Exhibit 10.1
AMENDMENT NO. 5
TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT NO. 5 to the SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the
“Amendment”), dated to be effective as of April 1, 2008, is by and among
PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company (“Borrower”);
JPMORGAN CHASE BANK, N.A. (individually as a lender and as agent, “Agent”); each
of the Guarantors set forth on the signature pages hereto and the financial
institutions set forth on the signature pages hereto, (“Lenders”).
R E C I T A L S:
     WHEREAS, Borrower, PetroQuest Energy, Inc., a Delaware corporation
(“Parent”), Agent, Calyon New York Branch, as Syndication Agent; J.P. Morgan
Securities, Inc., as Sole Lead Arranger and Sole Book Runner, and the Lenders
have entered into a Second Amended and Restated Credit Agreement dated
November 18, 2005 (as the same may have been and may hereafter be amended from
time to time, the “Credit Agreement”), pursuant to which Borrower amended and
restated a previously existing credit facility dated May 13, 2003; and
     WHEREAS, Borrower, Parent, Agent and the Lenders 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.
     2. Amendments to the Credit Agreement. The Credit Agreement is, 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 Until the date as of which the Borrowing Base is next redetermined
pursuant to Section 2.2.2, the Borrowing Base shall be $95,000,000, as reduced
by Section 2.2.5.”
          (b) Section 2.3, Termination, of the Credit Agreement is hereby
amended in its entirety to read as follows:

 

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“2.3 Termination. The Aggregate Outstanding Credit Exposure and all other unpaid
Obligations shall be paid in full by the Borrower on the Facility Termination
Date; provided however, that Lender Rate Management Obligations arising under
Rate Management Contracts entered into prior to the Facility Termination Date
may exist and extend beyond such Facility Termination Date in accordance with
the terms thereof, provided such contracts shall not be for greater than twelve
(12) months, and in each case, upon the written agreement of the Agent, the
Borrower and Lender (or Affiliate thereof) party to each such Rate Management
Contract certifying that such Lender Rate Management Obligations are and remain,
to the satisfaction of Agent, fully secured by the applicable Collateral
Documents.”
          (c) Clause (i) of Section 6.23, Rate Management Transactions, of the
Credit Agreement is hereby amended by deleting such clause in its entirety and
substituting the following:
“(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 thirty-six
(36) months; (b) the aggregate notional quantities of oil or gas covered by all
such contracts for any month (determined, in the case of contracts that are not
settled on a monthly basis, by a monthly pro-ration acceptable to the Agent)
does not exceed (x) with respect to contracts fixing prices on oil (I) if such
month is within twelve (12) months of the time of determination, 100% of the
Projected Oil Production for such month, and (II) if such month is more than
twelve (12) months after the time of determination, 85% of the Projected Oil
Production, (y) with respect to contracts fixing prices on gas, (I) if such
month is within twelve (12) months of the time of determination, 100% of the
Projected Gas Production for such month, and (II) if such month is more than
twelve (12) months after the time of determination, 85% of the Projected Gas
Production, and (z) with respect to contracts fixing prices on natural gas
liquids (I) if such month is within twelve (12) months of the time of
determination, 100% of the Projected Natural Gas Liquids Production for such
month, and (II) if such month is more than twelve (12) months after the time of
determination, 85% of the Projected Natural Gas Liquids Production; 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 or one of its Affiliates)
at the time such contract is made has (or whose holding company has) long-term
obligations rated BBB or better by S&P or Baa2 or better by Moody’s or is an
investment grade-rated industry participant. As used in this subsection, the
term “Projected Oil Production”, “Projected Gas Production” and “Projected
Natural Gas Liquids Production” means, in the case of each such commodity, the
projected production of oil, gas or natural gas liquids, as the case may be
(measured by volume unit, BTU equivalent or gallons, as applicable, 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 Parent, the Borrower and their
Subsidiaries which are located in or offshore of the United

 

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States of America and which have attributable to them PDP Reserves, as such
production is determined by the Agent using the most recent Reserve 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 as PDP Reserves in such report but that
are reflected in a separate or supplemental reports meeting the requirements of
Section 6.1 above and otherwise are satisfactory to the Agent (including any
production that is newly classified in such separate or supplemental report as
PDP Reserves which was previously reflected as some other category of Reserves);
and”.
     3. Conditions Precedent to Effectiveness of Amendment. This Amendment shall
become effective when, and only when, each of the conditions below has been
complied with to the satisfaction of the Agent and the Lenders and the documents
required below have been delivered to the Agent and the Lenders:
          (a) Counterparts of this Amendment duly executed by Borrower,
Guarantors and Lenders;
          (b) A copy of the resolutions approving this Amendment, and
authorizing the transactions contemplated herein duly adopted by the Managers of
Borrower, accompanied by a certificate of the duly authorized Secretary of
Borrower, certifying 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 duly adopted by the Board of
Directors or Members of each Guarantor, as the case may be, accompanied by a
certificate of the duly authorized Secretary of such Guarantor, certifying that
such copy is a true and correct copy of the resolutions duly adopted by the
Board of Directors or Members of such 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) Payment of all fees required to be paid to the Lenders in
connection with this Amendment;
          (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.

 

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     4. Representations and Warranties of Borrower. Each of Parent and Borrower
represents and warrants as follows:
          (a) Borrower and Guarantors 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
Guarantors, 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 or such other corporate governing documents of any
Guarantor, or any contract, agreement, law or regulation to which Borrower or
Guarantors are 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 Document 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 satisfaction of the conditions contained in Section 3
hereof each reference in the Credit Agreement to “this Agreement”, “hereunder”,
“hereof”, “herein” or words of like import, and each such 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, the
Notes, 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 Guarantors under the
Credit Agreement, as amended hereby, and the Notes, and under the other Security
Instruments.
          (c) Each of the Guarantors hereby expressly (i) acknowledges the terms
of this Amendment; (ii) ratifies and affirms its obligations under its Guaranty
Agreement dated November 18, 2005, in favor of the Agent and the Lenders;
(iii) acknowledges, renews and extends its continued liability under its
Guaranty Agreement and agrees that its Guaranty Agreement remains in full force
and effect; and (iv) guarantees to the Agent

 

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and the Lenders to promptly pay when due all amounts owing or to be owing by it
under its Guaranty Agreement pursuant to the terms and conditions thereof.
          (d) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of Agent or any 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 Guarantors each warrants and represents
to Lenders that, to the knowledge of Borrower and Guarantors, 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 Notes and/or the Security
Instruments, or (ii) the performance of any of its obligations with respect to
the Notes and/or the Security Instruments, and in the event any such facts,
events, statuses or conditions exist or have existed, Borrower and Guarantors
each unconditionally and irrevocably waive any and all claims and causes of
action against Agent and Lenders and any defenses to its payment and performance
obligations in respect to the Notes and the Security Instruments arising prior
to the date of this Amendment.
     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.
[Remainder of Page Intentionally Left Blank]

 

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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed in multiple counterparts, each of which is an original instrument
for all purposes, all as of the 22nd day of April, 2008.

            “Borrower”

PETROQUEST ENERGY, L.L.C.

By: PetroQuest Energy Inc., its sole member
      By:   /s/ W. Todd Zehnder         W. Todd Zehnder        Executive Vice
President and
Chief Financial Officer     

 

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            “Guarantors”

PETROQUEST ENERGY, INC.
      By:   /s/ W. Todd Zehnder         W. Todd Zehnder        Executive Vice
President and
Chief Financial Officer        PITTRANS, INC.
      By:   /s/ W. Todd Zehnder         W. Todd Zehnder        Executive Vice
President and
Chief Financial Officer        TDC ENERGY, LLC
      By:   /s/ W. Todd Zehnder         W. Todd Zehnder        Executive Vice
President and
Chief Financial Officer     

 

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            “Lenders”

JPMORGAN CHASE BANK, N.A.,
As the Agent, a Lender and LC Issuer
      By:   /s/ Jo Linda Papadakis         Jo Linda Papadakis, Vice President   
            CALYON NEW YORK BRANCH,
As a Lender and as Syndication Agent
      By:   /s/ Tom Byargeon         Name:   Tom Byargeon        Title:  
Managing Director              By:   /s/ Sharada Manne         Name:   Sharada
Manne        Title:   Director        MACQUARIE BANK LIMITED,
As a Lender
      By:   /s/Andrew Sinclair       Name:   Andrew Sinclair      Title:  
Division Director              By:   /s/ Anita Chio       Name:   Anita Chio   
  Title:   Attorney