Document:

exv10w1

 

EXHIBIT 10.1

SIXTH AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT

THIS SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the “Amendment”) dated April
12, 2005, by and among PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company
(“Borrower”); PETROQUEST ENERGY, INC., a Delaware corporation (“PEI” ); PITTRANS,
INC., an Oklahoma corporation (“Pittrans,”); TDC ACQUISITION SUB LLC, a Louisiana limited
liability company (“TDC Acquisition Sub,” who along with PEI and Pittrans are, or will be
come, a “Guarantor”); JPMORGAN CHASE BANK, N.A. (successor by merger to BANK ONE, N.A.
(Main Office Chicago)) (individually as a lender and as agent, “Agent”) and the financial
institutions set forth on the signature pages hereto, (“Lenders”).

R E C I T A L S:

     WHEREAS, Borrower, PEI, Agent 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 Agent, as a Lender, all of its interest in the Credit Agreement; and

     WHEREAS, Agent, as a Lender, has by Assignment effective on or about November 7, 2004,
assigned and conveyed to certain other financial institutions a portion of its interest in the
Credit Agreement; and

     WHEREAS, Borrower, Guarantors, 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.

     (a) The following defined terms set forth in Article I of the Credit Agreement are
hereby amended as follows:

     “Borrowing Base Reduction Amount” means (a) $2,500,000 commencing May 1, 2005
and continuing for each month thereafter until the next semi-annual Borrowing Base
redetermination pursuant to Section 2.2.2, and (b) for each month thereafter, such
amount as designated by 100% of the Lenders in a notice to Borrower

 

 

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 100% of the
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 100% of the Lenders designate a new Borrowing Base Reduction Amount.”

     “Guarantor” means individually and collectively (i) PetroQuest Energy, Inc., a
Delaware corporation; (ii) Pittrans, Inc., an Oklahoma corporation; (iii) TDC
Acquisition Sub LLC, a Louisiana limited liability company; and (iv) their
respective successors and assigns

     (b) 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:

     “CSP Pipeline” means CSP Pipeline LLC, a Louisiana limited liability company
and a Subsidiary of TDC Energy.

     “Excluded Subsidiary” means each of CSP Pipeline, Sea Harvester, Salvador
Energy and TDC Energy Systems.

     “Salvador Energy” means Salvador Energy Company, L.L.C., a Louisiana limited
liability company and a Wholly Owned Subsidiary of TDC Energy.

     “Sea Harvester” means Sea Harvester Energy Development Company, L.L.C., a
Louisiana limited liability company and a Subsidiary of TDC Energy.

     “TDC Acquisition Sub” means TDC Acquisition Sub, a Louisiana limited liability
company and a Wholly Owned Subsidiary of PEI,

     “TDC Energy” means TDC Energy LLC, a Louisiana limited liability company.

     “TDC Energy Systems” means TDC Energy Systems, L.L.C., a Louisiana limited
liability company and a Wholly Owned Subsidiary of TDC Energy.

     “TDC Merger Agreement” means that certain Agreement and Plan of Merger dated
April 12, 2005 among Borrower; TDC Acquisition Sub; TDC Energy; and the members of
TDC Energy who are a party thereto regarding the merger of TDC Energy with and into
TDC Acquisition Sub.

     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 Until the date as of which the Borrowing Base is next redetermined
pursuant to Section 2.2.2, the Borrowing Base shall be $67,500,000, as reduced by
Section 2.2.5.”

     (b) A new Section 5.31 TDC Merger Agreement is hereby added to the Credit
Agreement as follows:

     “5.31 TDC Merger Agreement. The transactions contemplated by the TDC
Merger Agreement have or will close as contemplated therein and neither Borrower,
any Guarantor, nor any other party thereto has waived nor shall waive, or in any way
amend, without the prior consent of the Agent, the terms of the TDC Merger
Agreement, including any condition to the obligations to close as so set forth
therein. A true, correct and complete copy of the TDC Merger Agreement (including
all exhibits, schedules and amendments thereto) has been delivered to Agent and a
true, correct and complete copy of each document and instrument delivered at closing
thereof has been delivered to the Agent. Neither Borrower, any Guarantor, nor any
other party thereto is in default under the TDC Merger Agreement or any document or
instrument to be delivered in connection with the TDC Merger Agreement executed in
connection therewith. The representations and warranties made by each of the
parties in the TDC Merger Agreement and any other document or instrument will be
true and correct (except for changes expressly provided for therein or herein) on
and as of the closing date as though made on and as of such date. None of the
Excluded Subsidiaries has any substantial business operations other than as
disclosed on Schedule 5.31.”

     (c) 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. Neither the Borrower nor any Guarantor will, 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;

     (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;

     (xiv) the Subordinated Indebtedness; and

     (xv) Indebtedness of TDC Acquisition Sub existing immediately after the
Merger (as defined in the TDC Merger Agreement) arising out of the
commodities hedging contracts and interest rate management contracts listed
on Schedule 4.23 to the TDC Merger Agreement.

     (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. Neither the Borrower nor any Guarantor will, nor will it permit
any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the
Property of the Borrower, any Guarantor or any of their respective 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;

     (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;

     (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; and

     (xi) Liens in favor of Macquarie Americas Corp., as the counterparty to
the contracts listed on Schedule 4.23 of the TDC Merger Agreement.”

     (d) Section 6.19 Affiliates, of the Credit Agreement is hereby amended by
adding the following new sentence:

     “Except as permitted below, PEI will not nor will it permit the Borrower or any
other Subsidiary to transfer assets of PEI, the Borrower or any other Subsidiary to
any Excluded Subsidiary, provide, however, PEI, the Borrower or any Subsidiary may
fund working capital to CSP Pipeline in an amount not to exceed $250,000 in any
calendar year. “

     (e) 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, any
Guarantor 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 Moody’s 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 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 Moody’s or is an investment grade-rated industry participant;

     (iii) 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; and

     (iv) contracts in favor of TDC Acquisition Sub as listed on Schedule
4.23 of the TDC Merger Agreement.

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.”

 

 

     (f) Section 6.26 Dry Hole Costs, of the Credit Agreement is hereby amended by
deleting the section in its entirety and substituting the following:

     “6.26. Dry Hole Costs. The Borrower shall not enter into any authority
for expenditure for (i) any single exploration well having a dry hole cost estimated
to exceed $3,000,000; or (ii) any single development well having a dry hole cost
estimated to exceed $5,000,000. “

     3. Conditions Precedent to Effectiveness of Amendment. This Amendment shall become
effective when, and only when, each of the conditions below have 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 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 or
Members of each Guarantor, as the case may be, accompanied by a certificate of the duly
authorized Secretary of such Guarantor, 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) Copies of all documentation executed by PEI, TDC Acquisition Sub, TDC Energy and
the other parties to the TDC Merger Agreement, certified by an Authorized Officer of
Borrower that such documents are true, correct and complete;

     (e) Twelve (12) certified copies of the Certificate of Merger as filed with the
Secretary of State of Louisiana, each in recordable form;

     (f) Evidence satisfactory to the Agent, the Lenders and their counsel as to the
termination and release of TDC Energy and CSP Pipeline from any and all obligations arising
out of or related to that certain Credit Agreement dated May 2, 2003 between TDC Energy and
Macquarie Americas Corp., a Delaware corporation, a lender thereunder, including, but not
limited to, such releases of Liens and UCC Termination Statements, in a

 

 

form and substance satisfactory to the Agent, the Lenders and their counsel, with
respect to the Properties of TDC Energy and CSP Pipeline, immediately prior to the Merger
(as defined in the TDC Merger Agreement) and such other agreements, documents and
instruments as may be necessary and appropriate, in form and substance satisfactory to the
Agent and the Lenders;

     (g) Mortgages, executed by TDC Acquisition Sub, in a form satisfactory to TDC
Acquisition Sub and to the Agent, the Lenders and their counsel with respect to the
Properties of TDC Acquisition Sub immediately after giving effect to the Merger (as defined
in the TDC Merger Agreement), which are part of the Collateral, and such other agreements,
documents and instruments as may be necessary and appropriate, in form and substance
satisfactory to TDC Sub and to the Agent and to the Lenders, executed and delivered by TDC
Acquisition Sub, as mortgagor or assignor, in favor of the Agent, ratably for the benefit of
the Lenders, in order to create and perfect the Lender Liens in and to all Collateral
described therein;

     (h) The Pledge Agreement, executed by PEI, in a form satisfactory to PEI and to the
Agent, the Lenders and their counsel, with respect to the membership interest of TDC
Acquisition Sub, along with one or more certificates evidencing such shares having attached
thereto duly executed stock powers and any financing statements related thereto;

     (i) The Pledge Agreement, executed by TDC Acquisition Sub, in a form satisfactory to
TDC Acquisition Sub and to the Agent, the Lenders and their counsel, with respect to the
membership interest of each Excluded Subsidiary, along with one or more certificates
evidencing such shares having attached thereto duly executed stock powers and any financing
statements related thereto;

     (j) A Guaranty, executed by TDC Acquisition Sub, in a form satisfactory to TDC
Acquisition Sub and to the Agent, the Lenders, and their counsel;

     (k) An amendment to the Subordinated Credit Agreement executed by Borrower and the
Subordinated Lenders, in a form satisfactory to Borrower and to the Agent, the Lenders and
their counsel, pursuant to which, among other things, the Parties thereto will amend the
Subordinated Credit Agreement to permit the increase in the Borrowing Base contemplated by
this Sixth Amendment;

     (l) True, correct and complete copies of all documents evidencing the settlement of the
Enron Litigation ( as defined in the TDC Merger Agreement), including, but not limited to, a
certified copy of a court order which has become final and non-appealable approving such
settlement, all in a form satisfactory to the Agent, the Lenders and their counsel;

     (m) 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 any Guarantor;

 

 

     (n) Payment of all fees as set forth in the Fee Letter executed by Borrower in
connection with this Amendment;

     (o) 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

     (p) 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 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 of Guarantors,
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 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 Guarantors
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 Guarantors 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 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]

 

 

     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/ Michael O. Aldridge
 	 
	 	 	Michael O. Aldridge, Senior Vice President, 	 
	 	 	Chief Financial Officer and Treasurer 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	“Guarantors”

PETROQUEST ENERGY, INC.

 	 
	 	By:  	     /s/ Michael O. Aldridge
 	 
	 	 	Michael O. Aldridge, Senior Vice President, 	 
	 	 	Chief Financial Officer and Treasurer 	 
	 

	 	 	 	 	 
	 	PITTRANS, INC.

 	 
	 	By:  	     /s/ Michael O. Aldridge
 	 
	 	 	Michael O. Aldridge, Chief Financial Officer 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	TDC ACQUISITION SUB

 	 
	 	By:  	     /s/ Michael O. Aldridge
 	 
	 	 	Michael O. Aldridge, Senior Vice President,
Chief Financial Officer and Treasurer

 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	“Lenders”

JPMORGAN CHASE BANK, N.A.,

As the Agent, a Lender and LC Issuer

 	 
	 	By:  	/s/ Charles Kingswell-Smith
 	 
	 	 	Charles Kingswell-Smith 	 
	 	 	Managing Director 	 
	 
	 	 	 	 	 
	 	GUARANTY BANK, FSB,

As a Lender

 	 
	 	By:  	/s/ Brian J. Petet
 	 
	 	Name:  	Brian J. Petet 	 
	 	Title:  	Assistant Vice President 	 
	 
	 	 	 	 	 
	 	CALYON NEW YORK BRANCH,

As a Lender

 	 
	 	By:  	/s/ Philippe Soustra
 	 
	 	Name:  	Philippe Soustra 	 
	 	Title:  	Executive Vice President 	 
	 
	 	 	 	 	 
	 	 	 
	 	By:  	/s/ Attila Coach
 	 
	 	Name:  	Attila Coach 	 
	 	Title:  	Managing Directorexv10w2

 

Exhibit 10.2

EXECUTION VERSION

FIFTH AMENDMENT TO SECOND LIEN SECURED CREDIT AGREEMENT

     THIS FIFTH AMENDMENT TO SECOND LIEN SECURED CREDIT AGREEMENT (this “Amendment”) is
dated April 12, 2005, among PetroQuest Energy, L.L.C., a Louisiana limited liability company
(“PetroQuest”); TDC Energy LLC f/k/a TDC Acquisition Sub LLC, a Louisiana limited liability
company (“New TDC” and, together with PetroQuest, “Borrower”); PetroQuest Energy,
Inc., a Delaware corporation (“Guarantor”); each of the Lenders that are, from time to
time, parties to the Credit Agreement; and Macquarie Bank Limited, a bank incorporated under the
laws of Australia (in its individual capacity, “MBL”), as administrative agent for the
Lenders (in such capacity, together with its successors in such capacity, the “Administrative
Agent”). Capitalized terms used but not defined in this Amendment have the meaning given them
in the Credit Agreement (defined below). Except as noted in this Amendment, all references to
sections, exhibits and schedules refer to sections in and exhibits and schedules to the Credit
Agreement.

Background

     A. PetroQuest and Guarantor are currently parties to a Second Lien Secured Credit Agreement
dated November 6, 2003 (as amended, the “Credit Agreement”), with Macquarie Bank Limited
(“Macquarie”), in its individual capacity and as Administrative Agent, and the other
Lenders party to that agreement.

     B. Guarantor has entered into an Agreement and Plan of Merger dated April 12, 2005 (the
“Merger Agreement”) with New TDC, a wholly-owned subsidiary of Guarantor, TDC Energy LLC
(“Old TDC”) and the owners of all of the outstanding membership interest in Old TDC. Under
the Merger Agreement, Guarantor and Old TDC will enter into a business combination transaction in
which Old TDC will merge with and into New TDC. New TDC will survive the merger with Old TDC and,
immediately following the merger, will change its name to TDC Energy LLC.

     C. Old TDC and Macquarie are parties to a Credit Agreement dated May 2, 2003 (as amended, the
“Old TDC Credit Agreement”). In connection with the merger of Old TDC into New TDC,
Macquarie will sell and assign to JPMorgan Chase Bank, N.A. (“JPMorgan”), the Bridge Note
(as defined in the Old TDC Credit Agreement) and the various liens securing the repayment of
amounts owed under the Bridge Note.

     D. Notwithstanding the sale of the Bridge Note and related liens to JPMorgan, New TDC will
assume and become directly liable for (i) all obligations of Old TDC under the Swap Agreement (as
defined in the Old TDC Credit Agreement) between Old TDC and Macquarie (the “TDC Swap
Agreement”), and (ii) all obligations owed or to be owed to Macquarie by PetroQuest under the
Credit Agreement.

     E. In connection with the transactions contemplated by the Merger Agreement, PetroQuest and
Guarantor have requested that Macquarie amend certain terms and conditions of

 

 

the Credit Agreement, and Macquarie is willing to do so pursuant to the terms and conditions
of this Amendment.

Agreements

     In consideration of the mutual covenants of Borrower, Guarantor and the Lenders set forth in
this Amendment and other good and valuable consideration, the receipt and sufficiency of which are
acknowledged by each of the parties, Borrower, Guarantor and the Lenders agree as follows:

     1. Amendments to Credit Agreement.

     (a) Modifications to Existing Definitions. The Credit Agreement is amended to
replace the existing definitions for each of the terms listed below with the new definitions
set forth along side each term in this Section 1(a):

     “Borrower” means, collectively, PetroQuest Energy, L.L.C., a
Louisiana limited liability company, and TDC Energy LLC, a Louisiana limited
liability company f/k/a TDC Acquisition Sub LLC.

     “Term Note” means, collectively, one or more promissory notes
substantially in the form of Exhibit B executed by Borrower and
delivered to Lenders (including any successors to and assignees of the
initial Lenders identified in this Agreement) pursuant to Section
2.4, together with all renewals, extensions, replacements and
rearrangements. As of the date of the Fifth Amendment, all references to
the Term Note will be deemed to refer to the Replacement Term Note.

     (b) Additional Definitions. The Credit Agreement is amended to include each of
the following additional definitions in alphabetical order:

     “Fifth Amendment” means the Fifth Amendment to Credit Agreement
dated April 12, 2005 among Borrower, Guarantor, Administrative Agent and the
Lenders party to the Credit Agreement.”

     “New TDC” means TDC Energy LLC, a Louisiana limited liability
company f/k/a TDC Acquisition Sub LLC.

     “Old TDC” means TDC Energy LLC, a Louisiana limited liability
company that was acquired by and merged into New TDC pursuant to the TDC
Merger Agreement.

     “PetroQuest” means PetroQuest Energy, L.L.C., a Louisiana
limited liability company.

     “Replacement Term Note” means the Replacement Term Note dated
April 12, 2005, substantially in the form of Exhibit B executed and

2

 

delivered to Lenders, together with any renewals, extensions,
replacements or rearrangements.

     “TDC Merger Agreement” means the Agreement and Plan of Merger
dated April 12, 2005 among Guarantor, TDC Acquisition Sub LLC, Old TDC and
the owners of all of the outstanding membership interests in Old TDC.

     (c) Modifications to Credit Agreement.

     (i) Joint and Several Liability of Borrowers. A new Section
2.12 is added to the Credit Agreement as follows:

     Section 2.12 Joint and Several Liability. Both PetroQuest and
New TDC expressly agree and acknowledge that they are each liable, jointly
and severally, for the full and final repayment and satisfaction of all of
the Obligations.

     (ii) Effect of Merger. A new Section 4.40 is added to the
Credit Agreement as follows:

     Section 4.40 Effect of Merger. New TDC is a Louisiana
limited liability company f/k/a TDC Acquisition Sub LLC, and is a
wholly-owned, direct subsidiary of Guarantor. New TDC is the
successor by merger to Old TDC and, pursuant to the TDC Merger
Agreement and by operation of law, New TDC acquired all of the
assets and assumed all of the liabilities of Old TDC.

     (iii) Debt Threshold. Section 7.11 of the Credit Agreement is
deleted in its entirety and replaced with the following:

     Section 7.11 Debt Threshold.

     (a) Permitted Outstanding Debt. Borrower shall not
permit the total Outstanding Debt to exceed (a) eighty million
dollars ($80,000,000) effective March 31, 2005 and (b) ninety
million dollars ($90,000,000.00) beginning on the date the
transactions contemplated by the TDC Merger Agreement become
effective.

     (b) Reduction of Permitted Outstanding Debt. The total
amount of Outstanding Debt permitted by this Section 7.11
will automatically reduce dollar-for-dollar concurrently with any
reduction(s), for any reason, of the Borrowing Base under the Senior
Credit Facility.

     2. Exhibits and Schedules. Exhibit B to the Credit Agreement is deleted in its
entirety and replaced with Exhibit B to this Amendment.

3

 

     3. Conditions to Effectiveness. This Amendment will become effective upon the first date (the
“Effective Date”) on which each of the following conditions is indefeasibly satisfied or
waived in writing by Administrative Agent:

     (a) Borrower and Guarantor, as applicable, will execute and deliver to the
Administrative Agent the following documents, in each instance, acceptable in form and
substance to Administrative Agent in its sole and absolute discretion:

          (i) Replacement Term Note

          (ii) Pledge Agreement

          (iii) Act of Mortgage, Assignment of Production and as-Extracted Collateral, Security
Agreement and Financing Statement (Louisiana Properties of New TDC);

          (iv) Deed of Trust, Mortgage, Assignment of Production, Security Agreement and
Financing Statement (Texas Properties of New TDC);

          (v) Security Agreement;

          (vi) First Amendment to Deed of Trust, Mortgage, Assignment of Production, Security
Agreement and Financing Statement (Existing Texas Properties of PetroQuest);

          (vii) First Amendment to Deed of Trust, Mortgage, Assignment of Production, Security
Agreement and Financing Statement (Existing Oklahoma Properties of PetroQuest);

          (viii) Act of Supplement and Amendment to and Notice of Reinscription of First Amended
and Restated Act of Mortgage, Assignment of Production and As-Extracted Collateral, Security
Agreement and Financing Statement (Existing Louisiana Properties of PetroQuest);

          (ix) Pledge Agreement (Membership Interests in New TDC)

          (x) Pledge Agreement (Membership Interest in CSP);

          (xi) Purchase and Sale Agreement (ORRI in TDC Properties);

          (xii) Registration Rights Agreement;

          (xiii) Release Agreement (Old TDC and TDC Members);

          (xiv) First Amendment to Master Agreement (TDC ISDA);

          (xv) First Amendment to Master Agreement (PetroQuest ISDA);

4

 

          (xvi) First Amendment to Unconditional Guaranty Agreement (PQUE); and

          (xvii) all other agreements, instruments, certificates, financing statements and other
documents necessary or convenient, in the sole and absolute discretion of the Lenders, to
give effect to the transaction contemplated by this Amendment;

     (b) PQUE shall have issued to Macquarie 500,000 shares of common stock (par value
$0.001 per share) of PQUE and delivered to Macquarie one or more certificates evidencing the
issued shares;

     (c) to the extent not previously delivered to Lender (or to the extent such requirement
has not been waived in writing by Lender), Borrower shall have delivered or caused others to
deliver to Lender all instruments, certificates, reports, legal opinions and other documents
required to be delivered pursuant to the Credit Agreement or any of the other Loan
Documents;

     (d) no Material Adverse Effect shall have occurred;

     (e) the representations in each of the Loan Documents of Borrower and each other Person
are true, complete and correct in all material respects;

     (f) no suit or other proceeding is pending or threatened before any court or
governmental agency seeking to restrain, enjoin or prohibit or declare illegal, or seeking
damages from Borrower in connection with the transactions contemplated in this Agreement (or
the operations contemplated as part of those transactions) or alleging the breach of any
material contract;

     (g) to the extent it has not done so previously, Borrower has reimbursed Lenders for
all Related Costs for which invoices have been presented;

     (h) each of the documents executed and delivered by Borrower or Guarantor in connection
with any amendments or supplements to the Senior Credit Facility will be satisfactory in
form and substance to Borrower, Guarantor and Lenders;

     (i) Senior Lender shall have executed and delivered to Administrative Agent an
amendment to the Intercreditor Agreement satisfactory in form and substance to Lenders in
their sole and absolute discretion; and

     (j) Borrower shall have paid to Administrative Agent, for the benefit of each of the
Lenders, a modification fee in the amount of fifty thousand dollars ($50,000).

     4. Reaffirmation of Representations and Warranties. To induce the Lenders to enter
into this Amendment, (a) PetroQuest and New TDC each hereby reaffirms, as of the date of this
Amendment, the representations of warranties of Borrower contained in Article IV of the
Credit Agreement, each of the other Loan Documents and all other documents executed pursuant
thereto, (b) Guarantor hereby reaffirms, as of the date hereof, its representations and warranties
contained in Article IV of the Credit Agreement, each of the other Loan Documents and all
other

5

 

documents executed pursuant thereto, and (c) each of PetroQuest, New TDC and Guarantor
additionally represents and warrants to each of the Lenders as follows:

(i) the execution and delivery of this Amendment and the performance by
Borrower and Guarantor of their respective obligations under this Amendment
are within such company’s power, have been duly authorized by all necessary
company action, have received all necessary governmental approval (if any
shall be required), and do not and will not contravene or conflict with any
provision of law or of the Charter Documents of Borrower or Guarantor or of
any agreement binding upon either of them; and

(ii) this Amendment represents the legal, valid and binding obligations of
each of Borrower and Guarantor enforceable against each of them in
accordance with its terms and subject only to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors’ rights generally.

     5. Ratification of Liens and Security Interests. Borrower acknowledges and ratifies
the existence and priority of the Liens granted by Borrower in favor of any of the Lenders or the
Administrative Agent for the benefit of the Lenders in and to the Collateral and represents,
warrants and covenants that such liens and security interests are valid, existing and in full force
and effect.

     6. Miscellaneous. This Amendment supersedes all prior agreements (written or oral)
between Borrower and the Lenders with regard to the subject matters hereof. This Amendment is a
Loan Document. Except as affected by this Amendment, the Loan Documents are unchanged and continue
in full force and effect. However, in the event of any inconsistency between the terms of the
Credit Agreement as amended by this Agreement and any other Loan Document, the terms of the Credit
Agreement will control and the other document will be deemed to be amended to conform to the terms
of the Credit Agreement. All references to the Credit Agreement will refer to the Credit Agreement
as amended by this Amendment. Borrower agrees that all Loan Documents to which it is a party
(whether as an original signatory or by assumption of the Obligations) remain in full force and
effect and continue to evidence its legal, valid and binding obligations enforceable in accordance
with their terms (as the same are affected by this Amendment or are amended in connection with this
Amendment). Borrower releases Administrative Agent and each of the Lenders from any liability for
actions or failures to act in connection with the Loan Documents prior to the date of this
Amendment. Any course of dealing among Borrower, Administrative Agent, any of the Lenders or any
other Person will not be deemed to have altered or amended the Credit Agreement or affected either
Borrower’s or the Lenders’ right to enforce the Credit Agreement as written. This Amendment will
be binding upon and inure to the benefit of each of the undersigned and their respective successors
and permitted assigns.

     7. Form. Each agreement, document, instrument or other writing to be furnished to
Administrative Agent or the Lenders under any provision of this Amendment must be in form and
substance satisfactory to the Lenders and their respective counsel.

6

 

     8. Multiple Counterparts. This Amendment may be executed in more than one
counterpart, each of which shall be deemed an original, and all of which constitute, collectively,
one instrument; but, in making proof of this instrument, it shall not be necessary to produce or
account for more than one such counterpart. It shall not be necessary for each of the parties to
execute the same counterpart of this Amendment so long as each of them executes a counterpart of
this Amendment.

     9. Governing Law. This Amendment and all transactions provided for in this Amendment
will be governed by, interpreted and construed under and enforced pursuant to the laws of the State
of Texas, without regard to its conflicts of laws provisions.

     10. Final Agreement. THE LOAN DOCUMENTS, AS AMENDED BY OR IN CONNECTION WITH THIS
AMENDMENT, REPRESENT 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 ORAL
AGREEMENTS BETWEEN THE PARTIES.

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

7

 

     This Amendment is executed as of the date set forth in the preamble to this Amendment.

	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 
	 	 	PetroQuest Energy, L.L.C.,
a Louisiana limited liability company
	 
	 	 	 	 
	

	 	By:
	 	/s/ Michael O. Aldridge
	

	 	 	 	 
	

	 	 	 	Michael O. Aldridge
	

	 	 	 	Treasurer
	 
	 	 	 	 
	 	 	TDC Energy LLC
	 	 	f/k/a TDC Acquisition Sub LLC,
a Louisiana limited liability company
	 
	 	 	 	 
	

	 	By:
	 	/s/ Michael O. Aldridge
	

	 	 	 	 
	

	 	 	 	Michael O. Aldridge
	

	 	 	 	Treasurer
	 
	 	 	 	 
	 	 	GUARANTOR:
	 
	 	 	 	 
	 	 	PetroQuest Energy, Inc.,
a Delaware corporation
	 
	 	 	 	 
	

	 	By:
	 	/s/ Michael O. Aldridge
	

	 	 	 	 
	

	 	 	 	Michael O. Aldridge
	

	 	 	 	Treasurer

	 	 	 	 	 
	 	 	LENDERS:
	 
	 	 	 	 
	 	 	Macquarie Bank Limited, 
a bank incorporated in accordance with the laws of Australia
	 
	 	 	 	 
	

	 	By:
	 	/s/ Nicholas O’Kane
	

	 	 	 	 
	

	 	Printed Name:
	 	Nicholas O’Kane
	

	 	 	 	 
	

	 	Title:
	 	Executive Director
	 
	 	 	 	 
	

	 	By:
	 	/s/ Anita Chiu
	

	 	 	 	 
	

	 	Printed Name:
	 	Anita Chiu
	

	 	 	 	 
	

	 	Title:
	 	Lawyer

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