being delivered to Hibernia concurrently herewith.
3. The Hibernia Indebtedness and the EnCap Indebtedness (as each such
term is defined below) will be secured by certain liens and security interests
granted by Debtors.
4. The execution and delivery of this Agreement is a condition
precedent to the extensions of credit under the Hibernia Credit Agreement and
the EnCap Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Hibernia to enter into the Hibernia Credit
Agreement with Debtors, and to induce EnCap to enter into the EnCap Credit
Agreement with Debtors, the parties hereto hereby agree as follows:
Section 1. Definitions.
(a) Specific Definitions. As used herein, the terms "Agreement,"
"Hibernia," "EnCap," "Debtors," "Hibernia Credit Agreement", "Hibernia Notes",
"EnCap Credit
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Agreement," and "EnCap Notes" have the meanings indicated above, and the
following additional terms have the following meanings:
"Collateral" means any and all property of any nature whatsoever which
now constitutes or hereafter will constitute collateral or other security for
payment of any of the Indebtedness.
"EnCap Default" means any "Event of Default" as defined in the EnCap
Credit Agreement.
"EnCap Documents" means (a) the EnCap Credit Agreement, (b) the EnCap
Notes and any other notes or instruments evidencing EnCap Indebtedness, (c) all
mortgages, security agreements, pledge agreements or financing statements
evidencing, creating or perfecting any Lien to secure the EnCap Indebtedness in
any way, (d) all guaranties of the EnCap Indebtedness, (e) all other documents,
instruments or agreements relating to the EnCap Indebtedness now or hereafter
executed or delivered by or among any Debtor or any Subsidiary of any Debtor, to
EnCap, and (f) all renewals, extensions, amendments, modifications or
restatements of the foregoing.
"EnCap Indebtedness" means any and all indebtedness (whether for
principal, interest, fees, indemnifications, expenses, or otherwise) owing by
any Debtor to EnCap under or relating to the EnCap Credit Agreement, any
promissory note issued by any Debtor in connection therewith (including the
EnCap Notes), any EnCap Document, or any Permitted Junior Securities.
"EnCap Liens" means all Liens securing the EnCap Indebtedness.
"Enforcement Action" means, with respect to any Indebtedness: (a) any
acceleration of any or all of such Indebtedness, (b) any enforcement or
foreclosure of Liens granted by any Debtor or any Subsidiary of any Debtor to
secure any or all of such Indebtedness, or (c) any other efforts to collect any
or all of such Indebtedness from any Debtor or any Subsidiary of any Debtor or
from any Debtor's or any such Subsidiary's assets or properties (including
proceeds of production), excluding receipt of payments on such Indebtedness in
the ordinary course of business but including the commencement or the joining
with any other creditor of any Debtor or any Subsidiary in the commencement of
any Insolvency Proceeding against any Debtor or any Subsidiary of any Debtor;
provided, that, none of the following shall constitute an Enforcement Action:
(i) acceleration of any of the EnCap Indebtedness following acceleration of any
of the Hibernia Indebtedness, (ii) acceleration of any of the Hibernia
Indebtedness following acceleration of any of the EnCap Indebtedness, (iii) any
of the actions described in the foregoing clauses (a), (b) or (c) that are taken
during the existence of any Insolvency Proceeding that is subject to the
jurisdiction of a court of competent authority, and (iv) demands or actions to
enforce this Agreement.
"Hibernia Documents" means (a) the Hibernia Credit Agreement, (b) the
Hibernia Notes and any other notes or instruments evidencing Hibernia
Indebtedness, (c) all mortgages, security agreements, pledge agreements or
financing statements evidencing, creating or perfecting any Lien to secure the
Hibernia Indebtedness in any way, (d) all guaranties of the Hibernia
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Indebtedness, (e) all other documents, instruments or agreements relating to the
Hibernia Indebtedness now or hereafter executed or delivered by or among any
Debtor or any Subsidiary of any Debtor to Hibernia, and (f) all renewals,
extensions, amendments, modifications or restatements of the foregoing.
"Hibernia Event of Default" means any Hibernia Non-Payment Default or
any Hibernia Payment Default.
"Hibernia Indebtedness" means any and all indebtedness and other
obligations (whether for principal, interest, fees, indemnifications, expenses,
or otherwise) owing by any Debtor to Hibernia under the Hibernia Credit
Agreement or the "Loan Documents" as defined therein.
"Hibernia Non-Payment Default" means any "Event of Default" as defined
in the Hibernia Credit Agreement, other than a Hibernia Payment Default.
"Hibernia Payment Default" means a default in the payment of any
principal or interest owing in respect of any Hibernia Indebtedness, whether
such default relates to the failure of any Debtor to pay when due (i) any
regularly scheduled payment under the Hibernia Indebtedness, (ii) any payment of
the Hibernia Indebtedness which may be from time to time required under the
terms of the Hibernia Credit Agreement (including those which might result from
a redetermination of the Borrowing Base Amount as therein defined); and/or (iii)
all Hibernia Indebtedness upon the acceleration of the maturity of same pursuant
to the terms of the Hibernia Credit Agreement.
"Indebtedness" means any of the EnCap Indebtedness or the Hibernia
Indebtedness.
"Insolvency Payor" means, in connection with any Insolvency Proceeding,
any Debtor or any trustee in bankruptcy, receiver, assignee for the benefit of
creditors, liquidating trustee or agent of or for any Debtor or its unsecured
creditors.
"Insolvency Proceeding" means any (a) insolvency, bankruptcy,
receivership, custodianship, liquidation, reorganization, readjustment,
composition or other similar proceeding relating to any Debtor or any of any
Debtor's properties, whether under any bankruptcy, reorganization or insolvency
law or laws, federal or state, or any law, federal or state, relating to relief
of debtors, readjustment of indebtedness, reorganization, composition or
extension, (b) proceeding for any liquidation, liquidating distribution,
dissolution or other "winding up" of any Debtor, voluntary or involuntary,
whether or not involving insolvency or bankruptcy proceedings, (c) assignment
for the benefit of creditors of any Debtor, or (d) other marshaling of the
assets of any Debtor; provided that any merger, consolidation or liquidation of
any Debtor which is permitted under both the Hibernia Credit Agreement and the
EnCap Credit Agreement shall not constitute an "Insolvency Proceeding".
"Lien" means any lien, mortgage, security interest, pledge, deposit,
judgment lien, attachment garnishment, or other charge or encumbrance for
security purposes or to enforce a judgment, whether arising by law or agreement
or otherwise.
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"Permitted Junior Securities" means (a) stock or other equity interests
in any Debtor or any parent company of any Debtor, and (b) debt instruments or
securities (including renewals and extensions of EnCap Notes) issued by any
Debtor or any parent company of any Debtor in exchange for or in renewal and
extension of EnCap Notes that (i) have a maturity date longer than that of the
EnCap Indebtedness being exchanged or renewed and extended, and (ii) are
subordinate and junior in right of payment to the payment of the Hibernia
Indebtedness at least to the extent provided in this Agreement.
"Person" means an individual, corporation, limited liability company,
partnership, association, joint stock company, trust or trustee thereof, estate
or executor thereof, unincorporated organization or joint venture, court or
governmental unit or any agency or subdivision thereof, or any other legally
recognizable entity.
"Proceeds" has the meaning assigned to it under the UCC, shall also
include "products" (as defined in the UCC), and, in any event, shall include,
but not be limited to (a) any and all proceeds of any insurance, indemnity,
warranty, letter of credit or guaranty or collateral security payable to any
grantor from time to time with respect to any of the Collateral, (b) any and all
payments (in any form whatsoever) made or due and payable to the owner of the
Collateral from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
government body, authority, bureau or agency (or any Person acting under color
of governmental authority) and (c) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Subsidiary" means, for any Person, any corporation, limited liability
company, partnership, or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions (including that of a
general partner) are at the time directly or indirectly owned, collectively, by
such Person and any Subsidiaries of such Person. The term Subsidiary shall
include Subsidiaries of Subsidiaries (and so on).
"UCC" means the Uniform Commercial Code, as amended and as in effect
from time to time in the State of Louisiana.
(b) References and Headings. Unless the context otherwise requires or
unless otherwise provided herein, references in this Agreement to a particular
agreement, instrument or document (including references to promissory notes,
loan agreements, guaranties and security documents) also refer to and include
all renewals, extensions, amendments, modifications, supplements or restatements
of any such agreement, instrument or document which are made in writing by the
parties thereto; provided, that, nothing contained in this Section 1(b) shall be
construed to authorize any party hereto to execute or enter into any such
renewal, extension, amendment modification, supplement or restatement. The
headings used herein are for purposes of convenience only and shall not be used
in construing the provisions hereof. The words "this Agreement," "this
instrument," "herein," "hereof," "hereby" and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless expressly
so limited. The word "or" is not exclusive, and the word "including" (in its
various forms) means "including without limitation". Pronouns in masculine,
feminine and neuter genders shall be construed to
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include any other gender, and words in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise requires.
Section 2. General. Notwithstanding any provision of the EnCap
Documents, the EnCap Indebtedness shall be subordinate and junior in right of
payment to all Hibernia Indebtedness, to the extent and in the manner provided
for in this Agreement, and EnCap, by acceptance thereof, whether upon original
issuance, transfer, assignment or exchange, agrees to be bound by the provisions
of this Agreement.
Section 3. Insolvency Proceedings. In the event of any Insolvency
Proceeding all Hibernia Indebtedness shall first be finally and irrevocably paid
in full in cash before any payment or distribution of any character, whether in
cash, securities or other property (except Permitted Junior Securities) shall be
made by any Insolvency Payor, or received or accepted by EnCap from any
Insolvency Payor, for or on account of any EnCap Indebtedness. In the event of
any Insolvency Proceeding, any payment or distribution by any Insolvency Payor
in such Insolvency Proceeding of any kind or character, whether in cash,
securities or other property (other than Permitted Junior Securities), which
would otherwise (but for this Agreement) be payable or deliverable to EnCap in
respect of any EnCap Indebtedness shall be paid or delivered by such Insolvency
Payor directly to Hibernia for application in payment of the Hibernia
Indebtedness to the extent necessary to pay in full all Hibernia Indebtedness
then remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of the Hibernia Indebtedness. EnCap hereby grants to
Hibernia the right to file proofs of claim on account of the EnCap Indebtedness
in any Insolvency Proceedings in the event that EnCap fails to do so within 15
days of the bar date pertaining thereto; provided, however, that Hibernia shall
not be permitted to vote such claim, and all voting rights with respect thereto
are retained by EnCap. In the event of any Insolvency Proceeding of any Debtor
and any hearing or motion therein under Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Bankruptcy Code with respect to the use of Collateral constituting cash Proceeds
from the sale of oil and gas production of any Debtor in the ordinary course of
business, EnCap will not oppose any payment of such cash Collateral to Hibernia
to the extent such cash Collateral is to be applied to payment of Hibernia
Indebtedness.
Section 4. Subordination Upon Hibernia Payment Default. If any Hibernia
Payment Default ever exists (whether at a date fixed for payment or by
declaration, acceleration or otherwise), then the rights of EnCap to receive any
payment from any Debtor with respect to the EnCap Indebtedness (other than in
the form of Permitted Junior Securities) shall be suspended from and after the
date that Hibernia gives EnCap written notice of such Hibernia Payment Default
until such Hibernia Payment Default has been cured or waived or until the
Hibernia Indebtedness is satisfied in full.
Section 5. Subordination Upon Hibernia Non-Payment Default. If any
Hibernia Non-Payment Default occurs, then Hibernia may, at its option, give
notice thereof to EnCap, in which event the rights of EnCap to receive any
payment from any Debtor with respect to the EnCap Indebtedness (other than in
the form of Permitted Junior Securities) shall be suspended for a thirty day
period from and after the date that Hibernia gives EnCap written notice of such
Hibernia Non-Payment Default; provided that Hibernia may give only one such
notice during any consecutive twelve-month period.
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Section 6. Lien Priorities and Application of Proceeds.
(a) Any and every perfected Lien in the Collateral in favor of Hibernia
or any other lender from time to time party to the Hibernia Credit Agreement
held as security for payment of the Hibernia Indebtedness has and shall have
priority, as among the parties hereto, over any Lien that EnCap now has or may
hereafter acquire in the Collateral, notwithstanding any statement or provision
contained in the EnCap Documents or otherwise to the contrary and irrespective
of the time or order of filing or recording of financing statements, security
agreements, pledge agreements, deeds of trust, mortgages or other notices of
Liens or assignments granted pursuant thereto, and irrespective of anything
contained in any filing or agreement to which any part hereto or its respective
successors and assigns may now or hereafter be a party, and irrespective of the
ordinary rules for determining priorities under the UCC or under any other law
governing the relative priorities of secured creditors.
(b) At any time during which all or any part of the Hibernia
Indebtedness remains outstanding, and whether or not the same is then due and
payable, the Proceeds of any Enforcement Action by Hibernia or EnCap upon all or
any part of the Collateral shall be applied in the following order of
priorities, irrespective of the application of any rule or law or the defect or
impairment of any Hibernia Document, EnCap Document, Lien or assignment
thereunder or the failure to perfect any Lien or assignment securing the
Hibernia Indebtedness:
first, to the payment in full of all Hibernia Indebtedness, in such
order as Hibernia shall determine in its sole discretion;
second, to the payment in full of all EnCap Indebtedness, in such
order as EnCap shall determine in its sole discretion; and
third, to be released to Debtors with the consent of EnCap and
Hibernia, or as a court of competent jurisdiction may direct.
(c) Each of EnCap and Hibernia shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which proceedings are
pending, or a certificate of the liquidating trustee or other Person making any
distribution to EnCap or Hibernia, as the case may be, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Agreement.
Section 7. No Changes to Payment Terms.
(a) Until the termination of the Hibernia Credit Agreement, Debtors and
EnCap will not (without the written consent of Hibernia) amend or supplement the
EnCap Documents in any way that requires any Debtor to make principal payments
on the EnCap Indebtedness prior to November 17, 2001 or that increases the
interest rate payable on the EnCap Indebtedness.
(b) Until the termination of the EnCap Credit Agreement, Debtors and
Hibernia will not (without the written consent of EnCap) amend or supplement the
Hibernia Credit Agreement
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in any way that requires any Debtor to make additional principal payments (not
already provided for) on the Hibernia Indebtedness prior to one day after the
date set forth in the preceding subsection (a) or that increases the interest
rate payable on the Hibernia Indebtedness, except that the Hibernia Credit
Agreement may be amended to add additional lenders and to provide additional
credit to Debtors thereunder (which shall be considered additional Hibernia
Indebtedness hereunder) so long as (i) the maturity dates of principal payments
due to such additional lenders are no earlier than the maturity dates of the
principal payments and mandatory prepayments presently required and which may
from time to time be required due to Borrowing Base redeterminations made by
Hibernia under the Hibernia Credit Agreement, and (ii) such additional lenders
expressly acknowledge in writing and agree that any such indebtedness extended
by them under the Hibernia Credit Agreement shall be considered Hibernia
Indebtedness for purposes of this Agreement.
Section 8. Optional Prepayments; Turnover of Payments Wrongly Received.
(a) Debtors may make optional prepayments (i) on the Hibernia
Indebtedness as permitted under the Hibernia Credit Agreement if at the time of
such prepayment no EnCap Default shall have occurred or be continuing or be
caused solely by the making of such prepayment and (ii) on the EnCap
Indebtedness as permitted under the EnCap Credit Agreement if at the time of
such prepayment no Hibernia Event of Default shall have occurred or be
continuing or be caused solely by the making of such prepayment.
(b) If any Debtor or any Subsidiary of any Debtor shall make any
payment of EnCap Indebtedness or any payment in respect of any purchase,
repurchase, redemption or defeasance or distribution (whether in cash, property
or any other manner) to EnCap which is prohibited hereby or EnCap shall collect
any such payment or distribution which is prohibited hereby (including any such
amount resulting from the taking of any Enforcement Action, whether or not
permitted hereunder), then such payment shall be received and held in trust for
and paid over and delivered by EnCap to Hibernia as agent for itself and any
other lenders party to the Hibernia Credit Agreement upon demand by Hibernia.
Section 9. Payments to EnCap Otherwise Permitted. Except as expressly
provided herein, nothing shall prevent any Debtor from paying, or EnCap from
receiving, any payments when due on the EnCap Indebtedness or limit the rights
of EnCap to take Enforcement Actions.
Section 10. Notice and Right to Cure; Subrogation.
(a) From and after the date hereof until and but not including
September 18, 2001, Hibernia will give notice to EnCap of any Hibernia Event of
Default at least thirty days prior to taking any Enforcement Action with respect
thereto, and Hibernia agrees not to take any Enforcement Action until the end of
such thirty day period without the consent of EnCap. From and after September
18, 2001, Hibernia will give notice to EnCap of any Hibernia Event of Default at
least fifteen days prior to taking any Enforcement Action with respect thereto,
and Hibernia agrees not to take any Enforcement Action until the end of such
fifteen day period without the consent of EnCap. Although EnCap has no
obligation to cure any Hibernia Event of Default, each Debtor hereby irrevocably
authorizes EnCap to make any such cure, if EnCap so
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elects, and Hibernia hereby agrees that it will allow EnCap to make any such
cure on behalf of such Debtor (whether during or after such thirty or fifteen
day period, as applicable).
(b) From and after the date hereof until and but not including
September 18, 2001, EnCap shall give notice to Hibernia at least thirty days
prior to any Enforcement Action with respect to the EnCap Indebtedness, and
EnCap agrees not to take any Enforcement Action until the end of such thirty day
period without the consent of Hibernia, provided that all amounts received by
EnCap from Enforcement Actions thereafter must be paid over to Hibernia as agent
for itself and the other lenders then party to the Hibernia Credit Agreement
until all Hibernia Indebtedness has been paid in full. From and after September
18, 2001, EnCap shall give notice to Hibernia at least fifteen days prior to any
Enforcement Action with respect to the EnCap Indebtedness, and EnCap agrees not
to take any Enforcement Action until the end of such fifteen day period without
the consent of Hibernia, provided that all amounts received by EnCap from
Enforcement Actions thereafter must be paid over to Hibernia as agent for itself
and the other lenders then party to the Hibernia Credit Agreement until all
Hibernia Indebtedness has been paid in full. Although Hibernia has no obligation
to cure any event of default under the EnCap Documents, each Debtor hereby
irrevocably authorizes Hibernia to make any such cure, if Hibernia so elects,
and EnCap hereby agrees that it will allow Hibernia to make any such cure on
behalf of such Debtor (whether during or after such thirty or fifteen day
period, as applicable).
(c) To the extent that EnCap has made any payments hereunder to
Hibernia, after the payment in full in cash of all Hibernia Indebtedness EnCap
shall be subrogated to the rights of Hibernia to receive payments and
distributions of cash, property and securities applicable to the Hibernia
Indebtedness and the Collateral until all amounts owing on the EnCap
Indebtedness shall be paid in full in cash. For purposes of such subrogation, no
payments or distributions to the holders of the Hibernia Indebtedness by or on
behalf of any Debtor or any Subsidiary of any Debtor or by or on behalf of EnCap
by virtue of this Agreement which otherwise would have been made to EnCap shall,
as between any Debtor or any Subsidiary of any Debtor, their respective
creditors other than Hibernia and EnCap, be deemed to be a payment or
distribution by any Debtor or any Subsidiary to or on account of the Hibernia
Indebtedness.
(d) Hibernia will at any time following the occurrence and during the
continuance of a Hibernia Payment Default, upon request by EnCap, assign to
EnCap all of the Hibernia Indebtedness, all of Hibernia's rights under the
Hibernia Credit Agreement, and all appurtenant liens, rights, documents and
instruments upon payment of a cash purchase price equal to 100% of the Hibernia
Indebtedness so assigned and assumption or termination of any remaining duties
under the Hibernia Credit Agreement. Any such assignment will be without
recourse, representation or warranty, except that Hibernia will warrant that it
owns and holds, free of any encumbrance or subordination created by Hibernia,
the Hibernia Indebtedness and the liens, rights, documents and instruments which
it is transferring.
Section 11. Provisions Solely to Define Relative Rights. The provisions
of this Agreement are solely for the purposes of defining the relative rights of
Hibernia, on the one hand and EnCap, on the other hand. Nothing herein shall
impair or prevent Hibernia from exercising all rights and remedies otherwise
permitted by applicable law upon default under the Hibernia Credit Agreement
subject, however, to the provisions of this Agreement. Nothing herein shall
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impair, as between any Debtor and EnCap, the obligation of any Debtor, which is
unconditional and absolute, to pay to EnCap the principal of and interest on and
fees with respect to the EnCap Indebtedness as and when the same shall become
due in accordance with their terms, nor shall anything herein prevent EnCap from
exercising all rights and remedies otherwise permitted by applicable law upon
default under the EnCap Documents, subject, however, to the provisions of this
Agreement and the rights of Hibernia to the extent provided herein. EnCap shall
not at any time be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to EnCap or the taking of any other
action under this Agreement unless and until EnCap shall have received written
notice from Hibernia and, prior to the receipt of any such notice, EnCap shall
be entitled to assume conclusively that no such facts exist, except that EnCap
hereby understands and agrees that any Enforcement Action by EnCap shall
constitute a Hibernia Non-Payment Default (with all the consequences thereof
under this Agreement) of which EnCap shall be deemed to have received notice
without the requirement of any further notice thereof by Hibernia to EnCap.
Section 12. Specific Performance.
(a) At any time that any of EnCap or any Debtor fails to comply with
any provision of this Agreement that is applicable to such party, Hibernia may
demand specific performance of this Agreement.
(b) At any time that any of Hibernia or any Debtor fails to comply with
any provision of this Agreement that is applicable to such party, EnCap may
demand specific performance of this Agreement.
(c) Each party hereto hereby waives any defense based on the adequacy
of a remedy at law which might be asserted as a bar to the remedy of specific
performance of this Agreement in any action brought therefor by either EnCap or
Hibernia.
Section 13. No Waiver or Requirement to Xxxxxxxx. No right of Hibernia
to enforce the subordination of the EnCap Liens and the EnCap Indebtedness as
herein provided shall at any time or in any way be prejudiced or impaired by any
act or failure to act on the part of any Debtor or by any act or failure to act
by Hibernia, or by any noncompliance by any Debtor with the terms of this
Agreement, regardless of any knowledge thereof which Hibernia may have or be
otherwise charged with. No right of EnCap to receive notice or cure Hibernia
Events of Default, as provided in Section 9(a), or to otherwise exercise its
rights as herein provided shall at any time or in any way be prejudiced or
impaired by any act or failure to act on the part of any Debtor or by any act or
failure to act by EnCap, or by any noncompliance by any Debtor with the terms of
this Agreement, regardless of any knowledge thereof which EnCap may have or be
otherwise charged with. Neither Hibernia nor EnCap shall have any obligation to
preserve rights in the Collateral or to marshal any of the Collateral for the
benefit of any Person. No failure to exercise, and no delay in exercising on the
part of any party hereto, any right, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided in this Agreement are cumulative and shall not be
exclusive of any rights or remedies provided by law.
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Section 14. Reinstatement of Agreement. Notwithstanding any prior
revocation, termination, surrender, or discharge of this Agreement in whole or
in part, the effectiveness of this Agreement shall automatically continue or be
reinstated in the event that any payment received or credit given by Hibernia in
respect of the Hibernia Indebtedness is returned, disgorged or rescinded under
any applicable state or federal law, including, without limitation, the laws
pertaining to bankruptcy or insolvency, in which case this Agreement shall be
enforceable against EnCap as if the returned, disgorged, or rescinded payment or
credit has not been received or given by Hibernia, and whether or not Hibernia
relied upon this payment or credit or changed its position as a consequence of
it. In the event of continuation or reinstatement of this Agreement, EnCap
agrees upon demand by Hibernia to execute and deliver to Hibernia those
documents which Hibernia reasonably determines to be appropriate to further
evidence (in the public records or otherwise) such continuation or
reinstatement, although the failure of EnCap to do so shall not affect in any
way such continuation or reinstatement.
Section 15. Representations, and Warranties. Each of the parties hereto
hereby represents and warrants that (a) it has full power, authority and legal
right to make and perform this Agreement, and (b) this Agreement is its legal,
valid and binding obligation, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and similar laws relating to the
enforcement of creditors' rights and to general principles of equity.
Section 16. Changes Must Be In Writing. No amendment of any provision
of this Agreement shall be effective unless it is in writing and signed by
Hibernia and by EnCap, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. Neither
the failure nor any delay on the part of Hibernia or EnCap to exercise any
right, remedy, power or privilege hereunder shall operate as a waiver thereof or
give rise to an estoppel, nor be construed as an agreement to modify the terms
of this Agreement nor shall any single or partial exercise of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such light, remedy, power or privilege with respect to any other occurrence.
Section 17. Governing Law. This Agreement shall be deemed a contract
and instrument made under the laws of the State of Louisiana and shall be
construed and enforced in accordance with and governed by the laws of such state
and the laws of the United States of America, without regard to principles of
conflicts of law.
Section 18. Invalidity of Particular Provisions. If any term or
provision of this Agreement shall be determined to be illegal or unenforceable,
all other terms and provisions hereof shall nevertheless remain effective and
shall be enforced to the fullest extent permitted by applicable law.
Section 19. Notices. All notices, requests, consents, demands and other
communications to any Debtor, EnCap, or Hibernia which are required or permitted
under this Agreement shall be in writing and shall be deemed sufficiently given
or furnished if delivered by personal delivery, by telecopy, by delivery service
with proof of delivery, or by registered or certified United States mail,
postage prepaid, at the addresses set forth on Annex I hereto (unless changed by
similar notice in writing given by the particular Person whose address is to be
10
11
changed). Any such notice or communication shall be deemed to have been given
and received (a) in the case of personal delivery or delivery service, as of the
date of first attempted delivery at the address and in the mariner provided
herein, (b) in the case of telecopy, upon receipt, or (c) in the case of
registered or certified United States mail, three days after deposit in the
mail.
Section 20. Successors and Assigns. This Agreement shall pass to and be
fully binding upon and inure to the benefit of the successors and assigns of
each party hereto. Neither Hibernia nor EnCap will transfer or assign any of its
Indebtedness to any Person (except in accordance with Section 7(b) hereof)
unless the transferee acknowledges this Agreement in writing. If EnCap transfers
or assigns any of its Indebtedness (other than participations to an Affiliate of
EnCap), the transferor or EnCap will give prompt notice of such assignment or
transfer to Hibernia, and if Hibernia transfers or assigns any of its
Indebtedness, Hibernia will give prompt notice of such assignment or transfer to
EnCap.
Section 21. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 22. FINAL AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF 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 Agreement to be
duty executed by their proper and duly authorized officers as of the day and
year first above written.
HIBERNIA: HIBERNIA NATIONAL BANK
By: /s/ Xxxxx Xxxx
--------------------------------------------
Xxxxx Xxxx
Title:
DEBTOR: PETROQUEST ENERGY, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx
Chairman of the Board and Chief Executive
Officer
PETROQUEST ENERGY, INC.,
a Louisiana corporation
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx
Chairman of the Board and Chief Executive
Officer
PETROQUEST ENERGY ONE, L.L.C.,
a Louisiana limited liability company
By: PETROQUEST ENERGY, INC., a Louisiana
corporation, its sole member
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxx
Chairman of the Board and Chief
Executive Officer
13
ENCAP: ENCAP ENERGY FUND CAPITAL FUND III, L.P.
By: ENCAP INVESTMENTS L.L.C., General
Partner
By: /s/ D. Xxxxxx Xxxxxxxx
------------------------------------
D. Xxxxxx Xxxxxxxx, Managing Director
14
ANNEX I
ADDRESSES FOR NOTICE
ENCAP ENERGY FUND CAPITAL FUND, III, L.P.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
HIBERNIA NATIONAL BANK
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
PETROQUEST ENERGY, INC., a Delaware corporation
PETROQUEST ENERGY, INC., a Louisiana corporation
PETROQUEST ENERGY ONE, L.L.C., a Louisiana limited liability company
000 X. Xxxxxxx Xxxxxx Xxxx, Xxx. 0000
Xxxxxxxxx, XX 00000
Attention: Chairman of the Board and Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
